STEFANOVSKI & STEFANOVSKI

[2012] FamCA 284

FAMILY COURT OF AUSTRALIA

STEFANOVSKI & STEFANOVSKI [2012] FamCA 284

FAMILY LAW - PROPERTY – Application under s 79 for property orders and lump sum spousal maintenance – Where claim by Husband of imbalance in initial capital contributed – Where Husband’s evidence uncorroborated – Relevance of use made of initial capital – Where business lease – Where no asset reflected in small pool

FAMILY LAW - PROPERTY – Where claims for substantial “add backs” of notional property not pursued – Where lack of disclosure and evidence by the Husband

FAMILY LAW - PROPERTY – Where potential claim by Husband as co-surety of business debt – Where chose in action incapable of being valued – Where s 75(2)(o) factor is the serious illness and incapacity of the Wife – Where assessment of contributions – Where significant contribution by the Husband’s parents

FAMILY LAW – SPOUSAL MAINTENANCE – Section 75(2) factors – Where adjustment to the Wife for spousal maintenance – Where periodic maintenance determined to be more appropriate than lump sum maintenance

Family Law Act 1975 (Cth)
Family Law (Superannuation) Regulations 2001 (Cth)
Limitation Act 1969 (NSW)

AE Goodwin Ltd v AG HealingLtd (1979) 7 ACLR 481
AGC (Advances) Ltdv West (1984) 5 NSWLR 590
Albany & Albany (1980) FLC 90-905
Albion Insurance Co. Ltd v GIO (NSW) (1969) 121 CLR 342
Anast & Anastropoulos (1982) FLC 91-201
Bevan & Bevan (1995) FLC 92-600
Burke v LFOT Pty Ltd (2002) 209 CLR 282
Clauson & Clauson (1995) FLC 92-595
Figgins & Figgins (2002) 29 Fam LR 544
Hickey & Hickey (2003) FLC 93-143
In the Marriage of Weir (1993) FLC 92-338
Lane & Wharton [2010] FamCA 18
Lang v Le Doursicot (1993) 5 BPR 11
Mahoney v McManus (1981) 180 CLR 370
McLean v Discount and Finance Ltd (1939) 64 CLR 312
McMahon & McMahon (1995) FLC 92-606
Moulton v Roberts [1977] Qd R 135
Norbis v Norbis (1986) FLC 91-712
Nutting & Nutting (1978) FLC 90-410
Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116
Pastrikos & Pastrikos (1980) FLC 90-897
Pierce & Pierce (1999) FLC 92-844
Polonius & York [2010] FamCAFC 228
Saxena & Saxena (2006) FLC 93-268
Staples v Baker [1999] 1 Qd R 317
Zalewski & Zalewski (2005) FLC 93-241

APPLICANT: Ms Stefanovski

RESPONDENT: Mr Stefanovski

FILE NUMBER: SYF 4278 of 2006

DATE DELIVERED: 15 March 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Kent J

HEARING DATE: 31 October 2011, 1 November 2011 and 3 November 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms De Vere

SOLICITOR FOR THE APPLICANT: Barkus Doolan Kelly

Orders

1. The Husband relinquish to the Wife the remaining net sale proceeds of … S Street, Suburb K, held in a Controlled Moneys account and that this Order be authority for the immediate release of those funds, including any accretions, to the Wife.

2. The Wife retain as her sole property absolutely:

   (a)       any credit balance in her CBA bank account number … 24;

   (b)       the contents and medical equipment in her possession;

   (c)       the Wife’s superannuation interest described in these proceedings as her interest in the Commonwealth Financial Services account number 1;

   (d)       the Wife’s superannuation interest described in these proceedings as her interest in the Commonwealth Financial Services account number 2; and

   (e)       any interest the Wife still holds as a member of the Stefanovski Superannuation Fund.

3. The Husband retain as his sole property absolutely:

   (a)       any credit balance in his Westpac bank account;

   (b)       his interest in the company B Pty Ltd (ACN …);

   (c)       the jewellery in his possession; and

   (d)       the contents in his possession.

4. The Wife transfer and relinquish to the Husband all of her right, title in and to the following:

   (a)       Any claim the parties or either of them have as co-sureties in respect of any debt or the payment in whole or in part of any debt relating to any of the entities referred to in this Order;

   (b)       The Stefanovski Property Trust;

   (c)       The Stefanovski Property Trust No. 2;

   (d)       The Stefanovski Family Trust;

   (e)       C Pty Ltd;

   (f)       Stefanovski Holdings Pty Ltd (whether on its own account or as trustee of the Stefanovski Superannuation Fund or as trustee of the Stefanovski Property Trust); and

   (g)       B Pty Ltd (ACN …).

5. The Husband shall indemnify, and keep indemnified, the Wife against any liability of any nature which the Wife may have at any time arising in any way in respect of any of the entities referred to in Order 4, including any business or businesses conducted by any of those entities, including, but not limited to, R Business, whether:

   (a)       By reason of the Wife having been an employee or director or officer or shareholder of the company or entity;

   (b)       By reason of the Wife having been involved in any business conducted by any such entity;

   (c)       By reason of the receipt of the Wife of any money or distribution from any such entity; or

   (d)       By reason of the Wife having given or executed a guarantee of any liability or liabilities of any such entity;

   and such liability indemnified shall include, but be not limited to, liability to the Australian Taxation Office.

6. Except as specifically provided for by any Order to the contrary, as against the Husband, the Wife is the sole owner of, and the Husband has no interest in, all personal property (including choses in action) of whatsoever nature and kind in the possession or name of the Wife at the date of the making of this Order.

7. Except as specifically provided for by any Order to the contrary, as against the Wife, the Husband is the sole owner of, and the Wife has no interest in, all personal property (including choses in action) of whatsoever nature and kind in the possession or name of the Husband at the date of the making of this Order.

8. Except as specifically provided for by any Order to the contrary:

   (a)       The Husband shall indemnify the Wife from and in respect of all actions, claims, suits and demands as may be made against the Wife in relation to all liabilities in the name of the Husband; and

   (b)       The Wife shall indemnify the Husband from and in respect of all actions, claims, suits and demands as may be made against the Husband in relation to all liabilities in the name of the Wife.

9. Except as specifically provided for by any Order to the contrary, each of the Husband and the Wife release the other from all debts owing from one to the other.

10. Except as specifically provided for by any Order to the contrary, each of the Husband and the Wife shall retain absolutely all property or financial resources presently in the name or possession or control respectively of that party.

11. The Wife shall retain absolutely, for her sole benefit, any interest she has as a member of the Stefanovski Superannuation Fund, or in any fund to which the Wife’s entitlement in the Stefanovski Superannuation Fund as at 30 June 2009 was transferred to or rolled into, other than the E Superannuation Fund.

12. The Husband indemnify the Wife and keep her indemnified with respect to any claim made by P or D with respect to the withdrawal of funds held on trust by the parties or either of them for the benefit of either P or D.

Superannuation

1. In relation to the Husband’s entitlement in the E Superannuation Fund:

   (a) That pursuant to s 90MT(1)(a) of the Family Law Act 1975 that the Husband, a member of the superannuation fund, the E Superannuation Fund, and the Trustee of the E Superannuation Fund do all acts and things, sign all documents and give all consents so that whenever a splittable payment becomes available to the Husband from his interest in the Superannuation Fund, the Wife is entitled to an amount calculated in accordance with Pt 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a base amount of $161,964.93, and there is a corresponding reduction in the entitlement of the Husband had these orders not been made.

   (b)       For the purpose of this Order:

   (i)The base amount to be allocated to the Wife in the Superannuation Fund is $161,964.93; and

   (ii)The operative time for this Order is four (4) days following the making of these Orders and this Order is to take effect from that operative time.

   (c)       The Trustee of the E Superannuation Fund shall pay or transfer the entitlement of the Wife created pursuant to Order 13(a), in cash to another superannuation fund nominated by the Wife.

2. Within fourteen (14) days of the making of these Orders, each of the parties do all acts and things necessary to cause a sealed copy of these Orders to be served on the Trustee of the E Superannuation Fund.

3. Having been accorded procedural fairness in relation to the making of these Orders, these Orders bind the Trustee of the E Superannuation Fund.

4. These Orders relating to superannuation shall be binding upon the heirs, executors, administrators and assigns of the Husband and the Wife.

5. The Trustee of the E Superannuation Fund, in accordance with the obligations set out under the Act and the Family Law (Superannuation) Regulations 2001 (Cth), shall do all acts and things and sign all such documents as shall be necessary to record the entitlement of and make payment or transfer to the Wife in accordance with Order 13.

6. For the purpose of giving effect to these Orders, but only for that purpose, the Husband shall be permitted to draw down from his member account with the E Superannuation Fund to facilitate the payment required to be made to the Wife pursuant to these Orders, but otherwise the injunction imposed by Order made on 28 April 2011 remains in full force and effect pending compliance by the Husband with Order 13.

7. Upon the Wife’s nominated superannuation fund receiving cleared funds in the amount of $161,964.93, rolled into her superannuation fund as provided for in these Orders, the injunction provided for in paragraph 3 of the Order of 28 April 2011 is discharged.

Spousal Maintenance

1. The Husband pay or cause to be paid direct to the Wife or as the Wife may from time to time direct in writing, maintenance for the Wife in the sum of $375.00 per week, the first payment to be made within seven (7) days of the date of this Order, and then weekly thereafter. Such payments are to be made into the Wife’s Commonwealth Bank account number …24 or such other bank account as may be from time to time nominated by the Wife in writing.

2. The payments referred to in Order 20 terminate upon the first in time of the following events:

   (a)       The death of the Wife; or

   (b)       The death of the Husband.

Other

1. Each party have liberty to apply in respect of the implementation of any of these Orders on seven (7) days’ notice to the other party.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Stefanovski & Stefanovski has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4278 of 2006

Ms Stefanovski

Applicant

And

Mr Stefanovski

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are competing applications for property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) together with the Applicant Wife’s claim for lump sum spousal maintenance.

2. The trial of these proceedings occurred over three days on Monday 31 October 2011, Tuesday 1 November 2011, and Thursday 3 November 2011.

3. The subject proceedings were initiated by an application for final Orders on behalf of the Wife filed as long ago as 16 November 2006. The Wife filed an Amended Initiating Application on 3 November 2010 and a further Amended Initiating Application on 28 April 2011. For his part, the Husband filed a Response to the Application for final Orders on 15 January 2007.

4. Despite the iteration of Orders sought respectively by each of the parties in the documents just referred to; as well as the form of Orders sought on behalf of the Wife in her Outline of Case Document filed for this trial; in the end, the Wife sought by way of property Orders, a division of 70%/30% in her favour of a pool of assets discussed below, plus an additional award of lump sum maintenance in her favour.

5. For his part, the Husband ultimately sought Orders having the effect that the pool of assets discussed further below be divided 80%/20% in his favour, with there being no Orders for spousal maintenance, whether by way of lump sum or periodic maintenance.

6. In the circumstances of her ill-health and disability discussed below, the Wife pursued these proceedings via her Case Guardian, Ms G, who is her sister, and was represented by solicitors and Counsel whilst the Husband represented himself at the trial before me.

Relevant History of Relationship

1. The Wife was born in 1958, and is 53 years of age. The Husband was born in 1956, and is 55 years of age.

2. The parties commenced a relationship in 1987, but did not commence cohabitation until their marriage in January 1989. The Husband was then aged 32 years and the Wife 30 years.

3. There are two children of the marriage, namely P, born in January 1990, currently 22 years of age, and D, born in October 1992, currently 20 years of age.

4. There is competing evidence, and even internally inconsistent evidence, by both parties as to when their separation occurred, but this is to be understood against the background of a serious illness the Wife suffered and a particular episode of that illness in April 2004.

5. In each of her Applications referred to, the date of 9 April 2004 is nominated by the Wife as the date of final separation. However, in paragraph 9 of her trial affidavit, the Wife deposes that the marriage ended, “in mid to late 2006”.

