Spoke and Spoke (No. 2)

FAMILY COURT OF AUSTRALIA

SPOKE & SPOKE (NO. 2)

[2009] FamCA 40

FAMILY LAW – PROPERTY SETTLEMENT – Wife seeks case guardian, McKenzie Friend and adjournment – Need for matters to be brought to a head and concluded – Wife seeks audit of company after two years – No evidence to support suggestion of any impropriety – Very limited asset pool – Dilemma where parties do not provide up to date financial material as to valuation of corporate entities – Assessing value based upon balance sheets of corporate entity after single expert witness two years earlier valued the entity on the basis of future maintainable earnings – Substantial s 75(2) factors favour the wife – Wife to receive nothing having regard to consent orders signed by her giving all of her entitlement to litigation funding lender

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
Kennon v Spry; Spry v Kennon [2008] HCA 56
MG and MG [2000] FamCA 893
Queensland v J L Holdings Pty Ltd [1997] HCA 1
Re F: Litigants in person guidelines [2001] FamCA 348
Sali v SPC Ltd [1993] HCA 47

APPLICANT:

Mr Spoke

RESPONDENT:

Ms Spoke

FILE NUMBER:

MLF

1437

of

2006

DATE DELIVERED:

2 February 2009

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

THE HONOURABLE JUSTICE CRONIN

HEARING DATE:

15, 16 & 21 January 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR O'CONNOR

SOLICITOR FOR THE APPLICANT:

DAWES & VARY PTY LTD

COUNSEL FOR THE RESPONDENT:

IN PERSON

SOLICITOR FOR THE RESPONDENT:

Orders

That by 4.00pm on 1 August 2009 and by way of final settlement pursuant to s 79 of the Family Law Act 1975 (Cth), the husband pay to Ask Funding Pty Ltd for and on behalf of the wife the sum of $75,000 in part satisfaction of their entitlements from the wife under orders made on 15 January 2009.
That all extant orders in relation to the use and occupation of the property at E be discharged.
That the wife have the sole use and occupation of E property until 1 August 2009 on condition that she continues to reside in the property.
That upon the payment by the husband of the sum referred to in paragraph (1) hereof but not earlier than 1 August 2009 unless the parties otherwise agree, the wife do all acts and things and sign all necessary documents to transfer to the husband at his expense, all of her interest in the property at E.
That forthwith, and upon the request of the husband, the wife sign any necessary document to transfer to the husband all and any shareholding in her name in N Company.
That by no later than 1 August 2009, the husband provide to the wife a document evidencing the release of the wife from any liability of N Company including any debt personally guaranteed by the wife in relation to the said company.
That in default of the provision by the husband to the wife of the releases referred to in paragraph (6) by 10 August 2009, the husband and the wife do all things necessary to:
(a) Sell the real property at E; and
(b)Place N Company in the hands of a liquidator for its liquidation under the Corporations Law, and upon the said disposals, the net balance (if any) from the sale of the said home be paid to the wife after all obligations of the company N Company including the costs of liquidation are discharged.
That upon the payment by the husband to the wife of the sum referred to in paragraph (1) hereof, the wife vacate the home at E and the husband have exclusive occupancy and entitlement thereto, thereafter.
That upon N Company or its successor in title or any authority or person on its behalf recovering monies otherwise declared in the books of accounts as at 30 June 2008 to be unauthorised expenses, such net sums shall be divided equally between the parties upon their receipt.
That any payment due to the wife pursuant to paragraph (9) shall be subject to the orders relating to Ask Funding Pty Ltd made 15 January 2009.
That each party otherwise retain and become the absolute owner of and the other party relinquish any interest in, any superannuation entitlement of that party as at the date of these orders.
That each party otherwise retain and become the exclusive owner of and the other party relinquish any interest in, all furniture, personal possessions and like chattels in their possession or control save for agreement reached within the next month from the date of these orders as to the division of those items.
That by 1 August 2009, the wife return to the husband the motor vehicle in her possession belonging to N Company.
That there be general liberty to apply to both parties in respect of the implementation of these orders.
That all outstanding applications be otherwise dismissed and all proceedings be removed from the list of cases awaiting a hearing.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 1437 of 2006

MR SPOKE

Applicant

And

MS SPOKE

Respondent

REASONS FOR JUDGMENT

Justice cannot always be measured in terms of money…a judge is entitled to weight in the balance the strain the litigation imposes on the litigants, particularly if they are personal litigants rather than business corporations, the anxieties occasioned by facing new issues, the raising of false hopes…[1]

[1] Lord Griffiths, Ketteman v Hansel Properties Ltd [1987] AC 189

In this case, the time has sadly come to end what has all of the hallmarks of the “War of the Roses”[2].
[2] 1989 American motion picture based upon the 1981 novel by Warren Adler.

The issues

This property dispute revolves around a company through which the parties conducted their construction business. Along with the parties’ home, the interest in the company is the only property of substance that they have. The dilemma is that the company and consequently its business, has a large negative value. The negativity encumbers the home.
The proceedings have been complex, arduous and made more than usually difficult by the wife’s constant changes of professional advisers.

The final hearing

The preparation for the final hearing involved both parties through legal representatives filing affidavit material and outlines of argument which set out orders to be sought. Despite that, the case wandered from one issue to another and decisions had to be made on an ad hoc basis about those issues.
The evidence was generally vague and at times, unhelpful making the identification of the pool of assets very difficult. For example, a single expert witness valued the corporate structure as at June 2006 but no attempt was made to update that valuation whilst at the same time, the husband wanted to rely on the expert’s 2006 opinion. On the husband’s own evidence, the financial situation of the company had changed so radically that not only were the expert’s figures out of date but his valuation methodology could not be sustained.
To add to the difficulties, the hearing was largely conducted by the wife without legal representation.
On the third day and before the wife gave evidence, she asked me to admit into evidence:
(a)medical certificates about her health which she said were relevant to her capacity to work; and
(b)an accounting report apparently prepared by the single expert witness which she said was inconsistent with his sworn evidence.
On the basis of the husband’s objection, I refused to receive these pieces of paper which were not in affidavit form.
I gave reasons for my refusal. In essence, I had heard all of the husband’s case and nothing specific had been suggested to him to show the figures presented to me were wildly inaccurate. On that basis, the equity of the parties was minimal and any issue about the wife’s capacity to work had to be seen to be modest. In addition, the wife’s affidavit from which she later partly resiled, said that there were no current medical issues. The inconsistency was later blamed upon the wife’s former lawyer. The wife then sought to cure the dilemma by calling the medical practitioners whom she said were on holidays but who according to the wife, had said they would give evidence. Thus the wife sought an adjournment which was opposed by the husband.
Section 135 of the Evidence Act 1995 (Cth) says:
The court may refuse to admit evidence if its probative value is substantially outweighed by the danger that the evidence might:
(a)be unfairly prejudicial to a party; or
(b)be misleading or confusing; or
(c)cause or result in undue waste of time.
Having regard to my understanding of the evidence presented to me as to the limited pool for division, the equity would not justify an adjournment in that it would result in undue waste of time.
The wife pressed for an adjournment also on the ground that she disputed the husband’s figures in the company’s books of account. She wanted the company books audited. I rejected that as a basis for the adjournment having regard to the fact that no challenge was seriously mounted to the corporate balance sheet figures. There had also been two years of preparation for this hearing including a number of witnesses involved as well as legal advisers and nothing had been produced to indicate the figures in the books of accounts were wrong.
There comes a point in time when not only the litigant is entitled to insist on the case being heard but also the court requires it. That is particularly so as we enter a time of desperate resource shortage and spiralling cost to the community of the provision of court services.
In Sali v SPC Ltd [1993]HCA 47, the majority said:
The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales. The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions to the court’s lists with consequent inconvenience to the court and prejudice to the other litigants waiting to be heard are pressing concerns to which a court may have regard.
In Queensland v J L Holdings Pty Ltd [1997] HCA 1 the majority of the judges of the High Court expressed caution about the statement above and said:
(n)othing in that case suggests that those principles (to refuse an adjournment) might be employed, except perhaps in extreme circumstances, to shut a party out from litigating an issue which is fairly arguable. Case management is not an end in itself. It is an important and useful aid for ensuring the prompt and efficient disposal of litigation. But it ought always to be borne in mind, even in changing times, that the ultimate aim of a court is the attainment of justice and no principle of case management can be allowed to supplant that aim.
Nothing I heard from the wife gave me any comfort that there is more evidence available that would avoid what is, effectively, the impending end of the “War of the Roses”. I insisted therefore that the wife proceed.

The conduct of the proceedings

Before I turn to the substantive property dispute, it is necessary to set out the way in the which whole litigation was conducted.
The proceedings were begun in 2006 by the husband. The wife responded to his application. Both parties were represented by legal practitioners. Initially the dispute was multi-faceted involving property, parenting and injunctive orders. The parties must have been confident about their financial prowess at that time because the court record shows each was represented by senior counsel. At the opposite end of the litigation road, the wife represented herself assisted by a “McKenzie Friend” knowing that an intervener in the case was her former litigation funder seeking something in the vicinity of $180,000.

