Stone and Stone
[2013] FamCA 270
•18 April 2013
FAMILY COURT OF AUSTRALIA
| STONE & STONE | [2013] FamCA 270 |
| FAMILY LAW – PROPERTY – Settlement in relation to marriage – Where the parties were married for 12 years – Where the difference in the parties’ claims is significant. FAMILY LAW – PRACTICE AND PROCEDURE – Obligation of full and frank disclosure – Where the husband failed to disclose and inadequately disclosed aspects of his financial affairs. FAMILY LAW – PROPERTY – BINDING FINANCIAL AGREEMENT – Section 90C of the Family Law Act 1975 (Cth) – Where the husband and wife entered into a binding financial agreement in 2003 – Where the wife seeks to enforce the outstanding balance of a loan made pursuant to the agreement and said to be owing to her by the husband. FAMILY LAW – CHILD SUPPORT – Administrative assessment – Where the husband’s income was assessed at $180,000 per annum – Where the wife seeks an order that the husband’s income be assessed at $341,000 per annum for the purposes of the Child Support Assessment Act 1989 (Cth). |
| Child Support Assessment Act 1989 (Cth) Family Law Act 1995 (Cth) Family Law Rules 2004 |
| Kannis v Kannis (2003) 30 Fam LR 83 White and Tulloch v White (1995) 19 FamLR 696 Wrigley and Wrigley (2004) FLC 93-182 |
| APPLICANT: | Ms Stone |
| RESPONDENT: | Mr Stone |
| FILE NUMBER: | SYC | 6953 | of | 2009 |
| DATE DELIVERED: | 18 April 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Justice Fowler |
| HEARING DATE: | 21-22 February 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Richard Schonell SC |
| SOLICITOR FOR THE APPLICANT: | Diana Perla & Associates |
| COUNSEL FOR THE RESPONDENT: | Elizabeth Cohen |
| SOLICITOR FOR THE RESPONDENT: | Self-represented |
Orders
Mr Stone (“the husband”) within two months from the date of these Orders pay to Ms Stone (“the wife”) the sum of $1,670,435 by way of property settlement.
It is declared that the Financial Agreement dated 23 December 2003 made between the husband and the wife is a Financial Agreement under s 90C of the Family Law Act 1975 (Cth) (“the Act”) and, pursuant to its power under s 90G of the Act, the Court makes the following order in relation to the enforcement of that agreement, that:
(a)the husband within two months from the date of these Orders pay to the wife the balance of $25,110 owing to the wife under said agreement.
The husband within two months from the date of these Orders pay to the wife the sum of $4,400 for the purpose of equalising the amount paid by each of the parties in respect of the fees charged by the single expert Mr M in the course of the proceedings.
In the event of non-payment by the husband to the wife of the sums specified in Orders (1), (2) and (3) herein by more than 24 hours from the due date for payment, the wife shall forthwith:
(a)be appointed as trustee and attorney of the husband for the purposes of selling the following properties:
(i)Suburb V property (Folio Identifier 1/…)
(ii)Suburb S property (Folio Identifier 29/…)
(iii)Suburb P property (Folio Identifier 5/…)
(iv)Queensland property and
(b)be appointed as trustee for the purpose of instructing the Executor of the estate of the late Mrs Stone Snr to finalise the estate and thereafter to sell the property at N Street, Suburb R (Folio Identifier C/…) and
upon the sale of the above properties, the wife shall apply the net proceeds of sale in full satisfaction of the husband’s obligations pursuant to Orders (1), (2) and (3) herein and pay any remaining balance to the husband.
Upon the husband’s payment to the wife of the sums set out in Orders (1), (2) and (3) herein, and upon the husband’s provision to the wife of the necessary documentation that she may be required to sign, the wife shall do all acts and things necessary to transfer to the husband all of her shareholding in X Holdings Pty Limited.
Whenever a splittable payment is payable in respect of the superannuation interests of Ms Stone in X Superannuation Fund:
(a)Mr Stone is entitled to be paid the amount calculated in accordance with the Family Law Superannuation Regulations 2001 by reference to a figure of 100 per cent and
(b)there is a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for this order.
The above Order binds the trustees of the X Superannuation fund.
Except as otherwise provided for in the Orders herein, the wife and the husband shall retain all personal items and other property including superannuation currently in their name, possession or control.
The wife’s application in respect of the Court setting the husband’s assessable income at $341,000 per annum for the purposes of child support be and is hereby dismissed.
In the event of a party failing for a period of 14 days to do all acts and things necessary to give validity to the Orders herein, a Registrar of the Family Court of Australia at Sydney is hereby empowered pursuant to s 106A of the Family Law Act 1975 (Cth) to do all acts and things necessary in the place and stead of the defaulting party to give validity and effect to these Orders.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Stone & Stone has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: SYC 6953 of 2009
| Ms Stone |
Applicant
And
| Mr Stone |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are property proceedings between a husband and wife who were married for approximately 12 years.
There is one child of the marriage, J Stone (“the child”), who is currently 11 years old. The mother has two daughters of a prior relationship who are aged 23 and 24 years old (“the wife’s older children”). No orders are sought in relation to parenting.
The wife sought in her application, in addition to orders altering the parties’ property interests, an order with respect to child support.
The wife seeks orders to the following effect:
a)That within two months the husband pay to the wife the sum of $2,654,647 by way of property settlement.
b)That within two months the husband pay to the wife the sum of $25,110, being the balance owing under a loan made by the wife to the husband in 2003 in respect of which the parties entered into a Financial Agreement pursuant to s 90C of the Family Law Act 1975 (Cth); the wife also seeks interest on this amount in accordance with the Commonwealth Bank home loan interest rate from 15 March 2009;
c)In the event of non-payment by the husband of the above sums by more than 24 hours, that the wife be appointed as trustee and attorney of the husband for the purpose of selling properties held in the husband’s name, such that the net proceeds of sale can be applied to satisfy the obligation of the husband to pay those sums.
d)That within 28 days the wife do all things to transfer to the husband her right, title and interest in the X Superannuation Fund, together with her shareholding in X Holdings Pty Ltd (“X Holdings”).
e)That pursuant to s 116 of the Child Support (Assessment) Act 1989 (Cth) the husband’s taxable income be set at $341,000 per annum for the period 1 April 2013 to 30 November 2019.
f)That the husband pay the wife’s costs of these proceedings on an indemnity basis.
An additional order which the wife seeks, but which does not appear in her proposed minute of order, is that the husband pay to the wife the sum of $4,400, which is the amount paid by the wife on the husband’s behalf for the expert fees of Dr M (“Dr M”) after the husband informed the Court he was unable to pay such fees.
The husband seeks orders to the following effect:
a)That the husband pay to the wife the sum of $150,000 by way of property settlement.
b)That the wife transfer to the husband the whole of her share in X Holdings.
c)That the wife resign all offices in X Holdings.
d)That each party retain the property and superannuation and other interests now owned by that party.
The difference between the parties’ claims in these proceedings is significant.
On the husband’s part, his claim is sought to be sustained by the fact that he received an inheritance from his mother’s estate late in the relationship; that he had a greater pool of assets at the date of commencement of cohabitation; and that his contribution financially during the relationship was greater than that of the wife. In addition, the husband asserts that his non-financial contribution was equal to that of the wife.
The husband further states that the wife is the sole child of her 85 year-old mother, whom he claims is a woman of means. The husband asserts that the wife is presently named as a beneficiary (as are the child of this marriage and the wife’s older children) in the current testamentary trust in her mother’s will. The husband asserts that the justice of the case requires that, in the event that the bequest received from his mother is taken into account, the like possibility of the wife inheriting from her mother should also be taken into account.
The wife on the other hand points to her mother as being in good health and having testamentary competence. She also asserts that there are other beneficiaries of the testamentary trust and that there is no guarantee that her mother will not utilise the assets in her estate prior to her death. In addition, the wife claims that there is no guarantee that she will survive her mother, who may also alter her testamentary disposition of assets.
The wife argues that, based on the decision of the Full Court in White and Tulloch v White (1995) 19 FamLR 696, the Court should have no regard for the possibility that she might at some point in time inherit something. Counsel for the wife directed the Court to a passage in that judgment at page 707, where their Honours Fogarty, Kay and Hilton JJ stated as follows:
… the bald assertion that one of the parties has an elderly relative who has property and is or is likely to benefit that party is so speculative that it would be inappropriate to contemplate it as relevant in a s 79 determination, it being too remote to affect the justice and equity of the case in any worthwhile way.
