Shardy and Kuhne
[2017] FamCA 364
•26 May 2017
FAMILY COURT OF AUSTRALIA
| SHARDY & KUHNE | [2017] FamCA 364 |
| FAMILY LAW – PROPERTY– Where the parties disagree as to the amount provided by the de facto husband’s mother towards the purchase of the former matrimonial property – Where the value asserted by the de facto husband as to the amount provided by his mother is accepted – Where the de facto husband asserts but the de facto wife denies that the parties have a joint debt to the de facto husband’s friend and business partner – Where the evidence fails to establish that the parties have a joint debt to the de facto husband’s friend and business partner – Where contributions are assessed at 35 per cent to the de facto wife and 65 per cent to the de facto husband – Where the de facto wife contends that the de facto husband has failed to make full and frank disclosure in relation to certain business interests – Where it is not accepted that the de facto husband failed to fulfil his obligations pursuant to Black & Kellner (1992) FLC 92-287 but is found to have failed to provide proper evidence of his interest in overseas entities – Where the de facto wife is to have greater ongoing responsibility for the parties’ child – Where a 10 per cent adjustment is made in favour of the de facto wife for s 90SF(3) factors – Where orders are made for the de facto husband to retain the former matrimonial property and to make a lump sum payment to the de facto wife – Where the parties are to otherwise retain the property and superannuation in their possession. |
| Family Law Act 1975 (Cth) |
| Black & Kellner (1992) FLC 92-287 Giunti and Giunti (1986) FLC 91-759 Stanford v Stanford (2012) 247 CLR 108 |
| APPLICANT: | Ms Shardy |
| RESPONDENT: | Mr Kuhne |
| FILE NUMBER: | SYC | 3454 | of | 2009 |
| DATE DELIVERED: | 26 May 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Stevenson J |
| HEARING DATE: | 30-31 January and 1 February 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Mr AA |
| COUNSEL FOR THE RESPONDENT: | Mr Rosic |
| SOLICITOR FOR THE RESPONDENT: | Mr Chodat, Kells |
Orders
The respondent will pay to the applicant a sum of $683,000 within three (3) calendar months of the date of these Orders.
Simultaneously with and upon payment by the respondent to the applicant of such sum of $683,000, both parties will do all things and execute all documents required to effect the transfer to the respondent of the whole of the applicant's right title and interest in the property situate at and known as B Street, Suburb C in the State of New South Wales (“the Suburb C property”).
Simultaneously with compliance by both parties with Orders 1 and 2 hereof, the respondent will forthwith indemnify the applicant and keep her indemnified against all liability for loans owed by the parties to the respondent's mother Ms D Kuhne and the applicant's parents Ms E and Mr F Shardy and the Westpac Bank mortgage registered on the title to the Suburb C property.
The parties are otherwise declared to be solely entitled to all property and superannuation currently in his and her respective possession.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Shardy & Kuhne has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 3454 of 2009
| Ms Shardy |
Applicant
And
| Mr Kuhne |
Respondent
REASONS FOR JUDGMENT
The proceedings
Mr Kuhne and Ms Shardy were parties to litigation concerning settlement of property and parenting orders in relation to their daughter, G ("the child"). the child was born in 2006 and is currently 11 years of age.
After the parties heard the evidence of the Family Consultant, Ms H during the trial, they agreed upon parenting arrangements for the child. By consent I made final orders which provided that she lives with her mother and spends time with her father, increasing from one to five nights per fortnight over a period of eight months.
There remained for determination the issue of alteration of property interests. Each of the parties sought orders pursuant to Part VIIIB of the Family Law Act 1975 (Cth) (“the Act”), following the breakdown of their de facto relationship.
The applicant, Ms Shardy, sought the following:
1.Within 7 days of these Orders the Applicant and the Respondent do all things and sign all documents necessary to sell the property at [B Street, Suburb C] and by way of consequential arrangements:
(a)The parties shall list the property for sale by private treaty within a further 7 days with such agents as the parties may agree to appoint and, in default of agreement, with agents to be nominated by the President of the Real Estate Institute of New South Wales;
(b)The parties shall fix the sale price by agreement, and failing agreement in accordance with Order 2;
(c)An independent solicitor shall act on the conveyance as agreed between the parties;
(d)In the event that the property is not sold by auction or by private treaty within 1 month of the first listing, the parties shall negotiate with the agent as to the best method of selling the home, at the best possible price and the parties agree on a sale price, unless otherwise agreed, the property to remain on the market until sold.
2.The sale price at which the property shall be listed shall be such price as may be agreed between the parties, and in the absence of agreement reach (sic) within 7 days shall be the price nominated as the fair market value thereof, by a Valuer, appointed by the President for the time being of the Australia Property Institute (NSW) Branch and the costs of and incidental to such appointment and Valuation shall be borne equally between the parties.
3.The valuer shall, if requested by either party, 1 month after the date upon which the property is first listed pursuant to Order 1 hereof, nominate a sale price other than the other originally nominated price if the property remains unsold.
4.Upon sale of the property pursuant to these orders the parties do all things necessary to cause the proceeds of the sale to be paid in the following order of priority:
(a)Repayment of the mortgage;
(b)Payment of legal costs and agent's commission and expenses on the sale;
(c)All adjustments of rates and outgoings;
(d)Payment of the sum of EUR17,000 to the Applicant's parents;
(e)Payment of the sum of EUR100,000 to the Respondent's mother;
(f)The balance then remaining be divided as to 65% thereof to the Applicant and 35% thereof to the Respondent.