The intervener

On the day before the first day of the hearing, a company Ask Funding Pty Ltd sought to intervene. This company had a contractual relationship with the wife. At this point, the wife was represented by legal practitioners. In negotiations that followed, consent orders were arrived at and handed to me. The wife subsequently told me in evidence that she simply signed what her legal practitioner handed her. I leave that issue to other professional bodies to judge.
Importantly, on 15 January 2009, the wife consented to, and I made orders that:
BY CONSENT OF ALL PARTIES
1.That the Intervener be joined as a Third party to these proceedings.
BY CONSENT AS BETWEEN THE WIFE AND INTERVENER
2.That the wife’s entitlement to s 79 property settlement and her entitlement in maintenance proceedings be paid and/or transferred in full at first instance to the Intervener.
3.The Intervener shall refund to the wife any entitlement that exceeds the amounts owing to the Intervener pursuant to the first and second contracts referred to in the affidavit Brendan Lyle sworn on 13 January 2009.
These orders must be seen in the context of all parties agreeing. It is to be noted that there were no maintenance proceedings before me and it is questionable whether it is proper to make an order in terms of “and her entitlement to maintenance proceedings” anyway. The problem does not immediately arise but it may if there were future spousal maintenance proceedings.
The husband was represented by counsel but with a large legal practitioner bill unpaid and his loan account in the company significantly in debt for the legal fees that had been paid. The three children of the parties might one day ponder what could have been.

Summary of the financial position

I am satisfied after hearing the evidence that the financial situation is as the husband portrays it. Generally, I found the husband to be an honest witness. The wife did her best to provide evidence but much of what she said was not controversial.
That is not to say that the evidence was easily obtained or presented clearly. It was only after teasing out the position that the husband’s counsel agreed that the financial position was as I have set out below in these reasons. The wife denies that the financial position is as it is put by the husband but says all would be revealed if an audit was undertaken. She produced no evidence to show the prospect that something had occurred to trigger such a dramatic examination of the company’s books of accounts. There have been a number of exchanges of information by the husband with the wife to which I shall refer in a moment. Nothing suggested anything was untoward. The wife was not able to explain what the basis was for her belief or suspicion.

The litigation chronology

I return therefore to the litigation chronology.
In November 2006, the parties were litigating over parenting issues and the Court placed them in the (then) children’s cases program. That involved the Court hearing evidence and the parties and children participating in meetings with a family consultant. Now, between two and three years later, the husband has no contact or any relationship with his three daughters aged 16, 13 and 10. As such, although parenting issues were briefly mentioned both in trial documents and in opening discussions, the parenting case was not part of the dispute. There is no indication from the language and demeanour of either party that the rift between father and daughters can be resolved.
Also in 2006, the Court made orders that the wife have copies of various bank statements. The wife had been involved in the parties’ business but did not have direct access to the company’s financial records. Over two years later and as late as her cross-examination of the husband, she complained about not having records. When challenged about that, the husband said two important things. First, he and his advisers had provided various lawyers for the wife, documents (and at times, I understand the same documents) “five or six times” as the wife changed practitioners and could not get her file because she could not pay her bill. The wife did not dispute that and responded by asking rhetorically, what else could she do? Secondly, when asked about documents that he had been recently asked to produce, the husband said he would provide them. I accept his statement that he had nothing to hide.
Two other observations need also to be made about this point. The first is that the wife made clear in cross-examining the company’s accountant that she had been in touch with him and although he was not acting for her, he had given her answers to questions she asked. The second is that between August 2008 and the end of the first day of the final hearing, the wife was represented by the Queensland law firm whose “special counsel” flew down to Melbourne, announced his appearance, participated in discussion with me about what issues were alive in the case, negotiated with his opposing counsel and then said his financial retainer did not extend beyond that day and sought to be excused.
Back in 2006, the Court made an order for a single expert to be appointed to value the business and it is not disputed by the wife that the parties together, appointed Mr F. In November 2006 before Watt J, with the wife represented by counsel, orders were made for Mr F to “update” his June 2006 valuation and for that purpose, the husband was ordered to collate management accounts and “other documents”.
A further order made by Watt J by consent of the parties was that the husband “reinstate” the wife’s access to the fuel card allocated to her vehicle. By that, the order was referring to the fuel card drawn on the company and in relation to the vehicle owned by the company then driven by the wife. It appears that no written spousal maintenance application was made but since 2006 until just before the final hearing began, the wife had access to that fuel card. When challenged by the wife in cross-examination about the recent demise of the card, the husband said that over the Christmas period 2008/9, he had been unable to pay the Shell Oil Company on time and the account was stopped. He said the current financial position was such that he could not get the “stop” released. That evidence was consistent with everything else I heard about the parties’ financial position and in particular, the financial position of the company.
In December 2006, with all parties represented and the parenting issues still alive, the matter came back before Watt J. After a contested hearing, his Honour ordered more documents be given to Mr F, the husband pay Mr F’s bill and that if the parties sought to question Mr F, they do so by early January 2007. Importantly for my purposes, Watt J ordered the parties to file their trial hearing affidavits in January 2007. A cursory glance at his Honour’s order shows that the identifiable financial issues included the husband’s relationship with his partner Ms S, the question of what the wife had done with $30,000 she took from a company bank account and the specific details of the husband’s past inheritances. Specific orders were made for the husband to give to the wife’s solicitors copies of business tax returns along with the source documents. All of this was simple discovery and uncontroversial.
In January 2007, the orders of Watt J made it obvious that the final hearing was being contemplated because his Honour ordered a “draft trial plan” and case summary documents. His Honour even directed counsel’s mind to objections to evidence.
Nowhere in any of the court documents or his Honour’s orders was I able to find any reference to an assertion by the wife that the husband was involved in activities to defraud the business, reduce its value or anything similar that might justify appointing an administrator or seeking an auditor. Now, two years on, nothing has changed.

On 29 January 2007, with the parties all represented by counsel and in particular, the wife by senior counsel, the parenting orders were made by Watt J on a final basis. Hence, the orders contemplated by the husband before me were unnecessary. The financial matters remained unresolved but on 9 February 2007 in a telephone hearing, Watt J ordered the wife’s solicitor to send a copy of a “joint statement” of Mr F and a Mr L to the Court. Doing the best I can, it seems the wife had sought professional advice from an accountant Mr L and he and Mr F had met to discuss the valuation of Mr F. Exactly what happened remains unclear to me but there is a notation to his Honour’s order of 9 February 2007 that the wife’s application to adduce evidence from an adversarial expert was adjourned to 27 February 2007. I have concluded that an oral application was made for that witness to be used. There was never an order made for the wife to rely upon an adversarial expert notwithstanding she remained represented (at various times).
Neither party in the lead up to the final hearing sought an order for the admission of evidence from an adversarial witness. The husband simply filed an affidavit by the company accountant as what he described as expert evidence. It was not and should not have been so filed. I return to that evidence below.

The wife has a case guardian

On 31 May 2007, the case was back before Watt J only this time the wife was unrepresented. His Honour noted evidence from a Dr H given that day by telephone that the wife was not able to conduct the proceedings “unassisted” and that it was the wife who was to “explore” the availability of a person to act as her case guardian.
On 4 July 2007, a Mr C was appointed as case guardian for the wife. Doing the best I can from what evidence I have received, it appears that Mr C acted in the shoes of the wife. Mr C was not a lawyer and did not engage one.

A spouse maintenance order is made

In July 2007, after what appeared to be a contested telephone hearing, Watt J permitted the wife to change the residence of the children from Victoria to Queensland. In that hearing, his Honour ordered by way of spousal maintenance that the husband pay the wife $760 per week, provide her with a company car and the fuel card to which I have already made mention. That order was made “until further order”. His Honour then dealt with what was a partial property settlement by the sale and distribution of the parties’ home.

