ST & BC (No.2) - [2005] FMCAfam 37

FEDERAL MAGISTRATES COURT OF AUSTRALIA

ST & BC (No.2)

[2005] FMCAfam 37

FAMILY LAW – Property – contributions – initial contribution – application of Townsend principles for notional add backs – valuation of company – wife claims Kennon adjustment – Kennon does not establish a principle of general application that any assault warrants adjustment in the spouse victim’s favour pursuant to s.79(4)(c) – where assets are held in a family company – wife asserts taxation implications should be disregarded – Rossati discussed - because company must pay taxation on a distribution of its assets taxation must be taken into account – future needs.

Family Law Act 1975(Cth), ss.60, 65, 68, 75, 79
Child Support (Assessment) Act 1989 (Cth)

In the Marriage of Lee Steere (1985) FLC 91-626
In the Marriage of Ferraro (1993) FLC 92-335

In the Marriage of Clauson (1995) FLC 92-595
Russell v Russell (1999) FLC 92-877
Weir v Weir (1993) FLC 92-338
Black v Kellner (1992) FLC 92-28
Junti (1986) FLC 91-759
Mezzacappa (1987) FLC 91-853

Jenkins v Livesey (1985) 1 All ER 106
Luciano (2000) FamCA 401
Kennon & Kennon (1997) FLC 92-757
Tomasetti (2000) FLC 93-023

Applicant:

Respondent:

File No:

SYM693 of 2003

Delivered on:

19 April 2005

Delivered at:

Wollongong

Hearing dates:

3, 4 & 30 August 2004, 13 September 2004, 16 & 22 March 2005

Judgment of:

Ryan FM

REPRESENTATION

Counsel for the Applicant:

Mr G. Roberts

Solicitors for the Applicant:

Kells The Lawyers

Respondent:

In person

ORDERS

Within fourteen (14) days the husband shall do all things necessary to cause the company Building Pty Limited to issue two ordinary shares to the wife. The wife shall pay the company four dollars ($4) for these shares.
The husband shall instruct G M Egan & Company, Chartered Accountants, to calculate:
(a)The accounting fees needed to finalise the company accounts, and give effect to these orders; and
(b)Determine the amount payable by the company to the Australian Taxation Office by virtue of the distributions required pursuant to these orders.
Within seven (7) days of being advised by G M Egan & Company the amounts payable pursuant to the above order, the wife’s solicitors, Kells The Lawyers, shall pay the amounts due to the Australian Taxation Office and G M Egan & Company.
Of the balance then remaining the wife’s solicitors shall immediately pay:
(a)The wife 35 per cent;
(b)The balance to the husband, less an adjustment immediately payable to the wife of $12,673.
Within seven (7) days of the wife receiving her entitlement pursuant to order 4, the wife shall transfer her two ordinary shares to the husband for which the husband shall pay the wife four dollars ($4).
Unless otherwise specified in these orders:
(a)Each party be solely entitled to the exclusion of the other to all other property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and that for this purpose bank accounts are deemed to be in the possession of the person whose name appears on the banks’ record thereof, insurance policies are deemed to be in the possession of the beneficiary thereof and superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions for payment out of such entitlements.
(b)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.
All exhibits tendered in these proceedings be returned at the expiration of one calendar month unless an appeal is lodged.
The solicitor who issued any subpoena collects that subpoenaed material and returns it to the owner within seven (7) days.
In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
Subject to any application for costs, all outstanding applications are dismissed.
Any costs application shall be made within twenty-one (21) days of these orders.

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
WOLLONGONG

SYM693 of 2003

Applicant

And

Respondent

REASONS FOR JUDGMENT

Introduction

These are proceedings for the adjustment of property pursuant to s.79 of The Family Law Act 1975. Although the available assets are modest, this litigation has been unfortunately contentious and surprisingly complicated.
During their marriage the parties established a building company which shall be called Builder Pty Limited. The majority of their matrimonial property formed part of the company’s assets. Although the business had periods of modest success, from its inception, the parties repeatedly borrowed money in order to maintain the company’s viability. In order to work as a builder, builders are required to have asset backing sufficient to meet any damages that arise from defective work. When the parties purchased their home at Kiama; it was purchased in the company’s name. The former matrimonial home provided the key financial security for the company’s work. After separation, the husband finalised renovations on the former matrimonial home before selling it in December 2003. After paying agreed liabilities, including the mortgage and select company liabilities, approximately $230,000 was held on trust by the husband’s former solicitors. Unfortunately, the solicitor misunderstood or ignored his trust obligations and disbursed part of the funds without the wife’s knowledge. On 25 March 2004 I ordered the remaining monies to be paid into a controlled monies account nominated by the wife’s solicitors.
After separation and before the company ceased operation, the husband had exclusive control of the company’s income and assets. The wife believes that the husband has failed to fully disclose his financial circumstances and has used company funds for personal expenses. Apart from disagreement about the appropriate s.79(4) and s.75(2) adjustments, the primary issues concern:
·The company’s valuation, and
·Whether monies withdrawn by the husband after separation should be notionally added back into the asset pool, and
·Whether $20,000 advanced by the wife’s parents four weeks prior to separation is a joint matrimonial liability, and
·Whether the wife is entitled to a Kennon adjustment.

The applications

ST (“the wife”) started the proceedings when she filed her application for final orders on 21 January 2003. In her counsel’s case outline document she sets out the orders finally sought. Simply put, the wife proposes that the parties should each keep the assets that they currently own and that she should have the entire proceeds secured in the controlled monies account. Thereafter, in effect, she will relinquish any interest in Builder Pty Limited, the company should be wound up, and the husband indemnifies her in relation to any liability associated with Builder Pty Limited or the payment to her. As to the latter, because the sale proceeds comprise company assets the company must pay taxation on payments made to the parties.
BC (“the husband”) relied on his response filed 2 June 2003. In written submissions dated 1 October 2004 the husband submitted that the court would divide the available assets 55 per cent to him and the remaining 45 per cent to the wife after payment to him of $42,000 from the company. Reference to $42,000 is the amount the husband received for director’s fees and money in his loan account in 2004.