5.The Respondent retain to the exclusion of the Applicant all of his right, title and interest in the businesses known as "[I Pty Ltd]" and "[J Ltd]".
6.Each party is solely to be entitled to all items of personal property and personal effects including furniture and motor vehicles in their respective possession, money standing to the credit of any bank, building society or credit union account in their respective sole names and superannuation or other entitlements rising (sic) from their respective employment.
The respondent, Mr Kuhne, sought the following orders:
1.That within 42 days, the Applicant do all such acts and things and sign all necessary documents so as to transfer to the Respondent all of her right, title and interest in the property situated at [B Street, Suburb C] in the State of New South Wales (hereinafter "the [Suburb C] property") being the whole of the land comprised in Certificate of Title Folio Identifier ....
2.Contemporaneously with the transfer referred to in paragraph 1 above, that the Respondent:
2.1Do all acts and things so as to refinance and discharge the existing mortgage to Westpac Bank over the [Suburb C] property.
2.2Pay to the Applicant the sum of $300,000 by way of lump sum property settlement.
2.3Indemnify the Applicant and hold her forever indemnified with respect to any loan now or in the future, owed to:
2.3.1.The Respondent's mother [Ms D Kuhne]; and
2.3.2[Mr K].
3.Contemporaneously with the transfer referred to in paragraph 1 above, that the Applicant indemnify the Respondent and hold him forever indemnified with respect to any loan now or in the future owed to the Respondent's parents [Ms E] and [Mr F Shardy].
4.That as between the Applicant and Respondent and subject to the above orders the Applicant and Respondent shall each respectively retain all interest and entitlements to:
4.1.All personal property now in his or her respective possession or control;
4.2.All shares, debentures, unit in unit trusts, bank, building society, credit union accounts standing in his or her sole name respectively; and
4.3All interest in all life insurance policies, superannuation funds standing in his or her sole name respectively.
Background
The applicant was born in 1974 in Europe and is currently 42 years of age. The respondent was born in 1967 in Europe and is presently aged 50 years. The parties commenced a relationship in 2002 and began to live together in City L during 2004. It was common ground that they commenced a de facto relationship early in 2004.
At the start of 2004 the parties spent four weeks in Asia, before arriving in Australia on 27 February 2004. The applicant held a working holiday visa which entitled her to remain in this country for one year. The respondent entered Australia on a tourist visa. In April/May 2004 the parties leased an apartment in Sydney Suburb M and had their belongings shipped from City L to Australia.
The applicant deposed that she had savings of approximately €45,000 at the commencement of the de facto relationship. This sum included an inheritance from her grandmother. The respondent deposed that he had cash reserves of approximately €220,000 at the commencement of cohabitation. These funds included an inheritance of €160,000 from his father.
In June 2004 the respondent established a company known as N Pty Ltd. He deposed that this company remained dormant for about eight months. He then changed its name to O Pty Ltd and the company operated art competitions in Sydney and Melbourne.
In June 2004 the applicant commenced part-time employment. The respondent deposed that she assisted also in the business conducted by P Ltd.
The respondent deposed that he and two previous business partners established a company known as P Ltd in 2007. This company was registered in London. The respondent was the director and the only issued share was held by a company known as P Holdings Ltd (Exhibit 4). P Holdings Ltd was incorporated in the Caribbean on 1 February 2007. The respondent is the managing director of P Holdings Ltd. All issued shares are held by Mr K, a long-term business associate and friend of the respondent.
The respondent deposed that he began to receive an income from P Ltd in March/April 2005. He estimated that this income was €3,500 to €4,000 per month in 2005.
The respondent obtained a Section 457 Visa in March/April 2005, which enabled him to work and generate income via O Pty Ltd. He deposed that his income from this source was approximately $70,000 per annum.
In September 2005 the parties learned of the applicant's pregnancy with the child. She ceased her employment and the parties moved to Suburb Q.
During the applicant's pregnancy, the parties disagreed as to whether they would continue to live in Australia or return to Europe. The applicant wished to return to Country R and the respondent wanted to remain in Australia. Ultimately, they agreed to go to Country S and the child was born in City T in 2006. The parties returned to Australia in December 2006 and lived in this country until April 2007. They spent the period from April 2007 until October 2007 in Country S.
In June 2007 the parties purchased jointly a house property at B Street, Suburb C (“the Suburb C property”), for $1,300,000. They borrowed $300,000 from Westpac Bank and €250,000, or about $400,000, from the applicant's parents. The applicant contributed €45,000, or $72,000, and the respondent also provided funds for this purchase.
It was common ground that the respondent's mother loaned money to the parties for this purchase but there was a dispute as to the quantum. The applicant alleged that the respondent's mother provided €120,000, or about $192,000. The respondent deposed that his mother advanced sums of €100,000 or $163,930 and €75,000 or $122,950. These figures total €175,000 or approximately $286,800.
The respondent deposed that he and the applicant respectively transferred €160,000, or $266,000, and €45,000 or $72,000 from Country R to their joint Westpac Bank account. These transfers meant that the balance of the joint Westpac account was approximately $338,000 shortly before settlement of the purchase of the Suburb C property. The applicant did not appear to take issue with this evidence of the respondent.
In October 2007 the parties and the child returned to Australia and moved into the Suburb C property. They both occupied these premises at various times until March 2012. At that point, the applicant moved into her current rented apartment at Suburb U. The respondent was absent from the property for periods but the parties took two holidays together with the child in 2009 and 2011.