6. For his part, in his affidavit for trial filed on 4 October 2011, the Husband deposes (in paragraph 4) to the parties having separated, “in April 2004” but when cross-examined before me, the Husband readily agreed that he was there referring to the physical separation of the parties, as opposed to the breakdown of the marriage. In his oral evidence, the Husband pointed to early 2006 as the time when the marriage ended, in circumstances discussed further below.

7. The significance of the date 9 April 2004 relates to the Wife’s medical condition. At trial, the Wife provided medical evidence from each of Dr H, locum haematologist, attached to Hospital 1, Mr J, a physiotherapist employed at that hospital, and Dr L, the Wife’s general medical practitioner. Reference to the affidavits and reports of those witnesses confirms that in January 2004, the Wife was diagnosed with Multiple Myeloma, a form of cancer involving the malignant proliferation of plasma cells in the bone marrow.

8. The Wife was being treated for this condition by Dr I with a variety of medications, when on either 8 or 9 April 2004, the Wife suffered an intracerebral haemorrhage that required surgery and thereafter a prolonged intensive care unit admission to Hospital 1. It appears that the Wife was comatose for a period, and during her initial admission, developed bilateral venous thromboses.

9. Following her intracerebral haemorrhage, the Wife has continued to suffer symptoms referable to it including ongoing problems of right-sided weakness, spasticity, and impaired speech. Underlying this condition remains her plasma cell myeloma, which also requires treatment.

10. Because of the haemorrhage, the Wife was in a coma for approximately eight weeks and spent a total of approximately five months in hospital. On 17 September 2004, the Wife was discharged from Hospital 1 to a nursing home in Suburb A. She remained there until August 2005, when she was discharged from the nursing home and began residing with her parents.

11. The Wife remains living with her father in his home in Suburb K. She has required significant aids and equipment, and is largely wheelchair-bound. She continues to suffer from the effects of her haemorrhage, and in May this year underwent surgery on her Achilles tendon, as well as a posterior tendon release in an effort to increase her mobility. She returned to Hospital 1 from late May until late July 2011 for that purpose.

12. Whilst the Wife can walk around her home unassisted, she uses her wheelchair for all other purposes. She has little movement in the right arm, but can write with her left hand.

13. Having had the opportunity to observe the Wife in Court, including when she was required to take an oath to give evidence, it is plain that her mobility is dramatically affected and the Wife had difficulty in repeating the oath administered to her. I should note that beyond being sworn to give evidence, the Wife did not actually give any oral evidence before me as after the Wife gave the oath, the Husband stated that he did not require her for cross-examination.

14. The Wife has required, and will continue to require, significant treatment for her myeloma condition. Dr H refers to the Wife requiring infusions every six weeks for the prevention of the development of bone lytic lesions, and Dr H postulates as to future treatment, but cannot predict the timing of same. Dr H postulates the potential need for, “a number of courses of different treatment modalities over the years, e.g. combination medications, including novel anti-myeloma agents, conventional chemotherapy, steroids, and potentially autologist stem cell transplantation.”

15. Dr H refers to the Wife’s current treatment being provided within the public hospital system, and at times that the Wife may require autologous stem cell transplantation, at significant cost, although notes that if this occurred in a public hospital, the cost would not be directed to the Wife. Mr J confirms in his evidence the Wife’s significant need for ongoing physiotherapy and likewise, Dr L outlines, in his evidence, both the Wife’s current treatments and her need for, “…lifetime high-maintenance care.”

16. Whilst the medical evidence before me does not contain a specific prognosis as to the Wife’s life expectancy, Dr H notes in her report dated 26 July 2011, attached to her affidavit, that, “In May 2011, I noted that [the Wife] had a steadily increasing paraprogrin level, consistent with disease progression.”

17. It seems that whilst the Wife’s medical condition and need for treatment imposed a physical separation upon the parties in April 2004, their marriage did not break down until early 2006, when disputes arose between the Husband, on the one hand, members of the Wife’s family, on the other, particularly centred upon the management of the Wife’s affairs and some perception on the part of members of the Wife’s family of a failure by the Husband to adequately provide for the Wife’s financial needs.

18. On the evidence before me, the Husband held a Power of Attorney for the Wife until, at the instigation of the Wife’s family members, proceedings in the Guardianship Tribunal ensued in 2006, which placed the Wife’s affairs in the hands of the Office of the Protective Commission. It seems that it is at that point, in early 2006, that it can be said that the marriage broke down irretrievably.

19. Throughout the period of the marriage, save for the period referred to above referable to the Wife’s illness, the parties resided with the Husband’s parents in a home owned by the parents. As noted, following her illness and hospital and nursing home accommodations, the Wife has since lived with her family and currently in a home owned by her father.

20. Taking the evidence as a whole, I find that the parties’ marriage broke down irretrievably in early 2006, rather than in April 2004 when a physical separation was dictated by the Wife’s medical condition.

21. I therefore find that the marriage relationship subsisted for slightly in excess of 17 years and, as earlier noted, it was a marriage which produced two now adult children.

22. A further period of more than five (5) years elapsed between the parties’ final separation and the trial before me.

Financial History

Initial Capital

1. At page 3 of his affidavit for trial filed 4 October 2011, the Husband deposes that at the date of commencement of cohabitation:

   I had a fully paid investment property at [… S Street, Suburb K], which I had purchased for $95,000 five years previously. A vehicle worth about $20,000, house contents and personal effects valued about $15,000, savings $6,000 and superannuation of about $160,000. About $15,000 cash in wedding gifts were received (jointly). No liabilities.

1. The Husband did not produce any corroborative evidence to establish that his property at S Street, Suburb K, was purchased for a price of $95,000.00 five years prior to cohabitation, nor as to its value at the time of commencement of cohabitation. Likewise, there was no evidence produced by the Husband to corroborate that the property was, “…fully paid…” in the sense that there was no debt owing on the property. For her part, at paragraph 14(a) of her affidavit filed 1 August 2011, the Wife deposed to the effect that she did not know how much S Street, Suburb K, was worth at the date of marriage, but positively asserts that it was then subject to a mortgage.

2. In paragraphs 15 and 16 of her affidavit for trial, the Wife positively asserts that the property at S Street, Suburb K, was not owned outright at the time of commencement of cohabitation. The Wife refers to her recollection that the Husband paid out the mortgage over that property in 2003, rather than prior to the parties’ cohabitation and marriage. As the Wife was not challenged by the Husband in cross-examination on this aspect, I accept her affidavit evidence in this respect. For reasons discussed further below, I have reservations about the Husband’s reliability as a witness and I am not prepared to accept his uncorroborated evidence on this aspect.

3. It is well-settled that it is not simply the dollar value of an initial contribution of capital which matters. Regard must be had to the use made of that initial contribution and the weight to be attached to an initial contribution of capital within the entirety of the content of the relationship.[1] Here, because the parties were able to live with the Husband’s parents, S Street, Suburb K, was utilised as an investment/rental property which provided a source of rental income to the marriage, subject to any question about paying the mortgage.

   [1] Pierce & Pierce (1999) FLC 92-844.

4. In the end, it is probably not necessary for the Court to determine its value or equity at the outset, because, as will be further discussed below, on 12 February 2010, settlement of the sale of S Street, Suburb K, occurred, and the net proceeds of $778,972.00 were paid to a creditor, ING Bank (Australia) Limited (“ING”), as and by way of reduction of overall debts of certain business interests, discussed further below, which at the time of payment were in the order of $1,200,000.00.

5. That is, the sale and use of the proceeds of S Street, Suburb K, is not currently reflected in the pool available for division between the parties because those proceeds were consumed in repaying business debt in the circumstances further described below, save that the significant reduction of a liability that might otherwise exist has an obvious effect.

6. As noted, the Husband claimed to have a vehicle (worth about $20,000.00) at the date of commencement of cohabitation/marriage. That would not seem to be in issue, as indeed the Wife asserts in paragraph 14 of her affidavit that the vehicle had a value of approximately $30,000.00.

7. The Husband also claims to have had house contents and personal effects valued at about $15,000.00 and savings of $6,000.00 at the commencement of cohabitation. The Wife’s affidavit is silent as to those claims.

8. As to superannuation, the Husband deposes to having superannuation, “…of about $160,000…” at the date of commencement of cohabitation/marriage, and in respect of that item, the Wife acknowledges in paragraph 14(c) of her affidavit that the Husband had superannuation, and she also acknowledges it to have been in, “…an unknown amount.”

9. As to the Husband’s claim to have had, “…about $160,000…” in superannuation as at the date of cohabitation/marriage (on 29 January 1989), I note that Annexure 10 to the affidavit of Ms G is a letter from the Husband’s then-solicitors, N Law Firm, to the Wife’s then-solicitors, which is dated 4 January 2007. I infer that the letter was written on the Husband’s instructions, as he acknowledges that firm as acting for him at the relevant time. Relevantly for present purposes, paragraph 3 of the letter reads:

   Our client was working at [Bank 1] and received a redundancy in 1991 of around $60,000.00 plus $120,000.00 in superannuation interest. He used the $60,000.00 as capital to start a company with his brother. Our client travelled overseas a number of times sourcing new products and building the business.

   It would follow that it was more than two years into the marriage that the Husband’s superannuation stood at $120,000.00 (not $160,000.00) and the $60,000.00 redundancy package allegedly received was likewise received more than two years into the marriage and was applied to the business operations that are discussed below.

10. I note that it follows from Annexure 13 to the same affidavit that the Husband apparently failed to provide relevant disclosure about the $120,000.00 allegedly held or received in superannuation, notwithstanding requests by the Wife to that effect and an Order, made on 9 May 2007, obliging the Husband to so do.

11. In the circumstances, I do not accept the Husband’s uncorroborated affidavit evidence that he had as much as $160,000.00 in superannuation at the time the parties married. Moreover, as will be further discussed below, absent the Husband’s explanations and evidence on the topic, it is not possible to discern in what way, if any, the Husband’s current superannuation held in his self-managed E Superannuation Fund correlates with any superannuation he held either at the time of marriage or from 1991. I refer below to the Husband’s lack of evidence concerning the relevant chronology of financial events, including events relating to the various Stefanovski entities discussed further below.

12. As to the Wife’s initial capital, at paragraph 12 of her affidavit, the Wife sets out the items and values of property she had at the date of commencement of cohabitation. She deposes to having a car worth approximately $10,000.00. The Husband would suggest it was worth (or was purchased for) $6,000.00. The Wife claims to have had savings of more than $10,000.00 and the Husband deposes that the Wife had a bank account but deposes to an “unknown” balance. I accept the Wife’s evidence as to this item. The Wife also deposes to having household contents worth $15,000.00, and again the Husband refers to the Wife having, “…personal effects…” of an unknown value, and refers to bedroom furniture purchased after the parties’ wedding of $7,000.00. The Wife further deposes to having jewellery worth approximately $5,000.00, and that is not challenged by the Husband. As to superannuation, the Wife deposes to having two funds with “[O] Superannuation”, but deposes that she does not know the value of those funds as at 1989, whereas the Husband says that the Wife had superannuation funds, “…in excess of $34,000…”

13. It therefore seems that as at marriage, the Wife stood possessed of property and superannuation with a combined value in the order of $70,000.00.

14. Again, given the meagre value of the non-superannuation assets now available to the parties, as discussed below, it cannot be said that those net assets now, many years later, reflect in any real connective sense the initial capital either party introduced. As to superannuation, absent documentary evidence I cannot determine how much superannuation the Husband held, but there is now $243,000.00 standing to his credit in superannuation. The Wife seems to have had $34,000, and now has two policies worth a combined $64,000.00.

15. The Husband’s affidavit for trial was sparse. It runs for a total of five pages, and contains very little to no information about the financial history of the parties. That financial history is to be gleaned from a combination of the Wife’s affidavit for trial; the affidavit of Ms G, the Wife’s sister, appointed her Case Guardian; the affidavit of Mr F, a chartered accountant engaged by the Wife to review the parties’ financial position and the oral evidence of each of Mr C Stefanovski, the Husband’s brother and Ms S Stefanovski, the Husband’s sister-in-law, who were subpoenaed by the Wife to give oral evidence in the proceedings before me.