The appeal against the maintenance

Against the orders to which I have just referred, the husband appealed. On 12 February 2008, the Full Court set aside the orders of Watt J. Thus, no spousal maintenance or fuel card orders can be seen to remain extant. A number of pertinent observations need to be made about the judgment of the Full Court because, in so far as the wife might now say she did not have access to material or there was still a dispute about values as well as procedures such as discovery, the Full Court canvassed the issues that were in dispute. The appeal was argued on 12 February 2008. The wife was present through her case guardian but this gentleman apparently did not engage legal representation. The Full Court said:
13.Apparently, it was common ground that the value of the house was $725,000 and that it is subject to an encumbrance securing company loans in the order of $700,000 which includes an overdraft facility of $500,000. These figures are reflected in the wife’s Financial Statement. The company was meeting all of the repayments.
14.In relation to maintenance, prior to the making of the orders the husband was paying the sum of $761.00 per week to the wife and meeting fuel card expenses incurred by her. The wife had the use of the house free of expenses other than rates and utilities. Up until May 2007 the husband had paid rates and utilities but ceased to do so, saying that he was unable to meet them financially.
I digress to comment that even with the discharge of his Honour’s orders by the Full Court, the husband continued to make payments to the wife. The Full Court went on to say:
15.During the course of the hearing before Watt J there were submissions made by the case guardian as to significant outstanding amounts owing for rates and other utilities. No evidence was provided as to these amounts said to be outstanding and at first his Honour said that these would need to be particularised and the husband be given an opportunity to look at them. After various discussions which are revealed in the transcript his Honour then thought that the matter could be dealt with by the payment of the husband to the wife of a figure of $1000 per week to include all expenses. Ultimately, the trial judge said:
HIS HONOUR:…So the only orders that I’m going to make at this stage, will establish that until further order, the existing arrangements are to continue, and that the utility costs up to the time of [the wife’s] vacation of the home, should be paid from the date of – I’m not dictating orders at this stage, I’m just foreshadowing what I do consider myself able to do today – and that there should be a one-off payment in an amount to be agreed or determined at trial in the absence of agreement.
…
…but I don’t have the evidence to do them today, so I’m not going to do them. So the only orders that I would make would perpetuate the existing situation. As I’ve said, I’ve already made orders in relation to the relocation issue, the filing cabinet, and the only other thing then that I have to deal with, is [the husband’s] application for a restraining order, and I suppose, the cancellation of the fuel card and the return of the motor vehicle.
…
…my present thinking is that I shouldn’t restrain the wife from selling the house, but should require her to give the husband an option to purchase the house at a price that might be offered by someone else. That is, if she receives an offer, she should give [the husband] a right, that I would refer to as a right of first refusal, but it doesn’t much matter how it’s termed.
(Transcript, 27 July 2004, page 45)
…
17.It is clear his Honour intended to leave the characterisation of the payments to the trial but he did order that the husband pay the amounts outstanding defined to include telephone, gas, electricity, water and council rates and further that these expenses be met on an ongoing basis. It is equally clear that at the time that his Honour made those orders he had no idea of the likely cost to the husband. Reference to the Financial Statement of the husband should have demonstrated some doubt about the husband’s capacity to meet such expenses. In view of the manner in which the hearing was conducted and the absence of reasons it is not apparent why his Honour did this. During the hearing of the appeal we were provided with a letter from Mr [C] dated 16 August 2007 setting out the moneys said to be owing in relation to the house in the sum of $23,870.11.
The reasons for the Full Court setting aside his Honour’s orders do not matter. What was clear then and still is now, the financial position was claimed by the husband to be dire.
The Full Court went on however to set out the husband’s position about what was to happen in the substantive trial by quoting from the husband’s submissions. They began by saying:
20.In relation to the application for an injunction and the oral application by the case guardian for sale of the home and associated orders, the written submissions of the appellant’s counsel, we think, are so comprehensive and useful we can do no better than reproduce them in part here:
…
16.It was argued on behalf of the appellant that he had before the Court an application that he retain the home as part of a final settlement of property between the parties (subject to any payment to the Respondent deemed appropriate) and, further, that retention of the home was important to the ongoing operations of the construction company operated by him.
17.It was common ground that the home was encumbered by bank loan and credit facilities of the company totalling approximately $700,000 and effectively fully drawn. It was orally submitted by the Case Guardian that the home had a present market value in the “mid-800’s” (Transcript page 37 line 38). In her Financial Statement sworn 24 January 2007 the Wife had however deposed to a value of $725,000. Accordingly, there was little (if any) equity in the home following payment of selling costs (estimated by the Case Guardian at $25,000).
18.It was additionally submitted for the Appellant that he was not in a position to purchase the Respondent’s interest in the home unless and until a final property division had been determined. The mechanism adopted by the Trial Judge of the Appellant being notionally entitled to match the offer of a prospective purchaser in practice give him no realistic opportunity of effecting a purchase (Ground 8), including the fact that by the terms of the Order the Husband would likely be required to additionally pay Stamp Duty upon any such transfer.
Nothing about the financial situation of the husband and the company seems to have changed.
As a result of the Full Court’s order, the matter came before me for the first time on 8 July 2008. On that day, a Mr McLelland appeared for the wife who was present by telephone. There was no appearance of the case guardian but I was told he no longer wished to be involved. I adjourned the matter for six weeks for the wife to get her house in order.

The case guardian is discharged

In her evidence before me, the wife said that the case guardian Mr C was “not a nice person”. In fact, she described him as “absolutely disgusting”. She said she applied for a job with him and hence he got to know her plight and offered to help her. She said Mr C wanted a “relationship” with her and eventually when they fell out, he would not give her the documents that he held.
This evidence did not appear in her trial affidavit. Exactly how this man became case guardian is not clear although the orders of Watt J showed that all parties consented and some evidence was produced from a medical practitioner. As to Mr C’s objectivity, I only have the wife’s evidence. I am not convinced that the actions of Mr C prejudiced the wife because of her subsequent attendances upon lawyers.
On 20 August 2008, the wife appeared in person. At her request and with the consent of the husband, I discharged the case guardian order. I was handed a medical report from the wife’s medical practitioner which said she could give instructions but needed a lawyer to represent her.

The case is fixed for trial

Having discharged the case guardian order, I made orders fixing the final hearing for 22 October 2008. I specifically ordered that if the wife intended to seek production of documents or alternatively, appointment of an adversarial witness, she had to file and serve an application by 13 October 2008. The wife did not do so. By that time, the wife had lawyers acting for her although the exact role they were fulfilling remains a mystery as it was not until very late that they actually filed anything.
On 22 October 2008, I held a telephone hearing. Both husband and wife were represented by their then solicitors. Without objection from either side and noting the absence of any further applications for interim or procedural orders, I made directions for filing of material. No party complained of any disability precluding their compliance.
It should be noted that the legal practitioner who attended by telephone on 22 October 2008 was the same one who appeared before me on 15 January 2009.
The next court event was a procedural hearing before Registrar Sikiotis. The Registrar noted the wife was “in person” by telephone but that the Queensland firm of solicitors were acting for her and there were issues with funding and legal aid. The Registrar noted documents would be filed and accordingly extended my directions for the time for those documents to be filed.
In his affidavit of evidence, the husband said that the wife had had more than ten changes to her representation throughout the proceedings and that on the day prior to the matter being listed on 22 October 2008, the wife’s practitioner Mr Harris contacted his solicitor confirming that he was acting on behalf of the wife. The husband then said:
Directly after the mention, whilst I was with my solicitor, my solicitor telephoned Mr Harris acting on behalf of the wife, putting on record that if there is (sic) anything they need (sic) they should contact my solicitor who will (sic) make the same available to them and if there is (sic) anything we can do to assist him (sic).
On 6 January 2009, the wife filed her affidavit of evidence. It is to be noted that the document bears the name Gordon Lyle Harris as the person responsible for its preparation. Mr Harris was the practitioner who announced an appearance on behalf of the wife on 15 January 2009.
Upon Mr Harris ceasing to act for the wife, I was handed by the wife on 16 January 2009, a set of orders she was seeking, a summary of argument and a list of assets and liabilities. She told me these had been prepared by Mr Harris.

McKenzie Friend

Initially, the wife said she wanted the assistance of a “McKenzie Friend” on the evening of 15 January 2009. She said her “Friend” knew her case. I initially refused her application.
On the morning of 16 January 2009, the wife sought to have me appoint a case guardian for her and specifically, she nominated the same “Friend”. She said she needed a case guardian, was not well, had had a case guardian once before but still wanted the case to proceed. After discussion, I refused her case guardian application but indicated that I would permit her “Friend” to sit beside her, marshal her documents and help her organise her case including her cross-examination. The wife told me that the Friend was a businessman with whom she was not in any relationship but who had introduced her to the solicitor Mr Harris. She said she and her Friend still had access to Mr Harris.

The law relating to case guardians

Chapter 6 of the Family Law Rules 2004 governs the conducting of a case with a case guardian.
Rule 6.08(1) provides that a child or a person with a disability may start, continue, respond to, or seek to intervene in, a case only by a case guardian. The dictionary to the Rules defines a person with a disability. No material was provided by the wife nor in my view could she produce anything having regard to the certificate of her medical practitioner provided to me in 2008. I am satisfied she was able to give adequate instructions and understood exactly what the case was about.
Chapter 6 of the Rules also provides that if a person has been appointed as a trustee or guardian under Commonwealth, State or Territory law, that person can act as a case guardian. There is no such person appointed here.
Rule 6.09 provides that the person contemplated as a case guardian must have no interest in the case adverse to the interest of the person needing the case guardian and must be able to fairly and competently conduct the case for the person needing the case guardian. I have already mentioned the complaint of the wife about her former case guardian which highlights the need for the Court to carefully scrutinize what is proposed particularly where one of the parties is not legally represented and is denying a capability of conducting the case. I have no evidence here of any of those matters that would convince me to permit a case guardian to be appointed. It is also important to point out that up until the conclusion of the day on 15 January 2009, Mr Harris at no time indicated that he thought his client needed a case guardian for any of the reasons that might fall within the definitions of Chapter 6 of the Family Law Rules.
Even without the formal material required under the Rules, the question must still be contemplated whether the wife was “capable” of adequately conducting “the case”. It was difficult to assess that without commencing the hearing and examining the way in which the wife dealt with issues. Having had that opportunity, I am satisfied the wife knew exactly what the case was about and knew exactly how to adequately and competently pursue issues to test the evidence.
In the circumstances, it was not appropriate for the wife to have a case guardian.

