Sorensen & Vester
[2024] FedCFamC2F 1835
•18 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Sorensen & Vester [2024] FedCFamC2F 1835
File number(s): HBC 171 of 2023 Judgment of: JUDGE TURNBULL Date of judgment: 18 December 2024 Catchwords: FAMILY LAW – PROPERTY – Short relationship – Valuation of assets of a dairy company – Whether certain assets are owned by the company or by the Husband – Whether the Husband’s father holds milk income of the company that should be included in the company assets – Whether all the purported expenses of producing the milk should be accepted – Whether the milk income should be ‘added back’ to increase the value of the company’s assets – Whether the company had a lease agreement with the Husband justifying the withdrawal of monies from the company for ‘lease payments’ or should those monies also be added back to form part of the company’s assets – the quantum of the company’s directors loans – Whether the Husband has a personal loan to his father – Whether the Court should take a one, two or three pool approach – Whether it is just and equitable for an order to be made – EVIDENCE – The impact of the failure of the Husband to call his father as a witness – Whether the Wife’s ‘estimated’ value of chattel items is admissible evidence – Whether her estimate was an ‘admission’ and thereby an exception to the hearsay and opinion rules - Whether there has been full and frank disclosure. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021
Evidence Act 1995 (Cth)
Income Tax Assessment Act 1936 (Cth)
Cases cited: Australian Securities & Investments Commission v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586
Australian Securities and Investments Commission v Rich [2009] NSWSC 1229
Bagshaw & See [2019] FamCA 482
Beck & Beck (No 2) (1983) FLC 91-318
Berghan v Berghan [2017] QCA 236; (2017) 57 Fam LR 104
Bevan & Bevan [2013] FamCAFC 116
Biltoft and Biltoft [1995] FamCAFC 45
Blatch & Archer [1774] 98 ER 969
Boege and Boege [2001] FamCA 1167
Briginshaw v Briginshaw (1938) 60 CLR 336
C & C [1998] FamCA 143
Campbell v Kuskey (1998) FLC 92-795
Clauson & Clauson (1995) FLC 92-595
Coghlan v Coghlan (2005) 33 Fam LR 414
Coshott v Prentice [2014] FCAFC 88
Dawes & Dawes [1989] FamCA 71
Dickons & Dickons [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Ermogenous v Greek Orthodox Community of SA Inc [2002] 209 LCR 95
Federal Commissioner of Taxation v Bosanac (no 7) [2021] FCA 249
Gadhavi & Gadhavi [2023] FedCFamC1A 117
Gould & Gould [2007] FamCA 609
Grier & Malphas [2016] FamCAFC 84
Grunseth & Wighton [2022] FedCFamC1A 132
Heydon v The Perpetual Executors Trustees and Agency Co WA Limited [1930] HCA 26 113
Hicks & Trustee of the Bankrupt Estate of Hicks [2021] FamCAFC 19
Hickey & Hickey & Attorney-General for the Commonwealth of Australia [2003] FamCA 395
Hoy Mobile Pty Ltd v Allphones Retail Pty Ltd [2008] FCA 369
Hunter & Borman [2020] FamCAFC 250
J & J [2006] FamCA 951
Jacobson & Jacobson (1989) FLC 92-003
Jabour & Jabour [2019] FamCAFC 78
Jones v Dunkel (1959) 101 CLR 298
Kannis & Kannis [2002] FamCA 1150
Kowaliw & Kowaliw (1981) FLC
Koch & Kest [2021] FamCA 408
Lavell & Lavell [2012] FamCA 34
Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369
Lithgow City Council v Jackson [2011] HCA 36
Lotta & Lotta [2017] FamCA 50
Mallet & Mallet (1984) 156 CLR 605
Mayne & Mayne [2011] FamCAFC 192
Medvitz & Baginski [2022] FedCFamC1F 632
NHC & RCH [2004] FamCA 633
Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195
Parshen & Parshen (1996) FLC 92-720
Pearce & Pearce (No 3) [2022] FedCFamC1F 418
Robb & Robb [1994] FamCA 136
Rodgers & Rodgers (No 2) (2016) FLC 93-712
Stanford & Stanford (2012) 247 CLR 108
Strand & Strand (No 2) [2018] FamCAFC 247
Shalhoub v Buchanan [2004] NSWSC 99
Sigley & Cullen (No 3) [2015] FamCA 825
Taylor & Taylor & Taylor [2000] FamCA 308
Teal & Teal [2010] FamCAFC 120
Vass & Vass [2015] FamCAFC 51
Warwick & Cutler [2016] FamCA 934
Weir and Weir [1992] FamCA 69
Wu v Li [2015] FCAFC 109
Zyk & Zyk [1995] FamCA 135
Division: Division 2 Family Law Number of paragraphs: 296 Date of last submission/s: 6 August 2024 Date of hearing: 22, 23, 24 and 25 July and 6 August 2024 Place: Hobart – delivered in Hobart Counsel for the Applicant: Ms Foale Solicitor for the Applicant: Simmons Wolfhagen Counsel for the Respondent: Mr Dudderidge Solicitor for the Respondent: Cogent Legal ORDER
HBC 171 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS SORENSEN
Applicant
AND: MR VESTER
Respondent
ORDER MADE BY:
JUDGE TURNBULL
DATE OF ORDER:
18 DECEMBER 2024
THE COURT ORDERS THAT:
1.All extant property orders are discharged.
2.Within 28 days the Applicant do all things and sign all documents necessary to transfer all her share, right, title and interest, in C Pty Ltd (‘C Pty Ltd’) to the Respondent (‘Transfer’), and to take all necessary steps to resign as an office holder of C Pty Ltd, including as a director.
3.Contemporaneously with the Transfer, the Respondent pay to the Applicant the amount of $315,793.24. (‘Payment’).
4.As from the date of the Transfer and Payment (‘the date of the Transfer and Payment’), the Respondent release the Applicant, and indemnify and keep indemnified the Applicant, to the maximum extent permitted by law, from all liabilities of and in relation to:
(a)C Pty Ltd that exists at the date of the Transfer and Payment or that may exist in the future, including any taxation liabilities; and
(b)Any current and/or future assets of C Pty Ltd.
5.As from the date of the Transfer and Payment, the Applicant release C Pty Ltd from any liabilities in relation to any director’s loans and/or any other monies that may be owed to the Applicant, to the maximum extent permitted by law (it being noted that the Applicant's director's loan of $29,719.76 has been repaid to her).
6.Unless otherwise specified in this order and save for the purpose of enforcing this order:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the legal or beneficial ownership or possession of that party as at the date of this order;
(b)Each party forego any claims they may have to any superannuation long service leave, redundancy, retirement, retrenchment, inheritance, and like benefits belonging to, earned or received by, the other;
(c)Life insurance policies remain the sole property of the owner named thereon;
(d)Any joint tenancy of the parties in any real or personal estate is expressly severed;
(e)Each party be solely liable for and indemnify and keep indemnified the other against all costs and expenses in relation to any items of property to which that party is entitled pursuant to these orders, and be solely liable for and indemnify the other against any liability:
(i)Encumbering any items of property to which that party is entitled pursuant to this order; and
(ii)in that party’s sole name, including, but not limited to, credit cards, loans, lease agreements and charitable commitments.
7.Each party must do or cause to be done all things necessary or reasonably desirable to give full effect to this order and the matters contemplated by it, including, but not limited to, the execution of documents.
8.In the event that either party fail to execute any documents required to be signed for the purpose of this order within 3 business days of any such document being provided to either party, and upon the Registrar of the Federal Circuit and Family Court of Australia (Division 2) being satisfied by way of Affidavit evidence only of such failure or neglect or default by either party, then the Registrar be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) (Family Law Act) to execute any such documents in the name of either of the parties in order to give full force and effect to this order.
9.All extant proceedings are dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE TURNBULL
OVERVIEW
These are property proceedings initiated by Ms Sorensen (‘the Wife’) on 24 February 2023. At trial, the Wife sought a 65/35 division of the non-superannuation assets, in her favour[1]. Mr Vester (‘the Husband’), sought an equal division of the value of the net assets of C Pty Ltd (‘C Pty Ltd’), being the asset built by the parties during the relationship — resulting in a payment to the Wife of $30,596.81 upon the transfer of her shares in C Pty Ltd to him. Otherwise, he sought that the parties retain the assets in their name and under their control.[2] The parties lived in a de-facto relationship but for the purpose of these Reasons, they will be referred to as the Wife and Husband respectively.
[1] Until final submissions the Wife had sought a 60/40 division– but claimed a 5 per cent adjustment for s90SF(3) factors in final submissions and in her Case Outline.
[2] Written Submissions of Mr Vester filed 2 August 2024 (‘Husband’s Written Submissions’) [44].
The parties came to the hearing with the major facts[3] and the structure of the final orders[4] agreed, save for the issue of the cash payment to be made by the Husband to the Wife. The Husband argued that that sum should be the figure of $30,596.81,[5] while the Wife submitted that it should be a much larger sum. The parties also largely agreed upon the makeup and value of the balance sheet, the assets they would each retain, and that the Wife would transfer her share, right, title and interest in C Pty Ltd to the Husband. I commend the parties for adopting such a pragmatic approach.
[3] Exhibit J1: Statement of Agreed Facts (‘SOAF’).
[4] Exhibit J3: Minute of Consent.
[5] Husband’s Written Submissions (n 2) [44].
An expert property valuation report from Mr B of D Pty Ltd was jointly requested by the parties on 5 December 2023 to value certain assets located at various sites in Region E of Tasmania. The valuation was conducted on 5 and 6 March 2024 and the report released 8 March 2024.[6]
[6] Affidavit of Mr B filed 12 July 2024 (‘Expert Valuation of Mr B’).
A further expert valuation was undertaken by Mr F of G Company), to value the dairy stock pastured at H Street, Town J in Tasmania. Mr F inspected the calving dairy cows (‘the C Pty Ltd herd’) on 31 May 2024 and produced the expert report on 25 June 2024.[7]
[7] Affidavit of Mr F filed 18 July 2024 (‘Expert Valuation of Mr F’).
The trial commenced on 22 July 2024, with the evidence taking four days. Final submissions were received in August with the decision reserved on 14 August 2024.
HISTORY AND RELEVANT FACTS
A Statement of Agreed Facts (‘SOAF’) was tendered jointly at the outset of trial as Exhibit J1 pursuant to section 191 of the Evidence Act 1995 (Cth) (‘the Evidence Act’). The entirety of the exhibit is extracted below:
The Parties
1. The Applicant (Wife) was born [in] 1987, is currently 36 years of age.
2. The Wife has two children from a previous relationship, currently aged 12 and 18 years respectively, both live with the Wife on a fulltime basis.
3. The Respondent (Husband) was born [in] 1973, is currently 50 years of age.
4. The Husband has three adult children from a previous relationship currently aged 27, 29, and 31 years respectively.
5. The Wife is currently employed fulltime earning approximately $78,000 per year.
6. The Husband is self-employed with a taxable income in Financial Year ending 2023 of $79,634.00.
The Relationship
7. The Parties commenced cohabitation in November 2018, with the Husband moving into the Wife’s premises located at [K Street, Town L] (‘[Town L] Property’).
8. The relationship ended on a final basis in […] January 2022 and the Wife vacated the property on 20 January 2022 (Separation).
9. The relationship was approximately 3 years and 2 months in duration (Relationship).
10. The Parties did not marry.
11. There are no children of the Relationship.
12. There are 3 relevant periods:
a. Nov 2018 to May 2020: the Husband lived in the Wife’s home at the [Town L] Property, and the parties were each working full time;
b. [mid] 2020 to […] January 2022: [C Pty Ltd] is in operation and the parties lived at the [Town M] farm (accommodation provided for free by the share farm agreement); and
c. Feb 2022 to now: After Separation the Husband moved the [C Pty Ltd] herd (see para 32 herein) to [Mr N]’s (the Husband’s father) farm at [Town J]. Since that time the [C Pty Ltd] herd calved and were milked with all milk income deposited into [Mr N]’s bank account.
