SNELL & SNELL

[2011] FamCA 985

FAMILY COURT OF AUSTRALIA

SNELL & SNELL [2011] FamCA 985

FAMILY LAW ─ PROPERTY ─ Value of property – Conflicting evidence – Where the area of dispute related to the value of the corporation – Where given the experience and skill which the husband has demonstrated in relation to the corporation, it can be taken as a sign of confidence that the business is viable, and going to continue to be viable ─ Where ultimately the Court preferred the wife’s expert’s approach to valuation ─ Where on balance and it being accepted that theoretically there is little to separate the approaches of either valuer the Court was comfortably persuaded that the valuation of the corporation should be taken as to $467,825 and that the $12,307 owed by it to the husband should be taken into account, as should the $34,726 which the parties owe to it.

FAMILY LAW ─ PROPERTY SETTLEMENT ─ Contributions ─ Where the contributions of the parties was not in contest ─ Where on balance, the Court concluded that to the date of trial, the parties’ contribution should be seen as favouring the husband by 56 per cent to 44 per cent ─ Where on balance, the Court is of the view that the appropriate section 75(2) adjustment is of 11 per cent and that would produce an outcome of 55 per cent to the wife, 45 per cent to the husband ─ Where the orders made by the Court provide a formula which preserves the overall split as consistent with the authorities.

FAMILY LAW ─ SPOUSAL MAINTENANCE ─ Where the wife will receive a capital sum of $410,000 at which time she can not satisfy the threshold of section 72 as she would not be able to demonstrate that she was unable to support herself other than by the payment of spousal maintenance ─ Where it was not demonstrated by the wife that, even in the interim, she would unable to support herself given the orders the Court makes for the husband to pay the $1000 per week until the wife receives her settlement moneys ─ Wife’s application for spousal maintenance dismissed.

Family Law Act 1975 (Cth) ss 72, 75(2)

Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336
Kardos v Sarbutt (2006) 34 Fam LR 550

APPLICANT: Ms Snell

RESPONDENT: Mr Snell

FILE NUMBER: DUC 415 of 2009

DATE DELIVERED: 19 December 2011

PLACE DELIVERED: Sydney

PLACE HEARD: Dubbo

JUDGMENT OF: Coleman J

HEARING DATE: 12 and 13 December 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hodgson

SOLICITOR FOR THE APPLICANT: Booth Brown Samuels & Olney

COUNSEL FOR THE RESPONDENT: Mr Battley

SOLICITOR FOR THE RESPONDENT: Nelson Keane & Hemingway

Orders

1. That the husband pay to the wife the sum of $410,228.50 comprising:

   (a)       The sum of $20,000.00 on or before 4 pm on 23 December 2011.

   (b)       On or before 19 April 2012 the sum of $233,912.50 for the wife’s share in SS Pty Ltd; and

   (c)       On or before 19 April 2012 the balance of $156,316.00.

2. That upon the husband paying the said sum of $410,228.50 to the wife in accordance with the terms of Order 1:

   (a)       The wife transfer and assign to the husband or his nominee absolutely and beneficially the whole of her right, title and interest and shareholdings in D Pty Ltd ACN … (“the First Company”) and SS Pty Limited ACN … (“the Second Company”) (jointly and severally “the Companies”) together with any other rights or entitlements which the wife has in or against the First Company and/or the Second Company howsoever arising.

   (b)       The wife resign all directorships and/or positions and/or offices in the Companies and assign all loan accounts as directed by the husband but the wife will first, if called upon to do so, vote at any meetings of members and directors in favour of such resolutions as the husband may direct.

   (c)       The wife resign her appointment as “appointor” of the D Discretionary Trust ABN … (“the Trust”), do and say all such acts and things necessary to appoint the husband or his nominee as her successor and sign a declaration pursuant to Clause 28.1 of the Trust Deed irrevocably renouncing all her right title and interest in the income and capital of the Trust.

   (d)       The husband indemnify the wife and forever keep her indemnified with respect to any liability of the wife to the Companies or to the Trust or to any third party (including but not limited to the Australian Taxation Office, CGU worker’s compensation and the W Group) arising out of or in relation to the wife’s involvement in the Companies and the Trust.

