Skelley and Skelley
[2010] FamCA 466
•3 June 2010
FAMILY COURT OF AUSTRALIA
| SKELLEY & SKELLEY | [2010] FamCA 466 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage |
| Family Law Act 1975 (Cth) ss 75(2), 79 |
| Lee Steere and Lee Steere (1985) FLC 91-626 Ferraro and Ferraro (1993) FLC 92-335 Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355 Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693 Kowaliw and Kowaliw (1981) FLC 91-092 |
| APPLICANT: | Ms Skelley |
| RESPONDENT: | Mr Skelley |
| FILE NUMBER: | SYC | 1938 | of | 2008 |
| DATE DELIVERED: | 3 June 2010 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston JR |
| HEARING DATE: | 17 & 18 February and 6 May 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Johnston |
| SOLICITOR FOR THE APPLICANT: | Fay Marie Nicholls & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Hodgson |
| SOLICITOR FOR THE RESPONDENT: | Julie Singleton Solicitors |
Orders
That the husband and wife forthwith instruct Larcombe Legal to pay the net proceeds of sale of the former matrimonial home at M to the parties as follows:-
(a)$654 141 to the wife and
(b)$485 859 to the husband and
(c)any balance is to be paid to them in the proportions 57.38 percent to the wife and 42.62 percent to the husband.
That the wife’s spousal maintenance application is dismissed.
That in the event that the parties are unable to agree about division of the contents of the former matrimonial home within 42 days the wife shall prepare two lists of such property each being of approximately equivalent value, that the husband choose a list and that thereupon, the property in that list shall become the sole property of the husband, and that in the other list shall become the sole property of the wife.
That otherwise, all property in the possession and/or control of each party shall be the sole property of that party.
That the husband within seven (7) days do all acts and things necessary to instruct legal representatives in Thailand to provide an advice in writing about the actions required to be taken by him and the likely success of such actions, to recover those monies invested by him or on behalf of V Pty Limited, which involved the purchase of village land and the construction of a villa thereon in relation to the development of the Beach Project in Thailand (“the Thailand investment monies”).
That within seven (7) days of receipt of the advice referred to in Order 5 herein, the husband do all acts and things to take all necessary actions required in accordance with the advice to recover the Thailand investment monies, including if so advised, to instruct the legal representatives to institute proceedings in a Court in Thailand of competent jurisdiction.
That the husband within forty eight (48) hours of the receipt of the advice referred to in Order 5 herein, provide a copy of this advice to the wife’s solicitors and thereafter do all acts and things to ensure that the wife is informed and continues to be informed upon a monthly basis of the progress of his efforts to recover the Thailand investment monies.
That the husband do all acts and things and sign and execute all authorities necessary to enable the wife and her solicitors to communicate directly with those legal representatives in Thailand, who are advising and acting on his behalf in relation to the recovery of the Thailand investment monies.
That in the event any monies are received by the husband as a consequence of his actions, or any actions on his behalf, to recover the Thailand investment monies, he shall do all acts and things necessary to pay to the wife, including signing an irrevocable authority directing his legal representatives to pay to the wife, an amount equivalent to 50% of any monies received, after deduction of any legal costs and disbursements incurred in the recovery process, including the cost of obtaining the advice referred to in order 5 herein.
That the husband, his servants and agents be restrained from dealing with or disposing of any monies whatsoever received as a consequence of the husband’s actions to recover the Thailand investment monies, save for the purpose of compliance with order 9 herein.
That all of the legal costs incurred in relation to the actions taken to recover the Thailand investment monies be borne by the husband in the first instance.
Liberty to apply to either party upon seven (7) days notice in relation to the implementation and facilitation of these orders.
That the above orders shall not commence operation until 6 July 2010.
That both parties have leave to relist these proceedings not later than 5 July 2010 for further submissions about the form of the orders only.
That all exhibits be released.
IT IS NOTED that publication of this judgment under the pseudonym Skelley & Skelley is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 1938 of 2008
| MS SKELLEY |
Applicant
And
| MR SKELLEY |
Respondent
REASONS FOR JUDGMENT
Introduction and Applications
These are contested property proceedings. The parties in these proceedings are Ms Skelley and Mr Skelley. For convenience I shall refer to them as “the wife” and “the husband” respectively.
The wife seeks orders to the following effect:
·That the parties forthwith authorise Larcombe Legal to pay to the wife the whole of the monies held by that firm on trust being the net proceeds of sale of the former matrimonial home at M to the wife;
·That the husband pay direct to the wife’s nominated bank account the sum of $300 per week by way of spouse maintenance;
·That otherwise each party is the sole owner of all other items of property in their possession and / or control respectively; and
·An enforcement order.