The use of a McKenzie Friend

The question then needs to be asked whether the wife should have had a McKenzie Friend. In MG and MG [2000] FamCA 893, the Full Court dismissed an appeal by a litigant who had been refused a McKenzie Friend. The substantive judgment was given by Kay J who said:
21.The issue of the role of a McKenzie friend, at least in its practice and application in the United Kingdom has been fully discussed in a recent decision of the Court of Appeal in R v The Bow County Court; Ex parte Pelling [1999] 4 All ER 751. Dr Pelling, it would appear, is a professional McKenzie friend, that being a person who, not being a qualified lawyer, makes a living from seeking to appear and assist other people in their litigation. The English cases are replete with references to Dr Pelling. In R v Bow County Court, the role of the person acting as what is known as McKenzie friend is significantly discussed.
22.In Collier v Hicks as far ago as (1831) 2 B & Ad 663, Lord Tenterton CJ said:
"Any person whether he be a professional man or not may attend as a friend of either party and may take notes, may quietly make suggestions and give advice. But no-one can demand to take part in the proceedings as an advocate contrary to the regulations of court as settled by the discretion of the justices."
23.Extrapolating that into contemporary language, save for the leave of the Court to be granted usually only in exceptional circumstances, no person may appear as an advocate before the Court on behalf of another person unless they are admitted to practice, and in this Court have signed the High Court roll of practitioners.
24.R v Bow County Court (supra) further limits the right of audience in cases that are heard in chambers, in saying that in chambers, as no member of the public has a right to be present, no person has a right to be there as an adviser, and that a judge may simply refuse to allow anybody in without giving reasons, although generally it is preferable to give reasons.
25.I think the dicta in the Bow County Court case is compelling. A litigant may seek assistance from any person providing that in so doing the orderly and expeditious conduct of proceedings is not interrupted. That assistance would usually mean being able to consult some person sitting in the body of the court from time to time. It would normally not mean allowing that adviser to take over the case and suggest every word that should be spoken. In some cases, where appropriate the judicial officer may allow the adviser or assistant to sit at the bar table and even speak to the Court (see Cooke and Stehbens (1999) FLC 92-839; (1998) 24 Fam LR 5).
Here, the wife apparently could not arrange for her legal practitioner to represent her. She desired her non-lawyer Friend to advocate for her. For the reasons earlier outlined, that was not appropriate.
I have however permitted the wife to have constant access to and assistance from her Friend. She told me she and the Friend had been up all night working on the case. He has no doubt been an invaluable assistance to her.
However, on the final day, the wife told me her friend could not attend. She had foreshadowed that when the case was adjourned after the second day but I then told her I would permit her to have someone else assist her. She told me on the final day that she could not get someone. She said that she could not proceed without assistance but having observed her with the assistance of her friend, I am satisfied she was well organised and could manage alone. It was at that point that she sought the adjournment that I earlier mentioned not on the basis of the absence of assistance but because of what evidence she wanted to call.

Advice to Litigants in Person

In Re F: Litigants in person guidelines [2001] FamCA 348, the Full Court said that in relation to cases where a litigant was not represented, the following guidelines should be applied:
253.Finally, we think it useful to list the set of guidelines as altered by our consideration of them above.
10.A judge should ensure as far as is possible that procedural fairness is afforded to all parties whether represented or appearing in person in order to ensure a fair trial;
11.A judge should inform the litigant in person of the manner in which the trial is to proceed, the order of calling witnesses and the right which he or she has to cross examine the witnesses;
12.A judge should explain to the litigant in person any procedures relevant to the litigation;
13.A judge should generally assist the litigant in person by taking basic information from witnesses called, such as name, address and occupation;
14.If a change in the normal procedure is requested by the other parties such as the calling of witnesses out of turn the judge may, if he/she considers that there is any serious possibility of such a change causing any injustice to a litigant in person, explain to the unrepresented party the effect and perhaps the undesirability of the interposition of witnesses and his or her right to object to that course;
15.A judge may provide general advice to a litigant in person that he or she has the right to object to inadmissible evidence, and to inquire whether he or she so objects. A judge is not obliged to provide advice on each occasion that particular questions or documents arise;
16.If a question is asked, or evidence is sought to be tendered in respect of which the litigant in person has a possible claim of privilege, to inform the litigant of his or her rights;
17.A judge should attempt to clarify the substance of the submissions of the litigant in person, especially in cases where, because of garrulous or misconceived advocacy, the substantive issues are either ignored, given little attention or obfuscated. (Neil v Nott (1994) 121 ALR 148 at 150);
18.Where the interests of justice and the circumstances of the case require it, a judge may:
·draw attention to the law applied by the Court in determining issues before it;
·question witnesses;
·identify applications or submissions which ought to be put to the Court;
·suggest procedural steps that may be taken by a party;
·clarify the particulars of the orders sought by a litigant in person or the bases for such orders.
The above list is not intended to be exhaustive and there may well be other interventions that a judge may properly make without giving rise to an apprehension of bias.
In this proceeding, I have endeavoured to progress the case with all of those guidelines fulfilled.
In so far as the wife was unrepresented in the hearing, she was not disadvantaged. In so far as she may have believed that disclosure or discovery had not been adequately provided by the husband, I reject that. If she did not have material and it was evident that that was the case, she had previously had access to that material, her advisers had not pursued it and in any event, on what was put to me, I do not accept it would have made any appreciable difference.

Disclosure

In respect of the last point mentioned, there was nothing in the wife’s affidavit to suggest the husband had acted inappropriately in relation to financial matters save for one assertion that his partner had had her house renovated from company funds. No cross-examination occurred on that point and no evidence was presented to corroborate it. I therefore reject that assertion.
The wife also inferred that the husband had “syphoned” money from the parties’ company to other companies. I am satisfied that she had no evidence to prove such an assertion. I shall deal with this evidence in more detail below.
Thus, I start these reasons for judgment with the sad statement that the parties have little if anything to divide and if the wife has some evidence to show otherwise, despite two years of silence on the subject and representation in the preparation of her evidence in chief, no such picture emerged.

The background

By way of background, the parties began living together in around 1989 and were married in January 1993. There are three children of the marriage, M aged 16, R aged 13 and T aged 10. The parties separated in November 2005 and the husband moved out of the matrimonial home at the end of January 2006. I have already set out above the litigation pathway that the parties followed.

The evidentiary material

The husband relied upon an affidavit filed on 8 December 2008 together with an affidavit by his accountant and also the affidavit of the appointed single expert witness Mr F. The husband’s affidavit of his accountant was filed on 8 December 2008 and is headed “Affidavit of Expert Witness”. I shall refer to this evidence in some detail below but I reject that the accountant could or should have been treated as a single expert witness or as an adversarial witness. No application had been made by the husband for the admission of evidence from an adversarial witness. The company accountant’s evidence was directed to the current financial position of the company.
The wife relied upon an affidavit that she filed on 6 January 2009. She also handed to me a financial statement which was completed but not sworn. That position was remedied upon her giving evidence.
When the wife gave evidence, she only resiled from a modest number of things in her affidavit. She said that paragraph 83(a) about her health was drawn by her solicitor and her friend who was assisting her but it was wrong. She otherwise expanded on issues to which I shall return below.
On 16 January 2009 at the conclusion of the day, I had to adjourn the matter for some days. The wife told me she intended to call the banker of the company. I warned her also that if she wished to question the single expert, she had to get in touch with him to arrange his attendance at court.
On 21 January 2009, the wife told me she had not contacted the single expert witness Mr F for cross-examination purposes. She made no mention of the parties’ banker. The subject was not raised again.

The orders sought by the parties

The formal orders sought by each party were set out in writing as follows. As to the husband, he sought:
4.The husband pay to the wife the sum of $150,000.00 (“the payment”) within 120 days of the date of these orders (“the date”).
5.Contemporaneously with the payment the wife do all things and sign all documents required to:
(a)Transfer to the husband, at his expense, all of her right, title and interest in the real property situate at and known as [E] (“the real property) and vacate the real property;
(b)Transfer to the husband and or his nominee all of her right, title and interest and any office, shareholding or position in the business of [N Company] and any related company (“the company”).
(c)Return to the husband the motor vehicle registration […].
6.That in the event that the whole of the payment has not been made by the date then the parties do all things and sign all documents as may be required to sell the real property forthwith altogether out of Court (“the sale”) and upon completion of the sale, the proceeds of the sale be applied:
(a)First to pay all costs, commissions and expenses of the sale;
(b)Second to discharge any encumbrance affecting the real property;
(c)Third to pay so much of the payment as is then outstanding together with interest thereon at the rate of 8% per annum adjusted monthly from the date to the Wife;
(d)Fourth to pay the balance to the husband.
7.That pending the payment or completion of the sale:
(a)The wife have the sole right to occupy the real property and that during such right of occupation the wife pay all instalments pursuant to any mortgage and all rates and taxes and like apportionable outgoings of the real property as they fall due;
(b)The parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)Neither party further encumber the real property without the written consent of the other.
8.That the husband:
(a)Be liable for and indemnify the wife against all payments and liability in respect of all liabilities of or arising in connection with the business including all debt personally guaranteed by the wife (if any) in relation to the business and all unpaid income tax assessed or hereinafter assessed against the wife in relation to income derived by the wife from the business and any related company and from all actions, proceedings, costs, claims and demands in respect thereof
(b)Use his best endeavours to secure a release of the wife in respect of any of the liabilities referred to in sub-paragraph (a) for which the wife is personally liable or has provided a personal guarantee.
9.That the wife forgo and forever release the business and any related company referred to in these Orders from any claim, cause of action or entitlement she may have or assert against any or all of them whatsoever.
10.That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at this date. The furniture, personal possessions and like chattels in the real property having been divided equally;
(b)Money standing to the credit of the parties in any joint bank account is to become the property of the husband;
(c)Each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other;
(d)Insurance policies remain the sole property of the owner named therein.
(e)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders;
(f)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Before the evidence commenced, the husband resiled from that position. He sought orders that the property of the parties be divided as to 60 per cent to the husband and 40 per cent to the wife.
In final address, although maintaining the percentage division above, the husband’s counsel asked me to:
(a)make the settlement of the sum to be paid to the wife as soon as possible; and
(b)make an order that the wife return the company car to the company forthwith; and
(c)make an order under s 106A of the Family Law Act because of the husband’s concern that any amount of money that the wife would be entitled to would be going to the litigation funder and there was no incentive for the wife to comply with orders.
The immediate dilemma will be obvious. If the pool of assets is negligible and the wife is to transfer the home to the husband, the wife has no money because she has agreed to an order that whatever she receives goes to the intervener. There was no prospect of the wife receiving any money on the evidence. In turn, the wife and children are on the street having nowhere to live. I suggested the parties contemplate a rental arrangement and/or a delayed settlement arrangement. No consensus could be reached.
The second obvious dilemma relates to the company car. The wife conceded that the car belonged to the company. It is included in the pool as part of the negative value of the company. I suggested I could order the husband to transfer through the company, the car to the wife. That too would fall foul of the order favouring the litigation funding intervener.
The consequences for the wife are therefore sadly dire.