16. At the time of the parties’ marriage, the Wife was working in the insurance industry in Suburb U. On and from marriage, the Wife’s salary was paid into a joint bank account with the Husband. The Wife took maternity leave for a few months upon the birth of the parties’ first child, P, who was born in January 1990, after which she returned to work full-time whilst P was cared for by the Husband’s mother while the Wife was at work. Similar arrangements occurred following D’s birth in November 1992.

17. In or about 1991, the Husband and his brother, Mr C Stefanovski, purchased the business known as R Business. Taken from the evidence of Mr C Stefanovski, it seems that this was a distribution business.

18. Mr C Stefanovski gave evidence to the effect that each brother contributed $60,000.00 or $65,000.00 approximately to the acquisition of R Business. Mr C Stefanovski rejected the proposition put to him by the Husband during cross-examination that it was the Husband who purchased the business initially, and that Mr C Stefanovski later supplied capital. I accept Mr C Stefanovski’s evidence that the business was acquired by the joint contributions of the brothers.

19. What is confusing about Mr C Stefanovski’s version of events, is that on his evidence the business was to be and remain that of the Husband and that Mr C Stefanovski’s contribution was essentially the result of urgings by the brothers’ father, Mr D Stefanovski, that Mr C Stefanovski should assist his brother, the Husband, without the expectation that he was a true “partner” or entitled to a share of the ownership.

20. What I found difficult to understand, on Mr C Stefanovski’s version, is that if the business was always intended to be that of the Husband, and Mr C Stefanovski never had any intention of deriving any benefit from the business operation, whether by salary or profit distribution or otherwise, that could readily have been achieved by Mr C Stefanovski advancing the funds without obtaining any ownership. In fact, it seems that the brothers initially operated the business as a partnership on a fifty/fifty basis, with Mr C Stefanovski being a “silent” partner in the business that was actually operated by the Husband and a similar corporate structure was subsequently employed. As will be discussed, there were other substantial transactions engaged in on a partnership or joint venture type business involving joint borrowings and investment which seem to me to be completely at odds with the merely passive role Mr C Stefanovski described of himself.

21. In this context, I note that Mr C Stefanovski is a consultant, and it seems that for significant periods he worked overseas.

22. On the Wife’s evidence, in 1993 she resigned from her external paid employment and commenced working full-time with R Business. She had undertaken assistance with the running of the business on weekends and on evenings prior to joining the business on essentially a full-time basis from 1993.

23. The Wife was not challenged in cross-examination on her evidence that when she joined the business on a full-time basis, she worked long hours for six days a week and for some three hours on Sundays as well. I accept the Wife’s evidence in this respect. That was the position until the Wife’s illness had its onset in late 2003 or early 2004.

24. I also accept the Wife’s evidence that the Husband was in the habit of making regular trips to Europe for several weeks per year during the marriage, during which the Wife cared for the children as well as operating the business in the Husband’s absence.

25. ASIC records reveal that on 5 February 1993, the company C Pty Ltd was incorporated, and it seems that it was from the time of incorporation of that company that R Business came under the control and operation of the company. Upon registration of C Pty Ltd, the directors of the company were the Husband’s parents, Mr D Stefanovski and Ms Z Stefanovski, and Mr C Stefanovski. In August 1993, the Husband was also appointed a director, and in or about December 2001, the Wife was appointed a director. Thus it would appear that from 1993, R Business was operated by C Pty Ltd.

26. This is at odds with the evidence given by Mr C Stefanovski. As already noted, he is a consultant, and his evidence is to the effect that it was his consulting business that was operated through C Pty Ltd until about 1997 or 1998, when the company also commenced to operate R Business. Mr C Stefanovski suggests that thereafter, the consulting income he produced was kept separate from the income of R Business, and that any income or distributions received by Mr C Stefanovski from C Pty Ltd was referable to the income he produced as a consultant. This appears to be at odds with the ASIC records, which, as noted, indicate that it was as early as 1993 that the Husband became a director of C Pty Ltd and that R Business was operated by C Pty Ltd from the time of its registration in 1993.

27. In the end, for reasons which follow as to the ultimate failure of R Business there appears to be no forensic necessity for me to determine this issue.

28. Mr C Stefanovski explained in his evidence that in about 1997 or 1998, the nature of R Business changed significantly. From a retailing/wholesaling operation, the business was taken in the direction of an importing and distribution business. It appears that this change in direction heralded the need for the business to make large outlays on importing containers of products in bulk.

29. Again by reference to ASIC searches and the affidavit evidence of the Case Guardian, it appears that on 8 October 2001, the company Stefanovski Holdings Pty Ltd was incorporated and that company was the trustee of the Stefanovski Superannuation Fund and it appears that each of the Husband, the Wife, Mr C Stefanovski and Ms S

30. Stefanovski were members of that fund. Stefanovski Holdings Pty Ltd was also the trustee of the Stefanovski Property Trust, a unit trust. Units in the Stefanovski Property Trust were held equally by Mr C Stefanovski and his wife, Ms S Stefanovski, and by the Husband and the Wife, and units were also acquired by the Stefanovski Superannuation Fund. On 20 December 2001, the Stefanovski Property Trust acquired the property at T Street, Suburb W, for a purchase price of $735,000.00 which was funded by borrowings of $515,000.00. Whilst the position is less than clear, it would appear that the balance of this purchase cost was funded via the acquisition of units in the unit trust by the Stefanovski Superannuation Fund. Thus it seems that the superannuation interests of the Husband and the Wife in the Stefanovski Superannuation Fund (as with other members), were at that point used in whole or in part to acquire units in the unit trust, which in turn funded the acquisition of the Suburb W property. The precise particulars of the funding via superannuation were not in evidence before me.

31. There were warehouses located on the property at Suburb W, and R Business relocated to that property and thereafter operated from that property.

32. I note at this point that whilst the affidavit evidence of Mr F, chartered accountant, contains an analysis of the unit holding in the Stefanovski Property Trust, and the notional entitlement of the Wife in the trust by virtue of the unit holding and a consequent analysis of the notional share of distributions to which the Wife was entitled (and this aspect formed a significant component of “add-backs” initially contended for on behalf of the Wife), it would appear that in the end, the “on paper” shares of profit and distributions were returned in one form or another to the business enterprise or to fund borrowings supporting the acquisition of units in the unit trust, and the Wife ultimately did not persist in her claim that these represented funds received by the Husband and used for his own benefit when the evidence did not support that proposition.

33. C Pty Ltd, as operator of R Business, leased the warehouses on the Suburb W property for the purpose of carrying on business, and obviously the capacity of C Pty Ltd to pay lease payments depended upon the viability of R Business.

34. On the evidence of Mr C Stefanovski, the business operations of R Business were successful in the sense of producing profits in the years 2001 to 2003. However, in mid-2003, the position was reached that significant stock had been accumulated and the then-rate of sales of that stock were insufficient to ensure that stock was sold before its “use-by” date in circumstances where the subject stock was perishable. It thus appears that a decision was made in about mid-2003 to open operations in Melbourne in addition to Sydney. Mr C Stefanovski gave evidence to the effect that there was something like $1,500,000.00 worth of accumulated stock in the Sydney warehouses of the business, with sales of about $60,000.00 per month, so that on a maximum two years of shelf life, something needed to be done to sell stock and that was the reason the Melbourne operation was commenced.

35. I accept Mr C Stefanovski’s evidence to the effect that the Melbourne operation was a business failure. This seems to have come about because it was contemplated that the Husband would make regular visits to Melbourne to supervise sales, but due to the onset of the Wife’s illness in 2004, and I have earlier referred to the fact that the Wife suffered an intracerebral haemorrhage in April 2004, those plans went awry because of the need for the Husband to attend to the Wife’s needs.

36. Obviously, the onset of the Wife’s illness prevented her from having any ongoing involvement in the business operations referred to, and it would seem that at that point, both Mr C Stefanovski, and his wife, Ms S Stefanovski, took more of an active role within the business.

37. Exhibit 7, being the financial statements for C Pty Ltd for the year ended 30 June 2008, discloses that for the year ended 30 June 2008, C Pty Ltd made a loss before income tax of $223,765.07; had accumulated losses to that date of $443,000.00 approximately; and had an excess of liabilities over assets in excess of $440,000.00. As per paragraph 32 of Mr F’s affidavit, from a sales figure of approximately $1.4 million in the 2005 financial year, sales in the 2009 financial year were less than half that amount at approximately $630,000.00.

38. In relation to the Stefanovski Property Trust, it seems that whilst each of Mr C Stefanovski, Ms S Stefanovski, the Husband and the Wife held units in the unit trust, payments to beneficiaries shown on the financial records for the trust as being received by those beneficiaries were in fact paid to the creditor, ING, in respect of loan funds advanced by ING to those parties to acquire units in the Stefanovski Family Trust established on 12 February 2000.

39. On 24 September 2008, Stefanovski Holdings Pty Ltd sold the property at Suburb W in order to reduce debt, and C Pty Ltd, trading as R Business, continued to lease the property from the new owners for the purpose of continuing to conduct the business. The 2009 financial statements for Stefanovski Holdings Pty Ltd as trustee for the Stefanovski Property Trust reflect the sale of the Suburb W property in that financial year.

40. Exhibit 2 is the settlement statement from the solicitors with respect to the sale of the Suburb W property. It reveals that from the net sale proceeds of approximately $892,000.00, after paying creditors, an amount of approximately $25,000.00 was paid to R Business and an amount of $336,000.00 was paid to the Stefanovski Superannuation Fund. As Mr F’s affidavit reveals (paragraph 8), units in the property trust were held by the Stefanovski Superannuation Fund. It would appear that the amount now held by the Husband in the E Superannuation Fund referred to below represents the Husband’s proportion of superannuation rolled over from the Stefanovski Superannuation Fund. Although there is no direct evidence from the Husband about this, it is a conclusion I infer in the absence of evidence from the Husband as to how his present benefit in the E Superannuation Fund has been funded apart from some contributions more recently via B Pty Ltd. The Stefanovski Property Trust, which held ownership of the Suburb W property, appears to have been wound up in the 2009 financial year.

1. An issue which loomed large in the proceedings before me was the fact that on 12 February 2010, the Husband settled the sale of the property he owned at S Street, Suburb K. It appears that that sale occurred without any notice to the Wife in circumstances where these proceedings were on foot in the context set out as follows.

2. In order to support the business operations, C Pty Ltd had sought and obtained from the creditor, ING, loan facilities with a limit of $1,200,000.00. It is that loan facility which comprised most of the liabilities of C Pty Ltd in the balance sheet for 30 June 2009 earlier referred to. Whilst C Pty Ltd was the borrower with respect to the loan facilities, those facilities were supported by security being taken by ING over the Husband’s property at S Street, Suburb K; real property at X Street, Suburb Y, owned by Mr C Stefanovski; and real property at Site 2, S Street, Suburb K, owned by the father of the Husband and Mr C Stefanovski, Mr D Stefanovski. In addition to that mortgage security, Mr C Stefanovski gave evidence, which I accept, that personal guarantees to support the borrowing were given by each of the Husband, the Wife, Mr C Stefanovski himself and the father, Mr D Stefanovski.

3. It appears that by September 2009, there was significant discord as between the Husband on the one hand and Mr C Stefanovski and his wife, Ms S Stefanovski, on the other. It appears that on 14 September 2009, notwithstanding that he was one of the directors of C Pty Ltd and a shareholder, and notwithstanding that the company then owed significant liabilities, most particularly to ING in an amount of approximately $1,200,000.00, the Husband elected to no longer apply himself in any respect to the operations of the business of that company. Ms S Stefanovski gave evidence to the effect that the Husband, “…did a runner,” on 14 September 2009, by which she meant that the Husband had then announced he was no longer going to be involved in the business. The extent of the discord between the relevant parties at that time is reflected in the feature that as at 14 September 2009, Mr C Stefanovski had then only very recently undergone liver transplant surgery and was recuperating from that surgery when he learned that the Husband had announced an intention to no longer involve himself in the business.