On the other hand, the husband seeks orders to the following effect:
·That the parties authorise Larcombe Legal to pay the trust monies to the parties in equal shares;
·That in the event that the parties are unable to agree about division of the contents of the former matrimonial home then the wife prepare two lists of property each of approximately equivalent value, that the husband choose a list and that the items in such list would become the sole property of the husband and that in the other list the sole property of the wife; and
·That the husband within seven (7) days do all acts and things necessary to instruct legal representatives in Thailand to provide an advice in writing about the actions required to be taken by him and the likely success of such actions, to recover those monies invested by him or on behalf of V Pty Limited, which involved the purchase of village land and the construction of a villa thereon in relation to the development of the Beach Project in Thailand (“the Thailand investment monies”).
·That within seven (7) days of receipt of the advice referred to in Order 1 herein, the husband do all acts and things to take all necessary actions required in accordance with the advice to recover the Thailand investment monies, including if so advised, to instruct the legal representatives to institute proceedings in a Court in Thailand of competent jurisdiction.
·That the husband within forty eight (48) hours of the receipt of the advice referred to in the above orders, provide a copy of this advice to the wife’s solicitors and thereafter do all acts and things to ensure that the wife is informed and continues to be informed upon a monthly basis of the progress of his efforts to recover the Thailand investment monies.
·That the husband do all acts and things and sign and execute all authorities necessary to enable the wife and her solicitors to communicate directly with those legal representatives in Thailand, who are advising and acting on his behalf in relation to the recovery of the Thailand investment monies.
·That in the alternative to the orders, the husband within seven (7) days provide to the Wife an executed power of attorney authorizing her to instruct legal representatives in Thailand on the husband’s behalf to provide advice and to take such actions as she may be advised by such legal representatives, to attempt to recover the Thailand investment monies, including the institution of proceedings on the husband’s behalf in a court in Thailand of competent jurisdiction and in this event, the wife shall be solely responsible for making all decisions as to following the appropriate courses of action and providing instructions in relation to the conduct of any proceedings, which may be instituted.
·That in the event any monies are received by the husband as a consequence of his actions, or any actions on his behalf, to recover the Thailand investment monies, he shall do all acts and things necessary to pay to the wife, including signing an irrevocable authority directing his legal representatives to pay to the wife, an amount equivalent to 50% of any monies received, after deduction of any legal costs and disbursements incurred in the recovery process, including the cost of obtaining the advice referred to above.
·That the husband, his servants and agents be restrained from dealing with or disposing of any monies whatsoever received as a consequence of the husband’s actions to recover the Thailand investment monies, save for the purpose of compliance with these orders.
·That all of the legal costs incurred in relation to the actions taken to recover the Thailand investment monies be borne equally by the husband and the wife.
·Liberty to apply to either party upon seven (7) days notice in relation to the implementation and facilitation of these orders.
Background
The husband was born in 1948 and he is therefore 62 years of age. The wife was born in 1955 and she is therefore 54 years of age. The parties married in 1977 and they separated on 30 January 2005. They remained living under the same roof until the husband left the home in January 2008. There are three children of the marriage, now all adults. They are C born in 1982, N born in 1984 and E born in 1989.
At the time of marriage each party owned a motor vehicle. Apart from these assets neither party owned any property of significant value. The husband was employed in financial services working full time with O Company. The wife was working as a clerk with S Company.
For the first six months of marriage the parties lived rent-free at the holiday home owned by the wife’s parents in Sydney. They next lived in a rented flat at P.
In January 1979 the parties purchased the property at B Street, P for $35 000. This was funded from saving and a loan on mortgage of $25 000.
In 1980 the husband ceased his employment with O Company and commenced working with H Company. In 1981 the husband ceased working for H Company and commenced employment with J Limited as a manager.
In 1981 the parties sold their B Street home and they purchased the property at G Street for approximately $79 000. This property was subsequently renovated including installation of a new kitchen, addition of two bathrooms and two bedrooms, a garden shed and terracing around the swimming pool.
The wife ceased her employment with T Pty Limited prior to the birth of the parties’ eldest child C.
In 1983 the parties purchased 25 acres of land. This was subsequently subdivided into 5 acre lots which were sold. This development project resulted in approximately $100 000 profit.
Also in 1983 the parties purchased a property in L Street for $65 000.
The wife returned to paid employment in approximately late 1983 working as a receptionist. She continued in this employment until approximately June 1984 shortly before the birth of the parties’ son N.
In 1984 the parties purchased a property at R Street for $65 000.