The hearing

The applicant wife relied on the following evidence:
·Her affidavit sworn 11 March 2004 and her oral testimony.
·Her financial statement sworn the same day.
·A considerable volume of financial records that became exhibits.
The respondent husband relied on the following evidence:
·His affidavit sworn 9 February 2004 and his oral testimony.
·His financial statements sworn 29 May 2003 and 16 March 2004.
·Affidavit of his former solicitor, Paul Donnelly sworn 30 March 2004.
·The husband also submitted a number of documents that became exhibits.
The hearing occurred on 2 and 3 August 2004 at Wollongong. At the end of the hearing I reserved my decision and judgment was scheduled for 5 August 2004. For the hearing the wife retained Accounting Solutions to value the company. On her behalf John McDonald valued the company as at the end of March 2004. Mr McDonald was given access to company records via documents produced to this court and through the husband’s and company’s accountant, Mr Egan. Together with Mr Egan, Mr McDonald prepared a revised balance sheet and profit and loss statement. At the hearing the accountants agreed that the company is presently worth $83,340. The total equity available was $93,340, from which they made provision for an additional $7,000-$10,000 accounting and tax expenses.
During the hearing it became apparent that neither Mr Egan nor Mr McDonald had been made aware of potentially significant company transactions. This was notwithstanding that all parties knew about these transactions. Only Mr Egan gave evidence. Neither party asked him to revise his opinion having regard to the transactions. No less importantly, Mr Egan emphasised that the monies held in the controlled monies account belonged to the company and not the parties. While the husband is clearly the company’s alter ego, he explained that distributing the funds would incur tax liability. The wife’s approach to this issue was simply that the court would order that she have the monies and any tax liability was the company’s and husband’s concern. Representing himself, the husband realised that such an outcome was unfair. However, neither took any steps to assist me quantifying the tax liability. Rather than give final judgment based on incomplete evidence, on 5 August 2003 I made partial property orders and further directions in order to address the gap in the evidence. The orders made 5 August 2004 are set out below:
1.Both parties forthwith give Paul Egan, the accountant for Builder Pty Limited (“the company”) and Accounting Solutions a sealed copy of the affidavit of the husband’s former solicitor filed in these proceedings.
2.By way of partial property order the husband and wife do all things and sign all documents required by Kells solicitors to immediately pay from the controlled monies account managed by them all outstanding liabilities identified in the companies adjusted balance sheet attached to the affidavit of John McDonald filed 30 July 2004 as well as all outstanding accounts comprising exhibit L being:
(a)Collection House Limited and QBE;
(b)M.J.Rowles P/L;
(c)Caltex;
(d)ATO;
(e)Paul Egan;
(f)Stegbar.
3.The court requests that the parties instruct Accounting Solutions and/or Paul Egan to prepare an updated valuation of the company taking into account the following transactions:
(a) The selling price of the home;
(b) Clarification of the line item “Profit on Sale - Asset” in the adjusted Profit and Loss Statement;
(c) The payments identified in the husband’s former solicitor’s affidavit to the husband and to the husband’s former solicitor;
(d) The payment of $5,000 from the company account to the husband’s former solicitor;
(e) Identify whether the payments referred to in (c) and (d) have been treated as trade creditors. If so make appropriate adjustments to the accounts to reflect the personal nature of the transactions;
(f) The sale of any motor vehicle/s referred to as company assets including selling price, lease pay out and payment of nett sale proceeds into the company account.
4.Both parties have leave to re-open in order to provide updated valuation evidence taking into account the above matters.
5.In the event that either party fails, refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, then pursuant to s.106A, a Registrar or Deputy Registrar of the Federal Magistrates Court of Australia is hereby appointed to execute all deeds, documents and instruments in the name of the defaulting party and to do all such acts and things necessary to give validity and operation to such deeds, documents and instruments.
By agreement, the court received a further report prepared by Paul Egan dated 25 August 2004 and a review of it by Accounting Solutions in a letter dated 30 August 2004. Neither party sought to cross-examine either author.
On 13 September 2004 I directed the parties to file written submissions.
After the evidence closed, and in a separate submission dated 27 September 2004, the husband wrote to the court submitting a damages claim made by Port Kembla Leagues Club against the company. The club claimed damages arising from building work the company carried out during 1999/2000. The club alleged on 20 May 2003 water flooded into a lift well the company constructed. It claimed that one of the causes for water penetrating the building was inadequate design and/or construction of box gutters in the lift well. On 7 September 2004 the company’s insurer, QBE Mercantile Mutual Limited, advised the husband and company that the insurer refused cover under the company’s insurance policy. The husband understood that the full amount of the claim was in the vicinity of $30,000-$40,000. It appeared from his correspondence that the husband, who represents himself, wanted his letter, and thus the claim, to form part of the evidence. Correctly the wife’s counsel submitted that unless formally admitted the court must disregard this issue.
Once the letter was brought to my attention I was concerned about justice as between the parties and concerned about distributing the company’s assets if doing so potentially defeated a third party claim where the third party is unaware of these proceedings. I re-listed the matter and asked the husband whether he wanted me to take this potential claim into account, which he did. The wife’s solicitors advised that if the husband was given leave to re-open on this issue, they sought to re-open her case. As the husband had not had any further contact with the club since its first telephone call in May 2003 he asked that the matter be further adjourned so that he could ascertain the club’s present position viz the damages claim. When the matter resumed on 22 March 2005 on his oath, the husband said that he had spoken to the club’s secretary and understood that the club was no longer pursuing a damages claim against the company. I accept the husband’s evidence that any damages claim will be made against the architects who designed the lift well. I am satisfied that there is little prospect that the club will pursue the company and that it is proper to finalise the matter without notice to the club.