Initial Contributions
13. As at the commencement of the Relationship the Parties had the following assets and liabilities:
a. Wife:
Item
Asset/Liability
Value/Debt
1
[K Street, Town L] (50percent share)
E$220,000
2
Horse Float
E$8,000
3
Contents/chattels, ride-on-mower, […] horses, horse equipment
E$25,000
4
Mortgage (50percent share)
(E$190,000)
5
Total Net Assets (non-super)
E$63,000
6
Superannuation
7
[Super Fund 1]
E$50,000
8
[Super Fund 2]
E$14,279
9
Total Super
E$64,279
10
Total Assets (inc Super)
E$127,270
b. Husband:
Item
Asset/Liability
Value/Debt
1
[Motor Vehicle 1]
E$2,500
2
[Motor Vehicle 2]
E$70,000
3
[Motor Vehicle 3]
E$70,000
4
[Motor Vehicle 4]
E$35,000
5
[Motor Vehicle 5]
E$150,000
6
[Motor Vehicle 6]
E$70,000
7
[Motor Vehicle 7]
E$3,000
8
[Motor Vehicle 8]
E$1,500
9
[Motor Vehicle 9]
E$10,000
11
Cattle
E$15,000
12
Net Assets
E$427,000
14. The Wife contends that the Husband also had an initial liability of $324,000. The Husband contends that that liability arose in April 2021 (per paragraph 90 of his Affidavit). It is agreed that he introduced the liability of $324,000, whether that was initially or later on is a fact in dispute.
15. Neither party made any contributions to the assets and liabilities of the other set out in paragraph 12.a. & b. herein.
During the Relationship – Pre [C Pty Ltd] (November 2018 to May 2020)
16. No joint assets acquired by the Parties.
17. No joint liabilities incurred by the Parties.
18. No joint bank accounts between the Parties.
19. The Husband lived in [Ms Sorensen]’s home between November 2018 and May 2020.
20. The Wife attended to the vast majority of domestic chores including cooking, cleaning and washing.
During Relationship – [C Pty Ltd]– (May 2020 to January 2022)
21. In or about [early] 2020, the Parties were offered a business opportunity, by a contact of the Wife’s, [Mr O], to operate a share dairy farming business with [P Pty Ltd] on an [P Pty Ltd] farm located at [Town M], Tasmania.
22. [In early] 2020, the Parties registered a company known as [C Pty Ltd] ([C Pty Ltd]), with each holding 50 x $1 shares and each being a director.
23. In or about May 2020 [C Pty Ltd] engaged [Q Business] to provide bookkeeping services to [C Pty Ltd].
24. [In] May 2020, [C Pty Ltd] entered into a share farming agreement with [P Pty Ltd] ([P Pty Ltd] Agreement).
25. The [P Pty Ltd] Agreement included terms, amongst others, as follows:
a. [P Pty Ltd] to provide the land, accommodation (for the Parties), and […] cows to produce milk (cll.13 & 56);5
b. [C Pty Ltd] to attend to, amongst other things, milking the cows; pasture management; fertiliser management; calf rearing; machinery maintenance;
irrigation management (cl. 13).
c. [P Pty Ltd] to pay [C Pty Ltd] remuneration of 11 cents per litre of milk produced,
calculated as follows (cll. 9 & 60):
i. Flat rate of 9.5 cents per litre; and
ii. Monthly bonus of 0.5 cents per litre; and
iii. 1 cent per litre for use of machinery supplied by [C Pty Ltd].
d. [P Pty Ltd] to provide all feed, fertiliser, veterinary services (cll. 34, 37 – 42, 46)
e. [C Pty Ltd] to provide the following plant & equipment, along with any other equipment necessary to carry out the [P Pty Ltd] Agreement (cll. 9(c), 25, 47, 60, & Schedule 2):
i. Vehicles;
ii. [Motor Vehicle 2] with attachments;
iii. [Motor Vehicle 9];
iv. [Motor Vehicle 8];
v. [Farm Equipment 1];
vi. [Motor Vehicle 7];
vii. [Motor Vehicle 10];
viii. [Motor Vehicle 12] and [Farm Equipment 2].
26. As at the date of the [P Pty Ltd] Agreement [C Pty Ltd]:
a. Did not own any machinery, plant & equipment, or livestock.
b. Did not have any funds.
c. Did not have any borrowing capacity.
27. In May 2020, the Husband borrowed $117,132.00 from the National Australia Bank (NAB) in his sole name secured by some of his pre-existing assets, and used those funds to purchase the following:
a. A new [Motor Vehicle 11]; and
b. A new [Motor Vehicle 10].
On the basis that [C Pty Ltd] was to pay the loan repayments through the Husband.
(Motor Vehicle 11] & [Motor Vehicle 10] Loan)
28. In or about May 2020, the Parties moved out of the [Town L] Property (the Wife’s property) and into the residence provided under the [P Pty Ltd] Agreement on the farm at [Town M], Tasmania ([Town M] Farm).
29. In July 2020, [C Pty Ltd] commenced operating under the [P Pty Ltd] Agreement on the [Town M] Farm.
30. During the [P Pty Ltd] Agreement the [Motor Vehicle 11] and the [Motor Vehicle 10] were used by [C Pty Ltd] on the [Town M] Farm.
31. During the [P Pty Ltd] Agreement, the Husband provided some of his machinery, plant & equipment to [C Pty Ltd] to use on the [Town M] Farm under the [P Pty Ltd] Agreement.
32. In July 2020, [C Pty Ltd] purchased […] cows ([…] delivered after 1 x death in transit) on credit via [R Company] at the purchase price of $168,421.00 ([C Pty Ltd] herd), with payment due to [R Company] in July 2021 ([R Company] Debt).
33. As at July 2020, the [C Pty Ltd] herd were pregnant and due to calve in August 2020.
34. Between October 2020 and July 2021, [C Pty Ltd] made payments from its bank account totalling $41,980.24 to [R Company] against the [R Company] Debt for the [C Pty Ltd] herd.
35. In or about August 2020, the Wife and her former partner sold the [Town L] Property, with the Wife receiving $29,719.76 of the net sale proceeds by way of property division.
36. In August 2020:
a. The [C Pty Ltd] herd gave birth to […] calves.
b. [C Pty Ltd] received […] cows from a [Mr T], a friend of the Wife’s, at no cost with an option to purchase in 12 months ([Mr T] Herd).
37. On 1 October 2020, the Wife deposited the $29,719.76 (net sale proceeds of the [Town L] Property) into the [C Pty Ltd] bank account.
38. On 9 November 2020, [C Pty Ltd] purchased a new [Motor Vehicle 12] from [S Pty Ltd] for $19,470.00, made up of:
a. Deposit of $4,867.50 on 6 November 2020 from [C Pty Ltd] own funds;
b. The balance of $14,602.50 by way of finance from [U Company], which was paid by [C Pty Ltd] on 12 November 2021 from its own funds (plus $425.00 interest, totalling $15,027.50).
39. Between 9 November 2020 and 31 December 2021, [C Pty Ltd] made the following payments totalling $37,906.14 from its bank account to the Husband in relation to the [Motor Vehicle 11] and [Motor Vehicle 10] for the [Motor Vehicle 11] & [Motor Vehicle 10] Loan, with each payment of $2,147.42 made up of $1,952.20 (being the monthly loan repayment for the [Motor Vehicle 11] & [Motor Vehicle 10] Loan) plus GST:
Date
Amount
9 November 2020
$2,147.42
16 November 2020
$2,147.42
31 December 2020
$2,147.42
5 February 2021
$4,994.84 (being $2,147.42 x 2)
24 February 2021
$2,147.42
31 March 2021
$2,147.42
28 April 2021
$2,147.42
31 May 2021
$2,147.42
25 June 2021
$2,147.42
4 August 2021
$2,147.42
11 August 2021
$2,147.42
1 September 2021
$2,147.42
4 October 2021
$2,147.42
5 November 2021
$4,994.84 (being $2,147.42 x 2)
31 December 2021
$2,147.42
40. As at 28 July 2021:
a. The outstanding balance owed to [R Company] for the [R Company] Debt, for the [C Pty Ltd] herd, was $128,070.00.
b. [C Pty Ltd] did not have funds to pay the $128,070.00, nor any borrowing capacity regarding same.
41. On 29 July 2021:
a. The Husband borrowed $128,000.00 in his sole name from NAB;
b. The Husband deposited $128,000.00 into [C Pty Ltd] Bank Account ending #[…]52 with the description “[MR VESTER] LOAN [C PTY LTD]” ([Mr Vester] Cow Loan);
and
c. [C Pty Ltd] paid from its Bank Account ending #[…]52 the amount of $128,070.00 to [R Company], and therefore discharging the [R Company] Debt.
42. Between 29 July 2021 and 29 December 2021, [C Pty Ltd] made payments totalling $15,364.62 from its bank account ending #[…]52 to the Husband against the [Mr Vester] Cow Loan.
43. As at July 2021, [C Pty Ltd] did not have sufficient funds to purchase the [Mr T] Herd, on that basis, in July 2021 [V Company] purchased that Herd from [Mr T] ([V Company] Herd) and then immediately leased them to [C Pty Ltd] for a period of 12 months to use under the [P Pty Ltd] Agreement ([V Company] Lease).
44. On the date of Separation, the Wife vacated the [Town M] Farm.
45. As at the date of Separation:
a. The balance owing on the [Motor Vehicle 11] & [Motor Vehicle 10] Loan was $77,653.00.13
b. The balance owing to the Husband by [C Pty Ltd] for the [Mr Vester] Cow Loan was $112,635.38 (being $128,000.00 less $15,364.62 referred to in paragraph 38 herein).
46. As at the date of Separation namely January 2022, the [C Pty Ltd] herd totalled […] head which […] were pregnant due to calve in approx. July/August 2022.
47. Apart from [C Pty Ltd], during the Relationship:
a. There were no joint assets acquired by the Parties.
b. There were no joint liabilities incurred by the Parties.
c. There were no joint bank accounts between the parties.
Post Separation
48. [In] February 2022, the Husband moved the […] head of cattle ([…] of which were pregnant) in the [C Pty Ltd] herd to his parents’ farm located at [Town J], Tasmania.
49. [In] February 2022, the [P Pty Ltd] Agreement was terminated.
50. The [V Company] Lease was scheduled to end [in] June 2022, the [V Company] Herd remained at [Town M].
51. [In] July 2022, [P Pty Ltd] purchased the [V Company] Herd from [V Company] Livestock.
52. Between the date of Separation and June 2024, the Husband has repaid $56,613.80 to the NAB against the [Motor Vehicle 11] & [Motor Vehicle 10] Loan, and as at June 2024, the balance owing to the NAB for the [Motor Vehicle 11] & [Motor Vehicle 10] Loan was $21,039.20.
General - Dairy Farming
53. The gestation period for cows is approximately 280 days.
54. The term “Drying Off” means to attempt to shut down milk production and secretion and to seal the teat canal once milk production reduces prior to next calving cycle.
55. Drying Off is an essential and necessary part of dairy farming so as to avoid infections, mastitis and possible death.
56. Drying Off usually takes approximately 2 weeks.
57. Cows need to be dry for approximately 6 to 8 weeks before they calve.
58. Drying Off requires at least the following to be undertaken on the farm:
a. Management of reduction in milking.
b. Management of feed.
c. Management of the location of stock to avoid infections & mastitis.
d. Requires cows to be in a dry, clean paddock, not heavily soiled with manure, with no exposure to dairy effluent.
e. Application of ‘Dry Cow’ antibiotic treatment.[8]
(Original Emphasis)
[8] SOAF (n 3).