At approximately this time the husband ceased working for J Limited and set up his own firm K Pty Limited with other financial service providers and investors.
In 1985 the parties purchased a block of vacant land on U Street for $137 000. This property was later sold at a small loss.
Also in 1985 the husband had the first of five operations on his throat and vocal chords.
In 1986 the parties purchased the property at E Street for $120 000.
In July 1987 the husband ceased working in K Pty Limited and commenced working with one of his former partners at a bank.
In 1987 the husband received a bonus in excess of $600 000. The parties had a six week holiday to the United Kingdom travelling first class.
In June 1987 the parties moved into their R Street property for approximately 18 months while the G Street property was being renovated.
In January 1988 the husband ceased working with the bank. He set up a company V Pty Limited. He was the sole shareholder and director. The husband used this company as the vehicle through which he provided consultancy services and acted as an investor.
In 1989 the parties sold their properties at L Street, R Street and E Street. They invested the proceeds of sale in a farming venture with Mr A, the wife’s sister’s husband. The investment was undertaken through the husband’s company V Pty Limited.
In 1990 the husband purchased a sales agency for approximately $120 000 through his company V Pty Limited. Unfortunately the business failed and it was sold at a loss in 1992 of approximately $30 000. During the period that the husband owned this business he purchased a recreation centre in partnership with a Mr G. This was renovated and sold after approximately two years without profit or loss.
The husband retired from financial services in 1992 and worked full time in the farming venture. But, as indicated above, the project was unsuccessful and after approximately three years of operation it became clear that the monies invested had been lost. The company V acquired a tax loss credit of $600 000.
The husband returned to financial services work in 1993 employed at PB. At the beginning of that year the wife commenced working full time at WS.
In 1995 the husband borrowed firstly $20 000 then $25 000 from the wife’s father and purchased new share issues. I accept the husband’s evidence that both loans were repaid within two months of borrowing.
In December 1997 the parties sold their G Street property for $280 000 and purchased what has become the former matrimonial home at M for $510 000. This was funded from the net proceeds of sale of G Street and a loan on Mortgage from the ANZ Bank of $408 000.
In April 1998 the parties commenced renovations of M property including installation of a new kitchen and parquetry flooring throughout a large part of the home at a cost in excess of $100 000.
The wife was working full time as personal assistant to the proprietor of a caryard which employment continued for approximately six months. Then the wife worked full time in the public service.
At this time the parties were experiencing financial difficulty. Two sheriffs arrived at the home to enforce a debt. The wife’s mother loaned the husband $9297 to pay the debt. I am satisfied that these monies have never been repaid.
In December 1998 the parties sold two Hereford cattle and used the proceeds to pay outstanding school fees for N. They also sold two paintings and a ride on mower and used the proceeds to pay debts and living expenses.
In December 1999 the wife was involved in a serious motor vehicle accident. The driver of the other vehicle had proceeded through a stop sign. The vehicle driven by the wife collided with her vehicle and tragically the other driver was killed. The wife suffered serious injuries and was hospitalised. Upon her discharge from hospital the wife was restricted to a wheelchair initially and subsequently had to use crutches for a long time. I shall refer to this again below.
The following year, 2000, the parties arranged for C to attend at a private boarding school as a boarder. N continued to attend as a boarder at a private school and E was a day pupil in fifth class.
Between 2001 and 2004 the wife attended at the University of Western Sydney and completed a degree.
In September 2002 the parties drew down an additional $40 000 on the joint mortgage.
In December 2002 the wife received $303 000 net by way of payment to resolve a personal injury claim which she had made in respect of her injuries received in the motor vehicle accident. From this money the wife paid $90 000 to the husband’s ANZ account, $10 000 to the husband’s AEQUS Securities account, various debts and living expenses, and air conditioning for the home. In December 2003 the wife paid $100 000 to the joint mortgage account.
In 2004 the parties commenced further renovations to the property.
As indicated above, the parties separated under the same roof in January 2005. The husband continued to pay the mortgage repayments, rates and utilities and he gave the wife $300 per week. Until October 2008 the husband also paid medical and pharmacy expenses, health fund premiums and he purchased food and household supplies for the wife, E and himself.
In 2006 and 2007 the husband invested a total of $590 000 in ventures in Thailand. The parties fear that these monies have probably been lost. This is a major issue in these proceedings. I shall refer to this matter again below.
In 2009 the former matrimonial home was sold for $1 450 000. In March 2009 the net sale proceeds of $1 183 381.63 were paid into a controlled monies account by Larcombe Legal in trust for the parties. Since then the husband and wife have each received a payment of $30 000.