The Court accepts the submissions of the wife on this issue and will not consider a possible inheritance of the wife to her mother’s estate as being relevant to the s 79 determination that it will make.
In any event, the inheritance of the husband from his late mother’s estate is to be taken into account in the Court’s general consideration of his contributions to the property of the parties or either of them.
In order to do justice between the parties in cases such as this, the Court must have the assurance that it and each of the parties has been provided with full and frank disclosure of relevant facts and documents. Such disclosure, apart from being full and frank, must also be timely.
The history of this case is marred by a litany of failures on the part of the husband to make such disclosure. He has even in the documents produced to Court redacted some of those documents, stating that the portion so dealt with is in his view irrelevant. No one can form that opinion or argue whether it is so from the state of the documents produced by him.
Despite a number of directions, the Court has before it a history of
non-disclosure by the husband. In addition, it appears that some of the disclosure made is in fact inaccurate or difficult to explain or reconcile with other information. The Court will in the circumstances and as the authorities suggest act robustly and, inter alia, assume that had such a disclosure been timely and frank, it would have favoured the case of the wife.
The task facing the Court in these circumstances is one of determining whether there should be made an adjustment of the parties’ property rights and, if so, what adjustment.
Background Facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
In 1958 the husband was born. He is currently 55 years old.
In 1960 the wife was born. She is currently 52 years old.
In March 1986 the Z Trust (“the Trust”) was established. X Holdings, a company of which the wife and husband were for a time the sole equal shareholders and of which the husband is the sole director, is the trustee for the Trust.
In 1987 the husband purchased a property in H Street, Suburb P (“the Suburb P property”) for $225,000 plus stamp duty. This property purchased was mortgaged.
In September 1994, X Holdings as trustee for the Trust acquired a commercial office unit in Suburb U (“the U property”) for $215,000 plus acquisition costs.
The husband asserts that in February 1995 he purchased an interest in a business on the New South Wales north coast, which interest he claims was sold in 2005. The wife asserts that no documents were disclosed by the husband to support this proposition.
In late 1997 the wife purchased a property at O Street in Suburb R (“the O Street property”). This property was purchased for $555,000 and was unencumbered.
In January 1998 the parties commenced cohabitation. They initially resided together at the O Street property with the wife’s older children.
On 14 January 1998 the husband made an agreement with his sister in relation to a property owned by their mother in N Street, Suburb P (“the N Street property”). This agreement was made apparently in contemplation of the husband’s mother’s death in order that her estate would be divided in a certain way. Under the agreement, the husband advanced to his sister the sum of $350,000 as a payment during the lifetime of his mother of the entitlement in the N Street property to which his sister was expectant upon the mother’s death.
In March 1998 the husband purchased a property in Suburb S (“the S property”) for $240,000 plus stamp duty and acquisition costs. This property was purchased subject to a mortgage.
In May 1998 the husband and wife married.
In June 1999 the wife was appointed as Director and Secretary of
X Holdings.
In March 2001 the husband asserts that he purchased a property in Suburb V (“the V property”) for $286,500 plus acquisition costs. He borrowed $300,000 from CBA to fund the purchase.
In 2001 the child of the husband and wife was born.
In 2001 the husband asserts that he and his mother gifted to the child their loan accounts in the Trust having a credit balance in the sum of $250,000.
In 2002, X Holdings commenced construction of a house at the N Street property.
On 23 December 2003 the parties executed a Financial Agreement purporting to be pursuant to s 90C of the Family Law Act 1975 (Cth) (“the Financial Agreement”). The wife asserts that in January 2004 she lent to the husband the sum of $150,000 via the Financial Agreement. The husband asserts that the money was lent to X Holdings/the Trust and that the outstanding balance owed to the wife was repaid to her by X Holdings/the Trust in March 2010.
In 2004 the parties, the child and the wife’s older children moved into the N Street property. The husband and wife continued to live at this property with the three children until after separation.
In August 2005 the husband purchased a property in Queensland (“the Queensland property”) for $408,000 plus acquisition costs. An amount of $325,000 was borrowed to fund this purchase.
In August 2006 the husband’s mother died.
In November 2006 the wife purchased a healthcare business in Suburb R (“the P Road healthcare business”) for $390,000 plus acquisition costs.
On 12 April 2007 probate of the husband’s late mother’s will was granted. The husband asserts that as a beneficiary to her estate he received:
a)the N Street property
b)cash from the sale of investment units and
c)half of his mother’s share portfolio.
In February 2008 the husband and wife separated under the same roof.
In June 2008 the wife ceased being a director of X Holdings.
In March 2009 the parties separated on a final basis.
On 17 November 2009 the wife commenced proceedings for parenting and property orders in this Court.
On 15 March 2010 X Holdings repaid to the wife the sum of $124,890 in part payment of the funds which had been loaned by the wife to the husband in January 2004.
In May 2010 the wife moved out of the N Street property with the child and her two older children.
In 2011 the wife sold the O Street property for $955,000. She purchased a property at Suburb B for around $1,300,000.
On 19 April 2011 the husband’s income was assessed at $180,000 per annum for the purpose of child support payments.
The Evidence
Each of the parties relied on affidavits filed by them in the proceedings.
Single expert affidavits
Ms A of PG Sales and Valuations (NSW) was appointed to provide a valuation of the P Road healthcare business.
Ms A’s valuation was provided on 13 May 2012. Her report stated that the fair market value of the business was at that time $553,976, including stock, fixtures and fittings and goodwill, representing a 17 per centum return on investment to an interested purchaser.
Mr M of M Associates Pty Ltd was appointed to provide a valuation of the parties’ interests in the following entities:
a)PC Pty Ltd
b)DS & Associates Pty Ltd
c)X Holdings
d)The Trust
e)Y Pty Ltd.
Mr M’s valuation was provided on 13 November 2012. It states the following in relation to those entities (and the Court notes that these valuations were provided on the basis that the Trust owns 100 per centum of PC Pty Ltd and 75 per centum of DS & Associates:
a)PC Pty Ltd – no direct equity interest but a liability in the sum of $290,983 (in the husband’s name)
b)DS & Associates – 100,000 ordinary shares to the value of $8,153 and a loan account asset of $126,691 (both in the husband’s name)
c)X Holdings – one ordinary share in each of the parties’ names which are of no value
d)The Trust – an equity interest of $3,100,627 (in the name of the husband)
e)Y Pty Ltd – no direct equity interest.
Mr C of SS Property Valuations was appointed to provide a valuation of the P property.
Mr C’s valuation was provided on 20 March 2012 and at that time attributed to the house a value of $1,050,000.
Oral evidence
The husband and the wife both gave additional oral evidence in chief and were cross examined. No other witnesses gave oral evidence.
Credit
The husband did not impress the Court as a witness on whom reliance could be placed. His failure to disclose and his inaccurate disclosure which were in part conceded in his oral evidence gave the Court real cause for concern. His evidence, where there is conflict with the wife’s, is not preferred and otherwise is of questionable reliability.
The wife impressed the Court as a witness of truth in relation to those matters of which she was capable of giving evidence. However this was a marriage in which the husband assumed the responsibility for the administration of most of the parties’ wealth and kept knowledge of his financial affairs away from the wife. The wife’s knowledge of the history of transactions was gleaned in part from documents produced as a result of this litigation and from the cross examination of the husband. This cross examination in part demonstrated that the husband had failed and been untruthful in his disclosure, notwithstanding his avowed understanding of his obligations in that regard.
The Issues
The first step I must undertake is to identify the property of the parties or either of them available for division between them.
I must then determine whether it is just and equitable to make an order which alters the property interests of the parties to the marriage.
Following that, I must assess what is a just and equitable re-distribution of that property, having regard to the contributions made by each of the parties as described in s 79 of the Act.
Given the assets of the parties to the marriage or either of them, I must then assess what, if any, is an appropriate alteration to their property interests which will do justice to the parties, having regard to the matters required to be taken into account under s 75(2) of the Act.
