Strahan and Strahan (No. 4)
[2017] FamCA 949
•23 November 2017
FAMILY COURT OF AUSTRALIA
| STRAHAN & STRAHAN (NO. 4) | [2017] FamCA 949 |
| FAMILY LAW – PROPERTY – Where proceedings have been extant for many years – where wife applies for adjournment and senior counsel acknowledges that if unsuccessful, the case would proceed as undefended – where adjournment refused – orders made on the available evidence. |
| Family Law Act 1975 (Cth) Income Tax Assessment Act 1997 (Cth) |
| Bevan & Bevan (2013) 49 Fam LR 387 Chorn and Hopkins [2004] FamCA 633; (2004) FLC 93-204 Fields and Smith (2015) FLC 93-638 Markarian v R (2006) 228 CLR 357 Pierce and Pierce (1999) FLC 92-844 Stanford v Stanford (2012) 247 CLR 108 Steinbrenner & Steinbrenner [2008] FamCAFC 193 Strahan & Strahan [2017] FamCA 76 Strahan & Strahan (No. 2) [2017] FamCA 248 |
| APPLICANT: | Ms Strahan |
| RESPONDENT: | Mr Strahan |
| FILE NUMBER: | ADF | 228 | of | 2005 |
| DATE DELIVERED: | 23 November 2017 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 13 November 2017 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Livesey QC |
| SOLICITOR FOR THE APPLICANT: | Charlton Rowley Legal |
| COUNSEL FOR THE RESPONDENT: | Mr Wilson |
| SOLICITOR FOR THE RESPONDENT: | Kennedy Partners |
Orders
That the husband have leave to proceed in the absence of the wife.
By 4.00pm on 31 January 2018 (or at such other time as the parties may agree in writing), the husband:
(a) Pay to the wife $1.7 million; and
(b) Authorise his solicitors to release to the wife, the sum of $300,000 held on trust pursuant to the orders of this court.
Within 7 days of being presented with the necessary documents to give effect to this order, the wife do all such acts and things and sign any necessary document to:
(a) resign any office she holds in the following companies:
(i) KB Pty Ltd;
(ii) TS Pty Ltd; and
(iii) WS Pty Ltd
(“the companies”)
(b) Relinquish or resign as an appointor of the Mr S Trust;
(c)Transfer to the husband or his nominee any shares held by her in the companies;
(d)Assign to the husband any monies standing to her credit in the accounts of the companies and/or the Strahan Trust and the Mr S Trust (“the trusts”) and relinquish any right or entitlement which she may have under the deeds of settlement of the trusts;
(e)Withdraw, at her expense, any and all caveats lodged by her against the titles of the real properties to be retained by the husband in Australia, Hong Kong, Switzerland or Southern Europe; and
(f)Deliver to the husband the keys to the apartment in Switzerland.
Should the wife fail to comply with the terms of paragraph (3) of these orders, pursuant to s 106A of the Family Law Act 1975 (Cth), a registrar of the Family Court of Australia at Adelaide is appointed to sign all such documents in the name of the wife as may be required to give effect to these orders and the registrar shall be satisfied of the default of the wife upon production of an affidavit by the solicitor for the husband confirming such default.
By 4.00pm on 31 January 2018, the husband either in his personal capacity or as a director of the trustee of the Strahan Trust, do all such acts and things and sign all such documents as may be necessary to provide to the wife a transfer of land in registerable form to effect the transfer of the following properties to the wife:
(a) SW Street, Suburb NB;
(b) HC Street, Suburb NB;
(c) SE Street, Suburb PS;
(d) HS Street, Suburb AN; and
(e) RC Street, Suburb YK.
Upon the provision by the husband of the documents required of him in paragraph (5) of these orders, the order for interim spousal maintenance made on 24 April 2012 is discharged subject to any arrears that may be outstanding thereunder.
If by 4.00pm on 15 December 2017, the wife has failed to notify the husband of the entity into which she wishes the balance of her interest in SH Pty Ltd to be transferred, the husband be at liberty to arrange such transfer to P1 Limited.
Upon compliance by the husband with all obligations under these orders, all extant orders made by this court are otherwise discharged.
Save as otherwise provided by these orders, each party shall retain and the other relinquish any interest in, any assets in the name of the other party (or in which they have any legal or equitable interest) as at this date, including any interest as an employee pursuant to any superannuation fund.