   (e)       The husband indemnify the wife and forever keep her indemnified in respect of any and all manner of actions, suits, causes of action, arbitrations, debts, dues, costs, interest and demands whatsoever both in law and in equity which the husband now has or may have at any time or times hereafter against the wife and the Companies and the Trust and each of them respectively in respect of any act or thing done or omitted to be done by the wife or the Companies or the Trust, and each of them respectively up to and including the date of making these Orders whether by reason of the wife having been an employee and/or director and/or officer of the Companies or the Trust and/or by reason of her shareholding within the Companies and/or the receipt by her of any monies at any time from the Companies or the Trust or otherwise.

3. That in the event of the husband failing to comply with Order 1 hereof, the husband shall do all acts and things and execute all deeds, documents, instruments and writings necessary to cause the property known as and situate at R Road, Town B (“R Road”) to be sold at and for a price agreed in writing between the parties or, failing agreement, the price determined to be the market value of the property by Mr N, Registered Valuer of Town B, and cause the proceeds of sale of the property to be applied:

   (a)       In discharge of the parties’ indebtedness to the National Australia Bank Limited in the sum of $139,638.00 and $118,827.00.

   (b)       In payment of agent’s commission and legal expenses of the sale.

   (c)       In payment of the balance of the proceeds of sale to the wife.

4. That, simultaneously with the sale of R Road, the husband pay to the wife a sum calculated as:

0.55 x (net proceeds of sale of R Road + $474,335.00) – (net proceeds of sale of R Road + $20,000.00).

1. That, until the payment by the husband to the wife in full of the wife’s entitlement pursuant to these orders, the husband shall pay to the wife the sum of $1,000.00 per week PROVIDED THAT the said sum shall reduce in proportion to the extent to which the husband makes payments to the wife in partial satisfaction of his obligations pursuant to Order 1 of these orders prior to receipt by the wife of her entitlement in full.

2. Until satisfied in full that the wife’s entitlement pursuant to these orders be and remain a charge over:

   (a)       The husband’s equity in R Road; and

   (b)       The husband’s shares in SS Pty Ltd ranking in priority only to existing charges or encumbrances over the said real and personal property of the husband PROVIDED THAT, for the purpose of satisfying his obligations pursuant to Order 1 hereof, the husband shall be at liberty to increase any existing charges or encumbrances in relation to R Road and SS Pty Ltd, whether secured or unsecured.

3. That the husband indemnify the wife and forever keep her indemnified with respect to the joint and several liabilities of the parties to the National Australia Bank Limited in relation to the mortgages secured over R Road in favour of D Pty Ltd.

4. That the wife’s application for spousal maintenance be dismissed.

5. DECLARE THAT each party retain absolutely and beneficially all property and superannuation interest entitlements owned or possessed by either of them as at the date of these orders.

6. That the parties do all acts and things, execute all documents and give all instructions necessary to cause the jewellery referred to in the valuations of Mr C dated 24 February 2011 and 16 March 2011 to be sold by public auction in Sydney at and for prices agreed between the parties or, failing agreement, determined by the auctioneer conducting such auction to be the fair market value of such jewellery and cause the proceeds of sale of the jewellery to be divided as to 55 per cent to the wife and 45 per cent to the husband.

7. That costs be reserved.

8. That all outstanding applications and cross-applications for settlement of property be dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Snell & Snell is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT DUBBO

FILE NUMBER: DUC 415 of 2009

Ms Snell

Applicant

And

Mr Snell

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

introduction

1. The proceedings before the Court relate to settlement of property and spousal maintenance. The applicant in the proceedings, Ms Snell (“the wife”), sought by her Counsel’s outline of case document that the asset pool of property of the parties be divided as to 60 per cent to her and 40 per cent to the respondent, Mr Snell (“the husband”). In his closing submissions, Counsel for the wife sought a 65 per cent division of the asset pool in her favour. That was arrived at as to 50 per cent by virtue of contributions and as to 15 per cent by virtue of section 75(2) of the Family Law Act 1975 (Cth) (“the Act”). The 15 per cent comprised of; 5 per cent by virtue of disparity of earning ability, 5 per cent with respect to disparity of superannuation interests and 5 per cent by virtue of the wife having, in the future, the major obligation to care for and nurture the one child of the marriage. Counsel for the wife sought spousal maintenance of $1000 per week.

2. The husband sought that the net assets of the parties be divided as to 55 per cent to the wife and 45 per cent to the husband comprising, in the case of the wife, 45 per cent with respect to contributions and 10 per cent with respect to the three factors relied upon by Counsel for the wife, pursuant to section 75(2) of the Act. Those factors were; major obligation to care for a child of the marriage under 18 years of age, disparity of earning ability and disparity in superannuation interests.