Finally, I must ask whether the conclusion reached reflects a just and equitable distribution of property between the parties to the marriage.
Issues with respect to disclosure
The task of the Court and indeed the task of Counsel in this matter were made extraordinarily difficult by the conduct of the husband. No court exercising jurisdiction under the Act can readily provide a just and equitable result to the parties before it in the absence of full and frank disclosure of relevant facts and documents.
The duty of disclosure of parties to proceedings in the Family Court of Australia is “absolute”: Kannis v Kannis (2003) 30 Fam LR 83.
Under the Family Law Rules 2004 (“the Rules”), parties have a general duty to the Court and to each other party to give “full and frank disclosure of all information relevant to the case, in a timely manner”: r 13.01(1). Importantly, the duty of full and frank disclosure “starts with the pre-action procedure for a case and continues until the case is finalised”: r 13.01(2).
The authorities abound with references to the obligation of full and frank disclosure imposed on parties as a duty in the course of litigation in this jurisdiction. That obligation and any breach of it is not one which is regarded lightly by the Court, as its administration of justice depends upon it.
This case involves not only persistent and continuing inadequate disclosure, but false and misleading disclosure as well. That was seen particularly in relation to submissions of the husband to the effect that he was unable to afford some independent experts’ fees, when at the hearing it was discovered that he in fact held substantial credits in accounts under his control at the time. This discovery rendered the husband’s assertions not only false but palpably false.
The Court does, and has always, regard a proper, full and honest disclosure as imperative and, in circumstances where it is not provided, has visited robust decision making on those who fail to make it.
The husband has, on the evidence in this matter, failed to make full and frank disclosure. He has made also false disclosure. He has declined to produce documents relevant to the matters in issue which would have enabled the Court, the wife and those representing the wife to readily and more speedily come to conclusions. Further, some of the documents that he has produced are significantly redacted.
It is not as though the matters which the husband falsely asserted or deliberately failed to disclose (or indeed failed to disclose in the exercise of a spirit of insouciance) do not go directly to issues which are relevant in this case. The husband has been obstructive of attempts to procure light on the parties’ financial history in a marriage where the administration of his affairs was peculiarly within his ken and not that of the wife. The imbalance of knowledge made his obligation in these circumstances all the more significant and its breach likewise significant with consequential results.
Property Matters
The Balance Sheet
The first step I must undertake is to identify the property of the parties or either of them available for division between them.
The Court during the hearing was provided with a Joint Balance Sheet dated
22 February 2013 reproduced hereunder for its consideration.
Ownership Description Wife’s value
($)Husband’s Value ($) ASSETS
1 W [Suburb B property] 1,350,000 1,350,000 2 W [P] Road [healthcare business] 553,976 553,976 3 W Peugeot Motor Vehicle 20,000 20,000 4 W Westpac Bank Shares 3512 102,723 106,062 5 W Telstra and IAG shares 7,000 9,908 5A W [P] Road [healthcare business] Current Account CBA
NK5B W Current Account CBA NK 5C W NAB Fixed Deposit 35,000 5D W Trade Debtors 30,000 5E W [P] Road [healthcare business] NAB Current 6 W Contents & Jewellery 25,000 45,000 7 W Honda [Motor Vehicle] 0 5,500 8 H [Suburb P property] 1,050,000 1,050,000 9 H [Suburb S property] 375,000 375,000 10 H [Suburb V property] 370,000 370,000 11 H [Queensland property 375,000 375,000 12 H [T property] ([H] Street unit trust) Held in Unit trust by daughter [J] Held in Unit trust by daughter [J] 13 H [N] Street [Suburb R] Included in Z Trust valuation Included in Z Trust Valuation 14 H Shares 48,261 48,261 15 H BMW motor vehicle 82,000 82,000 16 H [DS] & Associates 8,153 8,153 17 H Moneys due by [DS] & Associates 126,691 100,328 18 H [PC] Pty Ltd Nil Nil 19 H [Z] Trust 3,100,627 3,100,627 20 H Funds not accounted for
(see Annexure A)
1,105,483
Not agreed21 H Contents 10,000 10,000 Total 8,709,914 7,674,815 ADDBACKS
22 Total 0 0
LIABILITIES
23 W Mortgage over [Suburb B property] 676,900 676,900 24 W Loan for [P] Road [business] -NAB 360,000 360,000 25 W [Ms G] 277,000 Not agreed 26 W Credit Cards Post separation Post separation 27 W Lease over Peugeot 32,703 NK 28 H Mortgages over Real Estate 1,444,856 1,444,856 29 H CBA Overdraft 48,342 49,744 30 H Credit Card Post separation 17,894 31 H Debt by Husband to [PC Pty Ltd] 290,983 290,983 Total 3,130,784 2,840,377 SUPERANNUATION
Member Name of Fund Type of Interest Wife’s value ($) Husband’s value ($) 32 W [X] Holdings SMSF 13,000 13,000 33 H [X] Holdings SMSF 37,300 31,000 34 W Profession specific Accumulation 29,537 29,537 35 H Commonwealth Life Accumulation 1,500 1,500 Total 81,337 FINANCIAL RESOURCES
Ownership Description Wife’s value ($) Husband’s value ($) 36 W Shares in [E] Pty Limited NK
SUMMARY
Ownership Description Wife’s value ($) Husband’s value ($) 1 Total Assets 8,709,914 7,674,815 2 Total Liabilities 3,130.784 2,840,377 3 Net Assets 5,579,130 4,834,438 4 Total superannuation 81,337 75,037 5 Total net assets + superannuation 5,660,467 4,909,475 Total SUMMARY OF WIFE’S ASSETS AND LIABILITIES
Ownership Description Wife’s value ($) Husband’s value ($) 1 Total Assets Wife 2,058,699 2,155,446 2 Total Liabilities Wife 1,346,603 1,036,900 3 Net Assets Wife 712,096 1,118,546 4 Wife Superannuation 29,537 42,537 5 Wife’s Total net assets + superannuation
741,633
1,161,083
SUMMARY OF HUSBAND’S ASSETS AND LIABILITIES
Ownership Description Wife’s value ($) Husband’s value ($) 6 Total Assets Husband 6,651,215 5,519,369 7 Total Liabilities Husband 1,784,181 1,803,477 8 Net Assets Husband 4,867,034 3,715,892 9 Husband Superannuation 32,500 32,500 10 Husband Total net assets + superannuation
4,918,834
3,74,392
Assets
The first point of difference on the balance sheet is found in Item 4 (the wife’s Westpac Bank shares). There is no evidence of valuation and in those circumstances I propose to adopt the valuation attributed to the shares by the wife on the basis that her assertion has the evidentiary value of being an admission against interest.
The second point of difference on the balance sheet is to be found in Item 5 (the wife’s Telstra and IAG shares). The like reasoning as above applies and the Court will accept the value attributed to the shares by the wife.
With respect to Item 5A (the wife’s healthcare business account with CBA), the wife in her affidavit sworn on 20 February 2013 deposed that this is the business’ “running account” which “can fluctuate from $1,000 to $75,000 depending on the time of month.” She further explained that, while the balance as at the time of the hearing was $49,671.84, she had written a substantial cheque on 20 February 2013 to a wholesaler and would also be paying wages that evening, which combined, these transactions would see the account balance drop to “approximately $3,000”. Accordingly, the wife submitted and the Court accepts that the account at Item 5A should not be added to the balance sheet.
With respect to Item 5B (the wife’s current CBA account), the husband submitted that the monies in the wife’s current accounts should be included on the balance sheet because the wife is a sole trader and her business was not valued as a corporation, as were the husband’s. The husband submitted that the wife had certain sums in her accounts but did not point the Court to any evidence in support of his assertions. The Court therefore has no material before it from which it can conclude that this item should be included on the balance sheet.
With respect to Item 5C (the wife’s NAB fixed deposit account), the husband submitted that evidence regarding this account was provided in the wife’s affidavit material which, he says, showed that:
in her name at the date of hearing there was a sum of $20,000 credit but she had withdrawn $30,000 the day before.
The wife in reply to that submission referred the Court to the unchallenged evidence in the wife’s affidavit sworn on 20 February 2013. At paragraph 4 of that affidavit, the wife deposed that the credit balance of her “NAB Offset Account” as at 20 February 2013 was $20,008.42. She further explained that:
[It] is an account I use to park money from the [business] during the month until I have to pay bills at the end of the month as it makes my interest less on my home loan.