Any joint tenancy of the parties in any real or personal estate is severed by these orders.
That the wife’s application as amended filed 9 June 2005 and the amended response to the application for final orders filed by the husband on 1 March 2017 are otherwise dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Strahan & Strahan (No. 4) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: ADF 228 of 2005
| Ms Strahan |
Applicant
And
| Mr Strahan |
Respondent
REASONS FOR JUDGMENT
Mr Strahan (“the husband”) married Ms Strahan (“the wife”) in 1994 and they commenced living together in a relationship that lasted until January 2005.
Legal proceedings between the parties were commenced about one month after their separation but it has taken until November 2017 to bring all of those proceedings to an end. Along the way, the court record shows innumerable hearings and over 700 filed documents. The evidence of both parties shows the expense has been extraordinary but they have each also used an enormous amount of the court's time over that journey.
Without any disrespect to the parties, I propose to refer to them as husband and wife even though they were divorced in 2006.
These proceedings relate to the division of property and to the wife’s application for spousal maintenance. They were ultimately heard on an undefended basis in the absence of the wife. The absence of the wife’s participation in the final hearing requires some explanation.
Matters preliminary to trial
Over more than 12 years, the wife has had involvement with about 15 different firms of lawyers who each filed a Notice confirming that they had instructions to represent her. Each in turn, either ceased to act or alternatively, had their services terminated.
On 1 September 2016, Austin J set the final hearing down for 3 April 2017. Directions for the filing of evidence were made. As there was limited, and in some cases no subsequent apparent compliance with those directions, a management hearing was listed on 9 February 2017 before me.
The wife’s solicitors who appeared in February 2017, flagged unresolved issues of litigation funding and discovery that they submitted had to be determined before a trial. Accordingly, an interlocutory hearing was fixed for 3 March 2017 (see Strahan and Strahan [2017] FamCA 76).
On 14 March 2017, the wife filed an application seeking litigation funding and a discharge of the September 2016 trial orders. On 17 March 2017, a hearing, at which the wife was not present because she was overseas with the husband, saw the 3 April 2017 final hearing vacated. I refixed it for 20 April 2017 when I understood that all parties would be back in Australia. By this time, the husband had filed his evidence but the wife had not. So out of date was the wife’s application for orders or final relief, that her last document was well-buried in the court file. Years had passed without any clear indication of what she was seeking, notwithstanding the parade of lawyers passing. Most of those lawyers were involved in interlocutory disputes about discovery and litigation funding.
On 20 April 2017, a new firm of solicitors, this time briefing new counsel, appeared and sought an adjournment of that forthcoming trial. Having given some thought to the problem, I made orders on 26 April 2017 about litigation funding and refixed the trial for 4 September 2017 which was the then earliest available date. (See Strahan and Strahan (No. 2) [2017] FamCA 248).
On 24 August 2017 with new solicitors again involved, the wife filed an application seeking to vacate the trial date. She again sought orders relating to litigation funding. In between April 2017 and August 2017, the only apparent activity was that the wife changed solicitors. At the hearing in August 2017, she was represented by Mr Glick QC.
On behalf of the wife, Mr Glick made clear that she wanted to put material before the court. He submitted that a proposal had been prepared which was subject to funding, but given time, it would see her case prepared for trial. The wife wanted that trial not to be before 1 March 2018. I refused the adjournment for that length of time but on the basis of an assessment as to how quickly the matter could be prepared, I refixed the hearing for 13 November 2017. I directed the wife to file her evidence and proposals for final orders but that had to be done by 2 November 2017. The wife failed to provide that material and as the record shows, in September 2017, she terminated the solicitor’s retainer.
Late on Friday 10 November 2017, a new solicitor filed a Notice of Address for Service on behalf of the wife and over the ensuing weekend, she filed an application in a case and an affidavit in support of it. The affidavit was sworn by the solicitor rather than by the wife.
On the morning of 13 November 2017, the wife’s interests were represented by her senior counsel, Mr Livesey.
On the basis of the affidavit of the solicitor, senior counsel sought to adjourn the trial again. For reasons given extempore, that application was refused.
Senior counsel for the wife began his submissions by saying that the wife was not ready to proceed. He said, no doubt on instructions, that if the wife’s position was rejected by the court, the proceeding would go ahead as an undefended case. He acknowledged that the wife had been granted indulgences but those had been based on conditional representation relating to litigation funding.