Short history

The wife was born in 1956 and is 48 years old.
The husband was born in 1957 and is 48 years old.
The parties met in late 1994.
In mid-October 1995 the parties commenced cohabitation when the wife moved into the husband’s home at Shellharbour. When the parties commenced cohabitation the wife’s three children by her former husband, C, S and D, moved in with them. These children are now aged 22, 19 and 18 years respectively. The wife and her first husband shared the children’s care equally.
When the parties commenced cohabitation, the husband was a director in a building company known as “C S Builders Pty Limited”. The wife was employed full time as a secretary.
During 1996 C S Builders Pty Limited was gradually wound down.
In July 1996 the parties formed a business partnership, “Builder” through which the husband undertook construction and building work.
In December 1996 C S Builders Pty Limited went into administration and was later struck off the register. The husband paid its other director $16,000 to finalise a loan account. The husband retained the tools of trade from C S Builders Pty Limited.
In 1996 the husband traded in a half cabin Haines Hunter boat which he owned at the commencement of cohabitation. The trade in price was $6,000. He purchased another boat for $17,000.
In 1996 the wife sold a Honda Accord motor vehicle for $2,000. The parties used the proceeds to acquire a Bravo utility for $19,500. The business made all the loan repayments.
In mid-1997 the wife resigned so that she could work full time for the business.
In July 1997 the parties incorporated Pty Limited (“the company”). The parties were its sole shareholders and directors. Initially, the husband drew $300 per week and the wife $200 per week from the company. The company paid the parties’ major expenses, including mortgage instalments and rates.
From cohabitation until late 1997 the parties renovated and improved the Shellharbour property. They painted the interior and exterior of the home, rendered and painted walls around the pool, erected a double car garage, laid a concrete driveway, built a front fence and gates and landscaped and improved the gardens. The husband did the majority of the construction work and the wife the majority of the landscaping and gardening. Both painted the property.
In early 1998 the company borrowed $105,000 in order to purchase land at Shell Cove. Although the husband drew plans for a new house, the house was not built. The Shell Cove land was sold in mid-1998 for $117,000. After deducting expenses and repayments little remained.
In March 1998 the parties separated for about two weeks.
On 13 July 1998 the husband received $16,200 compensation for industrial deafness. On 24 August 1998 these funds were transferred to the company and used as a deposit on an investment property at Albion Park. The purchase price for Albion Park was $103,000. In order to complete the purchase, the company borrowed $82,500 from the Commonwealth Bank. The company used the yard to store material and the boat. The front of the property was let for a nominal rent. This property was sold in 2000 for $114,000. After selling costs and interest there was no real profit.
The parties separated again in early September 1998 when the wife and her children left the home. The parties consulted solicitors and reached an informal agreement whereby the husband would pay the wife $30,000 in $10,000 instalments. He made the first payment of $10,000 on 4 December 1998. The husband raised the $10,000 by selling the boat for $22,290. After payment to the wife, he deposited the remaining $12,290 into the company account. The wife resigned as director of Builder Pty Limited and transferred her share to the husband.
In November 1998 the wife purchased a Honda Civic for $11,000. Not long afterwards the parties resumed their relationship. The parties maintained separated residences until the husband sold Shellharbour in late May 1999. After expenses the husband received between $90,000 and $100,000 from its sale.
On 5 June 1999 the parties married. The husband spent $17,000 on the engagement ring and wedding expenses.
After the parties reconciled the wife worked between 1-3 days per week and on the other days worked with the company.
In July 1999 the parties purchased the Kiama property for approximately $245,000. On the advice of the company’s accountant, the property was registered in the company’s name. This gave the company sufficient asset backing to operate as a building company. The parties borrowed approximately $180,000 in order to complete the purchase. The balance of the funds came from the sale proceeds of Shellharbour.

In mid-1999 the wife’s Honda Civic was written off when it was hit by another vehicle. The wife received $11,690 insurance payout.
In early August 1999 the parties borrowed $12,000 from the wife’s parents as a short term loan to boost the company’s trading account. This was necessary so that Capital Finance would approve the loan application for the purchase of the boat. In September 1999 the company purchased a $73,000 game fishing boat. The wife contributed $10,000 from her insurance payout and savings of approximately $8,000. The company paid $5,000 and borrowed the remaining $50,000 from Capital Finance. The boat was registered in the name of Builder Pty Limited.
On 20 August 1999 the company repaid the wife’s parents in full. They did not receive any interest on the advance.
During 2000, the husband’s eldest son by his former wife, K, moved in. The husband built an extra room before undertaking larger renovations. The materials for which cost $42,744.46. K did not remain long and, after relinquishing his apprenticeship to the husband, left the home.
At various times the company needed to borrow money in order to boost its cash flow. On 9 August 2000 the wife’s parents loaned the company $20,000 interest free. The company repaid $10,000 on 16 March 2001 and the second $10,000 payment was made on 24 July 2001. The wife’s parents did not charge interest. On 27 September 2000 the company borrowed $10,000 from the wife’s brother. This sum was repaid, together with an additional $2,000 interest on 16 January 2001.
On 12 June 2001 the husband consulted a local counsellor who sent him to hospital. There the husband saw a psychiatrist, Dr Pakula. The husband stopped work and started seeing Dr Pakula on a monthly basis. Although he returned to work, the husband was unable to focus on the company. The company continued to trade in a fashion, with subcontractors performing most of the building work. No doubt this materially affected the company’s profitability.
On 27 September 2001 the parties borrowed $10,000 from G E Finance, ostensibly to purchase home furnishings. However, the money was deposited with the company in order to boost its cash flow.
In March 2002, notwithstanding the husband’s opposition the wife borrowed $20,000 from her parent’s. Because the company was not performing well the parties were forced to sell the companies Toyota Land cruiser in order to pay out its lease. I infer that the company was unable to afford the lease repayments. The wife purchased a Mazda 323 which was registered in her sole name. The wife has not repaid her parents. The Mazda 323 cost $20,000.
The parties separated on 11 April 2002. At separation, the wife moved into a rented home at Kiama. She withdrew $3,000 from the company’s account in order to meet her relocation expenses. When the wife vacated the parties divided their furniture and household effects. A breakdown of the items each retained is attached to the wife’s affidavit[1] .
[1] Annexure C
At separation the company account contained $45,944[2]. Although the husband described minimal trade creditors there was in the vicinity of $47,000 outstanding. Thus excluding work in progress and the Kiama property and its mortgage, at separation the companies’ liabilities exceeded its assets. The husband continued to use subcontractors for building work as well as carrying out work himself. Between separation and May 2003 the husband continued to take $300 per week as wages.
[2] Exhibit C
On 24 April 2002 the husband withdrew $20,080 from the mortgage which funds were paid into the company account and used to pay subcontractors for work in progress.
On 1 August 2002 the wife commenced employment at WIN Television as a secretary earning approximately $33,000 per annum.
On 29 April 2003 the husband loaned his friend and subcontractor, TD $5000. In total since separation the husband has paid TD $26,000. Of this $11,000 related to painting work undertaken by TD’s company, Painting Pro. TD repaid the $5000 loan in about November 2003.
In May 2003 the husband increased his drawings to approximately $1000 per week. He drew twelve such payments totalling $12,021.15. Thereafter the husband withdrew $301.80 each week. This continued until the injunctions restrained the husband from making further withdrawals from the company.
The company exchanged contracts for the sale of the Kiama property on 21 November 2003. The company finished its last job shortly before hand and has not taken any work since. I accept the husband’s evidence that in the building trade work is commonly paid in instalments. Initially a lump sum is paid in advance and further payments made for work in progress. As the contracting builder the husband continued to receive accounts after work finished. Trade creditors thus took a while to finalise and at any particular time it was difficult for him to be certain precisely what amounts were due.
On 16 December 2003 the company sold Kiama for $485,000. After payment of the mortgage and selling costs, the net proceeds were $233,193.54. By agreement the husband’s former solicitor received the sale proceeds on trust for the parties. Notwithstanding the trust arrangement, purportedly acting on the directions of the company, and without notice to the wife or her solicitors, the solicitor made the following payments:
·In November 2003, $5000 to Lawyers on account of the husband’s legal fees.
·On 22 December 2003, $17,726.50 to Lawyers on account of the husband’s legal fees.
·On 3 February 2004, $2,000 to the husband (making total payments to him of $12,000).
·On 18 February 2004, $8,990.70 to G E Finance & Insurance.
·On 2 March 2004, $1,694.30 to Select Automotive Finance.
·On 2 March 2004, $364 to RTA.
·On 2 March 2004, $475 to NRMA Insurance.
·On 2 March 2004, $5,000 to the husband.
·On 9 March 2004, $18,654 to ATO.
·On 17 March 2004, $5,000 to the husband.
Upon the sale of the Kiama property the company ceased to trade. Although the final accounts needed completion the husband stopped work. Without capital backing the company is unable to perform building work.
On 25 March 2004 I granted the wife’s application for urgent interlocutory orders. The relevant orders are set out below:
1.Pending further order (the husband’s former solicitors) are restrained from authorising, withdrawing, disposing or encumbering the nett proceeds of sale of the Kiama property held in trust by them other than in accordance with orders of this court or the consent of both parties in writing.
2.That (the husband’s former solicitors) together with Kells Lawyers shall deposit the nett proceeds of sale of the Kiama property presently held in trust pursuant to order 1 into a controlled monies account with the wife’s solicitors to nominate the institution into which those monies shall be paid. Thereafter the monies shall be held on trust jointly and shall not be paid out other than in accordance with the written agreement of the parties or pursuant to an order of this court.
3.The applicant wife shall file an undertaking as to damages in the usual form by 4 pm 31 March 2004.
4.In relation to the wife’s application to restrain the husband travelling overseas, I refuse that application.
7.The matter be listed for further mention before me at 10 am on 1 April 2004.
8.The respondent to pay the applicant’s costs of $1,000, which monies are to be paid by monies held in trust pursuant to order 1 of these orders.
On 29 March 2004 the husband’s former solicitors paid the remaining sale proceeds of $173,288.84 to the wife’s solicitors. These monies are deposited in a controlled monies account. Interest is accruing at about $740 per month.
Between separation and hearing the husband visited Thailand on five occasions. He used a combination of company funds and money borrowed from friends. His final holiday, at Christmas 2003 lasted 46 days and the others 10 days.
After separation the husband sold his share of the house contents for $850. About four months before the hearing he sold a Nissan 300 car he purchased after separation for $16,660. From it sale he received $11,000 which monies the husband paid into the company account.
In accordance with the orders made 5 August 2004 a series of outstanding loans were paid from the sale proceeds. The loans are identified in exhibit L. The amount paid was approximately $8,380. In addition, the solicitors were ordered to pay all outstanding liabilities identified in the company’s adjusted balance sheet attached to John McDonald’s affidavit filed 30 July 2004. This was approximately $82,764.00.