The wife’s formal orders

The wife’s formal orders were contained in an unsigned response which she told me was prepared by Mr Harris. She handed that to me on 16 January 2009. Why these documents were not provided to the husband and his practitioners not only well prior to the commencement of the trial but even on the first day, escapes me. That is particularly important because the form of the orders was somewhat unusual. The wife sought the following orders:
1.That [N Company] Ltd be placed in administration;
2.That the court appoint an administrator;
3.That the administrator report to the court within 90 days as to the winding up of the company.
4.That the former matrimonial home situate and known as [E] in the State of Victoria (“the real property”) be sold and the money from the sale of the property be placed into the Administrator’s trust account.
a.That until the sale of the property the wife have sole use and occupancy of the real property and during that occupancy the husband pay the rates, taxes and outgoings of the said property as and when they fall due the parties hold their interests in the real property upon trust pursuant to these orders
That in the Alternative:
5.That within 60 days from the date of these Orders (“the date”) the husband pay to the wife the sum of $450,000 (“the payment”);
6.That contemporaneously with the wife receiving the payment:
a.the wife do all such acts and things and sign all such documents as maybe required to transfer to the husband at the husband’s expense all her right title and interest in the former matrimonial home situate and known as [E] in the State of Victoria (“the real property”);
b.the wife transfer her shareholdiug and any other right title and interest she may have in the company to the husband at the husband’s expense and the wife sign all necessary documents to be removed as a beneficiary of the [Spoke] Family Trust (“the Trust”) and relinquish any claim she may have of whatsoever nature in relation to the Trust
c.the husband assume responsibility for and indemnify the wife in relation to all rates, taxes and outgoings of the real property as and when they fall due;
d.the husband do all such acts and things and sign all such documents as may be necessary to obtain a full and complete release and discharge of the wife’s obligations pursuant to the mortgage secured over the real property;
e.the husband indemnify the wife and keep her indemnified in relation to all debts past, present and future in respect of the company and or the Trust inclusive of taxation in respect of any monies actually or notionally attributed to the wife as a result of her involvement in the said company or the Trust including any personal guarantees given by the wife securing the debts of the company or the Trust. That pending the payment, the wife have sole use and occupancy of the real property and during that occupancy the husband pay the rates, taxes and outgoings of the said property as and when they fall due the parties hold their interests in the real property upon trust pursuant to these orders;
f.neither party shall encumber the real property without the consent in writing of the other party;
7.That the husband do all such acts and things and sign all such documents as may be required to provide to the wife a fixed and floating charge on the assets of the company to secure the payment.
8.That in the event that the husband defaults in the payment by the due date he do all such acts and things and sign all such documents as maybe necessary to transfer to the wife the real property to be held on trust for sale and such sale shall be conducted on terms and conditions to be mutually agreed upon and failing agreement terms and conditions and with such agent as nominated by the president of the REIV or his or her nominee (“the sale”);
9.The proceeds of the sale be applied in the following priority
a.firstly payment of costs, commission and expenses of sale
b.amount required to discharge the registered mortgage secured over the real property
c.such part of the payment as is then outstanding to the wife together with interest according to the Family Court Rules adjusted monthly from the date
d.the remaining balance (if any) to the husband
10.In the event that the sale of the real properly pursuant to Order 8 herein provides insufficient funds to satisfy in full the payment to the wife inclusive of penalty interest then the husband do all such acts and things and sign all such documents as may be necessary to transfer his shareholding and his right title and interest in the company to the wife and thereafter resign as a director and office bearer of the company, the wife then be at liberty to sell and dispose of the company on terms and conditions agreed upon and failing agreement terms and conditions as recommended by a commercial business broker mutually agreed upon and failing agreement as is determined by the wife (“the company sale”) and the proceeds of the company sale to be applied in the following priority:
a.firstly, all necessary costs, commission and expenses of the sale;
b.secondly, such amount of the payment as is then outstanding together with penalty interest to the wife and
c.thirdly, any remaining balance to the husband.
11.That unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:
a.a party be solely entitled to the exclusion of the other to all property ( choses-in-action) in the possession of such party as at the date of these Orders ( furniture, personal possessions, and like chattels in the real property being deemed to be in the possession of the wife;
b.Monies standing to the credit of the parties in any joint bank account are to become the property of the husband and wife equally;
c.Each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;
d.insurance policies remain the sole property of the owner named thereon;
e.Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
On the evidence to which I shall refer, two observations must be made:
(a)there is no evidence to justify pursuit of the orders for administration of N Company notwithstanding its negative position because the husband was offering to remove the wife therefrom and obtain a discharge of liability for her; and
(b)there is not $450,000 equity (at this point in time) for the wife to get $450,000 that she sought.
The question of what might be available in the future depends upon a company defalcation issue which is mentioned further below.

The opening statement

In opening discussion, counsel for the husband said that apart from a significant inheritance from the husband’s family and notwithstanding the problems the wife had as a homemaker and parent, he conceded equal contributions were made during the marriage. Prior to leaving the court, and acting for the wife, Mr Harris told me in response that what counsel for the husband had said was basically right.
Mr O’Connor for the husband said that the pool was more or less set out in the husband’s summary of argument and Mr Harris said there was little dispute about that either.
Mr O’Connor for the husband said I should assess contributions as to 70 per cent to the husband and 30 per cent to the wife mainly because of the inheritance and that there should be a 10 per cent adjustment to the wife for factors under s 75(2). Mr Harris said he thought the contribution assessment was about right but the s 75(2) factors should be 50 per cent in favour of the wife.

When the wife began acting for herself, she told me she did not agree with what Mr Harris had said. Having said that, the wife said she wanted a home.
I shall deal with the assets and liabilities below rather than now because what each party put to me in their outline of arguments was either illogical or unhelpful.

The evidence as to acquiring assets

The husband’s evidence was that the business had been conducted after the parties purchased it in 1994. It was then incorporated and both husband and wife were shareholders and directors. In around 2002, the incorporated company was wound up and a new company called N Company was created. The husband remains the sole director of this company but both husband and wife are the shareholders.
The husband’s evidence was that it was difficult to work long hours as well as assist with the children. He was required to assist with the homemaker task because in 2004, the wife became very sick. He said he reduced his working hours and was constantly away from work during 2005 caring for the children on a full time basis. In September 2005, the wife was admitted to a psychiatric institution for treatment. None of this evidence was challenged. Having said that, the wife produced a reference that the husband had written for a babysitter. The wife maintained this established that it was she and the babysitter who looked after the children and not the husband. My task was made difficult in making a finding on this issue because neither side put the finite matters to the other. The wife asked me to draw the inference that her overall contribution on all points was greater than that of the husband. She said I should assess it as 70 per cent to her. I am unable to make any finding about the homemaker and parent role because the evidence of the husband was not challenged by the wife. It is to be noted that the husband’s affidavit was filed on 8 December 2008 so that I have presumed that the wife had access to the material when her affidavit was subsequently prepared by her lawyers and then sworn by her.
In her evidence, the wife said in 1995, the second child was born and was subsequently very ill. She said her mother “assisted” in the care of the older child. She said in 2004 she became ill. She then said:
The Applicant did not act as primary carer for the children at anytime during my confinement or convalescence. During my convalescence, the primary carer for our three children was our full-time housekeeper [Ms Y] who had sole responsibility for our children both within the house and also ensured their safe transport to and from schooling as well as the running of the household. She undertook all domestic duties including household cleaning, cooking meals and laundry. She was also assisted by a gardener who maintained the grounds and cleaners who washed the family vehicles. The Applicant did take time away from work during my convalescence.
The last sentence of that paragraph seems to me to be consistent with the husband’s evidence.
It is important to note that all contributions during the entire relationship have to be considered. There are often highs and lows, sickness and employment problems in any relationship. The quantum of contribution must fluctuate. To isolate one contribution or one period of a relationship does not do justice to all of the other periods and contributions where all of the parties were cooperatively together at their agreed tasks in the marriage venture. Here, the evidence suggests that both worked hard. I shall weigh and assess these contributions in a broad brush way.

Separation and the aftermath

Separation occurred between the parties in November 2005 and the husband’s evidence was that they made arrangements for him to care for the children at various times during the week.
Subsequently however, it would appear that the relationship between the husband and the children has radically altered to the extent that there is no contact between them at all. That must mean that the burden of the care of the children has fallen largely on the wife since separation. That too must be assessed and given weight.
In late February 2006, the wife withdrew $30,000 from the overdraft account of the company. The husband’s evidence which was not challenged by the wife was that she started spending excessively on her credit card and flew to Brisbane.
The wife conceded she took $30,000 from the company account after separation. She said that this did not pose any risk to the company’s cash flow position as the money had been quarantined from general trading revenue in a dedicated bank account and existed solely as a cash reserve. There is no evidence that the action posed any risk to the cash flow but that does not mean that the money ought not be accounted for on the basis that it either belonged to the company or to the parties themselves. The wife said that she travelled to Brisbane on 24 February 2006 and the costs of the flight were placed on her credit card. As such, I have concluded that she did not use the $30,000 for that purpose. She then said that she used some of the money to pay for breast augmentation surgery but otherwise did not account for what happened to the $30,000.
Counsel for the husband very fairly gave the wife an opportunity in cross-examination to explain what she did with the $30,000. She said she spent it on living expenses, legal expenses and repaying a brother some money she had borrowed from him. This was in addition to the breast augmentation surgery. Importantly however, she said the money was debited to her company loan account and as will become apparent from the evidence of the company accountant, the distribution by the company of a dividend to forgive and discharge the loan accounts must mean that the wife has paid for these funds from the pool of assets in the same way that the husband’s personal expenses debited to his loan account at that time were also forgiven. That must in turn mean that there can be no justification for adding back $30,000 to the pool. In any event, the money has gone forever.
The husband now lives with Ms S. He lives in the home of Ms S along with her children who are there on a part-time basis.