3. Counsel for the husband opposed the making of an order for spousal maintenance but did not oppose the wife continuing to receive, howsoever categorised, $1000 per week until the payment to her of the substantial bulk of her entitlement to a settlement of property and thereafter, if the whole of the wife’s entitlement were not then paid, to a pro rata reduction in the $1000 a week payable to the wife pending receipt of the totality of her property settlement entitlement.

4. The asset pool asserted by each party was, with one exception, not controversial. The one exception relates to a corporation in which the parties are shareholders and directors, which the husband has operated since the parties’ separation. It is known as SS Pty Limited or, as it has been referred to in various documents before the Court, “…”. In these reasons, the Court will refer to the corporation as either “SS Pty Ltd” or “the corporation”.

5. The credibility of the parties does not assume significance in determining these proceedings. Each party impressed during cross-examination as an essentially honest witness. To the extent that the husband was unable to explain how funds which the evidence reveals to have been available to him were able to be available, the Court does not accept that his inability to explain those matters, or matters such as the reasons for the appointment in recent times of a general manager of the corporation, are indicative of any lack of candour on his part.

6. The picture which emerges from the evidence before the Court is that the corporation’s business, which clearly commenced from very humble origins and has grown due to the energies of both parties directly and indirectly until separation, and of the husband since separation, is of a complexity and is now operating in an economic climate where, as the husband conceded, his skills were extended to a point at which he was uncomfortable. Unsurprisingly, he then relied upon others with greater expertise, both in terms of management so far as the appointment of a new general manager was concerned, and accountants and financial advisors in terms of categorisation of payments of various kinds by or on his behalf by the corporation.

7. The Court does not understand Counsel for the wife to have submitted any absence of candour or any failure to fully and frankly disclose on the part of the husband. To the extent that the wife’s case is in any way dependent upon the Court making findings of that kind, it does not do so on the evidence. As will be seen, the case is more about what, on a series of facts that are not seriously in doubt, or in most instances even in contest, is a fair apportionment of the assets of the parties, and a proper determination of the wife’s maintenance claim.

background

1. Some dates and events provide background to the proceedings. The wife was born in 1968. The husband was born in 1968. They are both accordingly aged 43 years. The evidence does not reveal that either party has any incapacity for appropriate gainful employment.

2. The parties commenced cohabitation in December 1999. At that time, the wife had four children of a prior relationship. Her evidence was that they were aged between three years and 11 years when cohabitation commenced. The wife’s four children continued to reside with the parties during their cohabitation. The wife received what she frankly conceded was minimal child support from the father of those children during the parties’ cohabitation and subsequently. As is not in doubt, the very considerable financial burden of raising the wife’s four children of her previous relationship fell upon the husband and the wife.

3. The wife had a car, the value of which is unclear, but in any event, given as her Counsel’s outline of case document records that the car was later taken by her previous partner, nothing turns on that.

4. For his part, the husband at the commencement of cohabitation was self-employed, conducting a mobile trade service from the back of his utility. That is not said in any deprecating way, but it is the fact. He had an interest in a block of land at R Road, Town B (“R Road”). It is not in contest that the husband had equity in that property of about $20,000 at the commencement of cohabitation. A house was subsequently built upon R Road and it became the matrimonial home of the parties until their separation in May 2009. The husband continues to reside in the R Road property.

5. The parties married in May 2001. In mid 2001, the one child of the marriage, S was born. S is accordingly 10 years of age. 

6. In 2002, the wife commenced employment with a retail business, initially for 15 hours a week, then for 30 hours a week. The position throughout the whole cohabitation, the evidence reveals, was that both parties applied their earnings from whatever source or sources for the benefit of the household that comprised the parties, the child of their marriage and the wife’s four children of her previous relationship.

7. The wife increased her working hours up to the point where she was working 40 hours a week at the retail business. Thereafter, in about 2007, the parties purchased what appears to have been a franchise in the E Store chain thorough a corporation, D Pty Limited, of which the parties were directors and shareholders.

8. On or about 22 June 2005 SS Pty Ltd was incorporated. The parties became, and remain, the shareholders in and directors of that corporation.

9. The parties separated on 17 May 2009, at which time the wife and three of her children and the parties’ child, S, commenced to live in rented accommodation. At that time there was a mortgage over R Road which was referrable to, it seems, the construction of the house and other improvements on the property some years earlier. There was also secured an encumbrance in relation to E Store.