ASSET POOL
A joint balance sheet was Exhibited as J2:[9]
Assets
[9] The original document has been slightly amended for ease of reading. C Pty Ltd’s assets have been moved to be listed under item 21. The exhibit had assets of C Pty Ltd dispersed throughout it, but for ease of reading they have been listed under the one heading. Figures in bold remain in dispute.
1 [Motor Vehicle 13] (W) $500 2 [Farm Equipment 3] (W) $1,800 3 Horse Float (W) $8,000 4 [Motor Vehicle 14] (H) $180,000 5 [Motor Vehicle 15] (H) $330,000 6 [Motor Vehicle 11] (H or [C Pty Ltd]) $58,000 7 [Motor Vehicle 1] (H) $7,500 8 [Motor Vehicle 16] (H) $1,800 9 [Farm Equipment 4] (H) $20,000 10 [Motor Vehicle 17] (H or [C Pty Ltd]) $2,500 11 [Motor Vehicle 18[ (H) $85,000 12 [Farm Equipment 5] (H) $7,500 13 [Motor Vehicle 4] (H) $38,000 14 [Motor Vehicle 3] (H) $75,000 15 [Motor Vehicle 2] (H) $95,000 16 [Farm Equipment 6] (H) $8,000 17 [Ms Sorensen[’s personal account ending #[...]63 (W) NR[10] 18 Furniture/chattels, ride on lawn mower, […] horses (all horse equipment) (W)[11] $25,000/Nil 19 [Mr Vester]’s NAB Account ending #[...]04 (H) NR 20 [Mr Vester]’s NAB Account ending #[...]10 (H) $10,686 21 Assets of [C Pty Ltd] (a) [Motor Vehicle 19] $18,500 (b) Cattle value/milk proceeds $174,000/$541,500[12] (c) NAB Account ending #[...]52 $263 (d) NAB Account ending #[...]46 $556 TOTAL NON-SUPERANNUATION ASSETS $1,147,605/1,515,105 [10] Means ‘not relevant’, as neither party prescribed a value to the same.
[11] The parties provided the Court with a joint email received 6 August 2024, which formed part of Exhibit J4, providing that the only evidence of value of these assets is found in the Wife’s affidavit. However, upon further clarification from the Court (Exhibit J5), it was clear that the parties were not in agreement as to whether item 18 should be included in the pool. The Wife contends the items have no value as there was no expert valuation of the items, whereas the Husband submitted that it should be within the pool at $25,000, as per the only evidence available: “As to item 19 of the J2 pool, it is agreed that the only evidence as to the value is at paragraph 3 of the Wife’s Affidavit dated 10 May 2024 of $25,000.00 as at the commencement of the Relationship. There is no evidence of current value and no evidence that they were disposed of or retained.” This led to the Court, post-trial, seeking clarification as to each party’s position. Their responses, via email, were exhibited as J5 and left the issue for the court to determine with the Wife arguing the figure should be ‘Nil’ while the Husband argued the sum should be $25,000.
[12] The sum of the milk proceeds was in contention, with the Wife initially arguing for the sum of $541,500 to be regarded as the figure. the Husband submitted that there were no milk proceeds as the profits had been eaten by the production costs. The amount of $174,000 — being the Expert valuation figure — was accepted as the cattle value, leaving in dispute the value of the calves given away.
Liabilities
22 NAB Equipment Loan ending #[...]65 (H) $21,039 23 NAB Equipment Loan ending #[...]72 (H) $124,501 24 Cow Loan: NAB Equipment Loan ending #[...]08(H) $62,855 25 NAB Equipment Loan ending #[...]97(H) $343,069 26 Monies owed to [Mr N] (H)[13] $203,456/Nil Total — Liabilities $754,902 NET TOTAL OF NON-SUPERANNUATION ASSETS $392,703/$760,203 [13] It was in dispute as to whether there was in fact a loan to the Husband from his father, with the Wife submitting that no such loan exists and the Husband arguing that he owes those monies and therefore should be classed as a liability.
Superannuation
27 [Super Fund 1], 50percent pre relationship (W) $33,199 28 [Super Fund 2] all pre relationship and not contribution during (W) $56,830 29 [Super Fund 1]: post relationship (H) $7,138 TOTAL SUPERANNUATION $97,167
It was agreed that each party would retain the assets registered in their names or under their control. Two items — Motor Vehicle 17 (item 10) and Motor Vehicle 11 (item 6) — were claimed by the Husband to be his personal property while the Wife argued they were assets of C Pty Ltd.[14] This left for determination:
(1)Whether Motor Vehicle 11 (item 6) and Motor Vehicle 17 (item 10) are the personal property of the Husband or assets of C Pty Ltd.
(2)The value (if any) to be attributed to the Wife’s furniture/chattels, ride on lawn mower, and horses and horse equipment (‘the Wife’s chattel items’) — item 18;
(3)The nature and value of the assets owned by C Pty Ltd — item 21 — with reference to directors loans, one of which is linked to the NAB ‘cow loan’ – item 24; and
(4)Whether the alleged loan from Mr N — item 29 — should be included in the balance sheet.
EVIDENCE
[14] The items are Motor Vehicle 11 (item 6) and Motor Vehicle 17 (item 10). During final submissions, Counsel for the Husband argued that the items were in the Husband’s name, and therefore should be regarded as his rather than assets of C Pty Ltd. Counsel for the Wife conceded that the items were under the Husband’s name but argued they should be considered as assets of C Pty Ltd as they were purchased for C Pty Ltd and the company had been making the repayments.
Wife’s Evidence
The Wife relied upon:
·Her Amended Application filed 10 May 2024;
·Her Affidavits filed 10 May 2024 and 14 June 2024;
·Her Amended Financial Statement filed 10 May 2024;
·Affidavit of Mr B filed 12 July 2024;
·Affidavit of Mr F filed 18 July 2024;
·Documents exhibited, including those from her Tender Bundle (‘Wife’s Tender Bundle’);
·Several joint exhibits; and
·Two joint summaries — filed 2 August 2024 and 13 August 2024 — made pursuant to section 50 of the Evidence Act.
The Wife
The Wife was cross-examined, answering questions directly and making appropriate concessions. I found her evidence to be largely reliable, although the issues in dispute will be mostly determined with reference to the more objective evidence produced.
Husband’s Evidence
The Husband relied upon:
·His Affidavit filed 31 May 2024;
·Affidavit of Ms W filed 31 May 2024;
·Affidavit of Mr B filed 12 July 2024;
·Affidavit of Mr F filed 18 July 2024;
·Documents exhibited, including those from his Tender Bundle (‘Husband’s Tender Bundle’);
·Several joint exhibits; and
·Two joint summaries — filed 2 August 2024 and 13 August 2024 — made pursuant to section 50 of the Evidence Act.
The Husband
The Husband was cross-examined. The reliability of his account was somewhat undermined by his inability to recall certain details or deferring to information provided by his father — Mr N (‘Mr N’) — who was not called as a witness. As I will comment later in these Reasons, his choice not to call Mr N as a witness was difficult to understand, as he may have helped resolve several of the central issues in dispute. I treat the Husband’s evidence with some caution, but note again, that the Court will focus on the more objective evidence when determining the issues in dispute.
Ms W
Ms W is the bookkeeper for C Pty Ltd and her evidence addressed the financial operation of C Pty Ltd prior to and post-separation.
Ms W gave her evidence in a straightforward fashion, leaving the impression that she is well organised and across the details of the financial operation of C Pty Ltd. Given this, I was somewhat surprised, when questioned under cross-examination, that she stated that she held notes and other documents in her possession that were not produced at trial, or discovered, that could have corroborated the existence and details of the purported lease agreement between the Husband and C Pty Ltd for the use of his farming equipment (‘the equipment lease agreement’).[15] This was important information, as the Husband claimed that an amount of $53,789 had been legitimately paid to him by C Pty Ltd for lease payments. The Wife denied the existence of the lease agreement.
[15] This is further supported by her affidavit dated 21 May 2024 at [12] where she describes the bookkeeping services she provided for C Pty Ltd, demonstrating that Ms W would have kept significant business records that were not produced to which she admitted under cross-examination to have these notes, but when Questioned by Ms Foale, said words to the effect that she did not attach any of these notes to her affidavit or produce them based on the advice of her employer’s legal team, her father and the Husband’s solicitors.
Ms W also gave evidence that the Wife had given her authority to pay the Husband $53,789, and again, under cross-examination, stated that there were notes and corroborating the same, which were not produced.
Given the apparent existence of these notes, it would be expected that the Husband, knowing the existence of the lease was in dispute,[16] would have ensured that the documents were produced and tendered in evidence. At a minimum, one might have expected such documents to be annexed to Ms W’s affidavit, if not discovered earlier. The failure to produce these documents was not adequately explained.
[16] Case Outline of Ms Sorensen filed 18 July 2024 (‘Wife’s Case Outline’) [4.10]; Affidavit of Ms Sorensen filed 14 June 2024 (‘Wife’s June Affidavit’) [7].
Ms Foale, Counsel for the Wife, submitted that the Court should afford Ms W’s evidence little weight:
4.13It is the Wife’s position that the evidence of [Ms W] was unclear, inconsistent and changed numerous times under cross examination:
4.13.1. At times she said 2 Directors were required to authorise payments, at times they were not.
4.13.2. [Mr Vester] didn’t know the cow loan was being paid by [C Pty Ltd], then conceded he did, see W18.
4.14. [Ms W] was in no way independent, and gave the evidence that supported the Husband, and significantly that supported their transfer of $53k from [C Pty Ltd] to the Husband as advised by the Husband’s lawyer per document W5.[17]
[17] Wife’s Case Outline (n 16) [4.12]-[4.14].
Mr Dudderidge, Counsel for the Husband, submitted:
39. There is no basis for the Court not to accept the evidence of [Ms W] at face value. The fact that the Husband has been a client of [Ms W] for some time is not relevant to or determinative of the honesty of her evidence.[18]
[18] Case Outline of Mr Vester filed 18 July 2024 (‘Husband’s Case Outline’) [39].
The failure of Ms W to produce the documents she mentioned under cross-examination detracted from what otherwise was clear and consistent evidence. The fault ultimately lay with the Husband who had a responsibility to discover documentation relevant to the proceeding. It was fully within the power of Ms W, as a witness for the Husband, to provide these documents if they existed. Ms Foale could have made a call for the documents, but the Husband knew the existence of the lease was in dispute and if the documents referred to by Ms W existed, they should have been produced.
Expert Witnesses
Mr F
Mr F was engaged as the Single Expert to value the cattle owned by C Pty Ltd. He was cross-examined by Ms Foale as to whether he was confident that all the cattle had been valued — which he was. He was also questioned about the value of the calves born of the original herd. He maintained his position that his valuation set out in his report — $174,000 for the herd — was true and correct.[19] He referred to the poor quality of the herd and the small value – if anything – that might be attributable to calves of the herd, when confirming his opinion.
[19] Expert Valuation of Mr F (n 7) 5.
Mr F was an excellent witness, demonstrating a strong knowledge of the dairy industry and the factors to be considered when valuing cattle. Mr F answered questions put to him directly and exhibited a professional and objective outlook. I accept his evidence.
Mr B
Mr B was the Single Expert valuer from D Pty Ltd engaged to value the property and other assets owned by the parties. He was not cross-examined, and his valuation was accepted by both parties.
STANDARD OF PROOF
I note briefly, before continuing, that all facts in issue in these proceedings must be proved on the balance of probabilities. A fact in issue is 'proved' if I am reasonably satisfied, on the evidence, that it is more likely than not that the fact existed or occurred in the manner ultimately determined.