The respondent was in Country R between December 2011 and January 2012. The applicant contended that his return triggered her decision to leave the Suburb C property. The parties were in dispute as to their date of separation, with the applicant and respondent contending respectively that the year was 2011 and 2009.
In October 2010 the applicant commenced employment with V Pty Ltd. She moved to a different employer in September 2016 and currently earns $3,500 net per month.
The respondent moved to Asia in February 2015 and entered into a new relationship. He unilaterally rented the Suburb C property to his friend and business associate Mr K. The lease was for a term of three years from 9 April 2015, at a rental rate of $500 per week. Mr K sublet the property for $1,250 per week for a total period of six months. In May 2016 the respondent moved back into the property and the lease was cancelled by arrangement with Mr K.
The respondent's dealings with Mr K were a significant issue in the proceedings. In particular, the applicant strongly disputed the contention of the respondent that the parties have a joint debt of approximately $264,000 to Mr K.
When he gave oral evidence, Mr K produced a Certificate of Incumbency (Exhibit 6) which showed that he was the sole shareholder of P Holdings Ltd and the respondent the only director of that company. As noted, P Ltd was owned solely by P Holdings Ltd. P Holdings Ltd employed the respondent as managing director of P Ltd.
The respondent and Mr K both gave evidence to the effect that P Ltd advanced funds to the former in 2010. They both deposed that these funds were advanced to enable the respondent to repay part of the debt to the applicant's parents.
In his affidavit the respondent set out these alleged advances from P Ltd, which totalled €151,000. Mr K deposed that the total amount of these advances was €146,000. In his oral evidence Mr K said that he recalled advances amounting to "about €150,000", but added "I relied upon what [the respondent] told me".
Prior to 2010, monthly repayments to the applicant's parents had been made from the parties' joint account. The respondent contended that the parties had reached agreement for a financial settlement in 2010 and, in those circumstances, he wished to finalise his monetary involvement with the applicant's parents. The respondent maintained that it was in this context that he arranged for advances from P Ltd in order to repay this debt.
The respondent and Mr K both gave evidence to the effect that the latter closed down P Ltd in 2013. They both maintained that, from this point, they considered that the funds advanced by the company for repayment to the applicant's parents became a debt of the parties to Mr K personally. There was no evidence the terms and conditions of any such loan arrangement.
In his oral evidence Mr K accepted a description of this arrangement as "a gentleman's agreement". He said that the respondent has made no repayments in relation to these advances. It would appear that Mr K has made no demand of the respondent or the parties for any repayment on account of this alleged debt.
It was common ground that the parties' liability to the applicant's parents has been reduced from approximately $400,000 to $26,000 or $18,230, according to the applicant and respondent respectively. The applicant's legal representative suggested that the difference was due to fluctuations in the exchange rate between euros and Australian dollars. No other explanation was proffered on behalf of either party.
The respondent contended that his mother loaned to him a sum of €100,000 in February 2013, for the purpose of repayment of the applicant's parents. He claimed that this sum was in addition to her advance at the time of the purchase of the Suburb C property.
In 2013 the respondent acquired a shelf company in Country R known as Company W for a price of €26,690. He changed the name of the company to Company X. The respondent is employed by this company on a salary of approximately $72,000 per annum. Country R law prescribes that that this company must hold a sum of €25,000 at all times.
The respondent is one of four founders of an enterprise known as "J Ltd". In April 2015 he and two others established a company in the United Kingdom known as J Ltd. They each held one-third of the issued shares in J Ltd.
In October 2015 the respondent and two others, including Mr Y, established a company known as J Ltd in the Country Z. According to the respondent, J Ltd Country Z was established as "a non-for-profit entity that would allow like minded individuals to network to develop social business ideas around pollution."
The respondent deposed that, in August 2015, Mr Y purchased a vehicle which was intended for use in the J Ltd venture. He said that he commissioned an inspection of the vehicle prior to settlement of the purchase. A subsequent inspection revealed that the vehicle had structural issues which, apparently, will require repairs to the extent of some €600,000 to €750,000. Accordingly, J Ltd has been unable to operate business using this vehicle. The respondent deposed that J Ltd Country Z conducted business between June 2016 and October 2016, using hired vehicles, but has made no profit.
The respondent deposed further that one of the original founders of J Ltd Country Z transferred his one-third shareholding equally to himself and Mr Y. The result is that the respondent currently holds half of the shareholding in J Ltd Country Z.
Approach to these proceedings
In Stanford v Stanford (2012) 247 CLR 108 the majority of the High Court of Australia held as follows at [35]:
It will be recalled that s 79(2) provides that “[t]he court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order”. Section 79(4) prescribes matters that must be taken into account in considering what order (if any) should be made under this section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s 79 is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.
Their Honours further observed as follows at [42]:
In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
With substitution of the equivalent sections in Part VIIIAB of the Act, these principles govern the present proceedings. There is no jurisdictional impediment to the Court’s determining the competing applications of the parties. They are both ordinarily resident in New South Wales (section 90SK). The de facto relationship of the parties subsisted for a period in excess of two years and they have a child (section 90SB).
There was a dispute as to the time of separation of the parties but, on any view, they have lived separate lives for several years. There has been no intermingling of their funds, nor common use of assets, since at least 2011. The major asset of the parties, being the Suburb C property, is owned by them jointly. Each of the parties wishes to put an end to any financial intertwinement between them.
I construe the competing applications of the parties as mutual concessions to the effect that it is just and equitable that there be orders for alteration of property interests. There was no suggestion or submission to the contrary. I am satisfied that it is just and equitable that there be orders for alteration of property interests for these reasons.