The Applicable Law
Sub-section 79(1) of the Act provides that in property settlement proceedings, the Court may make such order as it considers appropriate.
Sub-section 79(2) provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.
Property available for division
The parties were able to agree on many items of available property but there were several issues as follows.
The first issue is that it was submitted on behalf of the wife that there should be added back to the pool of available property the sum of $590 000. These were the monies invested through the husband’s company V Pty Limited on investments in Thailand referred to above.
In 2006 the husband learned that certain acquaintances of his had invested approximately $840 000 in PL Property Development Co Ltd allegedly the owner of vacant land on the Beach in Thailand. The husband became interested in the project and discussed it with the wife. The husband went to Thailand having arranged to meet his friend Mr RW there, Mr RW apparently also being interested in investing in the project. They met a Mr I there, this person apparently being the promoter of the project. Mr I took them, together with the husband’s above acquaintances, to view the vacant land on the waterfront at the Beach. Apparently this was represented to them as being owned by the company PL Ltd. Clearly the husband was impressed with the land and the proposed project. Upon his return he discussed it with the wife. There is an issue about the extent to which the wife agreed to investment in the project.
The husband and Mr RW agreed to invest AUD250 000 each in the company PL Ltd and to become shareholders in that company. A new company GL Property Co. Limited was incorporated in Thailand in 2007 for the husband and Mr RW. The directors were the husband, a Ms RO, who was Mr RW’s representative and several Thai nationals who were arranged by the promoter to be shareholders. Apparently it is a requirement of Thai law for any Thai company to be held 51 percent by Thai nationals.
In any event, in December 2006 the husband commenced sending money through his company V presumably to the company PL Ltd.
A total of AUD212 000 was forwarded between December 2006 and February 2007 apparently towards the Beach project.
It appears that the Thai investment project became somewhat expanded by the husband and Mr RW deciding to invest further monies through their company GL Property Co. Limited for the purchase of five acres of vacant land (the Village Land). Their intention was to sub-divide this land, sell the sub-divided lots and reinvest the profit into the Beach project.
There was a further investment by the husband and Mr RW in the purchase of a villa in a development between the Beach and the Village Land. They endeavoured to do this through their company GL Property Co. Limited at a cost of $60 000 each. They intended this villa to be the corporate office from which sales of the sub-divided lots from the Village Land would be managed and ultimately for the management of the proposed construction of condominiums in the Beach project.
Over the period from December 2006 to August 2007 the husband arranged for his company V Pty Limited to pay either to the company PL Ltd or entities associated with Mr I amounts totalling AUD$590 000.
Mr I visited the husband and wife in Sydney in early 2007 staying with them for two evenings. He invited the wife to visit him in Thailand and to inspect the land and discuss the projects. The wife went to Thailand on 20 June 2007 for two weeks. Mr I met her at the airport. The wife said that she used her time in Thailand to endeavour to obtain from Mr I some evidence which would satisfy her that there was some concrete action being taken in respect of the project and some proof of the project. However the wife said that she left Thailand without being satisfied about any proof of the existence of the project. She did say that she offered her skills to Mr I as an interior decorator for the project.
The wife said that she went to Thailand primarily for a holiday. While I accept that she went for a holiday it was clear that before she went, both she and the husband were becoming concerned about the nature of the project and the security of their investment. It is also clear that a purpose of the wife’s holiday to Thailand was to inquire into the bona fides of the project.
Throughout much of 2007 the husband and also his acquaintances were endeavouring to obtain through Mr I title deeds which would prove that the relevant land was owned by the company PL Co. Limited in which they had invested so much money. But they were unsuccessful in this. The husband had, during the course of 2007, attended several meetings with Mr I and architects and engineers. At some of the meetings the husband’s acquaintances were present.
The husband said that in late 2007 when he was in Thailand he was provided with a copy of what he understood was a title deed showing his company GL Property Co. Limited as the purchaser of the villa. The husband annexed a copy of this document to his affidavit as Annexure I. The husband also annexed at Annexure J what he said he understood was a copy of a Trust Agreement dated 28 October 2007 between his company GL Property Co. Limited and PL Co. Limited purporting to be evidence acknowledging funds received from GL Property Co. Limited into the PL Co. Limited account. Strong objection was taken to these documents and one could not be confident about making any findings that these documents were in fact what they purported to be.
In any event, by late 2007 the husband was becoming very concerned about whether he had lost his investment. He engaged solicitors in Bangkok, McEvily & Collins. The husband says that the solicitors ascertained through searches that he had been removed as a director and shareholder without his consent or knowledge from the company GL Property Co. Limited. His solicitors then endeavoured to pursue with Mr I what had happened to the monies invested.