At paragraph 6, the wife listed various creditors with whom she has unsettled accounts and to whom she must provide payment (totalling $19,003.67) by the end of February 2013. She further explained that, by the month’s end, there would be virtually no funds in the account and that, in the new month, she would begin accumulating funds in the account again in order to pay the next month’s bills. Accordingly, the wife submitted and the Court accepts that the account at Item 5C should not be included on the balance sheet.
With respect to Item 5D (the wife’s trade debtors), the husband submitted that details of the wife’s trade debtors were not provided by the wife. The wife on the other hand submitted that she had not seen any evidence which supported the husband’s proposition. Given the little evidence before the Court in relation to this item, the Court does not find itself in a position where it can draw any conclusions or include the item on the balance sheet.
As to Item 5E (the wife’s business account with NAB), neither party included a value for this account on the balance sheet or made submissions to the Court in relation to this item. This leads the Court to conclude that this account is the same account as that listed in item 5C.
With respect to Item 6 (the wife’s contents and jewellery), the Court in the absence of expert evidence otherwise accepts the wife’s assertion as to the value of the jewellery since her assertion is a concession against interest.
In relation to Item 7 (the Honda motor vehicle), although this vehicle is registered in the wife’s name, she asserts that it is used by her daughter. Counsel for the husband argued that the Court should adopt the registered ownership of the vehicle as being the beneficial ownership. The registered ownership of a motor vehicle does not in the Court’s view mean that it is the beneficial ownership. It is noted that if the evidence of the wife on this matter is accepted the item will be deleted from the balance sheet. The Court also observes that the wife claims the vehicle has a “Nil” value whereas the husband says it has a value of $5,500. No evidence of the valuation asserted by the husband was provided, so even were the Court to accept his argument, it would have to list the vehicle as being of indeterminate value. The Court however accepts the evidence of the wife and does not propose to include Item 7 on the balance sheet.
With respect to Item 17 (monies due by DS & Associates), the husband disputes the value asserted by the wife, which the wife says she took from
Mr M’s report. This report is the only substantial evidence before the Court on the matter, a point which Counsel for the husband conceded. The amount asserted by the wife will be accepted, since it is on that basis that the valuation of the entity on which the Court will rely was reached. If another date were to be chosen, another valuation would be required as at that date. It is the Court’s view, however, that there needs to be an end to that process.
With respect to Item 20 (funds apparently not accounted for by the husband), a breakdown of the figure arrived at by the wife was set out in “Annexure A” to the balance sheet. The wife says that the following amounts should be added back on the balance sheet, namely:
a)$150,000 – for a loan by the husband to the Z Trust
b)$270,000 – for a PC Pty Ltd term deposit
c)$185,000 – for a loan taken by the husband post separation
d)$58,943 – for the husband’s increase in his loan account with PC Pty Ltd
e)$327,540 – for a loan account in relation to the Z Trust specified as a loan account of the parties’ child.
The Court finds the following in relation to each of the above items (in the equivalently lettered paragraphs):
a)The financial statements of the Trust show no loan of this amount from the husband. They do, however, show a loan for an equivalent amount as a “bank loan”. The evidence before the Court supports the assertion of the wife that the trust documents are a fiction and that what in fact happened was that the husband borrowed the sum of $150,000 from a bank and lent it to the Trust. It was from this sum that the Trust repaid to the wife an amount due to her under the Financial Agreement which she had made to assist the husband. The husband has made no detailed disclosure of funds borrowed on mortgages which he has obtained over time; he simply claims that he has borrowed an amount of approximately $1,400,000. Included in that figure is the $150,000 loan from the bank, and so the amount specified is in fact “double dipped” in that it appears as a liability within the figure asserted at Item 28. The Court accepts the wife’s submission and will add back the $150,000 loan to the Trust to eliminate this effect. In final address, Counsel for the husband conceded that it was indeed a double dip and should be added back on the husband’s side of the balance sheet.
b)As to the $270,000 term deposit held in the name of PC Pty Ltd and not disclosed by the husband, the husband concedes the sum of $181,000. As to the balance, the husband submitted that bank account balances go up and down as part of an overall business structure. In the circumstances, no detailed disclosure was made of the use of the funds and the Court will add back the whole of the sum of $270,000.
c)With respect to the $185,000 loan taken out by the husband post separation, the husband’s evidence was that he “injected that money into the business” because “after separation he was depressed, he didn’t work very hard and he needed to inject funds into the business.” The husband has failed to provide details as to where the funds have gone other than “into the business” and there is no record of that available to the Court. As the wife submitted, there is also no evidence before the Court that the husband was depressed post separation and that this is why he did something. Either the business records are wrong or, alternatively, the husband’s explanation is incorrect. In the absence of any acceptable evidence, the Court will add the sum back on the husband’s side of the balance sheet, as it is inappropriate for an unexplained post separation borrowing to be charged against the wife.
In relation to the $114,000 withdrawn on 16 December 2010, the husband during cross examination stated that it most probably “would have gone into a venture that didn’t come off” but was unable to tell the Court what happened to the funds without looking at the books of PC Pty Ltd. Later, in oral submissions, it was again claimed that the sum withdrawn went toward a business venture that failed. The Court finds that the husband’s evidence in relation to this sum does not adequately support his submission and accordingly proposes to include this sum on the husband’s side of the balance sheet.
d)
As to the increase of $58,943 in the loan account with PC Pty Ltd, the husband submitted that this “is something that happened in the normal course of the business.” The Court was told that, as at
30 June 2009 the director’s loan in PC Pty Ltd was $232,000; by 30 June 2011 it had increased to $290,000. When the husband was asked during cross examination where the differential had gone, his response was that “I most probably spent it.” No reasonable detail was provided by the husband as to on what the money was spent and as such the Court proposes to include the sum as an add back on the husband’s side of the balance sheet.
e)With respect to the child’s loan account in the Z Trust, the husband submitted that this was gifted to the child by the husband’s mother when the child was born. The husband also submitted that some of his loan accounts were also gifted to child when she was born. In the accounts of the Trust, there is an account described as a beneficiary loan account in the child’s name with a credit balance of $327,540. In relation to this account, the Court finds as follows:
i)the husband failed to provide any loan account ledger or any documents from which it could be determined how the account arose. It was generally, and without particularity, asserted that the account was something which he and his mother set up.
ii)the wife argues that the Court should infer that documents and details supporting the creation of the account were not presented to the Court because they would not have assisted the husband’s case.
iii)it seems clear on the evidence that at least some part of the funds have been utilised by the husband for his own purposes. For example, the husband has paid his child support obligation to the child from the account, which contains the child’s own monies. During cross examination, the husband told the Court that the total amount paid from the account in any one year by way of maintenance and holidays for the child was in the order of $10,000 to $15,000. There is no evidence to support the view that the husband has any discretion to so apply the funds and it appears to the Court that the utilisation of the money for that purpose would be entirely wrong. Clearly the husband cannot, irrespective of the source of the loan account, assert that sums paid from the account, it being the property of his child, are contributions made by him to anything.
iv)the Court received evidence of the diminishing balance of the account from the year ended June 2007 (when the balance stood at $293,000) and the year ended June 2008 (when the balance stood at $250,000). The husband was unable to tell the Court what the application of the difference of at least $43,000 was.
v)the Court is asked to take the view that, since the husband controls the account at his whim and to his own benefit, it should be treated as his account and added back accordingly. It was pointed out that a declaration inter parties would not affect the rights of the child who is not a party to the proceedings. The Court is not prepared to take that step, which is a step too far on the evidence and the available implications. Although seemingly improperly accessed by the husband to support his obligations, it also seems clear that the money was spent in the fulfilment of his obligations to his child. Although entirely inappropriate, the history does lend some verisimilitude to the assertion made that the funds were settled on the child in the first place. In addition, the declaration sought by the wife, although operating inter parties, calls for what may appear to be a dispossession of funds said to be belonging to the child by reason of the conduct of her father, without affording the child the opportunity of being heard on the subject, presumably through a case guardian independent of both parties.
vi)despite being invited by the Court to apply, no party sought any order for the protection of the child’s rights in respect of this account. It seems clear to the Court that the husband is indebted to his daughter for the funds removed from this account in order to enable him to pay his child support obligations. The Court absent detailed evidence from the husband is unable to calculate what that sum may be. In the circumstances, the Court does not consider that it can without application make an order in relation to these monies at this time. The child will maintain her rights with respect to the loan account and may seek to enforce those rights and recover whatever sum has been inappropriately withdrawn from the fund. It may also be that in other proceedings elsewhere the child will seek the recovery of the loan.
vii)the Court will not, in conclusion, add the sum of $327,540 back to the pool of assets. Equally, although the husband will have a liability to the loan account, the Court does not intend to include that in his liabilities on the balance sheet given that he is the person whom derived the sole benefit from the unauthorised use of the funds post separation.