Dixon J, as he then was, remarked upon the standard of proof for civil proceedings in Briginshaw v Briginshaw (1938) 60 CLR 336, which remains relevant and authoritative:
The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found. It cannot be found as a result of a mere mechanical comparison of probabilities independently of any belief in its reality. No doubt an opinion that a state of facts exists may be held according to indefinite gradations of certainty; and this has led to attempts to define exactly the certainty required by the law for various purposes. Fortunately, however, at common law no third standard of persuasion was definitely developed. Except upon criminal issues to be proved by the prosecution, it is enough that the affirmative of an allegation is made out to the reasonable satisfaction of the tribunal. But reasonable satisfaction is not a state of mind that is attained or established independently of the nature and consequence of the fact or facts to be proved. The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal.
The Evidence Act 1995 (Cth) (‘the Evidence Act’) sets out the applicable standard:
140 Civil proceedings: standard of proof
(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.
(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:
(a) the nature of the cause of action or defence; and
(b) the nature of the subject‑matter of the proceeding; and
(c) the gravity of the matters alleged. [20]
[20] Evidence Act 1995 (Cth) s 140 (‘EA’).
Lee J recently considered the approach in Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369:
97. The matters set out in subsection (2)(a), (b) and (c) are mandatory but not exhaustive considerations; other considerations may also be relevant, including the inherent likelihood of the occurrence of the fact alleged and the notion that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and the other to have contradicted: Blatch v Archer [1774] EngR 2; (1774) 1 Cowp 63 (at 65 per Lord Mansfield).
98. The concept used in subsection (1), being the “balance of probabilities”, is often misunderstood. It does not mean a simple estimate of probabilities; it requires a subjective belief in a state of facts on the part of the tribunal of fact. A party bearing the onus will not succeed unless the whole of the evidence establishes a “reasonable satisfaction” on the preponderance of probabilities such as to sustain the relevant issue: Axon v Axon [1937] HCA 80; (1937) 59 CLR 395 (at 403 per Dixon J). The “facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied”: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298 (at 305 per Dixon CJ). Put another way, as Sir Owen Dixon explained in Briginshaw v Briginshaw [1938] HCA 34; (1938) 60 CLR 336 (at 361), when the law requires proof of any fact, the tribunal of fact must feel an actual persuasion of its occurrence or existence before it can be found.
99. Justice Hodgson put it differently, but to the same effect, by observing that when deciding facts, a civil tribunal of fact is dealing with two questions: “not just what are the probabilities on the limited material which the court has, but also whether that limited material is an appropriate basis on which to reach a reasonable decision”: see D H Hodgson, ‘The Scales of Justice: Probability and Proof in Legal Fact-finding’ (1995) 69 Australian Law Journal 731; Ho v Powell [2001] NSWCA 168; (2001) 51 NSWLR 572 (at 576 [14]–[16] per Hodgson JA, Beazley JA agreeing).
100. Whatever way it is put, a “[m]ere mechanical comparison of probabilities independent of a reasonable satisfaction will not justify a finding of fact”: NOM v DPP [2012] VSCA 198; (2012) 38 VR 618 (at 655 [124] per Redlich and Harper JJA and Curtain AJA); Brown v New South Wales Trustee and Guardian [2012] NSWCA 431; (2012) 10 ASTLR 164 (at 176 [51] per Campbell JA, Bergin CJ in Eq and Sackville AJA agreeing).
101. Although s 140 EA is now the starting point, the concepts it incorporates are neither new nor novel. Any fact-finding inquiry depends upon context. As Kiefel CJ, Gageler and Jagot JJ recently observed in GLJ v The Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32; (2023) 97 ALJR 857 (at 874–875 [57]), the statutory provision:
... reflects the position of the common law that the gravity of the fact sought to be proved is relevant to “the degree of persuasion of the mind according to the balance of probabilities”. By this approach, the common law, in accepting but one standard of proof in civil cases (the balance of probabilities), ensures that “the degree of satisfaction for which the civil standard of proof calls may vary according to the gravity of the fact to be proved”.
(Citations omitted)
102. As those acting for Mr Lehrmann correctly state, in Briginshaw, Dixon J (at 362) Emphasised that reasonable satisfaction is not attained independently of the nature and the consequence of the fact to be proved, and his Honour referred to the seriousness of the allegation, the inherent unlikelihood of the alleged occurrence, or the gravity of the consequences flowing from the finding in question as matters which could all properly bear upon whether the court is reasonably satisfied or feels actual persuasion. The other members of the Court in Briginshaw also referred to the seriousness of the allegation sought to be proved as a matter relevant to whether or not the tribunal of fact could be satisfied of the fact alleged (at 347 per Latham CJ; 350 per Rich J; 353 per Starke J; and 372 per McTiernan J).
103. None of this is inconsistent with what I said in Kumova v Davison (No 2) (at [262]), where I noted “the focus on the gravity of the finding is linked to the notion that the Court takes into account the inherent unlikelihood of alleged misconduct”. They are linked in that both the inherent unlikelihood of the alleged occurrence and the gravity of the consequences each require consideration.[21]
(Emphasis added)
[21] Lehrmann v Network Ten Pty Limited (Trial Judgment) [2024] FCA 369 [97]-[104].
I will ground my assessment of the issues in dispute upon the facts, of which I am persuaded, on the balance of probabilities.
FAILURE TO CALL WITNESSES
A party’s failure to call or provide evidence from important witnesses is a matter that can be considered when assessing evidence and can allow the Court to draw certain inferences.
Lord Mansfield in Blatch & Archer [1774] 98 ER 969 stated:
… all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other side to have contradicted.[22]
[22] Blatch v Archer (1774) 98 ER 969, 970.
Jones v Dunkel (1959) 101 CLR 298 is a ‘particular application’ of the rule in Blatch v Archer,[23] stating in relation to the trial judge’s directions that:
what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence.[24]
(Emphasis added)
[23] Lavell & Lavell [2012] FamCA 34 (‘Lavell & Lavell’) [122]-[123] (Murphy J).
[24] Jones v Dunkel (1959) 101 CLR 298, 308 (Kitto J).
Murphy J in Lavell & Lavell [2012] FamCA 34 considered the two authorities:
122. The “rule in Jones v Dunkel” relates to the potential for an adverse inference to be drawn in circumstances where evidence presented in a case raises an inference against a party and that party is in a position to give or call evidence to refute it and does not do so. But, the “rule in Jones v Dunkel” can be seen as “a particular application” of “the rule in Blatch v Archer”. (See Ho v Powell [2001] NSWCA 168 per Hodgson JA at [15], Beazley JA agreeing).
123. The latter “... applies where a person bearing the onus of proof does not give or call evidence which that person is plainly in a position to give or call; and unless some explanation is given of that failure, the tribunal of fact is entitled to infer that this evidence would not have assisted that person’s case ...” (Ho v Powell). The principle in Blatch v Archer can be seen as wider than the “rule in Jones v Dunkel” “because it is also available against the person bearing the onus of proof where that person does not adduce evidence that he or she was plainly in a position to adduce”. (Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 per Austin J at [439].[25]
(Emphasis added)
[25] Lavell & Lavell (n 23) [122]-[123].
Murphy J also extracted the following statement originating from Shalhoub v Buchanan [2004] NSWSC 99 and repeated in subsequent authorities, including Australian Securities and Investments Commission v Rich [2009] NSWSC 1229:
124.[T]he failure of a party who bears an onus of proof to call an available witness who could cast light on some matter in dispute can be taken into account in deciding whether that onus is discharged, in circumstances where such evidence as has been called does not itself clearly discharge the onus.[26]
[26] Lavell & Lavell (n 23)[124]; Shalhoub v Buchanan [2004] NSWSC 99, [71] (Campbell J); Australian Securities and Investments Commission v Rich [2009] NSWSC 1229 [440].
In Coshott v Prentice [2014] FCAFC 88 the Full Court of the Federal Court made the same observation when referring, with approval, to Lord Mansfield’s maxim in Blatch v Archer:
81. Thus, where the evidence relied upon by a party bearing the onus of proof does not itself clearly discharge the onus, the failure by that party to call or give evidence that could cast light on a matter in dispute is relevant to determining whether the onus is being discharged: Hampton Court Ltd v Crooks [1957] HCA 28; (1957) 97 CLR 367 at 371 (Dixon CJ); Shalhoub v Buchanan [2004] NSWSC 99 at [71] (Campbell J). This principle is therefore wider than that in Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298. As Austin J in Australian Securities and Investments Commission v Rich [2009] NSWSC 1229; (2009) 236 FLR 1 explained at 93 [440], “[w]hereas Jones v Dunkel reinforces an inference drawn against the party who has not called evidence, to the effect that the evidence would not have assisted that party’s case, Blatch v Archer leads either to the drawing of such an inference, or to some other assessment of the weight of evidence, unfavourable to the party against whom the principle is applied.”
82. In short, the Coshott parties bore the onus of proving the trust over Robert’s interest but failed to call or give evidence explaining the documents and transactions on which they rely. Yet Robert, in particular, was in the best position to explain them. This cannot be ignored when weighing the limited evidence they relied upon to support their case with all the other evidence which tended to undermine it.[27]
(Emphasis added)
[27] Coshott v Prentice [2014] FCAFC 88 [81]-[82].
In Australian Securities & Investments Commission v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586, Gilmour J at [102]-[105] explained the nature of the inferences that can be drawn when applying Jones v Dunkel:
102. The authorities state that two inferences are involved in the rule in Jones v Dunkel. First, a court might infer that the evidence of the absent witness would not have assisted the party that failed to call that witness; secondly, a court might draw, with greater confidence, any inference unfavourable to the party that failed to call that witness, if that witness appears to be in a position to cast light on whether the inference should be drawn: Manly Council v Byrne and Anor [2004] NSWCA 123 at [51]; ASIC v Macdonald [2009] NSWSC 287; 256 ALR 199 per Gzell J at [1137].
103. In Manly Council, the Court of Appeal stated that there is no compulsion on the trial judge to draw either of the Jones v Dunkel inferences. This was confirmed by the Court of Appeal in Howell v Macquarie University [2008] NSWCA 26 at [97]- [98], where Campbell JA said, with the agreement of Spigelman CJ and Bell JA (as her Honour then was):
In other words, in a civil trial by judge alone Jones v Dunkel licences, but does not compel, the drawing of inferences when a witness is not called. Whether either or both of the inferences are actually drawn is part of the trial judge's task of weighing the evidence.
104. Further, the Court of Appeal in Manly Council referred to the principles concerning the application of Jones v Dunkel set out by Glass JA in Payne v Parker [1976] 1 NSWLR 191 at 201-202 which have been widely regarded as correct although Glass JA was in dissent as to the application of the principles to the facts: per Campbell JA with whom Beazley JA and Pearlman AJA agreed, at [53]. In Payne [1976] 1 NSWLR 191, Glass JA said that whether Jones v Dunkel should be applied depends on establishing three conditions:
(a) the missing witness would be expected to be called by one party rather than the other,
(b) his evidence would elucidate a particular matter,
(c) his absence is unexplained.
105. Glass JA elaborated on condition (b), saying (omitting authorities):
According to Wigmore, par. 285, the second condition is fulfilled where the party or his opponent claims that the facts would thereby be elucidated. Under other formulations, the condition is made out when the witness is presumably able to put a true complexion on the facts..., might have proved the contrary...; would have a close knowledge of the facts..., or where it appears that he had knowledge.... I would think it in-sufficient to meet the requirements of principle that one party merely claims that the missing witness has knowledge, or that, upon the evidence, he may have knowledge. Unless, upon the evidence, the tribunal of fact is entitled to conclude that he probably would have knowledge, there would seem to be no basis for any adverse deduction from the failure to call him.[28]
(Emphasis added)
[28] Australian Securities & Investments Commission v Fortescue Metals Group Ltd [No 5] [2009] FCA 1586 [102]-[105].
In summary, the rule in Jones v Dunkel appears to operate as a narrower application of the rule in Blatch v Archer.
Jones v Dunkel refers to potential inferences arising from a person failing to refute evidence presented by the party bearing the onus of proof, if that person was able to call or give such evidence.