It is first necessary to determine the ownership and value or quantum of the assets, superannuation, liabilities and financial resources of the parties. All relevant contributions of each of the parties, within the meaning of paragraphs (a) to (c) of section 90SM(4) must be identified and weighed against each other. The matters set out in paragraphs (d) to (g) of section 90SM(4), particularly paragraph (e) which takes up by reference the provisions of section 90SF, must be considered and a determination made as to what, if any, alteration should be made to the entitlements of the parties as earlier assessed on account of contribution.
Assets, superannuation, liabilities and financial resources
The applicant submitted a balance sheet in the following terms:
| ASSETS | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 1 | Joint | B Street, Suburb C NSW … | 2,050,000 | 2,050,000 | ||
| 2 | Wife | Australian Bank Account | 10,000 | N/K | ||
| 3 | Wife | Country R Bank Account | 50,000 | N/K | ||
| 4 | Husband | Company X | N/K | Nominal | ||
| 5 | Husband | ¼ share in J Ltd UK | N/K | Nominal | ||
| 6 | Husband | ¼ share in J Ltd Country Z | N/K | Nominal | ||
| 7 | Husband | Australian Bank Account (Westpac Bank) | N/K | Nominal | ||
| 8 | Husband | Country R Bank Account | N/K | E 3,000 | ||
| 9 | Husband | Furniture and effects | 3,000 | E 6,000 | ||
| 10 | Wife | Furniture and effects | 20,000 | N/K | ||
| Total | $2,133,000 | N/K | ||||
| ADDBACKS | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 11 | Husband | Rent received for B Street, Suburb C | 70,000 | NIL | ||
| Total | $70,000 | $ 0 | ||||
| LIABILITIES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 12 | Joint | Mortgage to Westpac | 160,000 | E 161,000 | ||
| 13 | Joint | Loan from Ms E and Mr F Shardy | 26,000 | E 18,320 | ||
| 14 | Joint | Loan from Ms D Kuhne | E 150,000 | E 400,000 | ||
| 15 | Joint | Loan from Mr K (P Ltd) | 0 | E 382,000 | ||
| Total | $ 336,000 | $ E 961,320 | ||||
| SUPERANNUATION | ||||||
| Member | Name of Fund | Type of interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||
| 16 | Wife | BT Super | Accumulation | 20,000 | E 20,000 | |
| 17 | Husband | BT Super | Accumulation | 10,149 | E 10,149 | |
| Total | $ 30,149 | $ 30,149 | ||||
| FINANCIAL RESOURCES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 18 | ||||||
| Total | $ 0 | $ 0 | ||||
The respondent submitted a balance sheet in the following terms:
| ASSETS | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 1 | Joint | B Street, Suburb C NSW … | 2,050,000 | 2,050,000 | ||
| 2 | Wife | Australian Bank Account | 10,000 | 10,000 | ||
| 3 | Wife | Country R Bank Account | 50,000 | 50,000 | ||
| 4 | Husband | Company X (initial capital contribution: 25,000 Euros) | N/K | E 35,440 | ||
| 5 | Husband | ½ share in J Ltd UK | N/K | Nominal | ||
| 6 | Husband | ½ share in J Ltd Country Z | N/K | Nominal | ||
| 7 | Husband | Australian Bank Account (Westpac Bank) | N/K | Nominal | ||
| 8 | Husband | Country R Bank Account | N/K | E 3,000 | ||
| 9 | Husband | Furniture and effects | 3,000 | E 6,000 | ||
| 10 | Wife | Furniture and effects | 20,000 | 20,000 | ||
| Total | $2,133,000 | $2,174,440 | ||||
| LIABILITIES | ||||||
| Ownership | Description | Wife/de facto partner’s value | Husband/de facto partner’s value | |||
| 11 | Joint | Mortgage to Westpac | 160,000 | E 161,000 | ||
| 12 | Joint | Loan from Ms E and Mr F Shardy | 26,000 | E 18,320 | ||
| 13 | Joint | Loan from Ms D Kuhne | E 150,000 | E 400,000 | ||
| 14 | Joint | Loan from Mr K (P Ltd) | 0 | E 264,000 | ||
| Total | $ 336,000 | $ E 843,320 | ||||
| SUPERANNUATION | ||||||
| Member | Name of Fund | Type of interest | Wife/de facto partner’s value | Husband/de facto partner’s value | ||
| 15 | Wife | BT Super | Accumulation | 20,000 | E 20,000 | |
| 16 | Husband | BT Super | Accumulation | 10,149 | E 10,149 | |
| Total | $ 30,149 | $ 30,149 | ||||
Assets
The parties were in agreement as to the identity, ownership and value of the following assets:
($) 1. B Street, Suburb C (Joint) 2,050,000 2. Furniture and effects (Applicant) 20,000 3. Country R bank account (Applicant) 50,000 4. Australian bank account (Applicant) 10,000
The applicant contended that the respondent failed to make full and frank disclosure in relation to his interest in Company X and the J Ltd entities. She relied upon the Full Court decision of Black & Kellner (1992) FLC 92-287. Nicholson CJ at 79,133 approved the following passage in Giunti and Giunti (1986) FLC 91-759:
…
It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make a full and substantive disclosure of their financial affairs: see Briese and Briese (1986)
FLC 91-713, affirmed by the Full Court in Oriolo and Oriolo (1985) FLC 91-653, there is no problem, although there may be disputes as to valuation.However if, as here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this Court, not by outright refusal which would attract sanctions but by obfuscation and evasion.”