The company’s operations at present

The company was operating from premises which were put up for sale at a time when the lease held by it had expired. As a consequence, the company obtained a lease of premises for five years with an option for a further five years. The husband pointed to the fact that several large jobs had been completed over the course of the last year and there were no future projects of that size to enable the company to retain the staff that it has had in the past as a consequence of which there had to be reduction of staff numbers. The husband said, and this would be consistent with what the accountant told me, there is an expected drop in turnover in the current financial year.

The service companies

One of the issues raised by the wife and about which she skilfully cross-examined, related to two companies known as P Pty Ltd and V Pty Ltd. The husband referred to these two companies in his affidavit of evidence. He said that he had informed the wife’s previous case guardian of the two companies which he described as “relevant” to N Company. These companies were in fact service companies. He said that they had their services terminated as a cost reduction to the company and that N company now no longer dealt with V Pty Ltd and P Pty Ltd only had one vehicle on hire. Importantly, the husband said he had no involvement with either of those companies and was never a shareholder, director or had anything to do with their control. In respect of this latter point, the wife carefully cross-examined the husband putting to him propositions which he calmly and rationally answered.
The husband also said that he had undertaken a thorough review of the company’s accounts because of losses in the preceding year. He said he employed an independent financial advisory business to undertake the review which had been completed. He said it revealed that professional conduct of staff members had been “brought into question” and the matter was now with the Victoria Police. That is a matter to which I shall also return below.
Because of the financial position, the husband said that the company had not acquired equipment as it should have and that it needed significant amounts of money spent on it to upgrade the current plant and equipment.
The husband set out his financial position in relation to the company. He said that he was drawing a wage from which he then paid tax and he took $793 per week and gave the wife $761 per week which was then paid into her bank account.
In addition to making this payment of a “wage” the husband told me that he had also paid health insurance and loan repayments together with some utilities for the house. When I queried the husband about these payments, he said that it was part of his salary packaging to make the payments to the wife and as such, there was nothing untoward about the payments.
The husband pointed to the fact that in addition to the fuel card, the wife had had access to the company’s vehicles in which she had incurred fines and had been involved in at least two accidents all at the company’s expense.
I have already set out my observation that the only assets are the company and the home. The dilemma is that the company has obtained overdraft facilities of $500,000 and a $200,000 bank guarantee facility all of which is secured against the home which has been valued at $725,000.
The husband said and it was not challenged, since separation he had made all repayments secured against the house to be paid by the company and his concern was that if the house was sold, the company would have no capacity to secure its facilities to which I have just referred.
The husband gave evidence and again it was not seriously challenged that he had continued to fund the schooling of two of the children as well as pay health insurance and ambulance cover. The husband’s view was that the wife was capable of obtaining employment and annexed to his affidavit, an advertisement for an internet dating website in which the wife set out in glowing terms her attributes. The husband desired that I draw a conclusion that she was capable of securing employment to cover her own needs and expenditure.
In reality, even without medical evidence, neither the husband nor the wife gave evidence about the wife’s employment in which she could be involved. With some reticence, the wife said she had endometriosis and breast cancer. No corroboration was given about either of these diagnoses and I note the wife’s own evidence about the post-separation breast augmentation surgery. I am unable to make any finding about the wife’s employability. The husband said the wife worked in the business but also conceded that there were many problems. One thing however was not disputed and that is that the wife has the full-time care of the three children and under the orders I am urged to make, she will not only have no assets but a substantial liability for legal fees which she will not be able to pay now or in the foreseeable future. I am prepared therefore to conclude that the wife’s financial position is dire and will be for a long time and that that will not be ameliorated by any workforce participation even if she could have it.

Contributions

I turn then to the respective financial contributions notwithstanding the various discussions with counsel and Mr Harris which seemed to show consensus.
Whilst the parties were together, the husband inherited two blocks of land as well as money from his grandmother and in turn his own father and those funds all enabled the parties to build what is currently the family home.
In 1997, a contract was signed between his grandmother and himself along with the wife, to purchase a vacant block of land for $67,500. Notwithstanding that was the consideration, no money changed hands and a loan agreement was later made with his grandmother for a further $100,000 for the purposes of building a house on this block of land. In respect of that loan, repayments were made. The house was completed.
In 1997, the husband’s grandmother died and the debt that he owed her became an asset belonging to his father who was the beneficiary of her estate. The husband said and it was not challenged by the wife, he made loan repayments after his grandmother’s death. A year later, his father died and the debt then due to his father was forgiven. The sum at that stage was $89,116.
In addition to the benefit from the forgiveness of the debt, the husband inherited another block of land totalling 122 acres. The husband then sold the land and the proceeds were used to purchase the land upon which the home was then built.
I was able to observe the husband in the witness box. It is a challenging exercise at any time when one litigant cross-examines the other personally. The husband gave his evidence in a calm and rational manner. He made appropriate concessions. There were some matters about financial issues of the business that he said he did not know the answers to. I accept that explanation.

P Pty Ltd and V Pty Ltd

The husband was cross-examined about the two companies P Pty Ltd and V Pty Ltd. He was asked whether he issued directions to the directors of the companies. He said “never”. No document was put to him to show otherwise. It was put to the husband that he had wanted particular people to control or be directors of those companies. He agreed that that was so. If it was to be inferred that the various transactions between N Company and P Pty Ltd and V Pty Ltd were not at arm’s length, I do not draw that inference. I accept that P Pty Ltd and V Pty Ltd were service companies and their activities were governed by formal documents that had been subjected to scrutiny. I could find nothing improper about any of the set-up or structure of these corporate entities.
The wife produced an email written by an employee of N Company to the company’s accountants that made clear that if some connection was drawn between the companies “the shit would hit the fan”. What that was about is unclear save that the company accountant said that distancing of these serviced companies from N Company was important for workers compensation reasons. The wife did not give any evidence that would enable me to conclude that there was a conspiracy of some sort involving the husband syphoning off or transferring value from N Company to some other company or in particular, P Pty Ltd or V Pty Ltd.
I therefore reject the wife’s view that the company should be audited or placed in the hands of an administrator or liquidator for any particular purpose.

The husband borrows money for the company

The wife also maintained that the husband was paying a debt of his domestic partner through N Company and thus reducing the capital value of N Company. I reject that. The husband was shown a loan document that he had executed with Ms S borrowing money from her. The guarantor of that money was N Company. The husband explained why the borrowing was needed for N Company’s capital purposes. He borrowed the money from Ms S who had mortgaged her house to obtain the funds. He lent the funds to N Company. N Company in turn repaid the interest and in part, the capital debt. I elicited that information from the husband. The wife produced a letter from the solicitor who was involved in the lending of the money. Nothing untoward or inconsistent with what the husband said was indicated. The husband was not challenged about why N Company needed the capital injection. The wife asserted that the husband had guaranteed Ms S’s loan. If he had, and that was not what the loan document said, it made little difference if the funds so provided were given to the company. As I said, the wife did not challenge the husband about that nor ask the company accountant about how the loans were shown in the company’s books of accounts.
The wife had had months to pursue these issues not only with her various lawyers but also the earlier accounting investigation. I am satisfied that the loan was genuine.

The company funds are possibly misused

The husband said in his affidavit that the internal investigation to which I earlier referred, had been handed to the police. In transpires that a significant loss has occurred in the company for which a forensic examination is under way that may mean police charges will be laid against former employees. The wife said she was not told about this but she did have access to the accounting financial statements which show an allocated unauthorised expense of $376,000. That amount was not known to Mr F the single expert witness. The husband said he had had the internal review undertaken before he called the police. The wife put to the husband that at his 40^th birthday, he publicly acknowledged the work of the employees that he now suspects responsible for the loss. His explanation about why that plaudit had occurred after the investigation had been undertaken was that he had only just learned of the possible defalcation and did not wish to alert these people to the investigation. There is no reason for me to doubt what the husband said in relation to that particularly having regard to the fact that the wife called no evidence to contradict him. In so far as the wife wanted me to infer that the husband had been involved in some underhanded activity to defraud her or mislead the Court, I reject that.
The problem presented to me by both parties on the “defalcation” issue is that no-one can say whether there is such a fraud and even if there were, whether the money will ever be recovered. That in turn gave rise to a tentative agreement between the parties that if the money or any of it was ever recovered, it should then be divided between them. I can see no simple way of otherwise dealing with it. I canvassed with both parties that endeavouring to deal with a contingent asset on a formulaic approach has difficulties because the quantum could vary markedly. This case has dramatic outcomes for all parties and I see I have little choice but to do the best I can with what I have been presented. I propose to use a formulaic approach estimating that the husband’s evidence about the possible quantum of any fraud is correct.