The adjournment application was made to enable the wife to be properly represented and the funding conditions were said to be those of an irrevocable authority, a charge in favour of her solicitors over the wife’s property entitlement and access to money which I had previously ordered the husband to place in his solicitor’s trust account.
I ruled at the time that the meeting of the requirements for the protection of the wife’s solicitor’s costs, would not overcome my concern that the wife would do what history had shown in the past and her lawyers would be terminated.
The court was told that the wife was not present in Melbourne nor at the registry in Adelaide where a video conferencing facility had been set up in a courtroom to accommodate her desire not to come to Melbourne for the final trial.
Senior counsel for the wife submitted that his client was suffering anxiety and stress and could not attend. He said he had seen a medical certificate to indicate that she would not be available in or until December. None of that gave me any confidence that her medical condition would be resolved even for the adjourned period she was seeking which seemed to be early 2018.
Upon ruling that the adjournment was refused, senior counsel then withdrew and the matter proceeded on an undefended basis as anticipated. In my view, after 12 years of waiting, and at huge expense, the husband was entitled to have the matter concluded particularly having regard to the amounts of money that he had paid including by way of interim spousal maintenance but so too, the court was entitled to have the case finished. It is particularly pertinent to note that in this case, the duration of the marriage was shorter than the time that has elapsed since the separation of the parties.
Three controversial issues
Three controversial issues had been raised by the wife as indicated by the affidavit of her recent solicitor Mr Rowley, her August counsel Mr Glick QC and even by the evidence of the husband himself.
First, the wife has said (at least as late as a few days ago to her new solicitor) that the husband sent $142 million “offshore”. That allegation was made ten years ago and answered by the husband by affidavit. In the circumstances I do not accept that, apart from testing the husband’s evidence in cross-examination, the ten years of discovery and $20 million of legal fees (which the wife asserted she had paid) could not have elicited an unequivocal piece of evidence to show that the husband’s statement to the court was untrue. Absent such evidence, particularly since the husband’s affidavit was in the wife’s hands from 1 March 2017 or thereabouts, I do not intend to be further concerned about that allegation.
Secondly, in the August 2017 hearing, it was said that there were many boxes of documents that the wife (or more particularly her Melbourne lawyers) wanted to investigate but they were subject to a lien by her former Adelaide solicitors. This had something to do with the many millions of dollars which the wife’s solicitors in February 2017 had said would expose a significant amount of money that the husband had not disclosed. In August 2017, the husband’s counsel scoffed at the possibility of these documents establishing anything. He asserted that they were entirely historical and of little value. As the wife terminated the instructions of her lawyer (or vice versa) in September 2017, that investigative exercise was never undertaken. An unusual statement had been made in early 2017 that the wife had found over $60 million that the husband had not disclosed. Since then, no evidence has even hinted at the source of that knowledge.
Again, absent an unequivocal indication about what discovery needed to be undertaken, having regard to the time that has expired and the amount of money spent, I consider that the court should not be unduly troubled about that issue.
Thirdly, comment had been made in the February 2017 hearing about the husband’s income stream and how implausible his explanation was. I return to that evidence concerning the “KC Trust” below. But on that issue too, I saw no investigative work being undertaken. The wife said the case was complex and beyond her capacity particularly with the health problems she said she endured and those of the parties’ adult son. However, as the wife alleged, $20 million had been spent on her legal case over many years. No cogent evidence to dispute the husband’s assertions of March 2017 have been presented.
It could not be said that the wife is incapable of acting for herself. She filed an affidavit in early 2017 decrying the role her then lawyers had fulfilled. She made clear through the affidavit filed by her present solicitor that the many lawyers who had represented her, had let her down. That is an easy accusation to make but I do not accept there is any relevant evidence to support it.
In respect of this third issue therefore, nothing I have read has indicated that the husband’s income is not as he so described.
The wife has the husband’s affidavit
The evidence of the husband has been in the wife’s hands since March 2017. It is a relatively simple story and absent some indication of implausibility, it will be accepted as unchallenged. Many of the major disputes here over the years have revolved around an international syndicate or business which the husband asserted came to a conclusion by legal proceedings in Hong Kong. I have no concept of whether the wife has investigated those documents including the husband’s evidence that would have been available in the Hong Kong hearing and it has never been put to me that what the husband asserted about the conclusion of that syndicate was not correct.