Relevant law

The approach to the determination of an application under s.79 is well established by authority. See In the Marriage of Lee Steere (1985) FLC 91-626; In the Marriage of Ferraro (1993) FLC 92-335; In the Marriage of Clauson (1995) FLC 92-593. The process involves a multiple part procedure. Firstly, identifying the property, liabilities and financial resources of the parties at the time of the hearing. Secondly, evaluating the contributions made by the parties as defined in s.79(4)(a) to (c) and the effect of any proposed order upon the earning capacity of either party. The court must then evaluate the matters contained in s.75(2) insofar as they are relevant; any other order made under the Act affecting a party or child; and any child support under the Child Support (Assessment) Act 1989 that a party to the marriage is to provide or might be liable to provide in the future for a child to the marriage.
In determining what order should be made under s.79, the court must be satisfied in all the circumstances that it is just and equitable to do so: s.79(2). It is the justice and equity of the actual orders that the court must consider: See Russell v Russell (1999) FLC 92-877.
One of the important issues concerns the parties’ obligation to make full and frank disclosure, which means that they are required to disclose all material facts. In Weir v Weir (1993) FLC 92-338, the Full Court said at 79,593 “This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black v Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make full and frank disclosure of their financial affairs.” See also Junti (1986) FLC 91-759 and Mezzacappa (1987) FLC 91-853. And further on: “Irrespective of any obligation created by the Family Law Act or the Family Rules that we have identified, in our opinion the obligation of full and frank disclosure applies because of the duty of the Court to consider all of the circumstances of the case. See Jenkins v Livesey (1985) 1 All ER 106. This is particularly important in cases where the financial circumstances of the parties may be relevant. It is not sufficient for a party to simply adhere to the obligations specified by the rules of court. If the relevant rules are deficient in identifying an aspect of a party's financial circumstance then this is not a basis for a plea that there was non-disclosure because the rules did not identify an aspect of a party's circumstances that may be relevant.”
In the matter of Luciano (2000) FamCA 401, O'Ryan J summarised the principles that emerge from these cases as follows.
·“In proceedings in the Family Court in relation to financial matters, there is an obligation of each party to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto.
·The obligation arises because of the necessity for the court in such proceedings to consider all aspects of the financial circumstances of each party.
·The obligation is not created by the rules or the practice of the court and the rules simply set out the procedure by which that obligation may be fulfilled.
·If there is a deficiency in the practice adopted for the purpose of making such a disclosure, mere compliance with the requirements of the relevant rules if deficient, is not enough.
·If there is non-disclosure in the relevant sense then the failure to disclose undermines the whole process of adjudication of the proceedings in relation to financial matters.
·A finding of non-disclosure may in appropriate cases, depending on the circumstances, result in the other party being granted without more, the relief sought.”

Assets and liabilities as at the date of hearing.