…
There was no evidence whatsoever as to the value of the respondent’s interest in the two J Ltd entities. Accordingly it is pointless to include his interest in these entities as assets in the balance sheet. I will consider below the applicant’s Black & Kellner (supra) submission and also whether the respondent’s interest in these entities should be taken into account in her favour pursuant to section 75(2)(o) of the Act.
As noted, the respondent deposed that Country R law requires the company Company X to hold a sum of €25,000 at all times. It seems to me that the only option is to include a sum of €25,000 as an asset of the respondent in the balance sheet. The final balance sheet submitted on behalf of the respondent contained a figure of $35,440 for his interest in the company Company X. I find that the respondent's interest in the company Company X has a value of $35,440.
In his Financial Statement of 25 January 2017 the respondent deposed that his Westpac Bank account had a balance of $1,800 and that his furniture and effects were valued at $6,000. I find that the respondent holds these two assets with those values, on the basis of his admissions against interest.
The applicant sought to "add back" a sum of $70,000, which she asserted to be "rent received for B Street, Suburb C." The evidence was that the respondent leased the property to Mr K in February 2015 for a three-year term at a rate of $500 per week. The uncontradicted evidence was that Mr K sublet the property for $1,250 per week for a total period of six months.
There was no explanation why an amount of $70,000 should be "added back" to the list of assets on account of "rent received for B Street, Suburb C." The total of $500 per week for three years is $78,000. There was no evidence that the respondent "received" any amount from Mr K by way of rental. If Mr K received $1,250 per week for six months, the total figure is $32,500 but these funds were not "received" by the respondent. I will not include as an asset any amount on account of rental for the Suburb C property.
The parties agreed that they have superannuation benefits with the following values:
($) BT Super (Applicant) 20,000 BT Super (Respondent) 10,149
There was considerable dispute in the proceedings concerning liabilities. No documentary evidence established the payout figure of the Westpac Bank mortgage on the Suburb C property. The applicant and respondent suggested amounts of $160,000 and $161,000 respectively. I had the benefit of no submissions as to how I might properly resolve this issue. As the respondent has been meeting the mortgage repayments, I will assume that he is better placed to proffer an estimate and adopt his figure of $161,000.
There was a dispute also in relation to the outstanding balance of the loan from the applicant’s parents, arising from the acquisition of the Suburb C property. As noted, the applicant and respondent respectively contended that her parents are owed $26,000 and $18,320. There was no evidence from the applicant’s parents. As noted, also, the applicant's lawyer contended that this difference arose due to fluidity in the exchange rate between euros and Australian dollars.
There is no real reason to prefer the evidence of either party on the question of the balance of the debt to the applicant's parents. It would appear that the respondent has made the repayments since 2010, hence he may be in a better position to offer an estimate of the outstanding balance. I will adopt his figure of $18,320.
There was a substantial dispute as to the amount payable by the parties to the respondent’s mother, who gave no evidence in the proceedings. The respondent disputed the authenticity of an email dated 20 June 2012 allegedly sent by his mother to the applicant (annexure “A” to the affidavit of Mr AA sworn 20 January 2017). That email stated that the amount owed to her was €100,000. I attach no weight to the contents of this disputed email.
There was no issue that the respondent’s mother advanced funds to the parties when they purchased the Suburb C property. The applicant contended that she provided a sum of €120,000, or approximately $192,000, and the respondent maintained that the correct figure was €175,000 or about $280,000.
The respondent annexed to his affidavit of 25 January 2017 translations of three purported loan agreements between himself and his mother. These documents were dated 22 June 2007, 30 June 2007 and 15 July 2007 and referred to sums of €75,000, €50,000 and €50,000 respectively. The respondent referred to these documents in his affidavit of 28 November 2016 and annexed Country R language copies.
The applicant swore an affidavit on 6 December 2016, which she described as “response to the affidavit of Mr Kuhne dated 28 November 2016”. The applicant made no reference to these three purported loan agreements in her affidavit of 6 December 2016.
In her oral evidence the applicant said that the respondent’s mother “did not borrow €75,000 and lend it on to us.” A document annexed to the respondent’s affidavit of 25 January 2017 (page 82) would suggest that, in fact, she did do so. This document appeared to be a translation of a letter from ING to the respondent’s mother, which confirmed an advance to her of €75,000 on 28 June 2007.
I am inclined to the view, and I find, that the respondent’s mother advanced €175,000 to the parties at the time of their purchase of the Suburb C property. I am so persuaded in part due to the applicant’s silence in relation to the three purported loan agreements in her so-described "affidavit in reply". I have regard also to the document which appears to have come from the financial institution ING in relation to an advance of €75,000 to the respondent’s mother on 28 June 2007.
The respondent contended that his mother advanced to him additional sums of €100,000 and €20,000 in February 2013. He maintained that the sum of €100,000 was intended to assist with repayment of the advance from the applicant’s parents and that the additional €20,000 was for his personal benefit. The respondent did not seek to include the advance of €20,000 as a liability in the balance sheet.
The respondent relied on a purported loan agreement with his mother, dated 13 February 2013, which was annexed to his affidavit of 28 November 2016 (annexure “G”). A translation of this document was annexed to the respondent’s affidavit of 25 January 2017 (annexure “L”). Annexure “K” of the same affidavit appeared to be a bank transfer statement for the period 1 February 2013 to 28 February 2013. This document recorded a transfer of €100,000 to Ms E and Mr F Shardy (the parents of the applicant) in February 2013.