Liabilities
With respect to Item 25 (the wife’s loan from Ms G), it was conceded by Counsel for the wife at the hearing that the sum of $200,000 loaned by the wife’s mother to the wife prior to the commencement of cohabitation was “of vintage”. It was also conceded that “there has been no demand for repayment or no payment of interest” in respect of that loan. With respect to the sum of $77,000 loaned by the wife’s mother to the wife in 2006 for the purchase of the P Road healthcare business, the Court was not presented with any evidence to indicate that the wife’s mother has demanded, or will in future demand, the repayment of that sum. The Court is of the view that the likelihood of the wife’s mother demanding repayment of that sum is slim. In the circumstances, the Court will remove Item 25 from the balance sheet but take the loans of $200,000 and $77,000 from the wife’s mother into consideration as contributions by the wife at the relevant stages.
As to Item 27, (the wife’s lease over the Peugeot), the wife’s assertion as to the amount owing in the absence of any evidence to the contrary is accepted as being a valid liability of the wife.
In relation to Item 29 (the husband’s CBA overdraft), there is a minor point of difference between the parties in relation to the husband’s bank overdraft. On this matter the Court will accept the husband’s assertion as to the amount of the liability.
In relation to Item 30 (the husband’s credit card), there is no evidence before the Court of the value of the parties’ credit card debit at the date of separation and the Court will therefore treat the husband’s credit card liability as a post separation liability and remove it from the balance sheet. That does not mean the Court will not take it into account in its consideration of matters under section 75(2) in relation to the comparative financial position of the parties.
Superannuation
With respect to Item 33 (the husband’s X Holdings superannuation), the Court notes that there is a variation of $6,300 with respect to the value of the husband’s interest in the X Holdings superannuation fund. The Court will accept the husband’s assertion as to its value.
Financial resources
In relation to Item 36 (shares in E Pty Limited), the wife asserts that an Australian Securities and Investment Commission (ASIC) company extract for E Pty Limited dated 7 November 2012 demonstrates that she does not own the shares, rather her mother does. The wife was not cross examined on this issue and the Court accepts the evidence set out in her affidavit material. The Court does not propose to include the item on the balance sheet.
Items which do not appear on the balance sheet
In addition to those items which have been considered for inclusion on or removal from the balance sheet, the Court is asked to make orders in respect of assets and liabilities which do not appear on the balance sheet.
The first such item, which is the subject of an order sought by the wife, is the amount said to be owing to her by the husband under the terms of the Financial Agreement entered into by the husband and wife on 23 December 2003.
A copy of the Financial Agreement was annexed to the affidavit of the husband filed on 17 January 2013. Terms “H”, “I” and “J” of the agreement state as follows:
H.In order to complete the renovation to the [N] Street property, [the husband] has requested from [the wife] that she borrow money using the [[O] Street property] as security (“the loan”).
I.The loan will be in the form of a Line of Credit from Permanent Custodians Limited in the sum of $250,000. It is the intention of the Parties that $150,000 will be used for the renovation of the [N] Street property and up to $100,000 will be used by [the wife] to make improvements to the [[O] Street property].
J.As a result of the above circumstances, and to avoid any conflict in the future, the Parties wish to enter into a financial agreement to provide specifically for a method as to how they will deal with the [[O] Street property] and the loan if they separate and for that purpose the Parties agree that this Agreement is a Financial Agreement pursuant to Section 90C of the Family Law Act 1975 or any subsequent amendment to the Family Law Act.
In his affidavit filed on 17 January 2013, the husband asserts that the sum of $150,000 was lent by the wife directly into the bank account of X Holdings, which was the Trustee for the Trust. A copy of a bank statement for
X Holdings showing a deposit of $150,000 on 15 January 2004 from
“PFC and Co” was provided by the husband. The husband then asserts that in March 2010, the sum of $124,890 was transferred back to the wife by X Holdings. A copy of a bank statement (substantially redacted) for X Holdings showing a payment of $124,890 on 15 March 2010 with the description “REPAY [X] LOAN” was also provided by the husband. The husband has declined to cause the repayment of the balance of $25,110 to the wife and claims that this sum is not owed to her. The actions of the husband prior to March 2010 reflect his position in this regard.
In October 2009, the husband sent an email to the solicitors for the wife which attached a document titled “Deed of Acknowledgement” (“the Deed”). The text of the email sent by the husband contained the following message:
Deed for signature required for repayment of loan.
Please advise once approved for signature.
The Deed attached to the email contained terms which, inter alia, purported to establish the following as between the husband and wife:
a)neither the husband nor the wife complied with the 2003 Financial Agreement in its exact terms
b)in lieu of compliance with the Financial Agreement, the wife lent the sum of $150,000 to the Trust in January 2004
c)since cohabitation, the Trust had advanced to the wife the sum of $25,110.
As reflected in the Deed, the husband’s position is that the sum of $124,890 which was repaid to the wife in March 2010 represented the outstanding amount owing to her by the Trust at that time. The husband’s contention that there is no money owing to the wife under the Financial Agreement appears to be grounded in this reasoning.
The evidence before the Court is that a sum of $150,000 was paid to an account in the name of X Holdings in 2004; a sum of $124,890 was then repaid to the wife by X Holdings in 2010. Consistent with this evidence and contrary to the husband’s assertions, the wife’s understanding in January 2004 was that she was not loaning a sum of $150,000 to the Trust. The wife affirmed that this was her understanding during cross examination.
The Deed proposed by the husband was not executed. The fact of the payment and repayment in the manner referred to does not in the Court’s view offer any reason to depart from the clear words of the Financial Agreement prepared by lawyers on behalf of the parties and executed by them, since a borrower may direct a lender as to payment other than to himself and may procure repayment of the amount of the loan from a third party without changing the nature of the transaction.
The Court finds that the debtor of the loan made under the Financial Agreement is the husband, given that it was an agreement between the husband and the wife in their own names. The Court proposes to make an order requiring the husband to pay to the wife the outstanding balance in the sum of $25,110.
The Court does not propose to include in the order that it will make a provision that the husband is to pay interest on the sum of $25,110 from 15 March 2009. Upon inspection of the Financial Agreement, the Court finds that no reference was made to the rate at which interest on the principal sum under the loan should be calculated, apart from clause 3.3 which states that:
... [the husband] shall pay all instalments of interest and principal as and when they fall due relating to the portion of the loan used for renovation of the [N] Street property.
Given that the Financial Agreement is one which was made pursuant to s 90C of the Act, and therefore one to which Part VIII of the Act does not apply, the Court does not propose to include the sum of $25,110 as an asset of the wife and as a liability of the husband on the balance sheet. Rather, the Court proposes to enforce the agreement, make a separate order in relation to it, and take the amount into consideration in the Court’s consideration of s 75(2) factors.
The other item which does not appear on the balance sheet and which the Court does not propose to include on the balance sheet is the $4,400 said by the wife to be owing to her by the husband for the payment of Dr M’s expert fees.
At an earlier stage in these proceedings, the wife paid the husband’s share of the fees charged for Dr M’s services, after the husband asserted that he had not the funds to pay his share. At the final hearing during Counsel for the wife’s cross examination of the husband, it became clear that the husband’s assertion was incorrect.
The Court proposes to make an order that the husband pay to the wife the sum of $4,400 for the purpose of equalising the amounts contributed by each of the parties to Dr M’s expert fees. In doing so, the Court notes that the order which it will make relates only to the said fees and is not exhaustive of the wife’s right to seek a costs order against the husband.