I find the assets, liabilities and financial resources of the parties as at the date of hearing are as identified in the following table:

Assets as at the date of the hearing	$
Builders P/L (h)[3]	83,340
Paid legal expenses (h)	22,000
Drawings (h)	12,000
Cbus superannuation (h) (agreed)	17,527
Cbus superannuation (w) (agreed)	8,449
AMP superannuation (w) (agreed)	6,000
Furniture (h)	9,985
Furniture (w)	8,000
Motor bike and equipment (h)	16,390
TOTAL ASSETS	183,681
Liabilities as at the date of hearing
Taxation	20,835
TOTAL LIABILITIES	20,835
NETT ASSETS	162,856

[3] Plus interest at $740 per month

Unless stated differently, the figures in the table are taken from the parties’ financial statements.
The husband claimed that his furniture was sold for $850. If sold for this price he sold at a considerable undervalue. In June 2003 the husband retained South Coast Auctions to value the remaining contents of the home. These are the contents the parties owned at separation and which the husband retained. The valuer determined the fair market value of the goods. Fair Market value is “the acceptable price which a ready, but not anxious seller could obtain, if reasonable time is allowed to find a buyer, and if both seller and buyer are fully informed.” In these circumstances this is the appropriate valuation methodology. Excluding vehicles the household goods are worth $9,985[4]. Applying the principles in Townsend (1995) FLC 92-569 I am satisfied that the value of the husband’s household goods is as reflected in his valuation. His circumstances were not so strained that he needed to dispose of joint matrimonial assets for so little.
[4] Exhibit I
The wife has significant household goods taken at separation. I do not have a valuation for these assets. In her financial statement the wife says they are worth $8000. Compared to the husband’s household goods this amount appears reasonable. I will treat the wife’s evidence as admission against interests and thus find that these assets are worth $8000.
The wife owns a Mazda Astina worth $14,000. This is the car she purchased using $20,000 advanced by her parents. Initially the husband said the wife probably had sufficient savings to buy the car. This is highly unlikely. Later he admitted that he knew the wife received $20,000 but submitted that the funds were a gift to the wife. Unfortunately neither of the wife’s parent’s gave evidence. Thus although I am satisfied that they advanced the monies as alleged, there is insufficient evidence to establish that the advance must be repaid. Previous advances have always been repaid far sooner than in this instance. The fairest way to deal with the issue is to exclude the car and associated transaction from the asset pool. I will not take the alleged loan into account pursuant to s.75(2).
The wife believes that it is no coincidence that the husband wound the business back after separation. Basically, she suspects that he continues to trade and has hidden the profits and business activity or, that this is merely a hiatus and that as soon as the proceedings are over the husband will re-establish the business profitably. Suspicions are not evidence. During the marriage the wife contends that the business earned only a modest income and that the husband earned no more than she did. It is counter intuitive that after separation she claims that the business ought to have produced considerable profit.
During the hearing the husband was cross-examined at great length concerning withdrawals made from the company account. Basically any sizeable, and some minor, withdrawals were treated as suspicious. Focussing exclusively on withdrawals has the potential for a distorted outcome. Exhibit C comprises the companies’ bank account from shortly before separation until May 2004. There are numerous pages of banking transactions, deposit and withdrawals. The deposits are as significant as the withdrawals. These records corroborate the husband’s evidence that he continued to work after separation and that he also paid subcontractors. The company had work in progress, reflected in sizeable deposits in the vicinity of $25,000 and numerous withdrawals probably paid for materials and proper company costs. For example, contractors, insurance and the Kiama property mortgage. It corroborates his evidence that he drew down on the mortgage and deposited the entire proceeds into the company account. When the available funds fell to $2,281 in July 2003 the husband raised $51,436 which was deposited into the account. I do not know the source of these funds, but clearly the deposit has no nexus to the wife. In August 2003 the husband deposited $59,273.93 another transaction to which the wife made no contribution. It seems probable that these are payments for work in progress. If the husband was intent on destroying the business I consider it unlikely that these transactions would have occurred. Alternatively, if he embarked on a campaign to fraudulently secret assets or income I doubt that these transactions would be included in the companies’ accounts. The effect of this is that I am satisfied that after separation the husband tried to maintain the companies profitability. Also that the companies accounts record all of its income and expenses.
The wife claimed that the husband failed to adequately account for approximately $62,000 drawn from the company. Essentially this amount is $265,000, roughly the company account after the Kiama property sale proceeds were received less $59,865 for the expenses paid by his former solicitor, less $62,347 GST on the sale and $83,000 liabilities. Of the $62,000, $22,000 relates to monies paid to his former solictor which I will add back for reasons given later. Also, $12,000 paid to the husband which I will add back for reasons given later. In making this submission the wife’s counsel used the profit and loss statements that the accountants used to determine the companies value. Although the accountants did not conduct an audit neither suggested that there are funds unaccounted for. Subject only to my additional concern about TD’s motor bike transaction, I am satisfied that there are no funds missing. The wife’s counsel approached this issue without considering the significance that the sale proceeds are company assets and the manner in which the transaction is treated for accounting purposes. Later in these reasons I explain the manner in which the sale funds were accounted for in the profit and loss statement. Examined from that perspective I am not persuaded that money is unaccounted for.
In November 2003 TD purchased a motor cycle and riding gear which the husband uses. The wife alleges that TD purchased it on the husband’s behalf using monies the husband advanced from the company. Essentially their evidence the payments made were for painting work is a ruse by which the husband was able to take company money for his own use. While I am satisfied that the husband paid TD for painting work I do not accept that all funds paid to him are business related. Months before TD purchased the motor bike the husband made payments to City Coast Cycles[5]. This is where TD purchased the bike in November 2003. TD appears to be a man of modest means, a matter reflected in the husband’s earlier $5000 loan. On balance I do not accept that TD purchased the bike and equipment and am persuaded that the husband is the beneficial owner. The bike will be notionally added back into the asset pool.
[5] Exhibit C