4. Again, on this important aspect, there is a dearth of direct evidence from the Husband. His version of events, to the extent that it can be described as a version, is reflected in his questioning of Mr C Stefanovski during cross-examination. The version of mr C Stefanovski is to the effect that, after being told by the Husband that the Husband was no longer going to involve himself in the affairs of C Pty Ltd, Mr C Stefanovski wanted to know what the Husband proposed to do about the significant liabilities of the company and in particular the debt to ING of $1,200,000.00. Both the Husband and Mr C Stefanovski appear to agree that a meeting was arranged by the company’s accountant, a Mr Z, which they both attended. The Husband’s questioning of Mr C Stefanovski included propositions he put to Mr C Stefanovski to the effect that the Husband was led to believe that Mr C Stefanovski was to pay, “…his share…” of the ING debt in an amount of $600,000.00 (one-half of the debt) and the Husband would sell his property at S Street, Suburb K, to fund the other half. Mr C Stefanovski rejects this version. On Mr C Stefanovski’s evidence, the Husband’s initial approach was that given that there were mortgages over the properties of each of the Husband, Mr C Stefanovski and the father, Mr D Stefanovski, the liability should be “split” three ways. Mr C Stefanovski confirmed that ultimately the Husband agreed that their father ought not be held accountable for the debt.

5. In the end, on the evidence before me an issue remained between Mr C Stefanovski and the Husband as to whether the Husband was morally obliged to meet the full liability (on Mr C Stefanovski’s version) or whether the Husband and Mr C Stefanovski were to be equally liable for the $1.2 million ING debt.

6. As noted, it is the Husband’s contention that he agreed to sell S Street, Suburb K, on the understanding that $600,000 of its proceeds would be applied to the debt, on representations to the effect that Mr C Stefanovski would meet the other half of that $1.2 million debt.

7. Exhibit 11 before me is some evidence that the Husband attempted to negotiate with ING about part of the proceeds only of S Street, Suburb K, being applied in reduction of the debt, and that upon payment from the sale of the security property, the Husband and the Wife would be removed as guarantors of the debt. However, some of the documents comprised in Exhibit 11 are incomplete, and those documents make it far from clear as to what ultimately transpired. That is, I cannot be satisfied on the documents contained in Exhibit 11 that the Husband succeeded in obtaining agreement from ING to release the Husband and the Wife from their personal guarantee.

8. What is clear is that upon sale of S Street, Suburb K, ING required the full proceeds of that sale to be applied in reduction of the loan owing by C Pty Ltd. Settlement of that sale occurred on 12 February 2010, and proceeds of $778,972.00 were applied in reduction of that loan facility.

9. The Husband subsequently resigned as a director of C Pty Ltd, and Exhibits 8 and 9 before me, being letters written by the Husband, reflect his approach that Mr C Stefanovski owes the Husband, amongst other claims, an amount of approximately $178,000.00 (plus interest), being the difference between the Husband’s notional “half-share” of the $1,200,000.00 ING debt, and the amount actually paid to ING from the proceeds of sale of S Street, Suburb K.

10. For his part, Mr C Stefanovski denies any liability to the Husband. As best as I can summarise it from Mr C Stefanovski’s evidence; he takes the view that he was only ever a passive or non-participating party in the business of C Pty Ltd so far as R Business is concerned (despite shareholdings or directorships etc.); and that in any event, he and his wife, Ms S Stefanovski, have continued, since the Husband’s departure from the business operations, to meet significant liabilities attaching to the business, including continuing to pay interest and like payments with respect to the ING debt.

11. On Mr C Stefanovski’s evidence, it would appear that R Business did not continue to actively trade for very long after the Husband’s departure, and as I understand his evidence, anything that was capable of being sold in terms of stock went towards liabilities of the company. Indeed it was Mr C Stefanovski’s evidence and that of Ms S Stefanovski that very significant amounts of stock could not be realised and further expenses were incurred in disposing of that stock, rather than it yielding any profit over and above liabilities. On the evidence of Ms S Stefanovski, by 1 April 2010 the landlord had taken possession of the premises from which the business had operated as the company/business could no longer afford to pay the rent.

12. Mr C Stefanovski referred to applying something like $600,000.00 of his own money to support C Pty Ltd over a number of years up until and post-2009. Challenged about that assertion, when reference is had to what is shown in the loan accounts of the company, Mr C Stefanovski suggested that capital he introduced to the company was reduced by reference to payments from the company referable to consulting income to which he was entitled. That is, that this provided a facility for him to receive repayments of what would otherwise be his loan account for the company, rather than receiving the income produced from his consulting operations. Mr C Stefanovski also referred to paying for significant items of stock for the company from time to time, including, he said, paying for a container load of stock sometime in 2002 or 2003, costing something in the order of $45,000.00. Ms S Stefanovski made reference to her and Mr C Stefanovski contributing something like $155,000.00 of their personal funds to the liabilities or debts of C Pty Ltd.

13. It is trite that there exists a prima facie right of contribution of a surety to require another surety to make a contribution towards payment of a debt to which they are jointly bound, such a right being long-established and deriving from equitable principles.[2]

    [2] Burke v LFOT Pty Ltd (2002) 209 CLR 282, 298-300; Albion Insurance Co. Ltd v GIO (NSW) (1969) 121 CLR 342; Official Trustee in Bankruptcy v Citibank Savings Ltd (1995) 38 NSWLR 116, 120 (Bryson J); Staples v Baker [1999] 1 Qd R 317.

14. There is authority that it is not necessary for the liability assumed to be a personal liability for the debt; and it is sufficient if a surety charges property with the payment of the debt.[3]

    [3] McLean v Discount and Finance Ltd (1939) 64 CLR 312, 350.

15. The right to contribution generally arises on more than the payment of the surety’s part of the debt.[4] Where guarantees are concerned, the right to contribution is not dependent upon demand actually having been made under the guarantee. It is sufficient if the guarantor has made payment in circumstances in which there is a real possibility that the creditor would resort to the guarantee.[5] There is also authority that the surety is entitled to interest on the amount of his or her contribution as from the date at which his or her payment first exceeded his or her proper share.[6] In determining the scope of liability to contribute, the prima facie position is that sureties who have co-ordinate liabilities should contribute equally.[7]

    [4] Mahoney v McManus (1981) 180 CLR 370.

    [5] Moulton v Roberts [1977] Qd R 135.

    [6] AE Goodwin Ltd v AG HealingLtd (1979) 7 ACLR 481.

    [7] AGC (Advances) Ltdv West (1984) 5 NSWLR 590, 604-605.

16. On the evidence before me, it would appear that the Husband has a prima facie right to receive contribution from his co-sureties with respect to the debt of C Pty Ltd, guaranteed by the relevant parties, to ING.

17. Of course, there may be potential defences to such a claim, and it is impossible for this Court to determine that it is conclusive that the Husband would ultimately succeed in a claim of this nature. On the evidence of Mr C Stefanovski, there may be potential set-offs or counter-claims with respect to any claim brought by the Husband, but again, given the reference to that in Mr C Stefanovski’s evidence rather than any detailed particulars, this Court is in no position to determine the merits generally concerning any dispute as between the Husband and Mr C Stefanovski and other relevant participants in any litigation on the issues agitated by the Husband. Likewise, aside from the contribution of a surety issue, this Court cannot determine whether there are any merits to the Husband’s other claims as agitated in Exhibits 8 and 9. There would need to be a forensic accounting exercise performed, by reference to relevant historical records, to determine whether Mr C Stefanovski has legitimate rights of defence or set-off or counterclaim to any claim by the Husband to recover $178,000.00 plus interest on a claim as co-surety and no such evidence was before this Court in these proceedings.

18. Before me, the Husband maintained that he would pursue formal legal action to redress his claims. So far as the contribution by co-sureties is concerned, I note that a claim for contribution, although based on equitable principles, is in New South Wales a cause of action to which the limitation period prescribed by the Limitation Act 1969 (NSW) (s 14(1)(a)) applies,[8] and so it would seem that the limitation period for instituting such a claim by the Husband has not yet expired.

    [8] See Lang v Le Doursicot (1993) 5 BPR 11, 782 (McLelland J).

19. The uncertainties as to any potential claim, on the evidence before me, extend to whether or not the Husband and the Wife would be treated jointly or severally; whether the payment by the Husband by the sale of his property would be treated as discharging any liability with the Wife as well; and the quantification of any contributions by Mr C Stefanovski and/or his wife, Ms S Stefanovski, in meeting interest or capital payments under the subject loan. Mr C Stefanovski gave evidence that he was in the process of attempting to re-finance the residual debt owing to ING (said to be something like $440,000.00). Obviously, if that was effected the ING debt would be extinguished and neither the Husband nor the Wife would be providing any security for the re-financed loan and, plainly enough, would not be providing security in the form of a personal guarantee for the new loan.

20. Given the lack of evidence to enable any realistic assessment to be made of the merits of any claim of the Husband and hence the value of that chose in action; and likewise the merits of any potential defences or counter-claims or set-offs that such a claim would face; it is impossible to ascribe any notional value to any potential chose in action vested in the Husband. It appears that these uncertainties dictated the Wife’s ultimate position of desisting from a claim that the amount of the alleged “excess” should be added back as a notional asset to the pool of assets to be considered in these proceedings. I set out below how, in these circumstances, I propose to deal with this aspect.

21. Another claimed notional asset, or “add-back”, initially contended for by the Wife, but which was not pursued as such by the time of final submissions, relates to the Husband’s removal of bank deposits held upon trust for the benefit of the parties’ sons, P and D. The evidence before me establishes that at a time when financial difficulties were being experienced in the business operations of R Business, the Husband caused, on or about 22 September 2004, term deposits held on trust for the benefit of the sons in a total amount of approximately $48,000.00 to be removed from deposit and applied to C Pty Ltd. Satisfaction on the evidence that the moneys had been so applied, and not used by the Husband for his own purposes, led to the Wife’s final position that it could not be contended that these funds be notionally “added back” to the pool for division. Even if the concession had not been made on that basis, it seems to me that it would be difficult for it to be contended that these funds be added back to a divisible pool in circumstances where it appears that prior to the removal of the funds, they were treated as being beneficially owned by the parties’ sons. Indeed, it seems to me that there is a contingent liability the Husband would face if the sons P or D or either of them pursued recovery action in the nature of a claim for breach of trust. In circumstances where the breach occurred, if it be a breach, as long ago as September 2004 and no claim of this nature has been advanced to date, it would seem a remote prospect that there would be any such claim now or in the future, particularly in circumstances where the initial source of the funds was obviously the parents themselves.

22. A further significant event in the relevant chronology of this matter is the incorporation by the Husband in March 2009 of his company B Pty Ltd, and the Husband’s creation by Deed dated 14 May 2010 of the E Superannuation Fund. The Husband is the sole director and shareholder of B Pty Ltd, whilst the trustees and members of the E Superannuation Fund are the Husband and one Ms M, a woman with whom the Husband says he shares accommodation but whom the Wife contends is in truth the de facto partner of the Husband.

23. The evidence establishes that in the months leading up to the Husband’s departure from involvement in C Pty Ltd in terms of his engagement in the business of that company, the Husband commenced to operate his own labour business, and it is that business which is operated by the company, B Pty Ltd.