Rather than include the amount as an asset of the wife and as a liability of the husband on the balance sheet, the Court proposes to take the sums into account in its consideration of s 75(2) factors.
The Court’s findings
Considering all of the above, the Court has come to the following findings in relation to the assets (including add backs), liabilities, superannuation and financial resources of the parties:
Item Ownership Description Value ($) ASSETS
Wife Suburb B property 1,350,000 Wife P Road healthcare business 553,976 Wife Peugeot Motor Vehicle 20,000 Wife Westpac Bank Shares 3512 102,723 Wife Telstra and IAG shares 7,000 Wife Contents & Jewellery 25,000 Wife Honda Motor Vehicle 0 Husband Suburb P property 1,050,000 Husband Suburb S property 375,000 Husband Suburb V property 370,000 Husband Queensland property 375,000 Husband T property (H Street unit trust) Held in Unit trust by daughter Husband N Street, Suburb R Included in Z Trust valuation Husband Shares 48,261 Husband BMW motor vehicle 82,000 Husband DS & Associates 8,153 Husband Moneys due by DS & Associates 126,691 Husband PC Pty Ltd Nil Husband Z Trust 3,100,627 Husband Contents 10,000 Total assets $7,604,431 ADD BACKS
20 Husband Funds not accounted for including (see annexure A):
a) Loan by husband to Z Trust
b) PC Pty Ltd term deposit
c) Loan taken by husband post separationd) Funds withdrawn 16/12/10
777,943Total add backs 777,943 Total assets (including add backs) $8,382,374 LIABILITIES
Wife Mortgage over Suburb B property 676,900 Wife Loan for P Road healthcare business –NAB 360,000 Wife Lease over Peugeot 32,703 Husband Mortgages over Real Estate 1,444,856 Husband CBA Overdraft 49,744 Husband Debt by Husband to PC Pty Ltd 290,983 Total liabilities $2,855,186
SUPERANNUATION
Wife X Holdings SMSF 13,000 Husband X Holdings SMSF 31,000 Wife Profession specific Accumulation 29,537 Husband Commonwealth Life Accumulation 1,500 Total superannuation $75,037 Total net assets (including add backs and superannuation) $5,602,225
In determining the way in which the parties’ contributions should be assessed and a result based on them arrived at, there was some argument from the husband that this should be done on an “asset-by-asset basis”.
In this case, where there is considerable doubt over some of the parties’ history as indicated above, it is in the Court’s view inappropriate to approach the matter on an asset-by-asset basis. The Court intends in the exercise of its discretion to approach the considerations it has to make on a “global basis”.
Whether the parties’ property interests should be altered
The wife and the husband were married for approximately 12 years but are now separated. They no longer share obligations of support and the mutuality which was attendant between them during the marriage no longer exists.
It is in the Court’s view appropriate to effect an adjustment of the parties’ rights and interests in the matrimonial property to meet the changing needs and circumstances of each of them into the future.
The parties have no agreement as to the division of their assets consequent on the failure of their marriage, aside from the Financial Agreement dated
23 December 2003 which the Court has considered and will enforce.
In the circumstances, the Court finds that it is just and equitable to make an order adjusting the property interests of the parties, including their interests in superannuation.
Section 79(4) contributions
Initial contributions
Both parties appear to have come into the relationship with significant assets. The husband’s financial contributions prior to and during the marriage outweighed those of the wife, due largely to a substantial inheritance that the husband received following his mother’s death and from capital gains that were realised on a property that he owned prior to cohabitation.
The husband asserts that at the commencement of cohabitation he had the following assets:
a)an interest as a discretionary beneficiary of the Trust and a loan account with the Trust
b)an interest in DS & Associates Pty Limited
c)PC Pty Limited
d)the P property, which had a mortgage of $39,045
e)an interest in the N Street property, which the husband was due to inherit upon his mother’s death, having paid to his sister $350,000 in order to buy out her interest in the property
f)a leased motor vehicle of indeterminate value
g)household furnishings of indeterminate value and
h)AMP and TAB shares of indeterminate value.
In relation to the Trust, the husband claims that it owned the following at the commencement of cohabitation:
a)a commercial property at Suburb U leased by PC Pty Ltd and DS & Associates
b)all of the shares in Y Pty Ltd (the sole shareholder of PC Pty Ltd) and
c)all of the shares in MDS Pty Ltd (now DS & Associates), which had been purchased by X Holdings in around 1998.
The husband also asserts that, at the commencement of cohabitation, he had an interest in a business on the New South Wales north coast. The husband provided no contemporaneous value for this asset but deposed that when he sold his interest in 2005 the proceeds of sale were “about $100,000”.
In relation to the husband’s interest in the N Street property at the commencement of cohabitation, the sum paid by the husband to his sister to buy out her interest in the property was borrowed and so constituted a debt at the commencement of cohabitation. The husband also had a personal overdraft debt of $50,000 at the commencement of cohabitation.
The wife says that the husband’s evidence is incorrect and that the husband had the following assets at the commencement of cohabitation:
a)the Suburb P property, which the husband says had a debt of $39,045. The wife submits that this asset had an indeterminate value; the husband’s evidence is that he purchased the property for $225,000 in 1987, which was over ten years prior to the commencement of cohabitation.
b)an interest in the Trust, which owned the shares in PC Pty Ltd and DS & Associates and which owned the U property. The wife submits that there is no evidence as to whether there was any net equity in these assets at the commencement of cohabitation.
c)an equitable interest in the N Street property which was subject to the agreement that the husband made with his sister in 1997. The wife submits that this interest constituted a chose in action actionable against his mother’s estate upon her death, but carried a debt of $350,000, which is the amount he paid to his sister under the agreement.
The wife asserts that at the commencement of cohabitation she had the following assets:
a)the O Street property, unencumbered and valued at $555,000
b)a motor vehicle valued at around $8,000
c)Westpac shares of indeterminate value and
d)$50,000 in cash.
The wife also asserts that in 1996 she took a loan of $200,000 from her mother, however this sum has neither been demanded nor repaid and is now statute-barred.
In the circumstances, the Court is faced with the alternative of either treating the wife’s initial contribution as being increased by the sum of $200,000, or of including this amount in its assessment of the contributions of the wife during the relationship. The Court proposes to treat the sum as a benefit brought into the marriage by the wife since it was then that the money was utilised.
Contributions during cohabitation
The parties resided at the O Street property which was owned by the wife from the commencement of cohabitation until early 2004, a period of approximately six years. The wife asserts that during this period, she continued to pay all the household bills and utilities, and the husband gave her money towards the cleaner and food. The husband also paid for social and entertainment expenses at this time.
Some time after moving into the wife’s O Street property, the husband began renting out the Suburb P property.
During the period that the parties lives at the O Street property, the N Street property, which was to become the husband’s upon his mother’s death, was substantially renovated.
With respect to the building and renovation works at the N Street property, the husband contends that the funding for such works was provided by the Trust and from the profits of PC Pty Ltd. The husband also borrowed funds from the bank by refinancing existing loans over real estate in his name. In terms of managing and supervising the works, the husband asserts that he oversaw the building of the house, which included obtaining Council approvals and attending the site regularly to meet with tradesmen.
The wife also contributed to the N Street property by loaning $150,000 to the husband in order to help fund the costs of finishing the renovations. As discussed above, that loan was the subject of a Financial Agreement between the husband and the wife and, upon X Holdings receiving the funds, it subsequently repaid to the wife $124,890. The wife asserts that in order to lend this money to the husband she mortgaged the O Street property in the sum of $250,000, using the balance of that sum to pay for renovations at the O Street property which commenced after the parties vacated it.
In addition to her financial contribution to the N Street property, the wife asserts that she attended meetings with the architect, designed the kitchen and visited the site with the husband in order to inspect the building.
In March 1998, shortly after the commencement of cohabitation, the husband purchased the Suburb S property for $240,000. He borrowed the whole of the purchase price.
In 2001, the husband asserts that he and his late mother gifted to the child their loan accounts in the Trust valued at $250,000.
In March 2001, the husband purchased the Suburb V property for $286,500 plus acquisition costs. He borrowed $300,000 to complete the purchase. This property was bought with the intention, so the husband says, that his mother would live there, however, this did not occur and the property was rented out.