Blatch v Archer provides for potential inferences to be drawn against either party, if evidence which was plainly available to a party to give or call was not given or called, and for which there is no explanation beyond that it would not have assisted their case.[29] Blatch v Archeralso allows for an unfavourable assessment of the weight to be given to a party’s evidence, when determining whether an assertion was proved to the requisite standard.
[29] Lavell & Lavell (n 23) [122]-[123].
By virtue of Jones v Dunkel and Blatch v Archer, this Court can be confident about drawing inferences against a party and assessing the weight of evidence as unfavourable to a party, if a party chooses not to call elucidating evidence that was within their power to produce.[30]
[30] Australian Securities and Investments Commission v Rich (n 26) [439] (Austin J). See also Jones v Dunkel (n 22) (Kitto J) which, with respect to the trial directions forming the basis of appeal, states that ‘what should have been added, and not being added was in the circumstances as good as denied, was that any inference favourable to the plaintiff for which there was ground in the evidence might be more confidently drawn when a person presumably able to put the true complexion on the facts relied on as the ground for the inference has not been called as a witness by the defendant and the evidence provides no sufficient explanation of his absence’.
NON-DISCLOSURE
Ms Foale submitted that the Husband failed to make timely and adequate financial disclosure — including a failure to provide documentation evidencing the post-separation milk income of the C Pty Ltd herd in a timely manner and source documents relating to the alleged expenses incurred to produce the milk income. Mr Dudderidge rejected the contention and countered that the Wife had failed to make timely disclosure but did not, in his written submissions, provide detail of any substantial failure of the Wife to disclose documents.[31]
[31] Husband’s Written Submissions (n 2) [42]-[43].
The obligation to make full and frank disclosure is set out at rule 6.01 and following of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (‘the Rules’).
The Full Court in Weir and Weir [1992] FamCA 69 stated:
[W]here there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s75(2) factors.
(Emphasis added)
Recently, the Full Court in Hicks & Trustee of the Bankrupt Estate of Hicks [2021] FamCAFC 19 referred to the potential ramifications of failing to disclose:
It is trite that the integrity of the s 79 process heavily depends upon the absolute duty of parties to meet their obligations of full and frank disclosure of all information relevant to the case, including disclosure of their financial position both as to assets and liabilities.
Whilst at one time this Court appeared to adopt the approach in non-disclosure cases that the jurisdiction under s 79 of the Act was limited to making orders with respect to identified, identifiable or quantified assets (see, for example, Monte and Monte [1986] FamCA 1; (1986) FLC 91-757), more recent Full Court authority supports the principle that a party should not be able to take advantage of his or her own non-disclosure such that it may be appropriate to make an order beyond the ascertained property, provided that any order made on this basis can be seen to achieve substantial justice relative to the subject non-disclosure (Weir at 79,593).
(Emphasis added)
The Full Court in Gould & Gould [2007] FamCA 609, set out the correct approach in relation to the failure to fully disclose assets, with reference to the decision in Kannis & Kannis [2002] FamCA 1150 (‘Kannis’), where the Full Court stated:
26. While the decision of the Full Court (and indeed also of Holden CJ) in Kannis confirms the earlier decisions which were cited by the Full Court and which establish that a robust approach can be taken by the court in cases of non-disclosure, neither that decision, nor any of the earlier decisions cited, would, in our view, support the approach which the trial Judge in this case took in paragraph 24 of his reasons for judgment, being to reduce his assessment of the Father’s contributions of account of the Father’s non-disclosure.
27. Rather the appropriate approach for his Honour to have adopted in this case would have been to have increased the asset pool to take account of non-disclosure by the Father, and indeed his Honour had already done this to some extent in accepting the schedule of assets prepared by the Mother’s Counsel (see also paragraphs 12 and 14 of his Honour’s reasons). Alternatively, or even in addition, had his Honour been persuaded that on the balance of probabilities there existed assets other than those contained in the asset pool contained in his reasons, his Honour could have made some adjustment in favour of the Mother on account of the Father’s non-disclosure pursuant to the provisions of s 75(2)(o), as did Holden CJ in Kannis.
(Emphasis added)
In Kannis, the Full Court emphasised the ‘absolute’ nature of the duty to disclose and stated:
51. Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude that the asset pool is greater than demonstrated. In those circumstances it might be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
(Emphasis added)
I will have strong regard to either party’s failure to make full and frank disclosure.
ADD-BACKS
Ms Foale submitted that two amounts should be added back as the assets of C Pty Ltd — milk income earned post-separation amounting to $445,130.21 and $53,789.17 being monies received by the Husband for ‘lease payments’.
A marriage or de facto relationship is, in countless ways, a shared endeavour. Married or de facto couples ordinarily work together to strengthen their economic position, enduring side by side the financial highs and lows of domestic life. In Kowaliw Baker J summarised the Court’s view:
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.[32]
[32] Kowaliw & Kowaliw (1981) FLC 91-92 [8].
The inverse is also true — parties should generally share the financial losses incurred during their relationship.[33] This statement of general principle is, of course, guided by the overarching requirement of justice and equity in property adjustment orders.
[33] Ibid [9]-[11].
Where one party has ‘prematurely and inappropriately obtained the benefit of property of the relationship prior to it being considered by the Court at final hearing’,[34] it is often inappropriate for the loss caused by that party’s expenditure to be shared by both parties. A common example — as given in Mayne & Mayne [2011] FamCAFC 192 — is a party withdrawing and using joint funds for their own purposes post-separation.[35]
[34] Warwick & Cutler [2016] FamCA 934 [127] (McClelland J).
[35] Mayne & Mayne [2011] FamCAFC 192 [73] (Faulks DCJ) (‘Mayne’).
A court faced with an application under section 79 or section 90SM may address any such injustice or inequity in three ways — taking it into account under sub-section 75(2)(o)/ 90SF(3)(r), notionally adding back the expenditure, or taking the expenditure into account as a contribution, as was done in Grier & Malphas.[36]
[36] Grier & Malphas [2016] FamCAFC 84 (‘Grier & Malphas’).
Sub-section 75(2)(o) or sub-section 90SF(3)(r)
One option is to take the conduct and loss into account under section 75(2)(o) or section 90SF(3)(r). Baker J said further in Kowaliw:
It does seem to me, however, that if a party has either by deliberate act or by economic recklessness reduced the value of assets available for distribution then the economic consequences which flow therefrom including the resultant burden to the other party are directly relevant to a consideration of the respective contributions of the parties contemplated by sec. 79(4).
If, on the other hand, the decision of the Full Court in Antmann and Antmann (supra) is to be interpreted both literally and restrictively as precluding the Court from a consideration of negative contribution in relation to para. (a) or (b) of sec. 79(4) then I am nevertheless of the opinion that evidence of wantonness or recklessness having economic consequences is clearly a matter which the Court may take into account pursuant to the provisions of sec.75(2)(o).[37]
[37] Kowaliw & Kowaliw (n 32) [16]-[17].
The Full Court in Dickons & Dickons [2012] FamCAFC 154, as restated by later authorities, refuted the idea that contributions should be assessed according to their ultimate economic result.[38] The Court confirmed that even though ‘negative contributions’ cannot be taken into account, Kowaliw is correct in that section 75(2)(o) (section 90SF(3)(r)) remains applicable to adjust any proposed division 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.[39]
[38] Dickons & Dickons [2012] FamCAFC 154, [14] (Bryant CJ, Faulks DCJ, Murphy J) (‘Dickons’); Jabour & Jabour [2019] FamCAFC 78, [61] (Alstergren CJ, Ryan and Aldridge JJ). See also Dovgan & Dovgan [2021] FamCA 306, [347] (Harper J), which restates the need to holistically assess contributions following the case of Dickons, and that ‘all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder’.
[39] Kowaliw & Kowaliw (n 32) [10].
Notionally adding back the expenditure
A second option is to notionally ‘add back’ the property of which a party has disposed to the asset pool. The item is added back ‘notionally’ by including its value in the pool, since the exact property item no longer exists as property of one or both of the parties. In simply adding back the value of the item, the absence of that item in the property pool is perhaps most tangibly addressed.
The circumstances in which it may be inappropriate to share a loss are as extracted in Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195 (‘Omacini’) below. Their Honours in that case discussed addbacks, but the categories extracted may also be addressed through other means at the Court’s discretion.[40]
[40] Mayne & Mayne (n 35) [180] (Strickland J).
30. To date, three clear categories of cases have emerged where the court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-816 the Full court said at 85,262:
11. 6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
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.”[41]
[41] Omacini & Omacini; sub nom AJO & GRO [2005] FamCA 195 [30] (Holden, Warnick and Le Poer Trench JJ).
The Full Court in Mayne also stated the following in relation to addbacks and their utility in pursuance of justice and equity:
78.It seems that human experience (and common sense) shows that while parties are together, each might, from time to time and with the consent of the other, either express or implied, apply or appropriate assets or funds to his or her own purposes. When the relationship is good, no-one is likely to care — let alone keep records. Individual amounts may stand out, as is the case here, but many small transactions in combination may exceed, in total value, one large transaction.
79.It is not the Court's function to conduct an audit of the marriage or of the relationship finances. The parties' remedies for resolving disputes about expenditure while they are together are centred on them and them alone. Choosing one transaction from many prior to separation for different treatments, specifically "to be added-back" or notionally included in the pool of property may make doing justice and equity between the parties difficult.[42]
[42] Mayne & Mayne (n 35) [78]-[79] (Faulks DCJ).
The Full Court in Vass & Vass [2015] FamCAFC 51 clarified that neither Stanford nor Bevan & Bevan [2013] FamCAFC 116 had the effect of making addbacks unavailable to first instance judges where they are an appropriate solution.[43] It is, however, ‘beyond doubt’ that notional addbacks are exceptional,[44] and that the Full Court’s remarks in C & C [1998] FamCA 143 remain authoritative:
46.Whilst not seeking to place a fetter upon the exercise of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.[45]
(Emphasis added)
[43] Vass & Vass [2015] FamCAFC 51 [138]-[139] (Strickland, Murphy and Tree JJ). See Bevan & Bevan [2013] FamCAFC 116 [79] at which Bryant CJ and Thackray J in applying Stanford said that ‘’notional property’, which is sometimes ‘added back’ to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute “property of the parties to the marriage or either of them”, and thus is not amenable to alteration under s 79’. The case ultimately did not turn on the issue, with their Honours stating that ‘in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property’.
[44] Mayne & Mayne (n 35) [185].
[45] C & C [1998] FamCA 143 [46] (Nicholson CJ, Ellis and Kay JJ).
Gill J in Koch & Kest [2021] FamCA 408, in explaining addbacks in the context of legal fees, extracted and cited with approval NHC & RCH [2004] FamCA 633 as authority that outstanding legal fees in themselves are not generally added back as a liability.[46] The Full Court in NHC & RCH also stated the following with respect to legal fees:
56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post- separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.[47]
The Approach from Grier & Malphas
[46] Koch & Kest [2021] FamCA 408 [21].
[47] NHC & RCH [2004] FamCA 633 [56]-[58] (Finn, Kay and May JJ) (‘NHC & RCH’).
A further option is, where appropriate, to treat the expenditure as a contribution of the other party. Grier & Malphas concerned the unexplained use of significant funds by the Husband post-separation, and considered how the same is to be taken into account if not treated as an addback. The primary judge avoided adding back these amounts, but without taking them into account under section 75(2)(o), or as a contribution of the Wife. Bryant CJ stated that the Husband’s receipt of the funds ‘require[d] expression in some form’, noting that the Wife’s submission to take it into account as a contribution was unclear at trial.[48] In their Honours’ reasons, Murphy and Kent JJ remarked that the power under section 79 (and section 90SM) is discretionary. While ‘authority eschews ‘overly pernickety analysis’ and section 90SM demands neither an audit nor an exercise in accounting’, the trial judge must, in their discretion, take it into account in the appropriate manner.[49] As discussed by their Honours:
57. In my view there is merit in Ground 4(b). I would not necessarily wish to be seen as endorsing the effect of receipt of these funds as “add backs” to the balance sheet, something which her Honour eschewed. However the receipt of these funds by the husband requires expression in some form, either as a matter to be taken into account under s 75(2)(o), or, as the wife later argues, in relation to contributions. But however expressed, failure to properly account for it leads to the conclusion that the result reached by her Honour was “plainly wrong” (see Norbis & Norbis (1986) 161 CLR 513 per Brennan J at 539).”[50]
[48] Ibid [57]-[58].