After separation the husband continued to draw $300 per week wages. While he was living in the home and the company was paying the mortgage and rates this was sufficient for him to live on. However, as funds became tighter the husband moved out of the home and tenanted the property. The total rent was $4000, which is accounted for in the companies’ profit and loss statement. This appears to roughly coincide with the husband’s decision to increase his drawings to $1000 each week. I accept the husband needed more than $300 per week to live on. His drawings were taken from income the company earned nearly two years after separation. None of theses drawings came from the Kiama property’s sale proceeds. The wife contends that thus at least $12,000 should be notionally added back. I do not agree. I accept that the husband needed money to live on and that $1000 for the three months that he withdrew those moneys reflects no more than his reasonable living expenses.
I turn now to the companies’ value. At the hearing the valuers agreed that the company was worth $83,340. However the accountants were unaware that in late 2004 the husband’s former solicitor had taken $22,000 for legal fees associated with these proceedings. These monies were treated as ‘professional fees”, something they clearly are not. Upon being appraised of these transactions the amounts were reversed and shown as an amount receivable under the BC loan account. These funds can either be notionally added back, applying the principles in Farnell & Farnell (1996) FLC 92-681 or the loan account treated as an asset. I will take the first course as this avoids a round robin of payments in order to achieve the same outcome.
The valuers were also advised that the husband had sold the Nissan 300 and deposited its sale proceeds into the company account. As the Nissan 300 was included as a company asset and the loan as a company liability the net asset position had changed. The net effect of this transaction was a net loss on sale of the vehicle of $2,167. I have allowed depreciation because in this instance the loss is real and depreciation actual and not notional.
The companies’ main asset is the profit on sale of the Kiama property. The profit on sale in the Profit and Loss account was calculated as follows:
·Sale proceeds $485,000
·Legal fees on sale $855
·Estate agents fees on sale $10,670
·Cost of original purchase $285,807.68
·Net profit $187,667.32
I accept that this is the proper accounting treatment for these transactions. Notwithstanding the above transactions the valuers’ opinion remained unchanged. I am persuaded that the court should accept the opinion.
The husband took $12,000 for his personal expenses from the sale proceeds as drawings, later categorised as directors fees. There is a distinction between money drawn from work in progress and money drawn from the Kiama property sale proceeds. Although both are company assets it is reasonable that the husband drew wages or directors fees from income earned post separation. The Kiama property, as well as being a company asset was the matrimonial home, an asset to which the wife made a significant contribution. Taking money from the sale proceeds, without paying the wife a similar amount was inappropriate. In these circumstances the $12,000 will be notionally added back. The notional add backs can either be added onto the value of the company or alternatively and more simply treated as assets the husband has received. For ease of accounting I will take the later course.
Taxation was a highly contentious issue. During cross examination Mr Egan said that any payment from the company account to the parties will attract company tax. As a rule of thumb he said the effective taxation rate is 25%. This is the applicable rate if the parties receive the funds as shareholders by fully franked dividends and bonuses. If distributed directly the company is likely to incur higher taxation as well as paying superannuation and workers compensation on the payments. I was surprised when the wife’s counsel submitted that the court would disregard the taxation issue. In Rosati (1998) FLC 92-804 the Full Court held:
“If the Court orders the sale of an asset or if satisfied that a sale of it is inevitable or would probably occur in the near future, or if the asset is one which was acquired solely as an investment and with a view to its ultimate sale for profit, then generally allowance should be made for any capital gains tax payable on such a sale in determining the value of the asset for the purposes of the proceedings.”
Although the Full Court in Rosatti was concerned about capital gains tax the principles apply to all taxation issues. Because I am satisfied that the company must pay taxation on a distribution of its cash assets taxation is a liability that must be taken into account. Distributing the assets without any regard to the taxation consequences would be highly unfair. However the absence of precise evidence of the amount of taxation payable makes dealing with this issue unnecessarily difficult. So as to limit the prospect that I may do an injustice I will use 25% as a guide when calculating the asset pool and frame the orders in percentage terms. There will be additional accounting costs associated with finalising the companies’ affairs and giving effect to these orders. The quantum of these expenses is unknown. Fairness requires that any such expenses are treated as joint matrimonial liabilities. Once again the orders will be framed to reflect the liability.