The respondent set out in his affidavit of 28 November 2016 a summary of repayments which he claimed to have been made to the applicant's parents. This summary included:
(l)On 19 February 2013 a payment of 100,000 euros was made from my mother.
Again, the applicant's so-described "affidavit in response" was silent as to this evidence of the respondent.
The applicant contended that the sum of €100,000 which was paid to her parents in 2013 came from the proceeds of sale of an apartment in City L, of which the respondent was the beneficial owner. The applicant maintained that the respondent's mother held the property on trust for him, as a device to defeat potential claims by creditors.
The applicant deposed as follows:
8.In around 2004 I recall [Mr Kuhne] saying to me words to the effect: "The [City L] unit in [Suburb BB] is in my mother's name, as a protection against any claims by creditors against me. I own it".
The respondent denied that he made this or any similar statement. He said words to the effect: "I never had a unit in [City L]. I have never owned or had any proprietary interest in a unit in [City L]."
The contents of an email dated 31 December 2010 from the respondent to the applicant's parents (annexure page 8 to the affidavit of Mr AA sworn on 20 January 2017) were put to him in cross-examination. The respondent accepted that he wrote "In an emergency I'll always be able to sell my flat in [City L], which currently covers our full liabilities to you."
The respondent said in cross-examination that he had discussed a sale of the apartment in City L with his mother. He contended that they had reached an arrangement whereby he could, if necessary, "procure a sale" of the property. He contended that he referred to the property as "my unit" because his mother had allowed the parties to live there.
The applicant relied also upon the contents of a letter dated 30 June 2011 to the Country R Consulate and signed by the respondent (pages 10 and 11 of the annexures to the affidavit of Mr AA). This document stated inter alia: "I also own an apartment in [City L] – [Suburb BB], which I need to take care of every now and then." This letter, effectively, was a submission in support of an application by the parties to hold Country R and Australian "nationality" simultaneously.
In cross-examination the respondent said that the applicant was the author of this letter. He maintained that he had not read the document before it was sent to the Country R Consulate. The respondent said that the applicant "invented" the statement that he owned an apartment in City L.
In my view, the evidence fell well short of establishing that the respondent held a beneficial interest in an apartment in City L. The property was not identified and there was no evidence whatsoever as to the terms of the alleged trust. There was no evidence in relation to the circumstances of the acquisition of the property by the respondent's mother. There was no evidence of the source of the money applied to the acquisition of the property. There was no evidence of a sale of the unidentified property. In these circumstances, the evidence does not support a finding that the respondent's mother held this unidentified property upon trust for him.
The fact remains, however, that the respondent entered into an arrangement with his mother, whereby €100,000 was paid to the applicant's parents in 2013. On any view of the evidence, the parties had separated well before this transaction. The applicant had no involvement with these arrangements between the respondent and his mother. In my view, the respondent simply cannot convert this unilateral arrangement into a joint debt of the parties. Accordingly, I find that the parties have a joint debt to the respondent's mother of €175,000 or approximately $286,800. The advance of €100,000 in 2013 is a matter relevant to contribution.
The respondent gave limited evidence in relation to the alleged debt of the parties to Mr K. In his affidavit of 28 November 2016 he deposed as follows:
97.A summary of these lump sum payments to [Ms Shardy's] parents include:
(a)On 22 June 2010 a payment of 10,000 euros was made from P Ltd;
(b)On 28 June 2010 a payment of 10,000 euros was made from [P Ltd];
(c)On 5 July 2010 a payment of 10,000 euros was made from [P Ltd];
(d)On 27 July 2010 a payment of 16,000 euros was made from [P Ltd];
(e)On 6 August 2010 a payment of 10,000 euros was made from [P Ltd];
(f)On 16 August 2010 a payment of 60,000 euros was made from [P Ltd];
(g)On 12 October 2010 a payment of 5,000 euros was made from [P Ltd];
(h)On 18 October 2010 a payment of 10,000 euros was made from [P Ltd];
(i)On 20 October 2010 a payment of 5,000 euros was made from [P Ltd];
(j)On 27 October 2010 a payment of 10,000 euros was made from [P Ltd];
(k)On 6 December 2010 a payment of 5,000 was made from [P Ltd]; and
(l)On 19 February 2013 a payment of 100,000 euros was made from my mother.
Annexed hereto and marked "F" are copies of relevant electronic Country R bank statements evidencing most of these payments.
98.P Limited was a company owned by a friend and business associate of mine, [Mr K] (hereinafter "[Mr K]") through another company he operated overseas.
99.At the time, and as [Ms Shardy] and I had separated it was my intention to sever any financial ties between myself and [Ms Shardy's] parents. In order to do that I had discussions with both [Mr K] and my mother and they both agreed to assist me financially by loaning me the funds required to discharge any existing loan [Ms Shardy] and I owed to her parents.
100.[Mr K] was willing to assist me as a friend (and as a past business associate) and we had discussed that I would repay the company over the next few years as and when I had the funds to do so.
101.[Mr K] subsequently closed down [P Ltd] in 2013, and from that time [Mr K] and I considered the funds that I had initially owed to [P Ltd], were now owed to [Mr K] personally.
102.Whilst there was never any formal loan document prepared, the payments made by [Mr K], through [P Ltd] were always intended to be repaid by me, and are still outstanding (in full) to date.