[49] Ibid [129], [131].
[50] Grier & Malphas (n 36) [57] (Bryant CJ).
While a loss purposefully or recklessly incurred may not be properly treated as a negative contribution, it may, nonetheless, be treated as a contribution of the party who has not experienced the benefit of that expenditure.
As an aside, Murphy and Kent JJ also made important remarks in relation to income splitting arrangements:
141. When the parties to a relationship earn income and derive capital through corporate/trust structures established primarily to lawfully minimise taxation, the indirect contribution of a party who is not involved in the day-to-day operation of those structures is sometimes overlooked. Yet, the “non-active” party can, in truth, be a significant contributor. This Court said more than 30 years ago in Lee Steere and Lee Steere, “it cannot be denied that the splitting of income tax is a direct and immediate financial benefit to the husband and to that extent a direct financial contribution on the part of the wife”. So, too, “the issue of the wife’s personal liability as a director of the companies … is a matter of increasing relevance in recent times … the ‘days of the sleeping, or passive, director are well and truly over.”[51]
[51] Ibid [141] (Murphy and Kent JJ).
ISSUES FOR DETERMINATION
Issue 1: Whether Motor Vehicle 11 and Motor Vehicle 10 are assets of the Husband or assets of C Pty Ltd
Motor Vehicle 11 (item 6 of the joint balance sheet) has a value of $58,000.00 and Motor Vehicle 17 (item 10) has a value of $2,500.00. The Husband argued that they are his assets whilst the Wife argued they are assets of C Pty Ltd.
The Husband initially submitted, in his Case Outline, that they were assets of C Pty Ltd,[52] but amended his position in final submissions:
[52] Husband’s Case Outline (n 18) [9(a)].
•By way of clarification in relation to the [Motor Vehicle 11] & [Motor Vehicle 10] (Items 6 & 11 of the Joint Balance Sheet), notwithstanding the Joint Balance Sheet and the Husband’s Case Outline, on review of the evidence and law following the Trial, the evidence and relevant law show that the Husband is in fact the legal and equitable owner of the [Motor Vehicle 11] & [Motor Vehicle 10]. This is because:
•The evidence shows that each of the following occurred pursuant to an arrangement between [C Pty Ltd] and the Husband:
•The Husband borrowed $117,132.00 and purchased the [Motor Vehicle 11] & [Motor Vehicle 10] in his name;
•[C Pty Ltd] utilised the [Motor Vehicle 11] & [Motor Vehicle 10] on the [Town M] Farm and in exchange paid a monthly amount to the Husband which included GST; [SoAF par 39]
•[C Pty Ltd] claimed those payments as an expense against its revenue and claimed a GST credit on the GST portion of those payments. [Evidence of [Ms W] in […] on 25 July 2024]
•If the payments made by [C Pty Ltd] to the Husband were not an expense of [C Pty Ltd] but were instead loan repayments by [C Pty Ltd], then GST could not have been added to it nor claimed as a credit by [C Pty Ltd], that is because as a matter of law loan repayments made by a business are input taxed and do not attract GST: See: Div. 9 (9-1, 9-5, 9-30) and Div. 40 (40-A) of A New Tax System (Goods & Services Tax) Act 1999 (Cth); See also: Reg. 40.5.09(1), (3) Item 3 of Table of A New Tax System (Goods & Services Tax) Regulations 2019 (Cth)).
•GST was added to the payments and [C Pty Ltd] claimed the GST credit from the ATO, and claimed the balance of the payments as an expenses against its revenue.
•It is not in dispute that:
•The [Motor Vehicle 11] was always registered in the Husband’s name (the [Motor Vehicle 10] was always unregistered and not a registerable vehicle);
•The title to [Motor Vehicle 11] & [Motor Vehicle 10] were never transferred to [C Pty Ltd] during the Relationship or after Separation.
•There is no evidence of any agreement for [C Pty Ltd] to purchase [Motor Vehicle 11] & [Motor Vehicle 10] from the Husband nor any evidence of any agreement to ever transfer the title in the [Motor Vehicle 11] & [Motor Vehicle 10] to [C Pty Ltd].
•Therefore, the [Motor Vehicle 11] & [Motor Vehicle 10] cannot be, as a matter of fact and law, [C Pty Ltd] assets.
•If it is determined that the [Motor Vehicle 11] & [Motor Vehicle 10] are [C Pty Ltd] Assets, then those assets have a negative equity of ($17,153.00) based on the outstanding balance of the debt owed to the NAB as at the date of Separation.[53]
[53] Exhibit J6: Motor Vehicle 10 and Motor Vehicle 11 email clarification. Following the hearing, the Court sought to clarify the parties’ submissions, leading to an email exchange that became Exhibit J6.
The Wife summarised her position as follows:
At all times during the conduct of this matter, including in pleadings, affidavit (not amended when the Husband was called and had the opportunity to do so), the case outline (also not amended), it was an agreed fact that the [Motor Vehicle 11] and [Motor Vehicle 10] were assets of [C Pty Ltd]. In closing submissions the Husband’s position changed.
The Wife maintains that the [Motor Vehicle 11] and [Motor Vehicle 10] are assets of [C Pty Ltd], regardless of how they were accounted for by the book keeper. However, whether they’re found by HH to be assets of [C Pty Ltd] or the Husband, it remains the case that:
1. They’re in the pool;
2. [C Pty Ltd] used them as assets for business;
3. [C Pty Ltd] made payments to cover the loans during the relationship, and
4. the Husband has retained use and benefit of them.[54]
[54] Ibid.
Determination
I accept the Husband’s submission. The Ford is registered in the Husband’s name, as was the loan obtained to purchase the items. There was no evidence produced that the Husband holds the items on trust for the company and the company claimed the GST on the payments to the Husband as a credit. Annexed to the Husband’s affidavit[55] were the paid invoices in the amount of $2,147.42 per month for the lease of the items to C Pty Ltd during the relationship — an arrangement agreed to by the Wife and managed by Q Business.[56] For these reasons I find that Motor Vehicle 11 and Motor Vehicle 10 are assets owned by the Husband and the balance sheet will be amended to reflect that fact.
Issue 2: the Value of the Assets of C Pty Ltd
[55] Affidavit of Mr Vester filed 31 May 2024 (‘Husband’s Trial Affidavit’), Annexure MRV-19.
[56] Affidavit of [Ms W] filed 31 May 2024 (‘[Ms W]’s Affidavit') [10], [32].
Milk Income
A major issue was whether the post-separation net income from the milk produced by the cows owned by C Pty Ltd (‘the milk income’) — retained by Husband’s father, Mr N (‘Mr N’) — is an asset of C Pty Ltd.
The history of the incorporation and operation of C Pty Ltd was set out in the SOAF at paragraphs 21 to 52. As can be seen, it was not in dispute that post-separation, the Husband retained control of the assets of C Pty Ltd, and that the cattle owned by C Pty Ltd were relocated to a farm owned by Mr N. Over the years that followed, milk was produced and sold, and calves were born. The purchaser of the milk was an organisation known as X Company (‘X Company’). The Husband claimed — without producing proof — that Mr N had to receive the milk income into his bank account because he held the relevant licence, and only the holder of the licence could be paid by X Company. Even if true, it was not explained why the milk income was not then immediately transferred to C Pty Ltd, as the Husband had promised via his lawyer’s letter of 14 February 2022 — Exhibit W9:
In light of his concerns he has today relocated the [C Pty Ltd] Herd for safe keeping and careful management to a property owned by his father at [H Street, Town J] […] where they will continue to be milked and well cared for. The milk produced by the [C Pty Ltd] Herd will continue to be paid to [C Pty Ltd].
Mr N could then have separately invoiced C Pty Ltd for the legitimate expenses relating to the milk production — thus creating a money trail supported by source documents. Under cross-examination the Husband said that the transfers of income to C Pty Ltd did not occur because of the ‘cost’.[57] This is difficult to accept when the cost of transfer did not seem to be prohibitive when monies from Mr N’s Y Bank account — into which X Company paid for the milk — were transferred to the Husband each month.
[57] Trial: cross-examination of the Husband.
Both parties agreed that the post separation milk income totalled $777,416.21 (excluding GST).[58] Both also agreed that the expenses associated with producing the milk income, as corroborated by source documentation, were $322,286.82 (‘the agreed expenses’).[59] What remained subject to dispute was whether any part of the balance retained by Mr N — $455,129.39 (exclusive of GST)[60] — should be regarded as an asset of C Pty Ltd.
[58] Exhibit J4: Agreed Supplementary Information provided via email (‘Exhibit J4’)
[59] Ibid. They were particularised at Annexure B of the Joint Summary filed 2 August 2024; Section 50 Joint Summary filed 2 August 2024 (‘Joint Summary’).
[60]Exhibit J4 (n 58); Exhibit J2: Amended Joint Balance Sheet (‘Exhibit J2’). The figure set out there is $455,130.21 but I calculate the difference between $777,416.21 and $322,286.82 to be $455,129.39.
I pause here to note that, notwithstanding the importance of this issue, the Husband, inexplicably, did not call his father as a witness. To put this omission in context, the parties were originally ordered to file their trial affidavits by 10 May 2024[61]. The importance of Mr N’s evidence to the proceedings was well known by that point, as was clear from a notation to the Orders providing trial directions:
There may be an application to join the husband’s father to the proceedings but that is likely to be an issue settled, if appropriate, when discovery takes place.[62]
[61] Order of Judge Turnbull in Sorensen & Vester (Federal Circuit and Family Court of Australia, HBC171/2023, 4 March 2024)
[62] Ibid [27].
The Wife filed her affidavit[63] in accordance with the trial directions, whilst the Husband failed to do so and successfully applied to adjourn the trial.
[63] Wife’s Affidavit 10 May 2024 (‘Wife’s May Affidavit’).
The dispute regarding the milk income was clearly set out in the Wife’s affidavit,[64] as were her concerns regarding non-disclosure. The new trial directions gave the Husband to 31 May 2024,[65] with which he complied, but he did not file an affidavit from his father, nor did he seek leave to do so after that date.
[64] Ibid [24]-[33].
[65] Order of Judge Turnbull in Sorensen & Vester (Federal Circuit and Family Court of Australia, HBC171/2023, 14 May 2024), [6].
Even though Mr N did not file an affidavit, the Wife requested that documents evidencing the milk income and the alleged expenses be produced. Notwithstanding requests,[66] Mr N refused to produce any source documents evidencing the purported expenditure relating to the purported expenses relating to the milk income, as confirmed by his email that became Exhibit W11:
Hi [Ms Z]
Thank you for your correspondence dated 13th March 2024.
I would like to confirm I have no relationship to [C Pty Ltd].
I would therefore reiterate that I have no obligation to provide my personal income and expenses information as you request.
Regards,
[Mr N][67]
[66] Exhibit W10 (letter from Wife’s solicitors to Mr N dated 6 March 2024). Also Exhibit W11 and W12.
[67] Exhibit W11 (email from Mr N 19 March 2024).
On 18 June 2024 the Wife issued a subpoena for Mr N to produce documents and attend court because neither Mr N nor the Husband would make adequate disclosure. Under cross-examination the Husband explained that he was unable to produce the requested documents because they were under Mr N’s control and he was not authorised to produce them.[68] Ultimately, she did not require Mr N to give evidence because he produced his documents and the subpoena was dismissed.