10. In August 2010 the parties managed to sell E Store. E Store appears not to have been particularly successful, but the evidence does not even hint at that lack of apparent success being referrable to any absence of diligence on the part of the parties, and particularly not on the part of the wife, who it is clear was primarily responsible for the day-to-day conduct of E Store’s business activities.

11. The wife then commenced to work full time for a travel agency until she ceased to work there because, as she explained, she was not willing or able to work as many hours as her employers wished her to in the travel agency business.

12. The wife has made some attempts to obtain employment. She has not yet done so. Her evidence is that she will continue to seek appropriate employment, that is, appropriate for her experience and qualifications and her obligations to the parties’ child, S.

13. In about December 2010 orders were made in the Federal Magistrates Court for the husband to pay the wife two instalments of $5000, the nature of such payments being left for determination in the proceedings heard in Dubbo last week. The Court has not added those moneys back, but will take them into consideration in the context of the post-separation period when evaluating contributions referrable to that period.

14. Since March 2011 the husband has been paying the wife $500 per week by way of maintenance. The evidence suggests that was increased in August 2011 to $1000 per week. For approximately four weeks the husband has been paying $700 per week with respect to the D Pty Ltd debt, that being at the insistence of the National Australia Bank.

property of the parties

1. As noted earlier, the property of the properties is not in great contest. It is agreed that R Road has a value of $530,000.

2. The area of dispute relates to the value of SS Pty Ltd. In that regard the husband’s valuer Mr P asserted a figure of $373,381 to be the current value of the corporation. Mr H, the wife’s expert, asserted a figure of $467,825. The difference, about $94,000, is in fact not as great as that figure suggests because, as Mr H properly conceded, in coming to his figure he had assumed that a debt owed to the corporation by the husband of $12,307 would be paid, whereas Mr P excised that debt from his calculations. Mr H had also assumed that the liability of the parties to the corporation of $34,726 would be paid. Again, Mr P excised that from his calculations.

3. It should be made clear that the Court does not criticise Mr P for excising those two sums, but the practical effect of it is that if they were excised from Mr H’s figure, his valuation would effectively be increased by $12,307, and then immediately reduced by $34,726, bringing his figure down to approximately $445,000. The difference between the experts is, in reality, accordingly about $72,000. That figure assumes significance in the context of the dispute between them because it is, in effect, the net goodwill asserted by Mr H.

4. Mr P made clear in his evidence that he would not concede “one cent” to be the value of the goodwill of SS Pty Ltd. His figure of $373,381 represents the net tangible assets of the corporation. That figure is not controversial in that sense, the essential difference between the experts being would a hypothetical willing but not anxious purchaser refuse to pay more than the net asset value of the business, as Mr P contends, or, as Mr H contends, effectively pay $72,000 over and above that for the opportunity to acquire the corporation’s business.

5. The Court prefers Mr H’s expert opinion evidence in relation to this topic. That is not withstanding, as Mr H himself conceded in cross-examination, that the formula he had used provided a fairly artificial basis of valuation, and that, through no fault of the parties or either of the experts, the figures upon which each relied did not include or have regard to some significant matters revealed in evidence before this Court.

1. Ultimately, however, the Court prefers Mr H’s approach. It is in dispute that this corporation has been in existence for six years, and has been essentially profitable throughout that period. It has weathered the global financial crisis and other economic downturns, including drought throughout the region. The business has continued, by reference to its recorded trading results, to have maintained its position both in terms of its own viability and, as Mr P said in his oral evidence, as the leading business of its kind in the local area, where there are a total of three or four such businesses. These factors support concluding that the business has good will.

2. The husband’s evidence, which there is no reason not to accept, is that he has maintained a skilled staff of about 14, that the costs of sales have increased to the extent that he has incurred expenses flying crews to jobs in order to more efficiently operate them, and has himself incurred expense in obtaining a pilot’s licence so that he can do that. Employing a general manager on a salary package of $104,000 earlier this year is not consistent with an expectation that the corporation is in decline. On the contrary, and given the experience and skill which the husband has demonstrated in relation to the corporation, it can be taken as a sign of confidence that the business is viable, and going to continue to be viable.