The evidence of the solicitor currently acting for the wife was that he had begun acting for her in October but he did not set out what about the husband’s evidence was disputed. If he did not have access to the court file, he could have obtained that by filing a Notice of Address for Service. He had no funding so presumably, only took preliminary instructions. To be clear, the husband has been paying over $6000 per week in spousal maintenance for years in addition to the various lump sums of partial property settlement to which I shall refer later and at the time the wife last filed a financial statement (July 2016), she had over $100,000 in the bank.
The wife’s approach to this litigation has been perplexing but in my view, it is time for the court to bring the matter to a head not just for the husband’s sake but also from the point of view of community resources.
Mr S
The parties’ child Mr S is now 21 years of age. He was born during the relationship and in the outline of case filed by the husband, Mr S was described as having been diagnosed with autism. At [13] of the affidavit of solicitor Mr Rowley, the wife’s current solicitor, he said that the wife had informed him that in addition to autism, Mr S had been diagnosed with high anxiety, insomnia, grand mal seizures, chronic Lyme disease, tick borne disease and he requires constant daily and ongoing regular care including nutritional feeding support.
The wife cares for Mr S but it would be important to acknowledge that she is assisted by a number of people all of whom are paid largely by the husband.
For example, the parties’ cooperation in relation to Mr S included a trip to the United States of America in early 2017 for the purposes of pursuing some form of treatment or cure and the carers were all taken as well. This was all at the husband’s expense.
There is no dispute from the husband that the wife has a significant role in the care of Mr S but counsel for the husband submitted that the court could take some comfort from knowing that the support would continue in the future. The role of the husband in the past would corroborate that submission.
When the wife last filed a financial statement in July 2016, she noted that the husband did not pay child support but that Mr S’s expenses were paid by a company WS Pty Ltd. She then said that the husband pays, either himself or through his various entities, Mr S’s medical expenses, naturopath expenses, nutritional supplement expenses, resources and staff support expenses, laundry and laundry products, medical trips to USA with a support team of ten, numerous interstate trips including support team, autism experts, Mr S’s personal care products, security guards, a chef and various other expenses about which there is some uncertainty.
For example, security guards are employed apparently to stop Mr S running away from the house. The medical trips to which I have earlier referred have been more than just that in 2017. It can therefore be seen that the husband has contributed significantly towards Mr S’s care and I have no reason to consider that he would not continue that role. In his financial statement filed 1 March 2017 the husband deposed that his maintenance payments/child support for Mr S amounted to an estimate of $70,760 per week. It may very well be that he can afford that sort of expense but he said his income was $89,800 per week. Thus, I conclude that there is substance to the submission by counsel for the husband that I can rely upon the husband to continue supporting his son.
Spousal maintenance
In March 2010, the wife filed an application for interim orders including “interim spousal maintenance” of $278,000 per calendar month. On 31 May 2010, an order was made that the husband pay by way of spousal maintenance, pending the determination of that application, a lump sum of $325,000. The wife appealed.
In July 2010, an order was made by consent that the husband access an interest in a company and pay one half to each of himself and the wife and the characterisation as spousal maintenance or interim property settlement be reserved to the trial. That did not resolve the spousal maintenance issue.
In December 2011, the wife filed a further application for spousal maintenance in which she sought $2 million for a period of 12 months.
On 24 April 2012, the parties litigated the issue of spousal maintenance and Dawe J made the following order:
(2)The husband pay the wife interim spouse maintenance fixed in the sum of TWENTY SIX THOUSAND AND TWENTY ONE DOLLARS [$26,021.00] per calendar month, the first payment to be on 1 May 2012 and thereafter the first day of each calendar month pending trial. (My emphasis)
In her reasons, Dawe J found that the husband had the capacity to pay spouse maintenance particularly if the payment was on a monthly basis. Her Honour noted that previously, the wife had sought the sum of $6254 per week but that her evidence was that there had been a “drastic change” in the financial position that she had enjoyed prior to separation when she had “virtually unlimited access to funds” from marital income and investments.
Dawe J considered the various aspects including s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) and noted as follows:
[120]For the purposes of an interim order an assessment in accordance with the provisions of section 75 requires the Court to consider an amount which is reasonable and proper for the provision of maintenance based upon the commitments which would be necessary to enable the wife to support herself, taking into account the standard of living that in all the circumstances is reasonable. This should also take into account the wife’s claim to a past luxurious lifestyle.