Little progress has been made about such enquiries notwithstanding the fact that the husband was in Thailand recently. The husband said that Mr McEvily informed him that he had not been able to pursue these matters because he had not received a power of attorney from Mr RW, the husband’s business partner in this matter.
It is submitted on behalf of the wife that the entirety of the $590 000 should be added back into the pool of available property. This is submitted on the basis that it has been the husband at all times who has been the person who has made the decisions to forward the funds to the Thai company. It is further submitted that at all times it has been available to the husband to use the appropriate legal mechanisms available in Thailand to pursue Mr I using his solicitors and that he has failed to do so. It is submitted that what has occurred has left the wife in a completely unsatisfactory position. It is submitted that there is no opportunity for the wife to be able to pursue this matter and that all she can do is wait for the husband to endeavour to recover the money. It is submitted that it is the husband who took the risk in respect of this project, that he has acted recklessly and that he should assume the entire responsibility for recovering the funds.
On the other hand it is submitted on behalf of the husband that to place the husband in such a position would be most unfair to him. It is submitted that at all times the wife knew what the husband was doing, that she was a full participant in this venture, that she entertained Mr I, visited him in Thailand, was shown the project and the project was discussed with her and that she even offered her services as an interior decorator for the project as I have said.. In these circumstances it is submitted that she has participated equally with the husband in the venture and that she should also bear the responsibility for any loss of the money.
This Court (Baker J) observed in its decision in the case of Kowaliw and Kowaliw (1981) FLC 91-092 as follows at pages 76,643 and 76,644:
Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec.79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec.79(4) and sec.75(2), although not necessarily equally.
Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as financial gains?
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec.75(2)(o) to applications for settlement of property instituted under the provisions of sec.79.
In the present case, in my view, it cannot be said that the husband had embarked on a course of conduct designed to reduce the value of the matrimonial assets. Quite the reverse in fact. He was hoping to make money from the investment. Nor did he, in my view, act recklessly, negligently or wantonly with matrimonial money. With the benefit of hindsight, no doubt he would have done things differently. But doing things differently is not the test.
Moreover, it cannot be said that the husband had never previously engaged in speculative venture, and that by doing so he acted recklessly. The marriage was characterised by numerous speculative ventures as indicated above. Some of these have been successful and some have lost the parties money.
In all these circumstances, in my view, there is no basis to add back into the pool of available property the $590 000. In any event, it might still be possible to recover the money but it will be up to the husband to endeavour to do this. I propose to put orders in place to provide for this matter to be pursued by the husband.
The next issue is that it is submitted on behalf of the wife that the sum of $10 000 should be added back to the pool of available property as against the husband. It is submitted that this would be on the basis that the husband has given away monies comprising this amount to various male friends in Thailand. Most of the wife’s assertions in her affidavit about this matter were struck out. The wife annexed to her affidavit various emails from the husband to various persons in Thailand. One email indicated that the husband sent a very modest amount of money to a person in Thailand. Other emails related to certain banking details being exchanged between persons in Thailand and the husband.
The husband said that he does not give money away and that he was undertaking financial services activities for these persons. In any event, the wife has not established any basis whatsoever for any add back of monies on the basis of this material.
The husband said that he had sent $450 to a friend called KG. The husband said that he sent this money to thank his friend for assistance which the friend had given to the husband at a time when the husband had been arrested in Thailand for overstaying his tourist visa. The husband said that he had to pay approximately AUD750 in bribes. He said that his friend used the husband’s credit card to obtain this money from his bank account at the time when he was being held at the police station. The husband said that he overstayed his visa because he was desperate to attend a meeting arranged by his Thai solicitor with the promoter of the Thai investment in an endeavour to find out what was happening with his money. The meeting was supposed to be held a matter of days after the expiration of the husband’s visa.
The next issue is that it was submitted on behalf of the wife that the tax loss credits available to the husband’s company V Pty Limited should be included in the pool of available property. The relevant amount is $193 644. I am not persuaded that the appropriate course is to include these tax credits as property.
As indicated above, the tax loss credits arose from the losses incurred by the husband’s company V Pty Limited with the unsuccessful farming venture. The losses were approximately $600 000. Taxable income of V Pty Ltd has been offset by the necessary part of these tax loss credits over some years now. It was submitted on behalf of the wife that because these can be used dollar for dollar as a set off against income earned by V Pty Ltd, that income being solely available to the husband, it would be unfair to the wife not to include these tax credits in the pool of available property.