3. So, too, is the acquisition by the corporation, for the husband’s use, of a new Mercedes Benz four-wheel drive motor vehicle. With respect to the husband, whilst no doubt a Mercedes Benz four-wheel drive motor vehicle is probably superior to four-wheel drive Holden utilities, the evidence does not establish that a vehicle of that magnificence was necessary for the husband to discharge his role for the corporation. That is not said critically of him, but the reality is that it can safely be inferred that the husband, an experienced and careful businessman, the evidence suggests, would not have caused the corporation to incur that kind of expenditure had he been fearful of its future viability. Other four-wheel drives for a fraction of the $110,000 for a Mercedes Benz would no doubt have been sufficient.

4. There is also evidence, which the experts did not have, of the availability of funds to the husband. Those funds do not appear to be in the nature of wages. They, on balance, appear likely, when categorised by the accountants in the 2011/2012 financial year, to be classified as drawings, but the reality is that the corporation has been able to make available significant payments over and above the husband’s recorded taxable income.

5. As noted earlier there is no suggestion that there has been any deception or that there is anything untoward in these payments. It is not insignificant that neither Mr H nor Mr P suggested that there were any skeletons in the closet of the corporation, or that there was the semblance of anything untoward in terms of the conduct of its business and the fidelity of its financial accounting. But the reality is that, at the moment, over and above the husband’s wages and the provision of a motor vehicle and other expenses which are to be expected, telephone and things of that kind, the corporation is able to make available $1700 per week, one thousand of which it has been making available for some months. It can, of course, be said that ultimately that will have to be accounted for and that is undoubtedly so, but it does provide in a real common sense way, support for rejecting the proposition that a willing but not anxious purchaser would refuse to pay as little as about $94,000 for the opportunity to acquire and operate this established and viable business.

6. Essentially for those reasons and without criticising Mr P whose expertise is undoubted and well known to this Court, the Court cannot accept that nothing would be payable for the opportunity to walk into this business and take over its existing contracts and operate it as opposed to someone with the husband’s skill set starting a business from “scratch” in the area with all the uncertainty attaching to that.

7. In some cases the Court can reach a figure other than that asserted by either expert. The High Court in Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1981) 146 CLR 336 made clear that valuation in these circumstances is in the nature of a discretionary exercise but in the circumstances of this case the Court does not consider that it can go beyond the two expert opinions without seeking to exercise expertise which it lacks.

8. On balance and accepting that theoretically there is little to separate the approaches of either valuer the Court is comfortably persuaded that the valuation of the corporation should be taken as to $467,825 and that the $12,307 owed by it to the husband should be taken into account, as should the $34,726 which the parties owe to it.

9. The wife’s motor vehicle is agreed to be worth $30,000 but as she owes the finance company $35,000 she has negative equity of $5000 in that vehicle. The husband has a motor cycle agreed to be worth $31,000.

10. The jewellery of the parties has been subject of valuation by Mr C. Mr C, a fourth generation jeweller carrying on business in Town B with expertise in jewellery valuation was of the opinion that if offered at an appropriate auction in Sydney, as opposed to fire selling the parties’ jewellery, none of which was to his expert eye “butt ugly,” a figure of $56,860 gross should be realised. Commission might be as much as 20 per cent on that sale.

11. For reasons which can briefly be stated, the Court accepts Mr C’s expert opinion evidence as to the value of the parties’ jewellery. Perhaps foremost amongst those reasons is that Mr C was the only expert to value the jewellery. In the course of his brief but refreshingly colourful cross-examination Mr C revealed nothing which would dissuade the Court from accepting his expert opinion as to the value of the parties’ jewellery. The Court proposes to quarantine the jewellery and deal with it, as effectively invited by both Counsel to, as being apportioned in such percentages as the Court determines the other assets of the parties should be determined.

12. The one point of disagreement in relation to the jewellery is that the wife wished to have it sold. The husband wished to retain it. Given that commission on the sale is likely to be 20 per cent, that is to say, $56,000 is likely to come down to about $45,000 one would have thought that the wife might have been content for the husband to have the jewellery at full value and take her percentage entitlement of $56,860. The wife opposes the husband retaining at least some of the jewellery for reasons which are understandable, whether or not they are correct.

13. As indicated to Counsel for the husband when this aspect of the dispute crystallised during final submissions, in the absence of clear evidence of an attachment to or connection with the jewellery on the part of the husband, the Court has little option in fairness to both parties than to make an order for sale. The parties can then, if they wish, purchase the jewellery. If, on more mature reflection however, the wife prefers to receive not less than another $5,500, that is to say, the commission or likely commission on the sale, and leave the jewellery with the husband, that would be entirely open to the parties. But, the Court orders will reflect what might be described as the default position, that is, a sale and division of the jewellery in such percentages as the Court determines to be appropriate with respect to the other property of the parties.