In August 2005, the husband purchased the Queensland property for $427,580 (including costs and furniture). The husband borrowed $235,000 to purchase the property and the balance of funds came from the husband’s sale of his interest in the north coast business. The husband says that, apart from a couple of family holidays at the Queensland property in about 2006, the property was rented out at all other times.
The husband has not provided the Court with figures of the rental income earned on the properties held in his name during cohabitation. The only information the Court has in respect of those rental properties is the current monthly rental incomes, details of which are set out in the husband’s affidavit material as follows:
a)the P property is currently rented for around $2,715
b)the V property is currently rented for around $1,477 and
c)the S property is currently rented for around $1,580.
In April 2007, probate was granted in respect of the will of the husband’s late mother. As a beneficiary to his mother’s estate, the husband says that he received:
a)the whole of the interest in the N Street property, which at the time had a value of $2,200,000
b)cash from the sale of investment units in the sum of $560,000 and
c)a share portfolio valued at $50,000.
At the hearing, it was submitted by Counsel for the wife that, as the husband came into the relationship with an equitable interest in the N Street property at the commencement of cohabitation, that should be factored into any assessment of his inheritance to his mother’s estate as a contribution during the period of cohabitation.
During the course of the relationship, the husband worked full-time for DS & Associates and PC Pty Ltd, which saw him earn a good income. The income he derived was passed through a number of entities which apparently afforded him a taxation benefit.
In his affidavit filed on 17 January 2013, the husband summarises the contributions that he made during the marriage as follows:
a.Mortgage payments for the $350,000 borrowed to acquire the half
[N] Street property which my sister … was to inheritb.The [Z] Trust provided a fully maintained vehicle for the wife from a period prior to our cohabitation until 2007 when the wife purchased the healthcare business and acquired her own vehicle
c.I always paid for the holidays for the family and paid when we ate out
d.I provided the wife with a credit card which was paid from my earnings
e.I paid the [the child’s] day care and school expenses and birthday parties etc
f.I paid the cleaner up to 2008
g.I paid the gardener and the pool maintenance man
h.I paid for and arranged takeaway meals for at least half of the week
i.I paid for other household expenses and utilities by depositing part of my salary into the wife’s separate bank account
j.I contributed to household expenses food and utilities by way of cash and deposits into the wife’s bank account
k.I paid the shortfall between the mortgage payments and other outgoings (rates, strata levies, insurances etc) and the rents on the investment properties at [Suburb P], [Suburb V], [Queensland] and [Suburb S] property
l.Inheritance from the husband’s mother’s estate including the property at [N] Street and over $600,000 including the shares.
The wife asserts that during the relationship she was the primary homemaker and the primary parent of the parties’ child. The husband concedes that for some time the wife was the primary parent, but contends that he contributed as much as he could having regard to the exigencies of his employment. Overall, the husband asserts that the parties made different but broadly equal parenting contributions, as the wife had two other children to provide for in addition to the parties’ child.
In the Court’s view, there is little doubt that for most of the period of cohabitation the wife undertook a greater part of the homemaker and parenting roles, particularly when she was working reduced hours but at other times as well.
During the initial period of cohabitation the wife worked two days per week and earned a few hundred dollars per week. She also received child support payments of approximately $2,000 per month from her former husband in respect of her two older children. The wife asserts that this money was “applied towards the payment of bills, etc”.
With respect to the payment of private school fees for the wife’s two older children, the wife deposes that she did not ask the husband for assistance. She contends that her former husband shared the costs of the school fees with her until 1999, after which time she paid them in full. In 2004, the wife says that her former husband agreed to start paying one-third of the school fees.
By March 2001, prior to the birth of the parties’ child, the wife had increased her workload to three or four days per week. When the wife became pregnant with the child, she contemplated reducing her hours. It was at around this time, the wife says, that the husband started depositing funds into her bank account with the description “pay”. The amount received by the wife in this manner increased gradually over the years, from $1,000 per fortnight in June 2001 to $1,120 per fortnight in January 2009. The wife asserts that she used this money to pay household bills (including telephone, electricity, water rates, gas, insurance, alarms) and to buy food for the family.
The parties’ child was born in May 2001. For the first six months of the child’s life, the wife stayed at home full-time with the child. After this period, she commenced working one day per week, which increased to two days per week. The wife continued to work part-time until 2006.
At the end of 2006, the wife purchased the P Road business using funds borrowed from the bank and from her mother. As discussed above, the Court finds that the sum of $77,000 loaned from the wife’s mother for the purchase of the business is to be treated as a contribution by the wife, given that there is no evidence to suggest that repayment has been or will be demanded. It is the husband’s assertion that the wife purchased the goodwill component of the business and the stock, but that he assisted in otherwise setting up the business. The husband also contends that he did the accounting work for the business until 2009 at no cost to the wife. The wife, however, asserts that she took her own accountant by the end of the first year of running the business.
The husband asserts that the financial contributions of the parties’ should be assessed as 80 per centum in favour of the husband. He submitted that the parties’ non-financial contributions were “very much equal” and that each of the parties made a contribution to the domestic activities of the household, assisted by cleaners and a gardener.
The wife concedes that during cohabitation, the husband’s financial contributions were greater than hers. With respect to non-financial contributions, however, she asserts that these emanated much more from her efforts than from the efforts of the husband, particularly with respect to the roles of homemaker and parent. The Court accepts her evidence in this regard.
Contributions post separation
The wife contends that post separation her contribution should be regarded as superior to that of the husband, particularly by reason of her role, she says, as sole or almost sole carer for the child.
The wife submits that she has attempted to encourage the husband to play a more substantial and significant role in relation to the child, however, she claims that he has refused to do so. When the husband does spend time with the child, which according to the wife is one day per week, the wife is required to deliver and collect the child at the commencement and conclusion of the time.
Counsel for the wife also pointed to the fact that, post separation, the husband has had the benefit of occupation of the home, that is, the N Street property where the parties resided together with the children in the later years of cohabitation.
The husband submits that post separation his contributions have far exceeded those of the wife, however no particulars were provided in the husband’s affidavit material or during oral submissions as to how.
Conclusion based on contribution
All in all I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties to the marriage or either of them, including such property which is no longer the property of the parties to the marriage or either of them and otherwise to the welfare of the family, to be 60 per centum to the husband and 40 per centum to the wife to the date of their separation.
Section 75(2) considerations
The husband is 55 years old and the wife is 52 years old. Both are in good health.
The wife is a healthcare professional and works at the P Road business which she owns. In her Financial Statement filed in November 2012, the wife asserted that her average weekly income is $2,228 and that her total personal expenditure per week is $3,405.
The husband is an financial professional and is self-employed by DS & Associates and PC Pty Ltd. In his Financial Statement filed in January 2013, the husband asserted that his average weekly income is $3,351 and that his estimated total personal expenditure per week is $3,858. At the hearing, it was submitted by the husband that he takes a salary from PC Pty Ltd of about $90,000 per year.
On the topic of the parties’ comparative future earning capacities, the Court finds itself in the difficult position wherein it cannot be certain of the accuracy of the information that the husband has disclosed. During cross examination of the husband, Counsel for the wife referred the Court to Exhibit 8 (an investment home loan application) as evidence that the husband’s earning has, in the past, far surpassed that which has been disclosed in his evidence. Indeed, that document showed that the husband’s net profits for the year 2007 were $278,334. Counsel for the wife also led the Court to Exhibit 7 (bank account statements for PC Pty Ltd), which shows that the husband’s net profit for 2008 was $268,740. On balance the Court finds that, contrary to the husband’s assertion that the wife’s earning capacity is greater than his, the reverse is far more likely to be true.
With respect to superannuation, the wife submitted that the entitlements of the parties are very modest. No submission was made by the husband on this point.
The parties have one child of their marriage, who is presently 11 years old. The wife is the primary parent of the child and it appears that the current parenting arrangement for this child will be ongoing. Since separation, it appears that the husband has spent time with the child once per week on Sundays. The wife asserts that, despite her efforts to foster a better relationship between the husband and the child, the husband has refused to play a substantial and significant parenting role.
With respect to the wife’s older children and the fact that these children lived with the parties during the period of cohabitation, the husband submits that this factor should be taken into account under s 75(2)(o). Specifically, Counsel for the wife contended that a lot of the wife’s income during the marriage was used to pay the school fees of these two children.