Her Honour noted that the husband had submitted that the claim of the wife was “manifestly excessive and unjustified”. Her Honour then looked at the amounts of expenditure of the wife and determined that it was proper to make an interim order for $26,021 per calendar month.
The present order has continued since 2012 and the husband now seeks that it be discharged. The financial statement filed by the wife in July 2016 showed similar expenses to those contemplated by Dawe J in 2012. Some of them are hard to understand but then again, the wife asserted that she had lived a luxurious lifestyle. The difficulty for the court now is that the wife has not participated in these proceedings and importantly, the orders I propose to make relating to property have her capital entitlements in mind so I am entitled to consider whether she can live within her means with those assets.
In my view, absent the wife’s participation, and taking into account the orders, the wife can adequately support herself even factoring in what she had previously described as a luxurious lifestyle. Some of the expenses that she deposed to having included “other necessary commitments” $1573 per week, “gifts, hairdressing, toiletries and cosmetics” $615 per week, “clothing and shoes” $1560 per week and “entertainment/hobbies” $350 per week. Absent some indication as to why those expenses are necessary even taking into account the “luxurious lifestyle” to which the wife deposed in the proceedings before Dawe J, and even allowing for income which would now be taxed (as it has not been by virtue of the fact that the payment she has received has been spousal maintenance), my view is that the wife should be able to live comfortably by community standards factoring in the significant amount of money and property that she will have from this case.
Part Property Settlement
Over the years, a variety of orders have been made and something in the vicinity of $12 million has been paid in addition to the payments to which I have already referred. Some of that money was to be “characterised” at trial but I have no idea where it has gone other than relying upon the hearsay evidence of the solicitor for the wife. On the adjournment application, he deposed that the wife had told him that she had spent nearly $20 million on her lawyers. The husband’s evidence is that when the parties separated, the wife retained cash of $6.77 million. By the time the case was before the court in 2016, the wife’s financial statement indicated that she had $106,000 in a cash investment account with the Commonwealth Bank. There were other bank accounts as well.
The absence of evidence as to what has happened to that money creates problems in the exercise of discretion under s 79 of the Act. The approach of the husband was to “add” all of these amounts “back” to create a total list of assets of $67.8 million. The difficulty with that undoubtedly is that if the wife is right about having spent $20 million on legal fees, a “pool” of $67.7 million is entirely artificial. However, having regard to authorities such as Chorn and Hopkins [2004] FamCA 633; (2004) FLC 93-204, parties who spend joint money or monies from their joint resources, on legal expenses, include them in the adjustment in some way. Here, I consider it is better to deal with that amount of money pursuant to s 75(2)(o) for the reasons that I shall later set out.
Legal costs of the husband
I have no doubt that the husband has spent a large amount of money on his own legal representation. Apart from a variety of hearings in the court in Adelaide, there have been Full Court appeals and at least one application for special leave to the High Court. His costs have not been “added back” in this exercise to establish what the parties might otherwise have had but then again, his legal fees have been paid from his “earnings” since the separation occurred 12 years ago.
Importantly, the wife has faced some unsuccessful applications in the court as a result of which she has been ordered to pay the husband’s costs. Some of those costs include the appeal in 2013. On any view, those cost orders which I can identify, exceed $100,000. By his proposed orders, the husband agrees to waive those costs and that is a significant resource for the wife as a consequence of the determination of these proceedings.
Single expert witness
Throughout the life of these proceedings, a large amount of money has also been spent on experts and, in his outline of case document, counsel for the husband calculated that that sum was $348,327.11. If the wife was responsible for half of those expenses as she should be, the resource which she is obtaining because the husband is waiving the return of any monies for that exercise, is $174,163. I take that into account.
The husband’s proposed orders
The husband sought a variety of orders including that within 60 days he transfer a number of real properties to the wife on an unencumbered basis. Some of these properties are owned by the Strahan Trust. He sought that on the basis of those transfers, once effected, his obligation under the interim spousal maintenance order be discharged.