14. The husband has household contents worth $8,488. The wife has household contents worth $5,000. The parties are owed $12,307 by SS Pty Ltd.

15. The liabilities are not in doubt and they comprise the D Pty Ltd debt to the NAB $118,827, CGU Workers Compensation $1,247, the Australia Taxation Ofiice integrated account which, from memory, is referable to D Pty Ltd but nothing turns on whether it is or not, $9,224, the mortgage over R Road $139,638, the $35,000 referred to earlier which is owed to BMW Australia Finance in relation to the wife’s motor vehicle and the parties’ indebtedness to SS Pty Ltd of $34,726.

16. Excising the $56,860 for jewellery the net assets of the parties are accordingly $745,870.

17. Superannuation interests of the parties are not in doubt. The wife has a superannuation interest of $26,751. The husband has a superannuation interest of $93,553. It is common ground, and with respect, sensibly so, given the ages of the parties that rather than including the superannuation in the property pool of $745,870 the Court will take it into account as financial resource pursuant to section 75(2) of the Act. So doing will clearly result in an adjustment under section 75(2) of the Act in the wife’s favour. Both Counsel acknowledge that. What they do not agree on is what might crudely be called, the split.

contributions of the parties

1. The contributions of the parties are not in contest. It is convenient to refer to the contributions of the parties by reference to the contributions from the date of commencement of cohabitation to the date of separation, some nine and a half years later, and to the post-separation contributions.

2. As is not in doubt, the husband’s initial contribution of $20,000 in equity in the R Road property was the only capital contribution by either party at the commencement of cohabitation. It was not a large sum but, as noted earlier, R Road became the land on which the matrimonial was subsequently built. That is now worth $530,000. As Brereton J, a Judge of the Supreme Court of New South Wales when sitting on the Court of Appeal of the Supreme Court of New South Wales observed in his scholarly judgment in Kardos v Sarbutt (2006) 34 Fam LR 550, it is necessary to consider not only the quantum of an initial contribution, but also its impact. That must be kept in mind where, as here, the initial contribution was referrable to what became the major asset of the cohabitation. Save for that contribution, and one to which reference will shortly be made, to the date of separation the contributions of the parties could and should be seen as equal. Put simply, the evidence suggests that each party gave of their best and displayed acumen in various ways during their cohabitation. The absence of robust cross-examination of either party to suggest otherwise is supportive of the Court so concluding.

3. As is not in doubt, and the evidence is not controversial in this regard, the husband made substantial contributions to the wife’s four children of her prior relationship during the nine and a half years of cohabitation. Whilst it is not seriously in doubt that the wife made the greater contribution as homemaker and parent both with respect to her four children and the child of the marriage, S, the husband also made contributions in that regard. To fail, however, to reflect and very substantially reflect, the husband’s contributions direct and indirect, financial and non-financial to four children in respect of whom he had no legal obligation for nine and a half years, particularly when it is remembered that a number of those children were passing through teenage years in that period, would be to completely fail to do justice and equity to what the evidence reveals.

4. The post-separation period requires consideration. In that period as is not in doubt the husband had the sole use and occupation of the former matrimonial home. The wife was paying rent elsewhere. It was submitted by Counsel for the wife that the evidence revealed the husband to have been paying modest child support for the child, S, in that period. Whatever the husband was paying, there is no evidence before this Court that it was inappropriate either in terms of the child support legislation or otherwise. There was apparently no application for departure from the assessed child support obligation.

5. Moreover, as is not in doubt and particularly in more recent times, the husband made other contributions with respect to the child, S. The wife received $10,000 in the post-separation period which has not been taken into account or added back in the balance sheet. For his part, in the post separation period, the husband has undoubtedly had a greater income available to him than has the wife. On the other hand, in the post-separation period, his has been the sole contribution to the continued operation of SS Pty Ltd and the discharge of the liabilities which remained after the sale of D Pty Ltd. Those obligations have been substantial.

6. On balance, to regard the wife’s post-separation contributions as modestly greater than those of the husband would be reasonable having regard to the evidence. It is necessary, however, to consider what impact that has on what the Court concludes to be a very substantial disparity of contributions to the date of separation. It must reduce that, albeit, in the Court’s view, to a very modest extent.