Assessment of contributions and other factors

Section 79(4) requires that the court looks at the entirety of contributions, both financial and non-financial, for the welfare of the family as well as the acquisition, conservation and improvement of those assets. Contributions are not required to be tied to the acquisition, conservation, or improvement of particular assets and are to be taken into account generally as contributions in a total sense.
At the commencement of cohabitation the wife owned effectively a full compliment of household furniture and effects. She also owned a thirteen year old Honda Accord. The wife claimed that her initial contribution was approximately equivalent to the husband’s. The husband was the sole registered proprietor of Shellharbour. The property was subject to a Commonwealth Bank mortgage in the amount of $130,000. The net equity was approximately $26,500. Additionally, the husband had an interest in C S Builders Pty Limited. It is unlikely that the husband’s interest in the company had any value. The wife did not have any liabilities and neither party had any financial resources. I do not accept that the wife’s initial contribution was equal to the husband’s. The wife was a woman of modest means with few assets. She had no savings of significance. I do not accept that the wife’s used family furniture was nearly as valuable as she contends. Thus, the husband made a greater initial contribution than the wife.
After the parties commenced cohabitation and whilst they lived together both parties contributed all monies earned by them to the family. The wife’s net income is set out below:
·1996 tax year - $26,201.
·1997 tax year - $22,650.
·1998 tax year - $26,732.
·1999 tax year - $17,017.
·2000 tax year - $32,781.
·2001 tax year - $21,966.
·2002 tax year - $22,889[6].
[6] Exhibit A
During the years that the wife’s children lived with the parties, the wife’s income was substantially expended supporting her children. The husband’s taxation returns are not in evidence. However, he always drew more from the company than the wife. The company paid the mortgages, car leases and its own expenses. I infer that the company provided the parties with the bulk of the family’s income. The profitability of the company fluctuated throughout the parties’ relationship. This was due to a number of factors, including general trends in the building industry, economic activity and investor sentiment. I accept the wife’s evidence that the largest factor in the performance of the business, “the attitude and mental stability of the husband”[7]. The wife says, “The company Builder Pty Limited suffered enormously during periods when the husband became very depressed, unmotivated, unwilling to work and moody”. During financially difficult periods, the parties borrowed money in order to keep the company afloat. Monies borrowed from the wife’s family enabled the company to continue to trade, I infer particularly during periods when the husband was unable to work. The loans were relatively modest and repaid quickly. The advances are contributions made on the wife’s behalf. I infer that they were advanced because of the lenders’ relationships with the wife. During periods of higher profitability, the company made enough profit to pay out $160,000 on the Kiama property loan, funds that the company later drew against.
[7] Par 52
During the separations, the husband, through the company maintained its earnings and paid its outgoings without the wife’s assistance. Post separation the husband continued to work the company for approximately two and half years. Compared to the years that the parties cohabited this is a significant period during which the husband alone contributed to the business. Although in the long term his efforts did not turn a real profit, I am satisfied that he generally tried his best in difficult circumstances to maintain the company.
Both parties contributed all of their assets held at the commencement of cohabitation and income during cohabitation to joint matrimonial purposes. During cohabitation, when work was available and his health permitted it, the husband worked full time. He earned $17-$24,000 per annum. While both parties contributed to the income earned by the company, the husband’s contribution was significantly greater. Primarily, it was his building experience and knowledge in the industry that enable the company to trade. An important issue in this matter is the assessment of the weight that should be attached to the parties’ initial contributions. In Pierce v Pierce (1999) FLC 92-844 the Full Court of the Family Court held, “In our opinion it is not so much a matter of erosion of contribution, but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution”. While the wife’s furniture enabled the parties to have a more comfortable home, the husband’s ownership of Shellharbour was pivotal to the parties’ financial future. His ownership of Shellharbour enabled the parties to live in accommodation where the payment for the home’s expenses was legitimately met by the company and meant that the parties had a home that they could live in without paying rent. The monies paid into the mortgage worked for them, rather than a landlord. The wife’s submission undervalued the real significance of the nature and value of the husband’s initial contribution. More than anything else, it was his ownership of Shellharbour that provided the cornerstone for the parties’ subsequent acquisition of the Kiama property. Although improvements made to Shellharbour after cohabitation contributed to its capital growth, it appears that but for that capital asset the parties are unlikely to have acquired any significant assets. Shellharbour provided a capital base that the company used to secure its home warranty insurance and which enabled the husband and wife to pursue their building venture.
When evaluated comparatively, the husband made a greater initial contribution and a greater overall financial contribution to the acquisition, conservation, and improvement of the parties assets.
Both parties contributed to the maintenance and improvement of their homes. In relation to Shellharbour, the husband’s contribution is considerably greater than the wife’s. He completed substantial building works which extended the property. Whilst improving the gardens was time consuming, it is unlikely that the improvements for which the wife is solely responsible contributed as substantially to the increase in the property’s value as those for which the husband is solely responsible. Similarly, at Kiama, the husband continued to improve the property after the parties separated. Overall, the husband made a greater non-financial contribution to the maintenance and improvements of their assets.
The wife was primarily responsible for the day to day care of the home and the family. As well as the wife’s children, K, the husband’s eldest son, lived with the parties for eighteen months. Caring for each other’s children are factors to be taken into account under s.72(2)(o). The parties did not have children and the wife’s contribution as a home maker did not require caring for children. Nonetheless, her contribution is significant. See Ferraro.
The wife claims a Kennon & Kennon (1997) FLC 92-757 adjustment in her favour, because she says at times the husband was violent, was moody and mentally unstable. The husband agrees that during the latter part of their marriage he abused the wife and that prior to separation he assaulted her. In addition, nine months prior to the parties’ final separation, the husband assaulted the wife and, notwithstanding police advice that she should press charges, the wife did not.
In Kennon (supra) the Full Court held:
“Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage, which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a Trial Judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of negative contributions, which is sometimes referred to in this discussion. In the above formulation we have referred only to domestic violence, but for the reasons we have indicated earlier, its application is not limited to that.”
And further on:
“However, it is important to consider the floodgates argument. That is, these principles which should only apply to exceptional cases may become common coinage in property cases and be used inappropriately as tactical weapons or for personal attacks, and so return this Court to fault or misconduct in property matters, a circumstance which proved so debilitating in the past. In addition, there is the risk of substantial additional time and cost. However, in our view s.79 should encompass the exceptional cases which we described above. It would not be appropriate to exclude them as a matter of policy because of this risk. It is a matter of commonsense for the lawyers involved, and where that may not be sufficient it is a matter for a firm hand by the Court at an early stage when the case appears to raise those issues. It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contribution of the other party. It is not directed to conduct which does not have that effect, and of necessity, it does not encompass, as in Ferguson, conduct related to the breakdown of the marriage. Basically, because it would not have had a sufficient duration for this impact to be relevant to contributions.”
The wife’s counsel made passing reference to the Kennon claim. Probably, this is because her evidence does not fall within the Kennon guidelines. Kennon does not establish a principle of general application that any assault warrants adjustment in the spouse victim’s favour pursuant to s.79(4)(c). In Kennon, the Full Court referred to a course of conduct which has a discernable impact upon the spouse victim’s contribution. The wife’s evidence is of two isolated incidents, which although frightening there is no evidence either or both had a discernable impact upon her contribution.
As at the date of separation, the wife’s contribution as a home maker and to the welfare of the family exceeds the husband’s.
The orders do not affect either party’s earning capacity.
There are no child support issues that the court needs to consider.
I am satisfied that as at the date of the hearing the husband’s contributions are 60 per cent as compared to the wife’s 40 per cent.

Section 75(2) factors

Subsection (a). The wife is 48 years old and in good health. The husband is also 40 years old and physically is in good health. During the marriage, the wife says the husband became depressed and when depressed his capacity for work fell away. In mid-2001 he needed psychiatric care during a period when he was unable to work. Through psychotherapy and medication he settled and after a number of months was able to return to work. I make an adjustment in the husband’s favour pursuant to the subsection.
Subsection (b). The parties’ property and financial resources have already been addressed. The wife’s income is about $33,000 per annum. The wife is an experienced secretary in secure appropriately paid employment. The husband’s situation is less certain. The husband has worked as a builder or carpenter all his life. After working as an employee or subcontractor he entered a partnership in 1992 and says that at one time the business had $1,000,000-2,000,000 work in progress. If this evidence is correct, the husband and the business have little to show for this level of activity. Work in progress is but one part of profitability. A successful venture requires at least that the work in progress exceeds the cost of producing the work product. The husband’s modest assets at cohabitation, suggest that whilst C S Pty Limited in its few years of operation may have had significant work in progress, the work in progress did not result in significant profits. In his own business, the husband has, since 1996, earned a modest income. Unfortunately, I formed the view that although the husband may be a skilled carpenter and builder, as a businessman he is less able. Without asset backing and prone to depression, the husband has little prospect of running his own building company in the future. Although he may disagree, the husband is likely to obtain casual and subcontract work in the building industry. It is feasible, that as a subcontractor or casual employee, he may earn more than he has been able to earn running his own businesses. The husband’s capacity to earn an income is less certain than the wife’s. Nonetheless, because of his vast experience and physical good health, it is likely that the husband will earn at least as much as the wife earns for the foreseeable future. Accordingly, I make no adjustment pursuant to the subsection.
Subsection (c). Does not arise.
Subsection (d). The wife has the commitments set out in her financial statement. Neither she nor the husband has responsibility to support any child. The husband’s financial circumstances are presently tenuous. That is because he is unemployed and presently unable to access remaining company funds. The husband has been living with TD in TD’s home. Because he is unable to afford to rent his own home, the husband has needed to rely on his friend for accommodation and basic living expenses. This is a temporary situation and does not warrant adjustment pursuant to the subsection.