24. The Husband’s failure to provide any detailed evidence on the financial history generally, but specifically as to this, does not reveal the source of funds currently held for his benefit in the E Superannuation Fund, which is outlined below. It would seem that an obvious inference is that these funds were “rolled over” from the Stefanovski Superannuation Fund after Stefanovski Holdings Pty Ltd sold the property at T Street, Suburb W, although the position is far from clear. It is a matter that could have been clarified by the Husband. Plainly enough, he would have records in his possession identifying how the E Superannuation Fund comes to have a substantial credit in favour of the Husband in the amount of $243,057.00. It would also have been open to the Husband to demonstrate any correlation between that balance of superannuation and the amount of superannuation he contends that he had at the outset of the marriage.

25. As already noted, in September 2008, Stefanovski Holdings Pty Ltd sold the Suburb W property and $336,000.00 of those proceeds were paid into the Stefanovski Superannuation Fund in respect of that fund’s unit holding in the Stefanovski Property Trust.

26. In his affidavit, at paragraph 50, Mr F details the balances held by the members in the Stefanovski Superannuation Fund as at 30 June 2009, subsequent to the sale of the Suburb W property and the distribution referred to. Relevantly, as at 30 June 2009, the Husband held $234,490.53 in his member’s balance and the Wife held $11,152.21.

27. As already noted, the E Superannuation Fund was created by Deed dated 14 May 2010, and I note that Annexure 50 to the affidavit of Ms G contains a St George Bank account opening confirmation receipt whereby an account was opened on 15 May 2010 for the E Superannuation Fund, with an initial cheque deposit of $230,166.62. In the absence of any explanation by the Husband otherwise, and in the absence of any disclosure by him to demonstrate otherwise, I infer that the opening deposit for the E Superannuation Fund was sourced from the Stefanovski Superannuation Fund and the apparent rollover of those funds from one to the other was caused by the Husband.

28. What is unclear to me, and I think unclear to the Wife given the Husband’s lack of disclosure generally and his otherwise failure to provide evidence, is whether the rollover amount includes in whole or part the member benefit of $11,152.21 standing to the credit of the Wife in the Stefanovski Superannuation Fund as at 30 June 2009, as earlier referred to.

29. Taken from the affidavit evidence of Ms G, it would seem that the power of attorney the Husband held to act as attorney for the Wife was suspended and subsequently terminated in 2006, and on 8 June 2006, the Office of the Protective Commissioner commenced to manage the Wife’s financial affairs. In May 2008, that management order appointing the Office of the Protective Commissioner was revoked, and since then, the Wife’s financial affairs have been handled by the Wife with family assistance. I mention this only because it is unclear to me how the Husband would have been able to facilitate removal of the Wife’s member benefits in the Stefanovski Superannuation Fund as a part of his benefits when the rollover to the self-managed E Superannuation Fund occurred.

30. It may be that the Wife retains some superannuation benefit in the Stefanovski Superannuation Fund, but the position is far from clear on the evidence before me. Given those uncertainties, I would not be prepared to include in the pool of assets to be considered any amount in favour of the Wife by way of an interest in the Stefanovski Superannuation Fund (if indeed that fund still exists), but the Orders I propose to make will include an Order that the Wife retain the benefit of any such interest. To the extent that the Husband may complain that the Wife is thereby retaining or receiving a benefit not otherwise taken into account in these s 79 proceedings, I simply refer to the affidavit of evidence of Ms G (which I accept) as to the concerted efforts that have been made on behalf of the Wife over a significant period of time to secure frank and full disclosure from the Husband, but that has not been forthcoming in many respects. If it be that the Wife retains a benefit not brought into account, then the Husband only has himself to blame for his failure to adequately explain the transactions under discussion or to make disclosure of documents making it plain as to the existence or non-existence of any interest of the Wife in the Stefanovski Superannuation Fund and/or the E Superannuation Fund in terms of sources of funding. There is ample authority for this Court to take a robust approach to such matters when non-disclosure or a failure to explain transactions is evident, as I find to be the case here.[9]

    [9] In the Marriage of Weir (1993) FLC 92-338; Dowrick v Sissons (1996) 20 Fam LR 466; In the Marriage of Chang and Su (2002) FLC 93-117.

1. As already noted, the parties, together with their sons P and D, resided with the Husband’s parents in a home owned by the parents throughout the marriage. As at 9 April 2004, when the Wife became debilitated by the intracerebral haemorrhage she then suffered, P was 14 years of age and D was 11 years of age. From a position where the Husband had been largely reliant upon the Wife and his own parents to supervise and care for his children, I accept that the Husband took time off work for a period and spent more time with his sons, although they continued living in the home of the Husband’s parents and were provided with a significant amount of care by the parents.

2. Unfortunately, it would appear that over the time since the Wife’s illness, not only has the Husband’s relationship with the Wife’s family become increasingly acrimonious, but it would also seem that the Husband has become estranged from his sons. I gather that this estrangement culminated in the Husband being prevented from seeing or contacting one or both of the boys via an Apprehended Violence Order.

Approach to Property Settlement

1. It is now well-settled that the preferred approach to the determination of an Application brought pursuant to s 79 involves four inter-related steps.[10] First, I 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. Second, I 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 which can be expressed as a percentage of the net value of the properties of the parties. Third, I should identify and assess the relevant matters referred to in s 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. Fourth, I should consider the effect of those findings and determinations and resolve what Order is just and equitable in all the circumstances of the case.

   [10] Hickey & Hickey (2003) FLC 93-143.

2. In many cases it is legitimate for the Court to adopt a global approach to the assessment of the overall entitlement of parties to property which involves the division of the parties’ assets on an overall proportion on a global view of the total assets. Alternatively, it may in the circumstances of the case under consideration be legitimate to adopt an asset-by-asset approach involving a determination of the parties’ interests in individual items of property.[11] There may also be circumstances dictating a “two pools” approach where non-superannuation assets and superannuation assets receive separate treatment.

   [11] Norbis v Norbis (1986) FLC 91-712.

3. In circumstances where the parties separated, on my finding, in early 2006, so that this trial occurs more than five years later, and obviously changes have occurred for both parties in the ensuing period, it might be thought that it is legitimate to adopt an asset-by-asset approach.

4. However, in my view, a just and equitable outcome is more likely, and a global approach here is legitimate, having regard to the following factors in particular:

   a)Neither party has proposed that an asset-by-asset approach ought be taken and indeed, both parties submitted to the Court on the basis that a global approach be taken, including both non-superannuation assets and superannuation in a single pool;

   b)Having married in January 1989 and final separation occurring in early 2006, the duration of marriage points to the legitimacy of a global approach, particularly in circumstances where no division of assets occurred at the time of separation;

   c)There has not been any significant build up in value or increase in assets overall since separation; for the reasons discussed below, the contrary seems to be the case; and

   d)As set out below, net non-superannuation assets total only a modest sum of $42,629.54 whilst the total of superannuation for both parties is $307,474.00 so that the reality of the situation is that the vast bulk of the “pool” is superannuation and as already noted, the Husband is 55 years of age and the Wife is permanently disabled from employment.

5. In these circumstances, having regard to relevant authorities, I will adopt a global approach as being the legitimate approach in this case.[12] As both parties urge the approach that non-superannuation assets and superannuation be included as a single pool and having regard to the length of the marriage and the age of the parties, I propose to take that approach.

   [12] McMahon & McMahon (1995) FLC 92-606; Zalewski & Zalewski (2005) FLC 93-241 per Finn J at [42]; Polonius & York [2010] FamCAFC 228 at [92]-[93] and Lane & Wharton [2010] FamCA 18.

6. In circumstances where I am to consider both Orders for property settlement and the Wife’s additional application for spousal maintenance, I ought determine the property Orders before considering maintenance as the relevant financial positions of the parties need to be reassessed in light of the effect of property Orders before maintenance is considered.[13]

   [13] Albany & Albany (1980) FLC 90-905; Pastrikos & Pastrikos (1980) FLC 90-897; Anast & Anastropoulos (1982) FLC 91-201; Clauson & Clauson (1995) FLC 92-595; Bevsn & Bevan (1995) FLC 92-600.

Step 1 – Identification and Valuation of Assets, Liabilities and Financial Resources

1. Based upon the document then identified as “Joint Balance Sheet”, dated 31 October 2011 and handed up at the outset of the trial, there was very significant contention between the parties as to the items and value to be included in the “pool” of assets and liabilities.

2. The fundamental difference was that the Wife sought very significant “add-backs” totalling some $554,000.00 (approximately). By the conclusion of the trial and having regard to all of the evidence, the Wife did not persist with her claim that these items should be notionally added back into the pool, although the Wife relies upon those factors as regards the assessment of contributions, and also with respect to s 75(2) factors discussed further below.

3. I find that the items and values of the relevant components to be considered are as follows:

Assets

Ownership	Description	Value
1.   Joint	Controlled monies account – net sale proceeds of Suburb K property	$17,245.54
2.   Wife	CBA Bank Account No. …24	$551.00
3.   Wife	Contents and medical equipment	$2,000.00
4.   Husband	Westpac Bank Account	$1,350.00
5.   Husband	Interest in B Pty Ltd	$21,089.00
6.   Husband	Jewellery	$1,500.00
Gross total of non-superannuation assets		$43,735.54

Liabilities

Ownership	Description	Value
1.   Wife	Centrelink Family Tax Benefit Debt	$1,106.00
Total net non-superannuation assets		$42,629.54

Superannuation

Ownership	Description	Value
1.   Wife	Commonwealth Financial Services Account No. 1	$58,019.00
2.   Wife	Commonwealth Financial Services Account No. 2	$6,398.00
3.   Husband	E Superannuation Fund	$243,057.00
Total superannuation assets		$307,474.00
TOTAL POOL INCLUDING SUPERANNUATION		$350,103.54

Pool Issues

1. The Husband included in his Financial Statement a value for his interest in B Pty Ltd at $4,798.00. However, the best evidence of the value of the Husband’s interest is provided by Exhibit 4, comprising the 2010 Financial Statements and Income Tax Returns for B Pty Ltd and the Husband. It can be seen from the Balance Sheet of the company that the net asset position of the company as at 30 June 2010 was $21,089.00, and in circumstances where there is no formal expert accounting valuation of the business, I find this is the best evidence available as to the value of the Husband’s interest and I adopt that value.

2. During submissions, the Husband made no submissions to me to the effect that I ought not include the value of his interest in B Pty Ltd at the balance sheet value or that his value for his interest he had contended for was maintainable.

3. It can also be seen from Exhibit 4 that a motor vehicle is included in the non-current assets, as well as the hire-purchase liability for that vehicle being included in the non-current liabilities. This refers to a Volkswagon van acquired by the Husband for the business and as that is reflected in the financial statements of the company, it ought not be treated as a separate item in the Joint Balance Sheet, as was the case.

4. As already noted, the Joint Balance Sheet contains a number of items which the Wife had initially sought to be included as, “add-backs” or notional property, but these claims were not maintained by the conclusion of the trial. That change in position does not reflect any unreasonableness on the part of the Wife in initially maintaining that significant sums should be notionally added back to the pool. This is because the Wife’s position altered by reason of information provided via evidence at the trial that would normally be available to a party by full and true disclosure or the frank exchange of information prior to trial, which did not occur here. It was the evidence at trial, including documentary evidence, and the oral evidence of each of Mr C Stefanovski and Ms S Stefanovski, that clarified matters, particularly with respect to the relevant history of events concerning C Pty Ltd.

5. I have already dealt with the Wife’s preliminary contention, not ultimately persisted in, that the funds removed by the Husband, held on deposit on trust for the sons, ought be notionally added back to the pool for division. As I have earlier noted, no sum should be added back for this, and indeed this item may properly be seen as a contingent liability in the circumstances already discussed. Whilst I do not make allowances for it in the sense of adding any amount as either an asset or a liability to the pool, I propose to deal with this contingency in Orders as part of the Husband retaining the benefit of any claims with respect to the business operations, as well as indemnifying the Wife with any burdens referable to those operations and what occurred.