7. On balance, the Court concludes that to the date of trial, the parties’ contribution should be seen as favouring the husband by 56 per cent to 44 per cent. The difference, about 12 per cent, is, in round figures, a difference of about $100,000 or somewhat less. To the extent that it might be complained on behalf of the wife that Counsel for the husband asserted contributions of 55/45, it is to be remembered that that position was adopted on the basis that SS Pty Ltd would be held to be worth, net of loan accounts, about $72,000 less than the Court has found.

8. The Court is satisfied that a disparity with respect to contributions of about 12 per cent or somewhat under $100,000 would, in the circumstances, be appropriate.

section 75(2) adjustment

1. It is necessary to consider the section 75(2) adjustment appropriate to be made and, in that context, there is the ongoing major obligation to care for the child, S, which as Counsel for the wife established in cross-examination of the husband, is somewhat greater than in many cases because of the husband’s inability, to date at least, to spend extended time with the child over and above weekends. That is a factor of significance.

2. The child is now 10 and a half years of age. There is, accordingly, about seven and a half years in the future. That obligation does not encompass child support. There is no evidence that the husband has not or will not do other than pay his proper child support obligations. It is the physical care and the obligation to provide housing and accommodation which is the major component of that factor.

3. The parties have a disparity of earning ability which is significant. That will change once the orders for settlement of property are implemented. If the husband is able to borrow all of the wife’s entitlement, his position will change in that he will have a very substantial debt to service. Even if, as is likely, the husband has to sell R Road, after secured creditors are paid out, there would be likely to be less than $250,000 in equity which would be paid to the wife, leaving on any view of the outcome a substantial sum remaining to be found from somewhere by the husband. Presumably the husband will borrow that sum if he can on the security of his shares in SS Pty Ltd in order to pay the wife her entitlement.

4. The wife’s position, it is not in doubt, will clearly improve very significantly once she receives her entitlement, whatever it is held to be. There will still remain a substantial disparity of earning ability as between the parties. Having regard to the husband’s last tax return, a disparity in the order of $400 or $500 a week appears to be the likely magnitude of the disparity of earning ability.

5. There is also the difference, with respect to the parties’ superannuation entitlements, and that difference is approximately $67,000. Neither party is realistically likely to be able to access that for some years to come.

6. The foregoing factors all favour the wife. It is also to be kept in mind that the wife will continue to receive $1000 per week, the significance of which will become more readily apparent when the spousal maintenance claim is considered, for a period which is likely to be some 12 to 16 weeks or 12 to 16,000 dollars. That would be not income in the wife’s hands or taxable. It would be payable at the rate of a thousand dollars a week and be a substantial sum.

7. Pursuant to section 75(2), it is also permissible, the Court concludes, to have regard to the effect of the orders which the Court will make in this sense. As is not in doubt, the wife will be paid a substantial sum of money for her entitlements and properly so. That sum is likely to be more than $400,000. It will be cash, provided that the husband is able to borrow or, if he cannot borrow, that SS Pty Ltd, if requiring to be liquidated, will produce that sum. The wife will receive her entitlement in cash. In the wife’s hands her entitlement will be in a form which is risk free.

8. As noted earlier, if the husband liquidates R Road, as he may well have to, he will still have to, if the wife is to receive $400,000 or more, secure borrowings of another $150,000. He would not then have the security of R Road to provide to a lender and would have to rely upon his shareholding in SS Pty Ltd. There is no evidence before this Court in relation to the position, but it can safely be said that in the absence of real estate over which funds borrowed could be secured, he may experience difficulty.

9. As is not in doubt, it is improbable that at $530,000 R Road, which is already encumbered to the tune of $260,000, could support borrowings of another $400,000. The point of all this is that in the real world, to fail to have regard to those realities would be unjust and inequitable. That is not to suggest that so doing should significantly reduce what the wife should be entitled to, but simply is a factor which, in the real world, cannot be ignored. There is a risk in relation to implementation of a settlement between these parties, and it can be said that the wife shares the risk in that she is dependent upon the husband. The risk after the orders are implemented will be and remain with him.