In my view there might be something to be said for this submission on behalf of the wife if there was some evidence before the Court about the value of such tax loss credits. I am unable to accept that they have a value of $193 644. After all, it is possible that they might not be used, although such would not appear likely.
One could envisage a methodology by which a valuation could be determined in relation to tax loss credits. For example, one could consider past average income, have regard to the applicable tax rate and the amount of tax that would be saved, consider the likely future income and capitalise the credits as a lump sum. One would also apply a discount factor for contingencies
As I say, the parties could have arranged for the tax loss credits to have been valued but they did not do so. In these circumstances, in my view, all the Court can do is to take the tax loss credits into account pursuant to s 75(2)(o) of the Act as having some value to the husband..
The next issue was that it was submitted on behalf of the wife that there should be added back to the pool of available property $8000 being the price at which the husband sold a statue. I accept that this was relevant property. Although it was acquired many years after separation, in my view it still falls into the definition of property which was available to the husband during the relevant periods. In these circumstances, in my view, it should be added back to the pool of available property.
Accordingly, the property available for division consists of the following:-
Assets
$
1. Proceeds of sale of former matrimonial home
1,140,000
2. Home contents
74,700
3. Wife’s 1998 Toyota motor vehicle
8,500
4. Wife’s jewellery
20,000
5. Wife’s Westpac account
10
6. Husband’s apartment contents
1,300
7. Husband’s Commonwealth Bank account
1,400
8. V Pty Ltd Macquarie Bank account (H)
3,299
9. Husband’s inheritance
182,792
10. Husband’s statue
8,000
11. Husband’s V Pty Ltd tax loss credits (value not known)
?_____________
$1,440,001
Liabilities
There was an issue concerning a debt to the wife’s mother which the wife alleges that the parties owe her. The relevant sum was $23 000. The items loaned which make up this alleged liability were set out in a list prepared by the wife’s mother dated 2 February 2009 which was admitted into evidence. Each of the items except one was money made available after the parties separated. The other item was the sum of $9297.90 which was said to be the money paid by the wife’s mother to the sheriffs when they arrived at the former matrimonial home in September 1998 apparently with a warrant to seize property to enforce a debt of the husband.
I had the benefit of seeing the wife’s mother cross-examined in relation to this and other matters and I accept that this money was paid and that it has not been repaid. However it is clear that the $23 000 is unenforceable. The wife’s mother made it clear that she was not expecting the money to be repaid. In these circumstances it would not be appropriate to regard it as a liability. Having said this, I propose to take the $23 000 into account as contributions on behalf of the wife.
Accordingly, there are no liabilities. The property available for division between the parties therefore has a total value of $1 440 001.
Contributions
This has been a long marriage. The period from the time of marriage to the time that the parties separated under the same roof has been in excess of 27 years. To the time the husband left the former matrimonial home the period has been in excess of 30 years. And of course their contributions have continued over all this time.
As indicated above, at the commencement of marriage both parties were working full time. This changed with the births of the children although the wife subsequently undertook some paid employment as I have described above. But the husband became the major breadwinner for the family. As such, he has made the overwhelming financial contributions.
On the other hand, the wife has made the major contribution to the welfare of the family and as homemaker and parent. This is not to say however, that the husband did not make contributions in this area, because he did. He assisted with the care of the children from the time they were babies and then through the years. He assisted C in travelling to school over many years. He assisted and supported the children in their various sporting activities. The husband also undertook household chores including most of the shopping, clothes washing, clearing up after evening meals and cleaning windows. For most of the marriage until approximately six months before separation a housekeeper was employed.
After the parties purchased the former matrimonial home the husband usually spent at least half the weekend maintaining and improving the 25 acres on which the home was constructed. Much of this involved slashing grass and mowing lawn. The family also enjoyed numerous family holidays including many overseas holidays.
There was little quarrel with an assessment of the parties’ contributions overall as having been close to equivalent over this long marriage apart from two areas. The first of these areas was in relation to the husband’s inheritance of the $182 792. It was submitted on behalf of the husband that the Court should not include this in a “global” assessment of contributions because it has eventuated after the parties separated and is in the nature of a “windfall”. I informed learned counsel for the husband that I proposed to include this “globally”. Having said this, the position regarding contributions to this inheritance must be that the wife is unable to demonstrate other than a very marginal contribution to this.
The other area of disagreement was that it was submitted on behalf of the wife that such was the nature and timing of her personal injury award, that this would tip the scales about contributions overall in her favour. This was on the basis that the wife had received the sum of $303 000 net from her compensation claim as late in the marriage as 13 months before separation and because of this and the fact of the wife’s pain and suffering, it would be unfair to her not to make such a finding.