The wife’s evidence about the inheritance

I have already set out above the evidence of the husband about the inherited money. The wife’s evidence was quite precise about the inheritance issue. I remained puzzled as to what the dispute was about here because neither party’s evidence was at odds with the other. In addition, before Mr Harris departed, as I have already indicated, he thought that counsel for the husband was putting something that was about right. The wife’s evidence was that the husband received net proceeds of about $305,000 by way of inheritance and that included real estate, equipment, cash and the discharge of loans that he owed. The wife then set out how all that came together and what land was then sold. Whilst there may be some inconsistency or different description between the parties, the reality is that there is no dispute about the size of the inheritance which was received late in the relationship.
Despite that evidence, the wife cross-examined the husband about a sum of $10,000 that related ultimately to plant and equipment. The wife seemed to be suggesting that the husband was double-dipping. The husband’s explanation was complicated but along the lines that money was advanced to him by way of a loan and not adjusted in the inheritance. There seems little point in that evidence because it is insignificant in the scheme of things.

Chattels

The wife asked the husband about a number of chattels inherited from his family. She suggested that there were certain items given either to her or to the children. There is no evidence upon which I could rely to make a finding as to exactly what happened in terms of any specific request. However, the husband indicated he would hold the various items on trust for the children (if any) of his daughters. I have no reason to doubt he will do so.

The wife asked the husband about a variety of chattels accrued by the parties themselves but now in possession of the husband. The husband said when questioned by the wife about whether he would meet and negotiate “a fair” division of them in a month’s time, that he would. Whilst I have some reticence about the prospect of such an event being fruitful, the wife did not pursue the matter and she sought no order about it. I shall make a note in the orders that each will keep their chattels subject to any agreement about a division otherwise. If no agreement can be reached, the chattels can remain where they currently lie. I am comfortable in saying that that is a fair outcome having regard to the fact that ultimately, the disputed chattel items in one form or another, came from the husband’s family.

Spoke Family Trust

The wife also asked the husband about the Spoke Family Trust. She led no evidence about it apart from saying it existed and she was the sole director of the trustee. I know nothing about it and where it fits into the picture. The wife asked the company accountant about it but he seemed to know little about its details either. The wife seemed specifically interested in some rentals received by or from that trust. However, there was no evidence as to the relevance of that issue.
The wife complained that the husband had used the company to pay for his part of the accounting side of the proceedings. The husband denied that and gave a cogent explanation that personal expenses were debited to the loan account. Both the husband and the accountant gave evidence to confirm that no advantage was given to the husband in a way that might have occurred if he had used company resources to fund his case. I accept that.
The wife’s evidence did not markedly differ from the husband about the background but having regard to what each said, any controversy was sufficiently modest to be hard to decipher and more importantly, on a “broad brush” basis, would make little or no difference.

Single expert witness F

I turn now to the evidence of Mr F.
I have already mentioned that the parties agreed on Mr F being the single expert witness to value N Company.
Mr F undertook that task and filed an affidavit on 5 February 2007 but the valuation related to 30 June 2006.
No-one challenged the expertise of Mr F.
Mr F set out the two main methods and then referred to other methods that could be used for the purposes of valuations of businesses. He said that in the case of N Company, he considered the capitalisation of future maintainable earnings as the appropriate approach. In justifying that position, he set out the background of the acquisition of the entity and its history. Mr F said that the turnover in 2004, 2005 and 2006 had been $9,854,331, $6,157,716 and $6,219,674 respectively. It was clear that at the time that Mr F viewed the financial documents, there was a consistent gross turnover. Mr F looked at the historical earnings for the purposes of determining the operating profit of the business and in particular, to adjust the owner benefits to the commercial value that should have applied to assess the true operating performance of the business. He attributed a notional value of employee benefits to the husband at $125,000 per annum.
He eliminated the bank overdraft and hire purchase charges to determine operating profit and excluded expenses that had no direct financial benefit for the business such as donations.
Having adjusted the historical earnings, Mr F came up with operating profits of $332,196, $94,488 and $252,737 for the years ended 30 June 2004, 2005 and 2006 respectively.
Based upon that flow of information, Mr F assessed those three years as the basis for the calculation of the future maintainable earnings. He did however point out that it was apparent that there were significant changes occurring in the trading performance of the business. There had been a decline in sales and changes had occurred in the company by instituting systems improvements in order to have greater control over the materials costs of the business.
Mr F then made the assessment on a three year average having regard to the disparity in the first year from the second and third years and then on a two year average for the figures which were consistent over the two year period.
Mr F then subjectively assessed the capitalisation rate. He said the multiples applicable to each of the operating profits to which I have referred needed to reflect the varying degree of risk relevant to each calculation. He obtained a mid-point range of 2 to 2.5 on the three year average and 2.5 to 3 on the two year average. He then took mid-point of those two multiples and calculated the capitalised value of the operating business as $493,500.
He then excluded from the net operating assets items which were of a non-operating nature showing ultimately that the net operating assets were $179,495. Taking the capitalised value of $493,500 and removing the average net operating assets of $179,495 he considered that the goodwill value of the business was $314,005. It will be noted that that was consistent with what the parties had acquired the business for and shown it in the balance sheet.
With the balance sheet then reconstructed with the appropriate adjustments, the value of the business as at early June 2006 was $31,705.
The dilemma about the valuation of the company ought be self-evident. The husband said I should rely upon Mr F’s valuation but that has to be affected by the evidence of the company’s accountant. The problem is that on the trend of the business operation, there are no maintainable earnings. Thus, I could not accept the evidence of Mr F even unchallenged and place it in the list of assets as put by the husband at $31,705. In the wife’s list of assets, prepared by Mr Harris, she presented the “book value” of the company’s assets and liabilities as at 6 January 2009. Even that shows a negative position of $651,325. That overall financial position is consistent with the company’s accountant’s view that as at 30 June 2008, the “book value” of the company assets was negative $751,399 and about $100,000 less than that now.

The company accountant’s evidence

Mr O gave evidence. He is a partner in the accounting firm BBS. He had 12 years experience and had been responsible for the preparation of the company’s financial reports since 2004. He said he had asked the husband to undertake a stocktake and was unsure whether he had but in any event, he said there was “good stock management”. When asked about the company’s financials, whilst acknowledging they were prepared on what he was presented, he said he believed the accounts to be true and correct. He said he checked some of the items against source documents.
Mr O was a professional who made appropriate concessions about being reliant upon the husband for accuracy but nothing was put to him to suggest that either the material was not credible or that the had somehow become a conspiratorial tool of the husband. I therefore accept his evidence.
The company’s accountant pointed to the losses in 2007 and 2008 which include the “unauthorised expenses paid” which may or may not be forensically correct but also may or may not be recovered even if correct. On any view therefore, the company asset position is a negative one. The dilemma is compounded by the fact that the company’s overdraft is secured by the party’s home. That security is limited to the maximum extent of the facility which is $500,000. What is common ground between the parties is that there is a negative value of $651,325 now. That is the figure that should be used for the pool for division.
If the company ever recovers the suspected unauthorised expenses, that sum should be divided between the parties but not necessarily on the same basis as the overall division to which I shall turn below.
What was common ground was that I should follow the four step process. I propose to do that.
That is the process set out by the Full Court in Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at 78,386 where the Full Court said:
Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.
The first step therefore is to determine the pool of assets.

The pool

Although the wife said that the house was worth more than $725,000, a statement she based on discussions about a smaller neighbouring property, both parties until the wife commenced to represent herself in the hearing told the Court they had agreed on $725,000. I intend to put into the pool that sum.
The house is encumbered by the company’s business facilities with its bank. To simply offset the strict balance of the overdraft would be artificial because it would ignore the true position of the parties’ equity in the company. Whilst the overdraft fluctuates daily, so do the debtors and creditors. I propose therefore to adopt the company’s balance sheet as the appropriate amount to be added to the pool on the basis that it accurately reflects the financial position of the company which in turn accurately reflects its current value or worth to the parties. I am satisfied that the balance sheet is not distorted by internal loans or the depreciation schedule.
All of that means there is a current liability or negative value of $651,325.
I have already referred to and excluded, the need to add back the $30,000 that the wife took from the company’s account.
The pool is therefore:
(a)           The House  $725,000
(b)          The Company  (651,325)
Net  $73,675
I then turn to decide how to treat the contingent recovery of the unauthorised expenses. Section 79(1)(a) provides that the Court may make such order as it considers appropriate in the case of proceedings with respect to the property of the parties or either of them, altering the interests of the parties to the marriage in the property.
In this case, for the purposes of the unauthorised expenses issue, I contemplated the use of s 79(5) on the basis that it might provide a better guide once the issue of the unauthorised expenses is clarified. However to use that particular provision, I would have to be satisfied that it was “likely” to be a significant change in the financial circumstances of the parties or either of them and in this case, I have no such evidence nor confidence.
Section 4 of the Act defines property as:
Property to which those parties are, or that party is, as the case may be, entitled whether in possession or aversion.
In Kennon v Spry; Spry v Kennon [2008] HCA 56 a decision of the High Court of Australia, French CJ said as follows in relation to the definition of property:
57.Where the husband was not entitled to be a trustee but was sole appointor and also a beneficiary, the Full Court of the Family Court in Goodwin upheld a finding that "the trust property was, in reality, the property of the husband" and in so doing applied as a statement of principle the perhaps unremarkable proposition that:
"[T]he question whether the property of the trust is, in reality, the property of the parties or one of them ... is a matter dependent upon the facts and circumstances of each particular case including the terms of the relevant trust deed."
In that case the husband had the sole power of appointment of the trustee which was a creature under his control and he was a beneficiary to whom the trustee could make payments exclusive of other beneficiaries as the husband saw fit.
58.Although a settlor is taken to transfer to the trustee the property in respect of which he or she creates a trust, there may be retained a right to take a benefit under it. Prior to the 1983 Deed Dr Spry as sole trustee had the "absolute discretion" to apply all or any part of the income and/or capital of the fund to himself as one of the "beneficiaries". On the basis of that power, and consistently with authority including the decisions of the Full Court referred to above, the assets of the Trust would properly have been regarded as his property as a party to the marriage for the purposes of s 79. But the coexistence of the power together with Dr Spry's status as a beneficiary does not define a necessary condition of that conclusion.
…
64.The word "property" in s 79 is to be read as part of the collocation "property of the parties to the marriage". It is to be read widely and conformably with the purposes of the Family Law Act.
I find therefore that there may be some prospect of the money being returned if it can be established that the expenses were unauthorised and there is culpability such as would then enable it to be recovered. However, that sum is undefined and at best, a contingent asset. It ought therefore not be added to the pool but rather placed as a separate class or category of asset and divided separately.
In a similar way, the parties have superannuation. There was no consensus as to what I should do with those other than that the parties seemed to say that they should each retain what they have. In my view, without an application for a splitting order and neither sum being currently available to the parties as cash, both parties have little prospect of being able to use those sums for some considerable time. It is therefore better to separate them out from the other assets in the pool and take them into account separately. In this case, the husband now has superannuation of $62,091 and the wife has superannuation of approximately $13,000. The wife produced no evidence to show exactly what the sum was but the husband did not challenge that position in any event.