Subsection (e). Neither party has responsibility to support any other person.
Subsection (f). Neither party receives any entitlement referred to in s.75(2)(f).
Subsection (g). Both parties have endured a reduced standard of living. Because she is presently employed, the wife is able to afford her own rented accommodation. Nonetheless, her standard of living is modest. Presently unable to afford his own accommodation the husband shares with TD. He has endured a greater fall in his standard of living than the wife. However, the husband’s reduced standard of living is temporary and does not warrant an adjustment to the subsection. It cannot be ignored that the husband has had sufficient funds since separation to enjoy five overseas trips, whereas the wife has not travelled.
Subsection (h) – (l). These subsections do not arise.
Subsection (m). The husband shares accommodation with TD. The financial circumstances of this arrangement are temporarily advantageous to the husband. There is no evidence that TD will continue to support the husband and the arrangements do not warrant adjustment pursuant to the subsection.
Subsection (n). The court has made findings concerning the contributions phase. As a result of which the matrimonial assets will be divided 60 per cent to the husband and 40 per cent to the wife. There is no reason in the circumstances of this case that there should be any further adjustment pursuant to this subsection.
The only other factor that requires consideration is s.75(2)(o). During the parties cohabitation the wife’s three children lived with them for considerably longer than the eighteen months the husband’s son K resided in the home. There is no evidence that any of the parties’ children financially contributed to the home. I infer they did not. Thus, the parties used joint matrimonial funds in order to support their children. During the periods that the wife’s children lived with the family it is highly likely that the parties used a significant share of the family’s income providing for the children. The amount used for K is probably substantially less than that paid towards the wife’s children’s support. K and the wife did not enjoy a happy relationship and the wife performed few household chores for K. K was old enough to fend for himself. The effect of this is that the husband contributed significantly more to the wife’s children than she did for his. This factor warrants an adjustment in the husband’s favour pursuant to the subsection.
Having regard to all of the relevant s.75(2) factors it is appropriate that there should be an adjustment in the husband’s favour of 5 per cent. This outcome reflects the cumulative outcomes of the findings I have made pursuant to s.75(2). See Tomasetti (2000) FLC 93-023. Any lesser adjustment, given the modest asset pool would be notional.

Section 79(2) is this a just and equitable outcome?

The outcome of s.79(4) and s.75(2) has resulted in a distribution favourable to the husband 65 per cent as compared to the wife’s 35 per cent. This is a just and equitable outcome within the meaning of s.79(2). The reason is that the s.79 exercise requires that the court gives proper weight to the parties’ financial and non-financial contributions. In this regard, the husband’s initial contribution, although modest in dollar terms was pivotal to the parties’ capacity to acquire further assets. This is a matter where the home maker contributions entirely favour the wife. However, the period of cohabitation was approximately six years and her home maker contribution, whilst important, is not as significant as the financial and other non-financial contributions. Both parties worked to improve their property, the husband’s non-financial contributions being more significant than the wife’s. The husband’s financial future, having regard to his uncertain mental health and the possibility that he will not secure permanent full time employment, is more uncertain than the wife’s. The wife has secure appropriately paid employment that is likely to endure. This factor must be recognised appropriately.
The net assets to be distributed are $183,681 less taxation and accounting expenses. The parties’ accountants agreed that the most tax effective manner within which to distribute the assets owned by the company is by making the wife a shareholder and distributing her s.79 cash entitlement as dividends[8]. This way the company will pay tax on the dividends, but at a lower rate than if the monies are paid directly to the wife. The husband is agreeable to this approach. I will take the recommended course. The level of disharmony between the parties is high and it offends the s.81 clean break principle to keep the parties financially intertwined. Accordingly, upon the wife receiving the payment to which she is entitled the wife must immediately transfer to the husband her one share in the company. The husband is then free to formally wind up the company or try and re-establish himself if possible.
[8] Exhibit N
Excluding the company the net asset pool is $100,351. Of this reduced pool the wife has assets worth $22,449 and the husband has assets worth $77,902. Thirty five per cent of $100,351 is $35,122 therefore the husband must pay the wife an adjustment of $12,673. As a working guide, including interest of about $4000, less $20,835 taxation and $5000 accounting fees the company’s net position is approximately $61,500. Therefore the wife will receive about $21,500 plus $12,673 by way of adjustment. During the hearing she said her unpaid legal costs were about $40,000. This is an unfortunate outcome from her perspective and suggests little proportionality in her approach to this litigation. From the company assets the husband will receive approximately $39,900 from which he must pay the wife $12,673.

I say approximately because the accountant’s fees and taxation payable are not precisely known. The wife’s solicitors shall distribute the funds once the company’s accountants have determined their fees to finalise the accounts and comply with these orders as well as the amount payable to the ATO. The solicitors must first pay the accountants and ATO (if necessary in advance) before distributing the balance of the funds in accordance with these orders. This is to ensure that the full intent of my orders is implemented.
The accountants postulated that the company may have additional outstanding creditors. By virtue of my earlier partial property orders all known outstanding creditors have been paid. Although the matter has been re-listed on a number of occasions since the hearing neither party has indicated that there are any further outstanding creditors.

I infer that there are none. Therefore the company accounts shall be finalise without further provision for outstanding creditors, other than the accounting and ATO costs to which I have already made reference.
I am satisfied this outcome is just and equitable.
For these reasons the court makes the orders identified at the start of this judgment.

I certify that the preceding one hundred and twelve (112) paragraphs are a true copy of the reasons for judgment of Ryan FM

Associate: S. Mashman

Date: 19 April 2005