[68] Trial: Cross-Examination of Mr Vester 24 July 2024.
Following the dismissal of the subpoena on the first day of trial, the Husband made, then abandoned, an application to file his own subpoena for Mr N to attend Court and give evidence. This was an option that the Husband had at his disposal since, at least, the issuing of the first set of trial directions.[69] I will address the impact of the Husband’s failure to call his father as a witness later in these Reasons.
[69] (n 61) [12].
I also note, before continuing, that the Profit and Loss statements for 2021 and 2022[70], do not show C Pty Ltd producing a significant profit. Unfortunately, the tax returns and financial statements for C Pty Ltd had not been lodged with the ATO, so there may be some question as to the accuracy of the figures in the statements. Nevertheless, the Profit and Loss statements show that the gross sales for milk and cattle in 2021 was $365,807.70 with expenses of $314,578.45, leaving a profit of $51,229.25. In 2022 the milk and cattle sales were $262,611.65 with costs of $232,621.68, leaving a profit of $29,989.97. I note that the expenses included wages totalling $110,534.01 in 2021 and $70,989.24 in 2022 were paid to one or both parties. Expenses also included monies to reduce loans held in the Husband’s name, referencing the loan for equipment that totalled $23,426.40 in 2021 and $13,655.40 in 2022. Thus, the financial benefit to the parties is somewhat understated if one only has regard to the company’s profitability in those years. I have no expert evidence that would allow me to infer that the profits of the company in the years that followed must be of a similar nature to the asserted profit in these foundation years.
[70] Exhibit H13: Profit and Loss Statement for the year ending 30 June 2024 (‘Exhibit H13’).
After the parties moved from the Wife’s property to a farm at Town M, the Wife submitted, which I accept:
During the second portion of the relationship when the parties moved to [Town M] for the share arming agreement (of which it is agreed they are both Director’s and owners/shareholders) the wife’s clear evidence was that:
4.7.1. the Husband worked at the farm but largely doing the farm machinery work, and his other business excavation works at times, depending on what work was available to him. The wife enabled him to be free to do that work, grow that business and pay off his debt to his ex wife. The wife also paid wages for the business; it was conceded by the Husband (“I accept that might have been the case”). Although minimal in dollar terms, an important demonstration of the joint approach to all enterprises.[209]
[209] Wife’s Written Submissions (n 16) [4.7.1].
This was a short relationship, where the parties kept their assets and income separate. Recently, the Full Court in Grunseth & Wighton [2022] FedCFamC1A 132 stated:
A particular feature of this matter is the shortness of the relationship. In such a case the comments in Anson & Meek [2017] FamCAFC 257; (2017) FLC 93-816 at [181] are apt. Justices Aldridge and Cleary said:
If the point is that, where there is a short marriage, where there are no children and where the parties’ contributions to their assets and to the welfare of the family from the commencement of the relationship to the time of the hearing is equal, any disparity in initial financial contributions is of critical importance in determining the overall contributions of the parties, then such a position is easily arrived at by the application of principle alone.
Therefore, there is much to be said for the proposition that the parties should simply receive the property owned by them. This is particularly so when the ownership of the B Town property was deliberately structured so as to reflect the parties’ contributions to it.[210]
[210] Grunseth & Wighton [2022] FedCFamC1A 132, [73]-[74].
I find that the Wife financially supported the Husband and housed him during the first half of the relationship. The Husband made financial and non-financial contributions to the relationship during the first period, and both contributed to necessary expenses in the second half of the relationship. The Wife’s contributions to this short relationship, in this regard, were slightly higher than the Husband’s.
I cannot ignore, however, that the Husband made a significant financial contribution to Pool Two, by introducing his business assets, built over the previous 30 years. The income from his business — to which the Wife made only a very small financial contribution — was used to pay off $324,000.00 loaned, primarily, to pay the Husband’s former wife. But for that significant direct financial contribution in the context of a short relationship, the net value of Pool Two would have been significantly smaller. I assess the Husband’s direct financial contributions to Pool Two to be significantly greater than the Wife’s.
Section 90SM(4)(b) — direct or indirect non-financial contributions to property
Pool One
Both parties were hard working, particularly in relation to the establishment and operation of C Pty Ltd. The Wife was primarily responsible for the farm operation pre-separation whilst the Husband’s focus was the operation of his excavation business. Post-separation, the Husband operated C Pty Ltd, with the assistance of his father. The parties’ non-financial contributions to Pool One may have favoured the Husband slightly, given his involvement in the operation pre-separation, and the Wife’s inability to contribute post-separation..
Pool Two
The parties kept their assets comprising this pool separate throughout the relationship and neither made any significant non-financial contribution to the other’s assets.
Section 90SM(4)(c) — contributions to the welfare of the family, including contributions as homemaker or parent
The Court must not give the parties' contributions to the family, including those as homemaker and parent, token weight. In Dawes & Dawes [1989] FamCA 71 the Full Court stated:
73.Although it is difficult, as it always is in such cases, to put one's finger squarely on what led his Honour to so undervalue the Wife's contribution, we think that one significant matter which did so was that he failed to give any weight to the fact that the Wife's performance of her role as homemaker and parent during the 30 years of cohabitation was not just a contribution under s.79(4)(c) (which he subsequently recognized to some degree) but was also a significant contribution under s.79(4)(b). That point was made by the Full Court (Nicholson, C.J., Murray and Buckley, JJ.) in In the Marriage of Napthali (1988) 13 Fam LR 146 at p 151, where their Honours said:-
151.Turning now to the second ground of appeal, (which was that 'the court erred in law in failing to take into account contributions made by the Wife during the marriage as homemaker and parent') it is apparent that nowhere in her Honour's judgment does she consider the contribution of the Wife to the business assets as a home—maker and parent. It is clear that the Wife did perform this role and nowhere in the evidence or in the submissions was any criticism directed at her capacities in this regard. It is to be noted that in Mallet v. Mallet [1984] HCA 21; (1984) 9 Fam LR 449; (1984) FLC 91—507, the High Court whilst rejecting the proposition of a presumption of equality, approved statements by this Court that the purpose of s 79(4)(b) is to give recognition to the position of the house Wife who by her attention to the home and the children frees her Husband to earn income and acquire assets and also approved the proposition that the contribution made by the Wife as a home—maker and parent should be recognised not in a token way but in a substantial way: see Gibbs C.J. at Fam LR 451; FLC 79,111; Mason J. at Fam LR 461—2; FLC 119—20.”[211]
(Emphasis added)
[211] Dawes & Dawes [1989] FamCA 71 [73] (Lindenmayer, Strauss and Cohen JJ).
The SOAF confirmed that between November 2018 and May 2020 the Wife attended to the vast majority of domestic chores including cooking, cleaning and washing[212] which the Husband agreed continued throughout the relationship[213] The task became more onerous for a period after the Husband had an accident:
[In] November 2020, I was hanging washing out on the line and [Mr Vester] took the [Motor Vehicle 10] for a joy ride, he rolled the [vehicle] and was injured badly, he was [taken] to the […] Hospital. [Mr Vester had seriously injured himself]. He stayed at the hospital for 10 days and once home was bed ridden for weeks and unable to do any work on the farm for at least 3-4 months after the accident and then it was only light duties. My dad came and stayed with us for the first few weeks [Mr Vester] was back at home to help [Mr Vester] get out of bed, go to the toilet and care for himself. [Mr Vester] was very angry and irritable, he was stuck in bed for a couple of weeks, then in a wheelchair/crutches. I cared for [Mr Vester] and continued to maintain all of the day to day management of the cows and dairy operation. I also continued doing all of the housework and cooking, in fact l did more, because [Mr Vester] needed regular meals at ce1tain times to have his medications. I do not know why, but [Mr Vester] refused to claim his income protection insurance for the accident. Again, he was very secretive about finances, and I didn't feel I could ask him.[214]
[212] SOAF (n 3) [20].
[213] Husband’s Trial Affidavit (n 55) [15].
[214] Wife’s June Affidavit (n 16) [13].
Although the Wife was primarily responsible for the domestic work, she accepted that the Husband contributed by undertaking maintenance work to the home.[215]
[215] Trial: Cross-examination of the Wife.
The considerations under this heading apply to both asset pools. The Husband and the Wife presented as industrious, hard-working people and I have little doubt that the Wife worked hard to maintain the home for herself, the Husband and her children. The Husband was often away working and unable to contribute to the same extent, but I have no difficulty in accepting that the Husband maintained the property as he claimed.[216] I find that the Wife’s important contributions under this heading , to both pools, were greater than the Husband’s.
[216] Husband’s Trial Affidavit (n 55) [15].
Conclusion regarding the parties’ contributions
Both parties made significant contributions of all kinds during their short relationship. Their joint endeavour to establish a dairy herd and milk producing operation was largely successful and without doubt required a significant level of hard work pre and post-separation.
Pool One
The evidence establishes that pre-separation the Wife made greater contributions to the running of C Pty Ltd, whilst post-separation the responsibility fell to the Husband, with the assistance of his father. C Pty Ltd provided a considerable financial benefit to the parties during the relationship, in the form of the Wife’s wages and the payment towards the Husband’s loans. The post-separation profit of C Pty Ltd was largely received by the Husband or retained by Mr N. The profit is reflected in the balance sheet. The significant efforts of the Wife to develop the enterprise pre-separation no doubt helped its success post-separation. I also note the Wife’s greater contributions as a homemaker when assessing these parties’ contributions to Pool One.
Considering all these matters, I am satisfied that the parties’ contributions to C Pty Ltd were equal, as reflected in their shareholdings. The value of each party shares in the company is $285,465.59.
Pool Two
The parties made little direct financial or non-financial contribution to the other parties’ assets comprising Pool Two. The Wife’s largest asset in that pool is her superannuation, whist the Husband’s largely comprise of the assets of MRV Contracting. The Wife’s direct financial contribution to MRV Contracting was to pay his employee named Mr BA $1,000.00.[217]
[217] The Husband, under cross-examination, accepted that this might have been the case.
Some of the income of MRV Contracting went towards the expenses of the family, as did the Wife’s income — including that from C Pty Ltd.
The Wife’s greater contributions to homemaking, as well as her important contribution to housing the Husband which assisted him to pay off his debt to his former wife, must be given weight.
Mr Dudderidge urged the Court to find that neither party made any contribution of significance to the assets of Pool Two, and as such the appropriate outcome is for each party to retain their assets, with a value of $505,966.38 (83.45 percent of Pool Two) for the Husband and $100,329.00 (16.55 percent of Pool Two) for the Wife.
Ms Foale asked the Court to find that the Wife’s contributions to this pool were 60 percent,[218] because of the Wife’s contributions to the family and her assistance to the Husband in the first part of the relationship.
[218] Oral submissions at trial; Wife’s Case Outline (n 16), 8.
Overall, I am satisfied that the Husband’s financial contributions to Pool Two were significantly greater than the Wife’s. He introduced significant capital and used his business income to meet the debt to his former wife and business expenses. The reduction of the debt acquired to pay out his former wife was a significant contribution to Pool Two. The parties kept their assets in Pool Two separate, and there is an attraction, given the length of the relationship, to leaving each party with the assets held in their names or under their control. To do so, however, would be to ignore the Wife’s contributions in providing housing and financial support for the Husband in the early part of the relationship and contributing as the primary homemaker throughout. As such, a small adjustment of five (5) percent will be made in her favour.
Given this, I assess the Wife’s contributions to Pool Two, to be 21.55 percent and the Husband 78.45 percent. In dollar terms this results in the Husband being entitled to net assets of Pool Two worth $475,638.73 and the Wife $130,656.65. — a differential of $344,982.08.