I must say I am not persuaded to such a finding. Firstly, the wife received the award 25 months prior to separation not 13 months prior to separation as submitted. But in any event, as has been emphasised on numerous occasions by this Court, the Court is to take account of all the contributions made by the parties. True it is that the award was received by the wife in December 2002 and the parties separated under the same roof in January 2005. But they continued to live in the former matrimonial home and to make relevant contributions up to the time that the husband left the home in January 2008. And they have both made contributions since that time as I have said. In these circumstances, in my view, to somehow give a special regard to the wife’s personal injury award as against all other contributions would be outside a proper finding about the contributions.
I also take into account the $23 000 contributions made by the wife’s mother as referred to above.
In my view, in all the circumstances, the assessment of contributions must be in favour of the husband taking account of his inheritance. In my view, the appropriate assessment is that the contributions overall have been 56 percent by the husband and 44 percent by the wife.
s 75(2) matters
The husband is 62 years of age. He has had recent eye operations and I am unclear about the state of his eyesight. But there was no submission to the effect that he has any impairment of vision which would affect his capacity to earn income. Apart from this, he is in reasonable health.
There is also some uncertainty about the level of income which the husband enjoys. In his financial statement sworn on 19 June 2009 the husband did not include an estimate of his income. But he said that he works as a financial service provider and professional investor through his company V Pty Limited of which he is the sole shareholder and director. The husband said that for the financial year ended 30 June 2008 V Pty Ltd received commissions of $76 088 and profit from share trading of $9134. The husband also referred to some other benefits which he enjoys from the company.
Learned counsel for the husband referred to the profit and loss account for V Pty Ltd for that financial year. This reported gross income for that year in the above amounts, which was a total of $85 222. But total expenditure was $66 043. This resulted in operating profit before income tax of $19 179. Because the company was able to set off income tax credits against any tax liability, this $19 179 was able to be received by the husband in effect free of tax.
I am satisfied that the husband has been receiving income at a higher level than this. He said during cross-examination that he had been drawing a little over $1000 per week from V Pty Ltd. It was suggested that the difference between this amount and the operating profit of approximately $369 would have been funded by the company paying this approximately $631 per week out of monies owed to the husband by the company and recorded in his loan account.
I must say that this all appears to me to be somewhat unsatisfactory. But I shall accept the husband’s evidence that the company has been paying him a little over $1000 per week. And this comes to him free of tax.
In addition, the husband also enjoys some other benefits from his company. The company provides a Mercedes Benz motor vehicle for his use, although the husband said that he seldom uses it. The husband also attributes at least some of his travelling expenses to the company. These were recorded in the company accounts for the financial years ended 30 June 2007 and 30 June 2008 as being $20 788 and $4201 respectively.
The husband has vast experience as a financial services provider and professional investor. On all present indications he should be able to continue to generate income from such occupation for some years yet.
On the other hand the wife is 54 years of age. There are some serious problems in terms of her health. For many years the wife has been suffering from depression. She witnessed a random shooting at a railway station many years ago when she was collecting the children. Subsequently the wife was diagnosed as suffering from post traumatic stress disorder. Unfortunately the wife was also involved in a serious motor vehicle accident in December 1999, as indicated above. As was also indicated above, the driver of the vehicle with which the wife’s vehicle collided was killed. The wife was hospitalised for a month. Her injuries included dislocated foot, damaged ligament and tendon, badly fractured right heel, broken kneecap, extensive bruising and a deep leg wound.
The wife has been treated by two psychiatrists, initially Dr Y and since August 2002, by Dr CI. In addition to depression the wife has suffered from panic attacks, she is very nervous in cars and she experiences suicidal thoughts. She is medicated by anti depressants and analgesics. She has been hospitalised on several occasions in relation to her condition the most recent being in December 2009.
Dr CI has diagnosed the wife as suffering from a dysthymic disorder (chronic depression) with underlying chronic marital stress. Dr CI said that she does not consider the wife to be in a position at the present time to be able to work in paid employment. This was on the basis of the various “stressors” which she has suffered from and continues to suffer from.
Learned counsel for the husband pointed out to Dr CI that some of the stressors which have been present for the wife either no longer continue or will soon no longer continue. These include the fact that the wife no longer lives with her ailing mother, the wife is no longer in an unfulfilling and abusive marriage, the husband no longer visits her home and soon the stress of being involved with these proceedings will be behind the wife. Dr CI acknowledged that removal of these stressors would be helpful for the wife but also said that it would be a long process for the wife to overcome the effects of the divorce because she has suffered a significant period of turbulence. Dr CI thought it would take at least to the end of this year for the wife to recover and return to her pre-morbid level of functioning. Dr CI also thought that an appropriate management strategy would be for the wife then to seek either paid or voluntary work. But Dr CI added the reservation that she was not sure how the wife would “go” and whether she would be able to obtain some form of work.