Contribution assessment.

I have set out the parties’ evidence relating to their contributions but based on that evidence, I find in respect of the net pool of $73,675, the contributions significantly favour the husband over the wife. I have weighed and assessed those inherited contributions as significantly outweighing the financial and non-financial contributions of the wife. I assessed those contributions to be 60 per cent to the husband and 40 per cent to the wife.
In the same way, the contributions concerning the contingent property and the superannuation favour the husband.
The husband continued to put aside superannuation through his earnings whilst at the same time using his net wage to support the family subsequent to separation. I assess the contributions to superannuation as to 60 per cent to the wife and 40 per cent to the husband.
In respect of the contingent property, I see no reason to distinguish the parties’ contributions from those in which I have made the other assessments. Accordingly, I assess that also as to 60 per cent to the husband and 40 per cent to the wife.

Section 75(2) factors

I have set out the evidence about the parties’ futures for the purposes of s 75 of the Act. However, on any view, that is academic because whatever sum I award to the wife, she will end up with nothing. Needless to say however, I think it is appropriate to contemplate those factors as they apply to each party.
There is no evidence about the health of the wife other than her own statements but in respect of those, she was not challenged. I do not know and she was reticent about telling me, the extent to which any illness she currently has is treatable and whether it is related to these proceedings. Both parties otherwise seem to enjoy good health and each has sufficient age on their side to enable them to be in the workforce at some stage or other in the future.
I take into account that the wife has no income and will have no resources or property arising out of these proceedings by virtue of the orders that she consented to on the first day of the hearing. Just exactly what her physical and mental capacity is for the wife to have appropriate gainful employment, I am not sure. Her submission prepared by Mr Harris seems to suggest there is no problem but she would have me think otherwise. She certainly has skills and ability as is indicated by the husband’s annexure to his most recent affidavit setting out her own description of herself on an internet website.
I am very conscious in this case that it is the wife who has the care and control of the children of the marriage under the age of 18 years and will have that responsibility for a number of years to come. That however does not appear to have restricted the wife in relation to a number of matters concerning employment within the company or if it has, she certainly did not say so.
I also take into account in relation to the wife that although she is currently not receiving any Commonwealth benefit, she most likely will be eligible in the foreseeable future.
One of the important issues to contemplate in a property settlement is the standard of living that in all of the circumstances each party had enjoyed prior to separation and divorce. In this case, the parties seem to have enjoyed an affluent lifestyle to some extent using the corporate entity as a vehicle for their benefit. However, on what evidence I have, that has all come to an end and I see no reason on the evidence to say that it will change in the future. On that basis, each party will have to cut their cloth according to their means.
I am obliged to take into consideration the duration of the marriage and the extent to which it has affected the earning capacity of the party. The particular provision in s 75 goes on to refer to “maintenance” but as s 79 requires me to contemplate all matters in s 75, I take into account the longevity of the marriage and the fact that the wife has considerably contributed towards the property of both of the parties as well as the impact upon her earning capacity. Up until the time of separation, it would appear on the evidence that the wife was considerably involved in the conduct of the financial affairs of the business. Her cross-examination clearly indicated that she has an understanding of a number of financial issues associated with the company so to that extent, I see no reason why in the future subject to her health, she could not be back in the workforce.
Sadly in this case, there is virtually no property left to be divided between the parties and as such, in a very small pool for division, the pendulum must swing heavily in favour of a person who has significant needs.
I take into account also the fact that the husband has indicated to me that he will continue to provide child support for the support of his children. I do not know exactly what that sum will be but it is clear on the evidence that the husband has shown responsibility up until now.
In relation to the husband, I have the evidence to indicate his earning capacity but that is very much determined by the capacity of the business to continue to support him. He has given evidence about the fact that employees have been terminated for economic reasons and I see no reason to conclude other than that his own lifestyle has reduced along the same lines as that of the wife. There is certainly no evidence of affluence.

I find there is a need for an adjustment in favour of the wife. There is no precise science here at work. The most significant issue however is the modesty of the size of the pools.
In respect of the pool of tangible assets, I make an adjustment in favour of the wife as to 40 per cent. That makes her entitlement 80 per cent of that pool.
In respect of the superannuation which totals $75,091 I would adjust the wife by contribution by a further 40 per cent in that case.
However, neither of those results provides a just and equitable outcome where the wife would have to pay the husband some cash. Similarly, if the husband did not wish to have his superannuation affected, he would somehow have to buy out the wife. In my view, the fourth step is where all of those matters can be adjusted.
In relation to the contingent property, it being such an unknown amount and doubtful recoverable commodity, it would be inappropriate for me to make an adjustment in favour of the wife along the same lines as I have done with the other property because of the fact that I might be doing a grave injustice to either party. However, on the evidence I have, it is most unlikely that the sum would exceed that in the balance sheet and had that sum been in the balance sheet, I would not have made a division of the first pool of assets referred to above in the same way as I have having regard to the matters that I have assessed under s 75(2) of the Act. In this case, doing the best I can with the contingent property, it seems to me that a further adjustment of 10 per cent in favour of the wife should be made so that if that sum is returnable and it is $370,000 or less, it should be divided equally between the parties.
When I turn to the fourth step in determining that the results are just and equitable, it is important to remember that it is the underlying value of what a party receives rather than the percentage adjustment that must be just and equitable. In this case, it seem that the only appropriate course of action for me which could achieve any form of just outcome would be for the wife to have the sum of $73,675 from that pool and each party otherwise retain the assets that they have. As I have already indicated earlier, the company’s balance sheet moves on a daily basis. I do not know as at the time of delivery of this judgment whether the cash position has improved and it seems to me that the appropriate course of action is for me to adjust the $73,675 to a net sum of $75,000. Again, I am very conscious of the fact that all of that money will go to the wife’s legal funding lender.
The wife was at pains to point out that what she really wanted was a house for herself and the children. On the evidence, there is no prospect that I could enable that to occur. The wife took the view that I should give her an opportunity to allow she and the children to remain in the home until M attained the age of 18 years. That is neither practicable nor sensible. The husband has the obligations to sort out the financial security of the bank and if the position continues the way it is currently going, there is no incentive for the husband to fight on as a result of which the wife would lose the house. In addition, even at M’s 18^th birthday, the interest accruing on the wife’s obligation to the lender will certainly mean that her debt will continue to rise unless something is paid towards it at this stage. The wife also sought that I make an order that the husband pay her legal fees. That is also impracticable having regard to the findings I have made.
Sad as it may be, I see no alternative other than for the wife to transfer the house to the husband on the basis that he provides to her a release from all liabilities that she may otherwise have in respect of monies due by the company and the husband to banks and other parties. If he does not provide that release, the house will have to be sold and the consequential domino effect will occur.
It goes without saying however that I am conscious of the fact that the wife has to rehouse with the children. She will need some time to do that. Sadly also, during that period of time her interest bill on her legal fees outstanding is continuing to rise. In my view, she needs to sort out her health, employment and financial position generally and I would have thought six months is ample time in which to do that. Accordingly, I propose to make orders that the wife have up until six months to vacate the home and to transfer the property to the husband.
I will also make orders about the company’s car as it is included in the value of the business.
In my view, on this evidence, these orders are as just and equitable as the circumstances will allow.

I certify that the preceding One Hundred and Eight Eight (188) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate:

Date: 2 February 2009

Key Legal Topics

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Family Law
Equity & Trusts
Insolvency

Legal Concepts

Remedies
Costs
Injunction
Fiduciary Duty
Constructive Trust

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Citations

Spoke and Spoke (No. 2) [2009] FamCA 40

Most Recent Citation

Keskin and Keskin & Anor [2019] FamCA 384

Cases Citing This Decision

1

Keskin and Keskin & Anor [2019] FamCA 384

Cases Cited

5

Statutory Material Cited

2

Queensland v JL holdings Pty Ltd [1997] HCA 1

MG & MG [2000] FamCA 893

Re F: Litigants in person guidelines [2001] FamCA 348

[2009] FamCA 40

2 February 2009

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Insolvency

Legal Concepts

Remedies

Costs

Injunction

Fiduciary Duty

Constructive Trust