The Court accepts that the husband’s provision of funding during the period of cohabitation for the care and maintenance of the wife’s two older children undoubtedly constitutes a contribution on his part. In the Court’s view, however, there is a limit to the weight that can be given to this kind of contribution, especially in a case where, as was the case here, the wife was receiving more than $20,000 per annum in child support from her former husband in respect of those children.
The husband has a credit card liability which appears at Item 30 on the joint balance sheet that was tendered by the parties. The Court decided not to include this debt on the final balance sheet, as it was characterised as a post separation debt for the reasons set out above. That said, in its assessment of whether an adjustment should be made, the Court considers it appropriate to take the debt into account as a relevant matter under s 75(2)(o).
With respect to the $25,110 which the husband owes to the wife in respect of the balance owing under the Financial Agreement, this sum is a liability of the husband and an asset of the wife that the Court did not include on the final balance sheet for the reasons set out above. The existence of this sum as a debt to the husband and an asset of the wife is a matter which the Court considers relevant to take into account under s 75(2)(p).
In summary, on the question of whether the Court should make an adjustment under s 75(2), Counsel for the respective parties submitted as follows.
Counsel for wife asserted that an adjustment should be made in favour of the wife and pointed to the husband’s higher earning capacity which, it was said, is far greater than what the husband’s evidence would suggest.
In seeking an adjustment, Counsel for the wife also pointed to the wife’s majority and ongoing care of the child. Finally, it was submitted that the Court could comfortably be satisfied that the husband was not truthful in relation to disclosing the true extent of his financial position.
It is the wife’s case that an appropriate outcome in these proceedings, based on the parties’ contributions and an adjustment under s 75(2), would see the pool of assets divided as to 60 per centum to the wife and 40 per centum to the husband.
Counsel for the husband asserted that no adjustment should be made under
s 75(2). It is the husband’s case that, even though the wife has the continuing and ongoing care of the parties’ child, no adjustment should be made in her favour by reason of what the husband contends is the wife’s higher earning capacity. The Court does not accept that that statement is correct, even though taxation assessments of the husband may suggest otherwise.
Overall, Counsel for the husband submitted to the Court that the s 75(2) factors equalise themselves out.
Conclusion on section 75(2)
For all the reasons referred to above, namely:
a)the mother’s ongoing primary care of the child and
b)the clear disparity between the parties in terms of their income and earning capacity, including a consideration of the husband's capacity to generate wealth through a number of his related entities and where
c)the result of the division of assets would otherwise leave the husband in a much stronger position as to capital than the wife and where
d)the husband’s failure to disclose leaves the Court in doubt as to whether he has other undisclosed assets, financial resources or income, and taking into account the financial resources otherwise available to the parties
the Court takes the view that there should be an adjustment of some 8 per centum in favour of the wife.
The 8 per centum adjustment to the wife will increase her entitlement of $2,240,890 under the contribution-based assessment by $448,178. Given that she will have the primary care of the parties’ child for at least another seven years, and for the other reasons referred to above, the Court calculates this to be an adequate and appropriate and just adjustment.
Overall division of assets
The above determination will see the wife receive 48 per centum of the parties’ assets and the husband receive 52 per centum.
Just and equitable
The division of assets would see the wife receive $2,689,068 worth of net assets and the husband receive $2,913,157 worth of assets.
In order to effect such a division, the Court proposes to make an order that the husband pays to the wife the sum of $1,670,435 by way of property settlement.
The Court also proposes to decline to make an order that the wife’s interest in the X Holdings self-managed superannuation fund be transferred to the husband in the precise terms in which it is sought. At the hearing, it was submitted by Counsel for the wife that prior written requests of the wife to have her member entitlement “rolled out” into a fund nominated by her had been refused by the husband. The wife’s position now is that she no longer wants the entitlement, and the Court proposes to make the order to give effect to what she seeks, by providing for a splitting order which requires a split of her entitlement as to 100 per cent to the husband. The Court finds that, having regards to who is the trustee of the fund, the Court can be satisfied that procedural fairness in relation to the order is afforded. The Court declines to make such an order as was sought because it is of the view that it has not the power to order a transfer of an interest but rather require the splitting of a payment. It is not the view of the Court that the status of the fund as a
self-managed fund changes the position. The Court respectfully adopts the view expressed by Young J in Wrigley and Wrigley (2004) FLC 93-182.
In the circumstances of this case the Court determines that result to be just and equitable.
Orders which should be made
The Court proposes orders which will give effect to the following division.
The wife will receive:
| Assets | ($) |
| · Payment from the husband to the wife | 1,670,435 |
| · Suburb B property | 1,350,000 |
| · P Road healthcare business | 553,976 |
| · Peugeot motor vehicle | 20,000 |
| · Westpac Bank shares | 102,723 |
| · Telstra and IAG shares | 7,000 |
| · Contents and jewellery | 25,000 |
| Superannuation | |
| · Profession specific (Accumulation) | 29,537 |
| Total assets (including superannuation) | $3,758,671 |
| Liabilities | |
| · Mortgage over B property | 676,900 |
| · Loan for P Road business | 360,000 |
| · Lease over Peugeot | 32,703 |
| Total liabilities | $1,069,603 |
| Total net assets (including superannuation) | $2,689,068 |
The husband will receive:
| Assets | ($) |
| · Suburb P property | 1,050,000 |
| · Suburb S property | 375,000 |
| · Suburb V property | 370,000 |
| · Queensland | 375,000 |
| · T property (H Street unit trust) | Held in Unit trust by daughter |
| · N Street, Suburb R | Included in AS Trust valuation |
| · Shares | 48,261 |
| · BMW motor vehicle | 82,000 |
| · DS & Associates | 8,153 |
| · Moneys due by DS & Associates | 126,691 |
| · PC Pty Ltd | Nil |
| · Z Trust | 3,100,627 |
| · Contents | 10,000 |
| Add backs | |
| · Funds not accounted for including (see Annexure A): a) Loan by husband to Z Trust | 777,943 |
| Superannuation | |
| · Husband’s interest in X Holdings (SMSF) | 31,000 |
| · Wife’s interest in X Holdings (SMSF) | 13,000 |
| · Commonwealth Life (Accumulation) | 1,500 |
| Total assets (including add backs and superannuation) | $6,369,175 |
| Liabilities | |
| · Payment from the husband to the wife | 1,670,435 |
| · Mortgages over Real Estate | 1,444,856 |
| · CBA Overdraft | 49,744 |
| · Debt by Husband to PC Pty Ltd | 290,983 |
| Total liabilities | $3,456,018 |
| Total net assets (including add backs and superannuation) | $2,913,157 |
Child Support
The wife seeks an order in relation to the child support payable by the husband.
The current child support assessment for the period ending on 1 April 2013 sees the husband’s income assessed at $180,000. The wife seeks an order that would involve the Court fixing the husband’s income at $341,000 for the period from 1 April 2013 to 30 November 2019.
The wife in her submissions stated that, were the Court to make the order that she seeks, the Child Support Agency would then adjust her income against whatever income the Court determines is attributable to the husband. The husband in opposing the wife’s application submitted that child support should be assessed on the actual income of the parties as at the date of the assessment.
The Court cannot on the state of the evidence accurately assess the husband’s income at 1 April 2013. That assessment should be made in the first instance by the Child Support Agency and be subject if necessary to the usual reviews.
Costs
As discussed above, the Court for the reasons set out above will make an order that the husband pay to the wife the costs that she has incurred on his behalf for the expert fees charged by Dr M in the course of these proceedings.
Should there be any further application for an order for costs then any applicant party must file and serve within 28 days of the orders herein made any such application that they might wish to make. Any application is to be accompanied by any affidavit material setting forth any evidence in chief on which they wish to rely together with any written submission in support of that application. Any respondent party must file within a further 14 days a response, together with a written submission in support of that response, and any affidavit material, setting forth any evidence in chief on which they wish to rely. Any applicant will have a further 7 days in which to file any submission or evidence in reply.
In the event that no application is filed within the time limit there will be no order as to costs.
I certify that the preceding one-hundred and eighty-five (185) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 18 April 2013.
Associate:
Date: 18 April 2013
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