On this issue Mr K deposed as follows:
7.Following [Mr Kuhne's] separation from [Ms Shardy] in 2009 we had many discussions about his financial affairs. [Mr Kuhne] said to me words to the effect "I still owe some money to [Ms Shardy's] parents that we borrowed to pay for the purchase of the [Suburb C] property. I want to repay them as soon as possible. Any future involvement with [Ms Shardy's] parents is unfair on them, I just want to pay them out".
8.At this time [P Ltd] was pretty successful due to some large … I had achieved with [Country CC] Clients.
9.[Mr Kuhne] said to me words to the effect "Do you think I could borrow the funds required from [P Ltd] as a loan to repay [Ms Shardy’s] parents". To assist [Mr Kuhne] I agreed. It was intended by [Mr Kuhne] and I that the amount paid by [P Ltd] to [Ms Shardy’s] parents would be repaid to the company.
10.I cannot recall the dates that each payment was made by [P Ltd] as I was not involved in the bookkeeping but recall that all payments were made in 2010, following [Mr Kuhne] and [Ms Shardy’s] separation. I recall the total amount paid to [Ms Shardy’s] parents from [P Ltd] was 146,000 Euros.
11.In 2013 I decided to close down the company in 2013 and focus on another business I was running in the real estate industry. The company was deregistered in the same year. As the outstanding debt had not been repaid by [Mr Kuhne] and [Ms Shardy] to the company by this time I said to [Mr Kuhne] words to the effect "with [P Ltd] closing, we will need to transfer the debt owed to [P Ltd] to me". [Mr Kuhne] agreed.
I am of the view, and I find, that the respondent failed to establish that the parties have a joint liability to Mr K. The evidence did not identify a precise quantum, nor any terms and conditions of such a loan. Mr K acceded to a description of the arrangement as "a gentleman's agreement" and conceded that he has never made a demand for repayment. Accordingly, I will include no amount in the balance sheet as a liability of the parties to Mr K.
I find that the assets, superannuation and liabilities of the parties are as follows:
ASSETS ($) 1. B Street, Suburb C (J) 2,050,000 2. Australian Bank Account (A) 10,000 3. Country R Bank Account (A) 50,000 4. Company X (R) 35,440 5. Australian Bank Account (R) 1,800 6. Country R Bank Account (R) 3,000 7. Furniture and Effects (A) 20,000 8. Furniture and Effects (R) 6,000 $2,176,240
SUPERANNUATION 9. BT Super (A) 20,000 10. BT Super (R) 10,149 $30,149
LIABILITIES ($) 11. Westpac Bank Mortgage (J) 161,000 12. Loan from Ms E and Mr F Shardy (J) 18,320 13. Loan from Ms D Kuhne (J) 286,800 $466,120
The letters "J", "A" and "R" denote ownership of assets and superannuation and responsibility for liabilities by the parties jointly, the applicant Ms Shardy and the respondent Mr Kuhne respectively.
Contributions
As noted above, each of the parties brought liquid funds into the relationship. The applicant and the respondent had savings of €45,000 and €220,000 respectively, part of which derived from inheritances. These funds assisted the parties with their purchase of the Suburb C property.
The parents of each of the parties advanced loan monies to enable them to purchase the Suburb C property. The debt to the applicant's parents has been reduced substantially but a large sum remains outstanding to the mother of the respondent.
Significant repayments were made to the applicant's parents, which reduced the parties' debt from approximately $400,000 to $18,320. These repayments were made in the form of monthly amounts of €1,200 from 2007 and lump sums transferred from the P Ltd account in 2010. I have found that a lump sum of €100,000 was paid to the applicant's parents on 19 February 2013, which funds came from the respondent's mother.
There was a dispute between the parties as to the extent of the applicant's involvement in the operation of the business of P Ltd. She contended:
13.We remained in Australia in the period February 2004 to March 2006. By March 2006 I was pregnant with the child who was born on … 2006. During the period 2004 – 2006 I worked for [Mr Kuhne's] … business. The work which I performed in [Mr Kuhne’s] business consisted primarily of editorial work for the website and administrative work including phone calls, emails, making bookings, organising accounts and so on. The work I carried out was more of an administrative type and [Mr Kuhne] was the public face of the business.
I am of the view that it is likely that the applicant overstated her involvement in the day-to-day operations of P Ltd. Her own evidence was as follows:
19.[Mr Kuhne] would work late into the night, particularly because of the necessity to communicate with Europe, and he slept in in the morning. When [the child] was little I would put her to bed, got up to her if she awoke during the night and settled her.
This evidence suggests that the applicant was not involved in the respondent's night-time activities in the business.
The respondent said words to the effect:
"[The applicant] never dealt with clients, took phone calls or worked on the website. She worked for a couple of hours per week."
I accept that the applicant played a role in the respondent's business but, in my view, however, it is more probable than not that she devoted considerable time to the care of the parties' daughter rather than the business.
On the matter of the parties' respective homemaker and parent roles, the applicant deposed as follows:
17.[The child] was born in [City T] on … 2006. I have always been the parent who has done the most care for the child, and I was, and have continued always to be, the child's primary attachment.
18.During our life together I did the vast bulk of the work such as cooking, cleaning, washing and so on. I estimated that I did
95% of that type of work and [Mr Kuhne] did about 5%.19.[Mr Kuhne] would work late into the night, particularly because of the necessity to communicate with Europe, and he slept in in the morning. When the child was little I would put her to bed, got up to her if she awoke during the night and settled her.
20.In the mornings I got up with the child, gave her breakfast and prepared for her day. We went to playgroups, childcare and school. I arranged all of her social activities with friends.