6. Another claim ultimately not persisted in by the Wife was that, “…sale proceeds of [R Business],” be added back in an unspecified amount. Again, it is understandable that there would be an expectation on the part of the Wife that the business was capable of being sold or was sold given, for example, the levels of stock usually carried. However, the evidence of Mr C Stefanovski and Ms S Stefanovski establishes that the business was wound down and ultimately ceased trading and the majority of stock was lost. That is, it would appear that whatever stock was sold was insufficient to meet the debts of the business and there is a significant residual debt to ING as well as other creditors.

7. The other items of claimed add-backs which were not pursued ultimately by the Wife relate to items identified by Mr F as set out in his affidavit evidence. These are, in essence, amounts identified in the accounts of the entities as distributions of profit or payments from one or other entity which the Wife did not actually receive. However, it would appear that whilst such payments and distributions were accounted for in the financial records of the various entities, any actual income or profits or share of proceeds, for example, from the Suburb W property, were returned to pay debts; either personal debts of the parties or business/company debt. Thus, whilst these are not notional “add-back” items, it is relevant to the assessment of contributions discussed below that amounts to which the Wife may have then been entitled were in fact not received by her but returned to support the business operations for a number of years post-separation or to pay personal debts incurred to fund the acquisition of units in the Stefanovski Property Trust or the associated Stefanovski Family Trust.

8. In dealing with the financial history of the parties outlined above, I have already dealt at some length with the sale by the Husband of the property at S Street, Suburb K, and the application of the proceeds of sale of that property to the debt owing by C Pty Ltd to ING. I have referred to the potential claim by the Husband against co-sureties (or perhaps the claim by the Husband and the Wife). I have also referred to the fact that it was the Husband’s position before me that he intends to pursue action not only in respect of the alleged “excess” he contributed via that sale, but also other claims he has against the company and/or Mr C Stefanovski.

9. Whilst there is considerable authority that choses in action are “property” for the purposes of s 79 of the Act,[14] for reasons I have already explained, it is impossible on the evidence before the Court to attempt to place a value on any such chose in action. It seems to me that the appropriate method of dealing with this aspect of the matter is to consider it, so far as it is relevant, in the assessment of contributions and otherwise as a fact or circumstance to be taken into account under s 75(2)(o) of the Act.

   [14] See, for example, Spellson & George (1989) FLC 92-046; Schreiber & Dickson (1977) FLC 90-274; Matusewic v Matusewic (1978) FLC 90-481; Duff (1977) FLC 90-217; Holden (1987) FLC 91-842; Best (1993) FLC 92-418.

10. It will be seen from the Joint Balance Sheet that the Husband proposed that certain liabilities be included. First is the Citibank Visa Card debt of $3,710.00. However, on the evidence before me, it is plain that this is a debt accumulated by the Husband post-separation of the parties, and in circumstances where he has had available to him income post-separation which is not brought into account, I do not propose to include that liability.

11. I have already dealt with the “VW Finance” liability which is attributable to the motor vehicle already referred to and which is taken into account in the valuation of the Husband’s interest in B Pty Ltd and therefore ought not be accounted for again separately.

12. The Husband also sought to include an amount of $13,174.00, being a liability the Husband has for legal costs with respect to these proceedings. The Husband has not paid those costs. Again, in circumstances where the Husband has had available to him over the lengthy period since separation income not brought into account, and in circumstances where he has not paid these legal fees, I do not propose to bring that liability into account, having regard also to the feature that there is no evidence before me that the Wife has paid any legal fees with respect to these proceedings. On the material before me, there is reference to the Wife seeking grants of Legal Aid.

13. The Husband also sought to include as a liability a fifty percent share of a liability said to be owing to Westpac in the sum of $7,390.00. As the Husband confirmed in submissions, this relates to a debt from family enterprises involving his brother. It is actually a debt of C Pty Ltd, according to the Joint Balance Sheet, and the Husband has not established, by evidence, how it is a debt owing by him and I do not therefore include it.

14. Finally, the Husband sought to include an income tax liability amounting to $3,414.00, but again, that liability relates to post-separation income enjoyed by the Husband, and for that reason ought not be included.

15. As will be noted, the sobering feature for the parties is that non-superannuation assets total a net modest sum of only $42,629.54 and the total of superannuation held by the parties is $307,474.00, a combined “pool” of only $350,103.54.

Step 2 - Contribution-Based Entitlements of the Parties (ss 79(4)(a), (b) and (c))

1. Before dealing specifically with this step, it is important that some observations be made about the evidence before me.

2. My assessment of the Husband as a witness, regrettably, is that he demonstrated many of the hallmarks of a witness upon whom the Court cannot confidently rely as a credible witness. It seemed to me that the Husband had difficulty distinguishing between his role as an advocate seeking to maximise his position and his role as a witness in giving evidence in the case. To my mind, when giving evidence on matters which he perceived may damage his case, the Husband was less than forthright, and prevaricated or obfuscated. He was unwilling to make concessions until points were reached in his cross-examination where there was no alternative.

3. For example, the sum total of the evidence the Husband offered in his affidavit for trial as to his current employment and business is as follows:

   Presently, I am employed as a contracted [labourer] on a casual basis; my contract expires 19/11/2011. There are many contractors tendering and it is unlikely I will be granted an extension to the contract.

4. An objective reader would conclude from that deposition that the Husband is in casual employment on a contract basis which is precarious.

5. Cross-examination of the Husband revealed that via the entity B Pty Ltd, the Husband employs some fifteen or more contract labourers in a labour business the Husband owns and operates via that entity. Exhibit 4 being the financial statements for the company for 2010 (the Husband offered no more current figures), reveals that for the 2010 financial year, the business operated by the company received service fees of $272,461.00. In circumstances where the business only commenced operations in about March 2009, Exhibit 4 reveals that for the 2009 financial year, the service fees received totalled $49,080.00. Given that the business was operating for about one-quarter of the 2009 financial year, it can be seen that the 2010 financial year figures represent both a significant increase in turnover and renders the Husband’s affidavit evidence less than frank and forthright in terms of the nature of his employment.

6. A further example of the Husband’s preparedness to attempt to mislead, prevaricate and be less than forthright is the Husband’s evidence concerning his removal, on about 7 June 2005, of sums totalling $47,694.01 held by the parties’ jointly on term deposits on trust for their sons, P and D.

7. Notably, in the knowledge that this was an issue for the Wife, given that she did not know about, nor consent to, the withdrawal at the time it occurred, nor had she been provided with any explanation of the use made of the funds and thus at trial sought an add-back to the pool in that amount; the Husband’s affidavit for trial is devoid of any reference to this transaction.

8. Cross-examined at trial about this, the Husband attempted to convey the impression, initially, that these funds had been withdrawn by his sister-in-law, Ms S Stefanovski, without his specific authority. He gave confusing evidence about a discussion with Ms S Stefanovski some weeks before the withdrawal, when Ms S Stefanovski had allegedly referred to the need to pay for a container or containers of imported materials for the family business in circumstances where there were no funds to pay for the container or containers. The Husband attempted to convey the impression that Mr S Stefanovski used the Power of Attorney the Husband then held with respect to the Wife to remove the funds from the bank accounts.

9. Subsequent and inconsistent oral evidence that the Husband gave suggested that he had received assurances from Ms S Stefanovski that the funds would subsequently be returned to the Husband once the business was in a position to do so, or that it was some temporary arrangement.

10. Ms S Stefanovski was subpoenaed by the Wife to give oral evidence at the trial. She did not file an affidavit. Her evidence, which I accept on this point, confirms that the Husband authorised, personally, the bank to effect the withdrawal of these funds. It was the Husband who held his Wife’s Power of Attorney and of course the Husband would be a necessary signatory to effect any withdrawal from a jointly held account.

1. It does no credit to the Husband that he attempted to mislead the Court on this aspect of the matter. I find that it was the Husband who authorised and caused the withdrawal of funds to be made, and it matters not whether it was Ms S Stefanovski or anyone else who physically collected the funds from the bank. They were applied to C Pty Ltd in circumstances already discussed.

2. Given that the evidence establishes that these funds were applied to the business, the Wife did not persist in her claim for this sum to be notionally added back to the property pool, leaving aside any question of whether the funds ought to have been added back in any event, in circumstances where they were apparently beneficially owned by the sons.

3. Another example of the Husband being prepared to provide a less than balanced or fair account of events and indeed to portray himself as a victim where that was not justified, relates to the Husband’s departure from the business of C Pty Ltd on or about 14 September 2009.

4. In his oral evidence, the Husband advanced the proposition that he was left with no choice but to leave the business because he was not being paid enough. He referred to his weekly wage being reduced to something like $350.00 per week, and sought to convey that he was being treated unfairly, as if an employee. This overlooks the fact that the Husband was at least as responsible for the business affairs conducted through the entities referred to below as anybody else. He bore primary responsibility for sales. He was effectively self-employed as a partner in the business via the corporate structure with other family members. The evidence establishes that the business income declined in circumstances where, by March 2009, the Husband had commenced to pursue his individual interests via the labour business operated by B Pty Ltd and notwithstanding that by September 2009, the Husband had essentially been in a business partnership with his brother for almost two decades, he announced to his sister-in-law Ms S Stefanovski (Mr C Stefanovski’s wife) that he was leaving the business. That was at a time when only some three or so weeks earlier, Mr C Stefanovski had undergone liver transplant surgery and was recuperating.

5. Mr C Stefanovski gave evidence to the effect that from a position where sales were $40,000.00 per month prior to the months leading up to September 2009, the sales figures had by then reduced to something like $14,000.00 per month, and the business obviously had outgoings to meet. It is clear enough that by September 2009, the capacity for the Husband to be paid was deteriorating by reason of a deterioration in sales for which the Husband himself was primarily responsible in terms of having a key role to play with respect to sales. It therefore is disingenuous for the Husband to suggest that he left simply because “they” were no longer paying him enough by way of wages.

6. The Wife provided affidavit evidence for the trial. She was available to be cross-examined. It was explained to the Husband the potential ramifications if he chose not to cross-examine any witness called in the Wife’s case, including the Wife herself. Having indicated initially that he wished to cross-examine the Wife, the Wife was called for that purpose and was administered the oath. However, at that point, the Husband elected not to cross-examine her.

7. Whilst in paragraph 12 of his affidavit for trial, the Husband asserts propositions to the effect that by reason of her illness, the Wife is not a reliable witness; and annexes a document dated as long ago as 24 November 2005 in support of that assertion; the Husband did not test that theory by cross-examining the Wife and I have the evidence of the Wife’s treating general medical practitioner, Dr L, whose affidavit was filed on 11 October 2011.

8. Dr L provides evidence as to the Wife’s capacity to give instructions and swear an affidavit in these proceedings. In her report dated 12 August 2011, Dr L opines:

   I have examined [the Wife] on 8.8.11. I explained about the affidavit she has to sign regarding her marriage & relationship. She was fully aware of all the circumstances & understands fully all the proceedings, her medical problems and all other issues. I certify that [the Wife] is medically and mentally fit to understand and sign the affidavit.

9. I record that Dr L has been the Wife’s treating general medical practitioner for many years and that Dr L was not challenged by cross-examination by the Husband. In those circumstances, I prefer the evidence of Dr L as to the Wife’s capacity and reject the Husband’s proposition that doubt attends the veracity of the affidavit evidence she provides. I find that the Wife’s evidence, where not put in issue either by competing affidavit or other evidence, including exhibits, is capable of being relied upon and ought be accepted.

10. I find that another reason for approaching the Husband’s evidence with caution is the evidence before me establishing that the Husband has been less than frank and forthright in his disclosure in these proceedings. It must be kept in mind that in these proceedings, it is “disclosure” and not simply “discovery” that a party to litigation is obliged to provide. I accept the evidence of Ms G, as set out in her affidavit, as to the concerted efforts made on behalf of the Wife over a significant period of time to obtain timely information from the Husband on a variety of relevant topics. As that evidence makes plain, the Husband has failed in many instances to properly or adequately explain matters that he ought to have explained. A simple example is the request for answers to specific questions annexed to the affidavit, and consideration of the Husband’s response, which is woefully inadequate.