It is the case that the wife has demonstrated some capacity for paid employment. As indicated above, the wife was working as a clerk at the commencement of the marriage and she continued working until shortly before the birth of the eldest child. She subsequently undertook some part time work including in the later years of the marriage although this has been quite limited. More recently the wife worked full time with the public service and before this she had worked full time as personal assistant at a caryard as I have said. As I have also indicated, the wife was able to complete a degree at university in 2001.
In my view the Court needs to be cautious about the likelihood of the wife being able to obtain paid employment. As I informed learned counsel during submissions, I hold the clear view that the capacity of the husband to be able to enjoy some more years of income earning activity is much stronger than that of the wife. This is a significant matter under s 75(2) of the Act although given the ages of the parties the set off for this matter will be modest
Another relevant s 75(2) matter is the fact that the husband’s Company V Pty Limited has tax credits in the amount of $193 644 as I have said.. He continues to earn his income through this company. As indicated above. the company has been off-setting the equivalent of its taxable income with the required tax credits, the consequence being that the company has not had to pay income tax for many years. Accordingly, the company has been able to take its income tax free. The husband is the sole owner of the company and has sole enjoyment of whatever income it earns. So the tax credits have a value to the husband. In my view there ought to be an adjustment of available property in favour of the wife to take account of this matter.
In all the circumstances, in my view, to achieve a just and equitable order as required by the legislation, a set off in favour of the wife of 6 percent of the available property is appropriate. This would be a differential between their positions in relation to property of $172 800. In my view this would be appropriate in all the circumstances.
Conclusion
The parties are to enjoy the property available for division by sharing it equally.
The wife is to have 50 percent of the available property. This is property with a value of $720 001. The wife has the following property:
$
1. 50 percent of home contents
37,350
2. 1998 Toyota motor vehicle
8,500
3. Jewellery
20,000
4. Westpac account
10
_________
$65,860
For the wife to achieve property with a value of $720 001 the wife will require further property with a value of $654,141 ($720 001 - $65 860 = $654 141). This will be paid from the proceeds of sale of the former matrimonial home.
On the other hand, the husband is to have 50 percent of the available property. This is property with a value of $720 000. the husband has the following property:
$
1. 50 percent of home contents
37,350
2. Apartment contents
1,300
3. CBA account
1,400
4. V Pty Ltd Macquarie Bank account
3,299
5. Inheritance
182,792
6. Statue (add back)
8,000
__________
$234,141
For the husband to achieve property with a value of $720 000 he will require further property with a value of $485 859 ($720 000 - $234 141 = $485 859). This will be paid from the proceeds of sale of the former matrimonial home.
Fourth step
The wife will have her property referred to above and a payment of $654 141 from the proceeds of sale of the former matrimonial home. These funds would enable her to purchase a modest home or to use the funds for the purpose of generating income and to provide herself with rented accommodation. As I have indicated above, with the stress of these proceedings behind her, the wife might be able to undertake some paid work as recommended by Dr CI. If she was able to do this, the wife would probably feel more confident about investing most of her funds in a home or even taking on the responsibility for a modest mortgage.
On the other hand, the husband will have his property referred to above and the payment from the proceeds of sale of the former matrimonial home. He too would be able to purchase a modest home and possibly even take out a mortgage. He should be able to earn income for some years and use the tax loss credits to reduce his tax.
I propose to make orders the effect of which will be to require the husband to do all reasonable things to endeavour to recover the funds, or as much thereof as possible, invested in Thailand. Any recovered funds shall be shared equally by the parties after paying appropriate recovery costs.
The orders I propose will not affect the capacity of either of the parties to earn income.
Spousal maintenance
As I informed the parties during the course of submissions, in my view, this is not a case where it is appropriate to make a spousal maintenance order. This is because I take the view that there is sufficient property available to be able to make an adjustment in favour of the wife to take account of her needs and the other s 75(2) matters as referred to above. In these circumstances, the wife cannot establish that she is unable to support herself within the meaning of the relevant legislation. Her spousal maintenance application will be dismissed, therefore.
I certify that the preceding one hundred and thirteen (113) paragraphs are a true copy of the Reasons for Judgment of Judicial Registrar W P Johnston.
Associate:
Date:
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Injunction
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Fiduciary Duty
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