Section 90SM(4)(d)-(g), including s 90SF(3) — other factors
It is not the task of a Court with jurisdiction under Part VIII to engage in social engineering under section 79(4)(d)–(g) (90SM(4)(d)-(g)) — that is, to serve any ‘moral’ or ‘charitable’ (but non-legal) ends outside the bounds of section 79.[219] The Full Court in Beck & Beck (No 2) (1983) FLC 91-318 explained that:
[I]t is the financial consequences of all of the relevant matters that are to be taken into account and the section is so drafted to effect this purpose while excluding matters of conduct in a moral or non-financial sense.[220]
[219] Clauson & Clauson (1995) FLC 92-595, 81,912.
[220] Beck & Beck (No 2) (1983) FLC 91-318 78, 167–78,168.
Whether in relation to maintenance or property settlement, the Court cannot assess or account for the section 75(2) (or section 90SF(3)) factors without satisfying itself that it bears upon a party’s financial circumstances.[221]
Section 90SM(4)(d) – the effect of any proposed order upon the earning capacity of either party to the de facto relationship
[221] Jacobson & Jacobson (1989) FLC 92-003, 77,178, at which Nygh J remarks that there ‘cannot be any doubling up as between the adjustment in capital position of the parties, which is implicit in sec 75(2) factors [in the context of s 79], and making provision for the periodic needs of a party who suffers from an inability to support [themselves] pursuant to sec 72 of the Act’. Both assessments, on his Honour’s remarks, require an assessment of the financial consequences of the factors considered. See also Sigley & Cullen (No 3) [2015] FamCA 825, [42], [105], as an example, in which Cronin J discusses the Applicant ’s health as it affected her academic studies, which in turn may have affected her employment prospects.
The Full Court in Beck & Beck (1983) FLC 91-318 defined ‘earning capacity’ for the purposes of section 75(2)(k) and therefore section 90SF(3)(k), applicable the Act generally, as:
a capacity to obtain income which could be used to provide maintenance … and not merely as current income from personal exertion or from the use of personal skills.[222]
[222] Beck & Beck (n 220) 78,166 (Evatt CJ, Emery and Hase JJ).
The parties proposed orders do not impact upon their earning capacity.
Section 90SM(4)(e) – the matters referred to in subsection 90SF(3) so far as they are relevant
Section 90SF(3)(a) — the age and state of health of each of the parties
The Wife is currently 37 years of age, and the Husband is 51.
The Husband argued that his age and health issues would affect his future earning capacity, however, he did not seek any adjustment in his favour for this factor,[223] nor did he produce any admissible evidence about his health issues.
[223] Husband’s Written Submissions (n 2) [13(b)(ii)].
The Wife also did not produce any evidence to suggest she had any physical or mental health issues that may impact her future earning capacity.
Section 90SF(3)(b) — the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
In Clauson & Clauson (1995) FLC 92-595, the Full Court stated:
It has long been recognised that in most cases the most valuable “asset” which a party can take out of the marriage is a substantial, reliable, income-earning capacity: see Best and Best (1993) FLC 92-418 at 80,295.[224]
[224] Clauson & Clauson (n 219), 81, 911 (Barblett DCJ, Fogarty and Mushin JJ).
Their Honours further remarked that:
In addition, it should not be forgotten that the payment of child support in no way compensates the custodial parent for the loss of career opportunity, lack of employment mobility and the restriction on an independent lifestyle which the obligation to care for children usually entails: see Langford (16 January, 1995, Full Court, not reported).[225]
[225] Ibid.
The Wife earns $80,000 per annum[226] whilst the Husband earns $79,633.84[227]. The Husband will retain the income producing asset of C Pty Ltd and his contracting business, which was able to produce sufficient funds to pay off a $324,000.00 debt within three and a half years, suggesting that he has an ability to access funds as his needs require.
[226] Wife’s Written Submissions (n 16) [6].
[227] Husband’s Financial Statement 31 May 2024, 3.
I note that the Wife will retain more superannuation than the Husband.
Section 90SF(3)(c) — whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years
The Wife has two children from her previous marriage, aged 12 and 18 years of age, who live with her on a fulltime basis.[228] The Husband has three adult children from a previous relationship.[229]
[228] SOAF (n 3) [2].
[229] Ibid [4].
There are no children of the relationship and therefore this factor is not relevant.
Section 90SF(3)(d) — commitments of each of the parties necessary to enable them to support themselves and a child or another person that the party has a duty to maintain
The Wife continues to support her children and receives child support for her youngest. The Husband has no ongoing obligation to support his children and both parties have incomes enabling them to support themselves and their children.[230] The Husband may need to obtain a loan to pay the monies he will owe the Wife because of the Order I will make, but there is no evidence that he will be unable to meet any obligation to pay the Wife an amount greater than he hoped to pay. As stated, he was able to pay off a loan of $324,000 in quick time, and there is no evidence to suggest that his contracting business does not remain profitable.
[230] Neither party produced evidence nor submitted that they were unable to support themselves or others in their lives. The Husband’s Financial Statement referred to significant expenses but many related to his business and it was not established that they are paid from his personal income.
Section 90SF(3)(e) — the responsibilities of either party to support any other person
This factor is not relevant.
Section 90SF(3)(f) —the eligibility of either party for a pension, allowance or benefit under any law or superannuation fund, and the rate of any such pension, allowance or benefit being paid to either party
This factor is not relevant.
Section 90SF(3)(g) — a standard of living that in all the circumstances is reasonable
There is no evidence that either parties’ standard of living has diminished since separation.
Section 90SF(3)(h) — the extent to which a party’s earning capacity could be increased by enabling them to undertake a course of education or training or to establish themselves in a business or otherwise to obtain an adequate income
This factor is not relevant.
Section 90SF(3)(j) — the extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party
Both parties made important financial and non-financial contributions during the relationship as detailed earlier on these Reasons. Each assisted the other to earn income, maintain their assets and build the assets of C Pty Ltd.
Section 90SF(3)(k) — the duration of the de-facto relationship and the extent to which it has affected the earning capacity of each party
The relationship of the parties was quite short, totalling of approximately three years and two months.[231] The relationship did not impact either parties’ ability to earn income, and, aside from C Pty Ltd, both parties will retain the assets that they brought into the relationship.
Section 90SF(3)(l) — the need to protect a party who wished to continue that party’s role as a parent
[231] SOAF (n 3) [9].
This is not a relevant factor.
Section 90SF(3)(m) — if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
There is no evidence that either party is cohabiting with another person.
Section 90SF(3)(n) — the terms of any order made or proposed to be made under section 90SM in relation to the property of the parties
Because of my findings regarding the parties’ contributions, the Husband is entitled to an equal division of Pool One — resulting in each of them being entitled to assets with a value of $285,465.59.
In relation to Pool Two (with a net value of $606,295.38), the Husband will retain 78.45 percent of the net assets and the Wife 21.55 percent, resulting in the Husband having an entitlement to net assets valued at $475,638.73 and the Wife $130,656.65. — a differential of $344,982.08.
Section 90SF(3)(o) — the terms of any order or declaration made, or proposed to be made, under this Part in relation to a party (in relation to another de facto relationship), persons in that other de facto relationship, or the property or vested bankruptcy property thereof
This factor is not relevant.
Section 90SF(3)(p) — the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to a party, persons in a marriage with the first-mentioned party, or the property or vested bankruptcy property thereof
This factor is not relevant.
Section 90SF(3)(q) — any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship
This factor is not relevant.
Section 90SF(3)(r) — any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
It is not in dispute that the Wife’s children lived with parties during their short relationship. I have already found that the Husband provided, at a minimum, financial support for the Wife’s children throughout. The fact that he purchased motor vehicles suggests that he had an affection for them. The Husband contributed to the costs of all the family (including the Wife’s children) throughout the relationship and the Wife also agreed that he helped her with collecting the children from the bus[232] from time to time. These contributions will be considered having regard to the decision in Robb & Robb [1994] FamCA 136 where the Full Court at stated:
In considering whether the justice of a case requires some act done by a party to be taken into account under s.75(2)(o), the Court should, we think, have regard primarily to the existence or otherwise of any legal obligations, as between the parties, in relation to the doing of that act, and also, perhaps, to ordinary notions of justice and equity between the parties.
In this case, the Applicant had a legal duty to maintain the children of her prior marriage, which duty had primacy over the duty of any other person, other than the children's Respondent, to so maintain them: ss.66A and 66B of the Act. The Respondent, on the other hand, had no legal duty to maintain these children at any time during the marriage because, by s.66G, a step-parent has such a duty only if he or she is a guardian of the child, or has custody of the child by an order of a Court, or a Court having jurisdiction under Part VII of the Act by order determines that it is proper for the step-parent to have that duty. None of those pre-conditions existed in this case.
Accordingly, in contributing to the support of these children the Applicant was merely honouring a legal obligation which she owed to the children, whilst the Respondent, in making his contribution, was acting essentially as a volunteer assisting the Applicant in the discharge of her legal obligations. Upon that basis, whilst we consider the justice of the case clearly required the Respondent's contribution to be taken into account under s 75(2)(o), the same cannot be said of the Applicant's contribution. In making that contribution the Applicant was in no way discharging or assisting to discharge any legal obligation of the Respondent.”[233]
(Emphasis added)
Section 90SF(3)(s) — the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship
[232] Wife’s May Affidavit (n 63) [4].
[233] Robb & Robb [1994] FamCA 136 [65]-[67] (Lindenmayer, Finn and Joske JJ).
This factor is not relevant.
Section 90SF(3)(t) — the terms of any financial agreement that is binding on a party to the subject de facto relationship
This factor is not relevant.
Section 90SM(4)(f) – any order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship
This factor is not relevant.
Section 90SM(4)(g) — any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship
This factor is not relevant.
Conclusion regarding the matters referred to in s 90SM(4)(d)-(g)
Having considered all the relevant evidence in the context of a short relationship, and noting that both parties have factors in their favour, I conclude that there should be no adjustment to either party for the factors set out in section 90SM(4)(d)-(g), including the factors set out in section 90SF(3).
Conclusion regarding the division of the parties' net assets
Having considered the matters set out in section 90SM and the other factors in sections 90SM(4)(d)-(g) — including s 90SF(3), I have determined that the parties assets of C Pty Ltd should be divided equally, and that the Husband should retain 78.45 percent of the assets of Pool Two and the Wife 21.55 percent.
This results in a cash payment to the Wife from the Husband of $285,465.59 in return for her transferring her shares in C Pty Ltd to him, and $30,327.65 being the cash payment needed for her to receive 21.55 percent of Pool Two. The full amount payable to the Wife is therefore $315,793.24.
What is the just and equitable exercise of discretion?
After assessing contributions and other factors this Court must consider whether, in light of those assessments and the actual property to be divided, the proposed exercise of the discretion under section 90SM is just and equitable. In Clauson, the Full Court stated:
… that exercise is not done in isolation; it is done against the background of conclusions already arrived at on contributions, the consequence of which will be in some cases to intrude into the s. 75(2) exercise because of the dimension of the former conclusion and the total pool.
It is largely for that reason that it is ultimately necessary to stand back from the process and reach a conclusion which appears overall to be a just and equitable exercise of the discretion.[234]
[234] Clauson & Clauson (n 219) 81, 911-81, 912.
I have determined that the assets of C Pty Ltd be divided equally — with a payment to the Wife of $285,465.59 — and that each party retain the assets under their control as contained in Pool Two, save that the Husband will pay the Wife $30,327.65 — being a combined sum of $315,793.24.
In the context of a short relationship, where the parties kept the assets they brought into the relationship separate, where they each assisted the other both financially and non-financially during the relationship and they both made significant contributions to build and maintain the enterprise of C Pty Ltd, I am satisfied that this outcome results in a just and equitable division of the parties’ net assets.
I will make the Order set out at the commencement of these Reasons.
I certify that the preceding two hundred and ninety-six (296) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Turnbull. Associate:
Dated: 18 December 2024
0
38
4