11. In assessing contribution, I take into account the financial contribution made by the Husband with respect to the property he introduced to the relationship, including his ownership of S Street, Suburb K. However, for the reasons already discussed, it is impossible to place any reliable value on the real property at the time of its introduction, or the Husband’s equity in that property, as the Husband has not provided corroborative evidence of these matters. Moreover, given the pool under consideration, it must be noted that the ultimate sale of the S Street, Suburb K property was utilised to reduce the debt of C Pty Ltd so that the effect is that there is less debt but no assets which can be pointed to in the pool referable to the property. Notably, there is no separate value or asset represented by C Pty Ltd to be considered in the pool.

12. Likewise, the paucity of the evidence that might have been gathered by the Husband to demonstrate otherwise does not lead to the conclusion that the Husband’s presently existing superannuation in the E Superannuation Fund correlates to the superannuation the Husband had at the outset of the relationship. In particular, the dealings with the acquisition of the Suburb W property by the relevant trust, and the fact that the then-existing Stefanovski Superannuation Fund acquired an interest in the entity which acquired the Suburb W property and thus received a share of proceeds of its sale, makes it far from clear whether, and to what extent, the E Superannuation Fund held by the Husband is referable to that transaction and of course, given what is discussed further about the Wife’s contribution to business operations, there is an indirect contribution by the Wife to the Husband’s present superannuation in any event.

13. Whilst I am satisfied that the Husband worked hard during the marriage, he deposes on page 4 of his affidavit filed 4 October 2011 to receiving modest salary income over the years, albeit that, as he deposes, the parties were able to send their sons to private schools for their education and to enjoy a reasonable standard of living.

14. Of course, given the Wife’s contributions to the business as discussed below, the salary received by the Husband was indirectly contributed to by the Wife.

15. It seems to be the case that the Husband was able to supplement his income from business operations by renting the S Street property because, again as a contribution notionally on the part of the Husband, the parties and their sons were able to live with the Husband’s parents throughout the duration of the relationship. Again, lack of evidence provided by the Husband does not demonstrate the amount of rental income received from S Street at any time, or the extent, if any, that such rental income exceeded mortgage repayments prior to the discharge of the mortgage.

16. It is clear enough that the Husband’s parents provided significant contributions to the family, both in allowing the family to reside in their home and in the care they provided for the parties’ sons when the parties were working, and again this may be treated as a contribution by or on behalf of the Husband. Against that, the Wife deposes, and I accept, her role as primary carer of the sons throughout the marriage subject to the limitations imposed by her need to apply herself to, first, her external employment, and subsequently, her engagement or application to the business enterprises. The Wife also assisted the Husband’s parents because of her attention to domestic tasks and as Mr D Stefanovski and Ms Z Stefanovski grew older she deposes to providing them with care, and I accept that evidence.

17. I also accept the Wife’s evidence that her contributions to the family and to the care of the boys had the feature that, as she deposes, each year the Husband would travel to Europe and spend time there. Responsibility thus fell to the Wife both for business matters and parenting in those periods. Those trips by the Husband also had to be funded.

18. I also accept that a greater burden fell to the Husband with the onset of the Wife’s illness, and I have already noted the circumstances of that and the ages of the parties’ sons at the time that occurred. Clearly, between the Husband and his parents, significant responsibility for the boys fell to them. Certainly from early 2004, when the Wife suffered her haemorrhage, she was precluded from assisting.

19. I accept the Wife’s evidence as to her employment and her involvement in the business operations. I note that at page 4 of his affidavit filed 4 October 2011, the Husband deposes that, “Being a small business owner with a huge overdraft, I did not have the luxury of devoting endless time with the family.” The Husband there proceeds to set out his routine, and the long hours he devoted to the business. It follows that much of the responsibility for parenting the boys fell to the Wife. I do not accept the Husband’s evidence to the effect that it was only in later years that the Wife gave assistance in the business. She has detailed in her affidavit material the manners and respects in which she gave assistance to the business, and I accept her evidence in these respects.

20. In the post-separation period (and in this context I have earlier referred to separation occurring in 2006), I accept that a financial burden fell to the Husband, but it was a burden met from essentially business operations that had been contributed to by then for a lengthy period by the Wife. As earlier noted, Mr F’s affidavit details some of the distributions of profits and payments from the various entities over the years post-separation which were not actually received by the Wife, but which went in reduction of either personal or business debt, or were otherwise applied for the benefit of the business. The Wife did not actually receive this income in the sense of having it to dispose so that the Husband’s receipt of income post-separation was thereby notionally contributed to by the Wife. Moreover, for a substantial period post-separation the operations of C Pty Ltd were facilitated by funding guaranteed by the Wife.

21. I have, for the reasons earlier noted, accepted that the Wife had property and superannuation at the outset of the marriage in the amounts earlier detailed.

22. Overall, I am satisfied that some weighting in the Husband’s favour for contributions ought be reflected because of his apparently greater property at the commencement of the relationship (although it is impossible to quantify this); the very significant contribution of the Husband’s parents, which ought be treated as a contribution on his side of the ledger; and the Husband’s contributions upon the Wife’s illness in 2004 precluding her from continuing the contributions she had made to that point of working at home and in the business. I accept that the Husband had to meet expenses for the Wife and to continue to meet expenses for their sons as per the receipts (rather than invoices) attached to the Husband’s affidavits for trial, but I reiterate what I have already noted about the Wife’s post-separation income.

23. Taking into account the modest size of the pool and the length of the marriage relationship and the parties’ respective post-separation contributions in the respects referred to, I consider a 60%/40% apportionment in favour of the Husband reflects the parties’ respective contribution-based entitlements.

Step 3 – s 79(4)(d) and (e), including subsection 75(2) factors

1. If, as is proposed, the Husband retains the business he currently operates via B Pty Ltd, the Husband’s earning capacity will be unaffected by any proposed Order. As to the Wife, the only potential effect of any proposed Order on the Wife’s earning capacity will relate to any earnings the Wife might derive from capital she receives.

2. As to the s 75(2) factors, it is plain that a very significant adjustment in favour of the Wife is called for.

3. As already noted, the Husband is now 55 years of age, and the evidence concerning B Pty Ltd shows that he has the capacity to earn income. Whether or not he is in fact in a de facto relationship with Ms M, the fact is that the Husband is able to currently share accommodation and expenses and may well re-partner in the future, if he has not already done so.

4. Whilst the Husband asserted to me in submissions that he has his own health issues, there is simply no evidence before me of any such health issues. Even in his affidavit for trial filed 4 October 2011 addressing s 75(2) factors, the Husband did not swear to any matters relevant to his health. I have rejected his evidence concerning his “dim” future employment prospects as he there asserts given the evidence concerning his labour business in B Pty Ltd.

5. The medical evidence, unchallenged by the Husband and which I accept, leads to the conclusion that at the age of 53 years, as she now is, there is no prospect for the Wife of ever returning to any remunerative employment. She is currently reliant upon the support of her family and a part disability pension. She will require aids and equipment and daily assistance for the rest of her life. I have referred to the medical evidence confirming that the Wife’s underlying myeloma condition is progressing and causing her to deteriorate. The medical evidence is that treatment for that condition is likely to be funded in the public system, but it seems to me that some regard must be had to the prospect of the Wife having to fund some of her needs in the event that her condition reaches the position that she requires more substantial nursing or quasi-nursing assistance. Taken from her Financial Statement, the Wife is already in the position of having to fund a total of approximately $275.00 per week in medical/optical/pharmaceutical expenses.

6. Annexure 62 to the affidavit of Ms G is a letter dated 16 January 2006 from a health service, which indicates the Wife’s needs as at the time she left the nursing home in August 2005 to return to live with her parents. The letter records:

   She receives maximal assistance from her parents and sisters to complete all activities of daily living. [The Wife] also receives a 32 hour/week care package. In order to remain safely in her parents’ home, [the Wife] requires an electric hi-low hospital bed with bedsides, an extra-wide wheelchair, a ROHO air cushion, a mobile shower commode and an extra-wide high back height adjustable chair. The Program of Appliances for Disabled People (PADP) has approved and supplied the hospital bed with bedsides, the wheelchair and ROHO cushion…

   At paragraph 150 of her affidavit, Ms G refers to her involvement in the Wife’s rehabilitation and recovery. Notably, at paragraph 156, Ms G deposes, and I accept, that the Wife currently receives respite assistance of approximately 25 hours each week. This involves a respite carer coming into the home for two hours each morning and again for two hours each night. The respite carers assist the Wife in getting out of bed and dressing and the process in reverse in the evening. The carers also provide cleaning assistance while the Wife’s sisters prepare her meals.

7. Whilst it is to be hoped that publicly-funded schemes remain accessible to the Wife to provide the assistance referred to, it cannot, in my view, be assumed that the Wife will always have access to such assistance or provisioning or that her needs will remain static given the evidence as to the progression of her illness.

8. Whilst it may be assumed that the Wife is more likely than not destined not to enjoy a life expectancy normal for a female of her age, part of the medical evidence refers to her requiring “lifelong” treatment and assistance, and does not positively assert a significant or any reduction in the Wife’s normal expectation of life.

9. Currently, the Wife’s sole source of income is a part disability pension in the amount of $329.00 per week. She already has significant medical, dental and optical expenses of approximately $198.00 per week (as per the Wife’s Financial Statement filed 1 August 2011), and chemist and pharmaceutical expenses of $75.00 per week. None of these expenses were challenged by the Husband.

10. In comparison, Exhibit 4 reveals that for the 2010 financial year, the Husband received, in one form or another, gross income of approximately $74,000.00, and a $33,600.00 expense item for “rent” paid by B Pty Ltd relates to supporting the Husband’s accommodation with Ms M. That company also contributed about $14,000.00 to the Husband’s superannuation in the 2010 financial year.

11. Whilst the Husband claims in his Financial Statement weekly payments of $100.00 as a repayment of a loan to his parents, I am not satisfied on the evidence that there is in existence in fact a loan owing by the Husband to the parents. Rather, it appears that historically the Husband may have made some modest payments to the parents given that the parties’ sons continued to reside with the parents. The Husband also claims a $375.00 per week expense item paid to Ms M as a personal expense but, as already noted, that expense is met by the Husband’s company.

12. Whilst the Husband asserts that he is potentially exposed to liabilities of C Pty Ltd, it would seem that that potential exposure relates to the personal guarantee given to ING and the Wife is likewise, on the evidence of Mr C Stefanovski which I accept on this point, a signatory to the subject guarantee. Whilst ING is still owed a significant sum, said by Mr C Stefanovski to be in excess of $400,000.00, the reality is that Mr C Stefanovski is attempting to refinance the debt and in any event, ING holds security over the properties earlier referred to owned by Mr C Stefanovski and Mr D Stefanovski respectively.

13. For the reasons already noted, it is unclear whether ING has in fact released the Husband and the Wife from the guarantee as was sought by the Husband at the time of the sale of S Street, but even if that has not occurred, it seems to me unlikely that ING would seek to enforce any liability of the Husband and/or the Wife on the guarantee of the debt of C Pty Ltd in circumstances where ING can first resort to either or both of the real properties secured in respect of the subject facility for that purpose owned by Mr D Stefanovski and Mr C Stefanovski respectively.

1. I note that Exhibit 12 before me is correspondence from the firm V Business, which is the principal contractor for some of the labour contracts the Husband, via his company, is involved in. Whilst the Husband relied upon Exhibit 12 to demonstrate the termination of some of the contract work, read overall, Exhibit 12 points to a positive future for V Business and its subcontractors, including the Husband’s company.

2. For the reasons already discussed, I take account under s 75(2)(o) prospect of the Husband successfully pursuing his rights as a co-surety with respect to the payment of the proceeds of S Street to ING. On one view, the Husband may have a prima facie claim for an excess payment in the order of $178,000.00. That is, of course, subject to any defences or claims for counter-claim and set-off that might be agitated if the Husband pursued those proceedings in the circumstances already discussed.