21.I almost always cooked for the child and put her to bed.
22.When I started working outside of [Mr Kuhne’s] business in late 2010, I worked on Wednesdays and Thursdays. the child would go to [DD] Child Care on Mondays, Tuesdays and Thursdays. I would take her there and pick her up. [Mr Kuhne] did provide a small amount of assistance at this time, however I also did work for the … business after hours at home as well as my external work.
The respondent deposed that he played a much greater role in the care of the parties' daughter the child than that suggested by the applicant. He maintained that he prepared her breakfast, bathed and dressed her and took her to playgroups. He estimated that he carried out approximately 40 per cent of the care of the child.
On any view of the evidence, the applicant has been the primary carer for the parties' child since her birth. The respondent spent substantial periods out of Australia, during which the applicant cared solely for the child. It may be that the applicant took steps, at various times, to prevent the child from spending time with the respondent. For whatever reasons, the applicant has been the child's primary carer since birth.
I have no reason to disbelieve the evidence of Mr K, concerning the advances which were made to the applicant's parents in 2010 from P Ltd. These advances were arranged by the respondent and should be regarded as a contribution on his behalf.
Similarly, the advance of €100,000 from the respondent's mother in February 2013 should be regarded as a contribution on his behalf. These funds were paid to the parents of the applicant and, indirectly, increased the equity of the parties in the Suburb C property.
It seems to me, and I find, that the contributions of the respondent exceeded those of the applicant. I find that the contributions of the parties should be assessed at 35 per cent to the applicant and 65 per cent to the respondent.
Section 90SF(3)
The applicant is aged 42 and is in good health. She holds tertiary qualifications and currently earns $3,500 net per month.
The respondent is 50 years of age and alleged that he suffers from physical problems with his back, shoulder and eyesight. He adduced no expert evidence that he suffers from these conditions, nor of any impact on his future capacity to engage in gainful employment. In his Financial Statement of 25 January 2017 the respondent deposed to a gross weekly income of $1,385 from his employment with Company X.
The respondent currently pays child support at the rate of $25.91 per week, as assessed by the Child Support Agency. His evidence was that he will pay child support as assessed from time to time.
Since early 2012 the applicant has paid rent for her accommodation and the respondent has had sole control of the Suburb C property. The respondent has paid the mortgage instalments since March 2012.
As noted, the respondent gave scant evidence in relation to his interest in the two J Ltd entities and Company X. The evidence revealed only that Company X holds a sum of €25,000 and pays to the respondent a salary of $72,000 per annum. The respondent left unaddressed the issue of his future financial benefits from these entities.
I do not accept that the respondent failed to fulfil his obligation to make full and frank disclosure of his financial affairs, as contemplated by the Full Court in Black & Kellner (supra). I am of the view that he could have made greater efforts to provide evidence of the nature and value of his interests in Company X and the J Ltd entities. On the other hand, the J Ltd entities came into existence in 2015 and do not appear to have undertaken any profitable activities.
As a sole shareholder, the respondent could have produced evidence such as balance sheets and profit and loss statements for Company X but did not do so. This company has provided the respondent with a salary since 2013, which suggests access to an income stream. There was no evidence as to its assets and liabilities, other than the sum of $35,440 which it must hold pursuant to Country R law.
I will take into account, in favour of the applicant, her greater ongoing responsibility to provide care and support for the parties' child. I will also take into account in her favour the failure of the respondent to provide proper evidence of his interest in overseas entities, particularly Company X.
In all of these circumstances, I find that there should be an adjustment of
10 per cent of the net pool of assets and superannuation in favour of the applicant on account of section 90SF(3) factors.
Result
Accordingly, I find that the net pool of assets and superannuation should be divided as to 45 per cent to the applicant and 55 per cent to the respondent. The proposal of the respondent was that he retain the Suburb C property and pay a lump sum to the applicant. I see no reason to deny him that opportunity, noting that the applicant could seek a sale of the property by way of enforcement if necessary.
The total value of the assets and superannuation is $2,206,389 and the liabilities amount to $466,120. The net value of the assets and superannuation is thus $1,740,269, of which 45 per cent and 55 per cent equate to $783,122 and $957,148 respectively.
The applicant will retain the following assets and superannuation:
($) 1. Australian Bank Account 10,000 2. Country R Bank Account 50,000 3. Furniture and Effects 20,000 4. BT Super 20,000 $100,000
She thus requires a payment of $683,122 from the respondent, if he is to retain the Suburb C property and assume responsibility for the liabilities.
The respondent will take or retain the following assets and superannuation:
($) 1. B Street, Suburb C 2,050,000 2. Company X 35,440 3. Australian Bank Account 1,800 4. Country R Bank Account 3,000 5. Furniture and Effects 6,000 6. BT Super 10,149 $2,106,389
He will assume the following liabilities:
($) 7. Westpac Bank Mortgage 161,000 8. Loan from Ms E and Mr F Shardy 18,320 9. Loan from Ms D Kuhne 286,800 $466,120
The respondent will thus hold net assets and superannuation to the value of $1,640,269. This figure exceeds his entitlement of 55 per cent by $683,122. I will round off to $683,000 the amount which he will pay to the applicant, on the basis that he retains the Suburb C property and assumes the associated liabilities.
I certify that the preceding one-hundred and three (103) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson delivered on 26 May 2017.
Associate:
Date: 26 May 2017
Key Legal Topics
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Contract Law
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Property Law
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Equity & Trusts
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