10. On balance, the Court is of the view that the appropriate section 75(2) adjustment is of 11 per cent. That would produce an outcome of 55 per cent to the wife, 45 per cent to the husband. The 11 per cent adjustment, which equates to about $90,000 can be seen as, broadly speaking, about $30,000 for each of the three factors to which both Counsel referred which are not controversial with a modest offset for what the wife will receive until settlement is implemented, and for the risk factor to which the Court referred. The 55/45 division in favour of the wife produces a disparity overall in her favour of about $75,000.

11. The Court is persuaded that such a disparity, particularly when regard is had to the section 75(2) factor last mentioned, is just and equitable. The effect of a 55/45 division of the $745,870 is to produce an entitlement of the wife of $410,228.50 after allowing for her effectively having no net assets. That is to say, her motor vehicle when offset, and plus her furniture when offset by her loan, produces a nil balance before the wife receives her property settlement award. The Court concludes that the husband should pay or cause to pay to the wife $410,228.50.

12. That division, 55/45, will carry over to the jewellery. The effect of that is that, subject to commission, the wife will receive about $5000 more than the husband in relation to the jewellery. The orders of the Court, which will shortly be read, will provide that the husband have a four month opportunity to pay to the wife $410,228.50 failing which he will be required to sell R Road. Unless and until the husband effects a substantial capital reduction in relation to the $410,228.50, he will be obliged to pay to the wife $1000 per week.

13. The Court has not forgotten the agreement of the parties that by 23 December 2011, $20,000 of the wife’s entitlement is to be paid and the Court orders will reflect that. The orders of the Court will apportion the $410,228.50 payable to the wife as to $233,912.50 as the consideration for the acquisition by the husband of the wife’s shares in SS Pty Ltd. The balance of $176,316 will be the balance then payable, $20,000 of which is to be paid by 23 December 2011.

spousal maintenance claim

1. It is necessary then to consider the wife’s spousal maintenance claim. As is not in doubt, and the point was taken in documentation filed on behalf of the husband prior to the trial of the proceedings, the wife has not particularised her asserted reasonable weekly needs. Her expenses, as she made clear in the witness box, of $912 per week plus her rent of $320 per week include children of hers of a prior relationship, including a 19-year-old son who is employed by SS Pty Ltd, who are living in the household. That son, although the evidence does not reveal what wage he receives, is apparently reluctant to pay more than $50 per week. It is clear that while ever the husband is paying $1000 week to wife, the husband is subsidising the wife’s children of her prior marriage, including one who is an adult.

2. The failure to particularise reasonable weekly needs is, as the authorities make clear, relevant to discharging the onus which rests upon an applicant under section 72 of the Act. The application for spousal maintenance could be dismissed on that basis. There is, however, a more significant basis upon which, in the circumstances of this case, the spousal maintenance application will be dismissed and that arises by virtues of three factors.

3. The first factor is that the wife will receive a capital sum of $410,000 at which time she could not satisfy the threshold of section 72. That is, she would not be able to demonstrate that she was unable to support herself other than by the payment of spousal maintenance. Learned Counsel for the wife asserted that the wife may wish to purchase a residence. There is no evidence before this Court of such an intention, the cost of a proposed residence or the reasonableness of doing so. The law does not differentiate between cash arising by way of settlement of property and income from other sources, whether involving personal exertion or not, in terms of the ability to support oneself without spousal maintenance pursuant to section 72 of the Act.

4. The second factor is that until the wife receives her settlement of property, albeit not by way of payment of maintenance but, in effect, by way of interest or however one wishes to categorise it on her capital sum the wife will receive $1000 per week until the husband substantially, if not entirely, discharges his obligations under the orders for settlement of property which the Court will make. The wife thus cannot demonstrate even in the interim an inability to support herself given the orders the Court will make for the husband to pay the $1000 per week until the wife receives her settlement moneys.

5. The third factor, which relates to the first, is that whether by borrowing the whole of the $410,000, the capacity for doing so appearing to be questionable, or by selling R Road and still having to borrow and pay rent to live somewhere else. The husband’s financial position will deteriorate significantly as and from the time he completes his obligations to pay the wife $410,000 and ceases to be obliged to pay her $1000 per week.

6. As the authorities make clear, when assessing spousal maintenance claims the Court must have regard to the effect of orders proposed with respect to settlement of property. This the Court has done and, accordingly and in reliance upon the matters to which reference has been made, the application for spousal maintenance must be and will be dismissed.

conclusion

1. The orders provide a formula which preserves the overall split because, if there is a sale of R Road then, consistent with authority, there has to be a percentage division.

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 19 December 2011.

Associate:

Date: 22.12.2011