3. Balancing the competing considerations, but having regard to the modest total pool under consideration, I consider that an adjustment of not less than 30% in favour of the Wife ought be made to the contribution-based entitlements of the parties.

4. That would lead to an overall outcome whereby Orders are made effecting a 70%/30% division in favour of the Wife.

Step 4 – Just and Equitable Orders

1. It is submitted on behalf of the Wife, in reliance upon the evidence provided by Mr F at paragraph 52 of his affidavit, that it is likely that any superannuation the Wife has or receives could be converted by the Wife into cash assets given her disability and total and permanent loss of employability.

2. The Husband’s superannuation is in a self-managed fund and the parties agree its value and it is appropriate to adopt that agreed value.

3. I have already noted that if the Husband retains his interest in B Pty Ltd, he retains his capacity to continue earning income in the manner in which he has so done in the past couple of years as well as the asset of the business itself.

4. If the Wife receives the controlled moneys account in the amount of $17,245.54, then it can be seen that she would stand possessed of the following assets and liabilities (including superannuation):

Description	Value
Controlled monies account – net sale proceeds of Suburb K property	$17,245.54
CBA Bank Account No. …24	$551.00
Contents and medical equipment	$2,000.00
SUBTOTAL	$19,796.54
Less Centrelink Family Tax Benefit debt	($1,106.00)
SUBTOTAL	$18,690.54
BB superannuation – Commonwealth Account No. 1	$58,019.00
BB superannuation – Commonwealth Account No. 2	$6,398.00
TOTAL	$83,107.54

1. 70% of the total pool including superannuation, amounting to $350,103.54, as outlined above, gives a total of $245,072.47. Thus, there would need to be a splitting Order of the Husband’s superannuation in favour of the Wife in an amount of $161,964.93 to achieve an overall 70%/30% division in favour of the Wife.

Spousal Maintenance

1. At the conclusion of the trial, it was submitted on behalf of the Wife that she ought receive the balance of the Husband’s superannuation, that is, the total of the E Superannuation Fund, as and by way of lump sum spousal maintenance. That is, that in addition to any splitting Order of the Husband’s superannuation necessary to effectuate property Orders, the balance of the fund should be paid to the Wife as and by way of lump sum spousal maintenance.

2. At the conclusion of the trial, on 3 November 2011, for reasons delivered then ex tempore, I acceded to an application on behalf of the Wife that pending final Orders, there be an Order for interim spousal maintenance in the sum of $610.00 per week. Without repeating all of the reasons then given, I was satisfied that the Wife had demonstrated reasonable needs of $610.00 per week and I was satisfied that the Husband had the capacity to pay maintenance in that amount, pending final Orders.

3. Section 72 of the Act provides that:

   A party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so if, and only if, that other party is unable to support herself or himself adequately…

4. Section 72(1) sets out the three circumstances which may cause the need for maintenance to arise and, relevantly here, provides in sub-paragraph (b):

   (b) by reason of age or physical or mental incapacity for appropriate gainful employment; …

   having regard to any relevant matter referred to in subsection 75(2).

5. In Bevan & Bevan (1995) FLC 92-600 (“Bevan”), the Full Court of this Court set out the process for assessing a spousal maintenance claim as:

   Taken together then, we would state the law as being that an award of spousal maintenance requires:

   1. A threshold finding under s 72 [now s 72(1)];

   2. Consideration of s 74 and s 75(2);

   3. No fettering principle that pre-separation standard of living must automatically be awarded where the respondent’s means permit;

   4. Discretion exercised in accordance with the provisions of s 74, with ‘reasonableness in the circumstances’ as the guiding principle.

6. The first question is whether the Wife is unable to support herself adequately. The answer to that depends on the question of whether the Wife can generate funds from her own resources or earning capacity to supply her own needs. Because of s 75(3), the Court is to disregard any entitlement of the Wife to social security benefits. As earlier noted, the Wife is in receipt of a part disability support pension.

7. I am satisfied on the evidence before me that the Wife is permanently precluded from engaging in remunerative employment.

8. As I noted in my ex tempore reasons for judgment delivered at the conclusion of the trial with respect to the interim maintenance application then made by the Wife, the Wife had established on the evidence reasonable weekly needs of $610.00 per week and the Husband agreed in his evidence that those were the reasonable needs of the Wife.

9. Plainly enough, what the Wife is to receive by way of property Orders will not eliminate her present weekly needs of $610.00 per week. If the Wife invested the full amount of $245,072.47, which 70% of the combined pool yields, at an assumed investment rate of 5% per annum, the return of $12,250.00 per annum (approximately) represents approximately $235.00 per week and obviously falls well short of the weekly needs figure.

10. On that approach, the Wife’s reasonable needs would reduce to about $375.00 per week. I note here that a return of $12,250.00 per annum is unlikely to be subject to much (if any) taxation given the tax-free threshold and tax rebates available for incomes at this level.

11. In Nutting & Nutting (1978) FLC 90-410, Lindenmayer J interpreted “adequately” within the meaning of s 72 of the Act as importing:

    A standard of living which is reasonable in the circumstances, including the circumstance that the parties are no longer husband and wife and that the assets and resources which were formerly available to them both in common have now been divided between them.

12. On my assessment, the Wife has reasonable needs, even taking into account the property she is to receive or have the benefit of pursuant to Orders made under s 79, of not less than $375.00 per week.

13. In Saxena & Saxena (2006) FLC 93-268, Coleman J set out the four steps that the Court should follow as:

    1. To what extent was the Wife unable to support herself?

    2. What were the Wife’s reasonable needs?

    3. What capacity did the Husband have to meet an order, if one were made?

    4. If steps 1 to 3 favoured the Wife, what order would be reasonable having regard to s 75(2) of the Act?

14. I have found that the Wife is unable to support herself, and that her reasonable needs (taking into account the property she is to receive and/or retain) are not less than $375.00 per week.

15. Plainly, given the findings recorded in my ex tempore reasons for judgment, the Husband has the capacity to pay $375.00 per week. As I then noted, the Husband claimed an amount of $375.00 per week as being paid to Ms M as rent and claimed this as a personal expense. However, the evidence before me establishes from Exhibit 4 that the company, B Pty Ltd, was making payments of approximately $33,600.00 per annum direct to Ms M and as the Husband confirmed in his cross-examination, there is no separate amount to this payable by him to Ms M.

16. Thus, whilst the Husband already has an excess of income over expenses on his 2010 figures (being the most current figures available), and by reference to his Financial Statement filed for the trial, there is an additional $375.00 per week available to the Husband given the error in accounting for that expense as a personal expense when it is already paid by the company.

17. Plainly, on the approach suggested by Coleman J, steps 1 to 3 favour the Wife, and it is thus necessary to consider what Order would be reasonable having regard to s 75(2) of the Act.

18. I will not repeat, but will reiterate, the findings I have made above with respect to the s 75(2) factors. I point out that spousal maintenance is not to be confused with the s 75(2) component in the s 79 exercise. It is the outcome of the s 79 process which determines the background against which the application for spousal maintenance is to be considered. Thus, whilst a property award is relevant to spousal maintenance, the question of spousal maintenance falls to be determined in light of the distribution of property.[15]

    [15] See Figgins & Figgins (2002) 29 Fam LR 544.

19. Whilst in some cases a person who secures a settlement under s 79 may, as a result, no longer need to be maintained,[16] this is not so in this case for the reasons identified.

    [16] See Pastrikos (1980) FLC 90-897; Anast & Anastopoulos (1982) FLC 91-201; Clauson (1995) FLC 92-595.

20. I find that the Wife has an ongoing need for spousal maintenance of $375.00 per week, and that the Husband has the capacity to pay such maintenance. The question then is the nature of the Order to be made under s 74 of the Act. That is, whether the Order should be periodical or for a lump sum as contended on behalf of the Wife, and if the latter, how the sum is to be calculated. In relation to these questions, the factors set out in s 75(2) are relevant.

21. In Clauson & Clauson (1995) FLC 92-595, the Full Court of this Court took the approach that lump sum maintenance is the capitalisation of periodic maintenance, and that there is no separate head of power to order lump sum maintenance. In other words, that it is necessary to determine the issue of periodic maintenance first and then consider capitalisation.

22. On that view, the power to award lump sum maintenance should be exercised cautiously, and should usually be considered only where there is doubt about the preparedness of the payer to comply with an Order or some doubt about the payer’s continuing ability to pay.

23. In Vautin (1998) FLC 92-827, the Full Court took a broader view of the role of lump sum maintenance. There, the Full Court held that lump sum maintenance was not confined to the capitalisation of periodic maintenance, nor do those cases where periodic payments were unlikely to be made because of concerns about the payer’s willingness to pay. Nor was lump sum maintenance confined to those cases where the need for and capacity to pay periodic maintenance was demonstrated. Instead, lump sum maintenance could be ordered in appropriate cases quite independently from the capitalisation of a periodic sum, for example, to meet the non-periodic expenditure for the maintenance of the payee, where there was an established need and capacity to pay.

24. Section 80 of the Act sets out the general powers of the Court in exercising its powers under Part VIII of the Act. Given the wide powers expressed in s 80, it cannot be said that the legislation dictates that lump sum maintenance be paid only as capitalised periodic maintenance. Conversely, the award of lump sum maintenance may potentially blur the distinction between a property Order and a maintenance Order, and in circumstances where the legislation can be said to evince an intention that maintenance be paid from income, there is obviously potential where, as here, it is contended that maintenance should be capitalised and paid out of the superannuation fund, that this has the character of a property Order rather than being maintenance.

25. It seems to me that on either approach, the real question is the application of s 75(2) factors to the case at hand, and as to which Order is considered, “…proper for the provision of maintenance,” within the meaning of s 74(1) in the context of the case. As the Full Court in Bevan (supra) put it, the discretion is exercised with “reasonableness in the circumstances” as the guiding principle, and that principle obviously guides not only the level of maintenance determined but also the form of Order made.

26. In this case, there are uncertainties regarding the Wife’s health. Notwithstanding the medical evidence before me, the prognosis for the Wife is uncertain and there are difficulties identifying what her likely needs may be in the event that her condition deteriorates. There is obviously potential for unfairness to capitalise a periodic sum in those circumstances or to award a lump sum, taking the broader view.

27. The value of the Husband’s chose in action in respect of his potential claim as a co-surety is problematic. Whilst on one view, the Husband has a prima facie claim of $178,000.00 for the reasons already canvassed, it cannot be known whether such a claim will ultimately succeed. The Husband is 55 years of age, and whilst it may be assumed he will have a normal working life, his current employment situation is relatively recent and it is unknown what the future might hold for the Husband in terms of his earning potential.

28. A 30% outcome so far as the combined property pool is concerned leaves the Husband with the modest total of approximately $105,000.00. On the Wife’s contention that the balance of the Husband’s superannuation ought be assigned to lump sum maintenance in favour of the Wife, that would leave the Husband with only his interest in B Pty Ltd; some jewellery and a bank account of nominal value and his chose in action referred to. Even if the Husband is able to continue working to notional retirement at age 65 years, he will, if he has no superannuation at all at this point, struggle to accumulate superannuation over the balance of his working life.

29. As already noted, I take into account that the Husband has the benefit of cohabitation with Ms M, and I am satisfied that the Wife has made a significant contribution to the earning capacity of the Husband and that the marriage subsisted for a significant period.

30. Balancing all of the competing considerations, it seems to me that “reasonableness in the circumstances” dictates an Order for periodic maintenance in the sum of $375.00 per week, rather than capitalising this sum or otherwise providing for maintenance to be paid in a lump sum.

31. I am mindful that if the Husband fails to pay periodic maintenance as Ordered (including that ordered to be paid on an interim basis pending this decision), that may be a basis for the Wife to enliven a subsequent maintenance application lump sum maintenance.

32. I therefore make the Orders set out at the commencement of these reasons.

I certify that the preceding two hundred and eleven (211) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 15 March 2012.

Associate: 

Date: 15 March 2012