The transfer of those properties out of the trust gave rise to the question of what cost or tax, there would be as a consequence. The husband relied upon the evidence of Mr KSP who is a chartered accountant and tax partner of TT Accountants Limited. His evidence has been in the hands of the wife since it was filed on 18 September 2017. It was the subject of a report prepared in April 2017 and the record shows that a copy of the chartered accountant’s advice was sent directly to the wife at her home address in April. Nothing was said by the solicitor for the wife about that issue.
The report of Mr KSP is extensive and addresses the various aspects of taxation including questions of Division 7A of the Income Tax Assessment Act 1997 (Cth) and also the impact of debt forgiveness, resignation of office holders and s 99B of the Income Tax Assessment Act.
Doing the best I can with that evidence and noting that it is unchallenged, it appears that there will be no tax or extra cost arising out of those transfers of properties from the Trust.
Returning then to the husband’s proposed orders, he sought that the wife transfer to him the various corporate entities and she resign any office holding positions as well as resign as the appointor of the Mr S Trust.
Apparently, the wife has lodged caveats in respect of a number of properties both in Australia and internationally and the husband sought that upon the transfer of the properties that he proposed, the wife withdraw those caveats. He also sought that she deliver the keys to a condominium in Switzerland.
There is also an asset known as shares in the SH Pty Ltd company which the husband acquired after separation but where he split the acquired shares into two parts. According to the evidence of the husband, the wife has not cooperated in respect of the reduction of the outstanding debt and accordingly he seeks an order that in the event that she does not indicate she desires to receive the balance of her interest in that company, the husband be at liberty to issue the shares to P1 Limited.
Other procedural orders were then sought by the husband including under s 106A of the Act for the registrar to sign documents on his behalf. Normally, until such time as the wife is in breach of the orders, it is not appropriate for that discretionary power to be exercised. Here, the transfer of properties out of the trust will require co-operation from the wife. If she does not immediately comply, a registrar may sign the necessary transfers. I have made provision in the orders for the registrar to be able to rely on an affidavit of the wife’s solicitor because I have no confidence about her cooperation.
The orders proposed by the wife
As I have indicated, the wife’s amended application is now seven years old and there is little point me referring to it because it otherwise does not assist. For that reason and the absence of the wife, I have dismissed that application.
The legal issue
Section 79(2) of the Act requires the court to only make an order if it is just and equitable to do so. In Stanford v Stanford (2012) 247 CLR 108, the High Court of Australia contemplated those words and said at [36]:
The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition [23] . It is not possible to chart its metes and bounds.
In Stanford, the High Court at [39] said that it should not be assumed that the parties’ interests in property were different from those that then existed. In other words, the ending of a marriage did not lead to the automatic adjustment of property interests between the parties.
At [41], their Honours said that the court must adhere to the “fundamental propositions” when exercising its power under s 79 including
the need to preserve and protect the institution of marriage identified in s 43(1)(a) as a principle to be applied by courts.
Thus, the parties may have relied upon a number of assumptions both stated and unstated that the court must look at to protect the institution of marriage but the court must have a “principled reason” for interfering with the property interests of the parties.
Importantly, their Honours said that a court could not reach a conclusion that the making of an order was just and equitable only because of the matters relating to contribution and future economic circumstances as set out in s 79(4) of the Act.
In Bevan & Bevan (2013) 49 Fam LR 387, the court said that a determination of what is just and equitable can be shown by “clear implication”. One must conclude that the discretion of the court, whilst approaching the issue of what is just and equitable, is not entirely unfettered.
Courts have previously used such words as “intuitive synthesis” to explain how various determinations came about. That approach drew some concern in a criminal law sentencing case where the High Court of Australia in Markarian v R (2006) 228 CLR 357 made reference to “instinctive synthesis” and noted that whilst the law strongly favours transparency, accessible reasoning was necessary in the interests of everyone including the public. Their Honours said that there may be occasions when some indulgence in an arithmetical process will better serve those ends. Here, that dilemma arises not only because of the extraordinary amount of time that has passed by since the parties lived together as a couple but also virtually all of the assets have risen from the direct efforts of the husband. That can be seen both before the relationship, during it and indeed since the parties separated twelve years ago. That is not in any way to deny that there has been a very significant contribution made by the wife through her care of Mr S and that the husband’s role in supporting Mr S has been largely confined to financial support. There is little doubt that the wife’s role in relation to Mr S will continue into the future but I am cognisant that he is now an adult.
Assessing the various contributions in this case is difficult when one has to contemplate them by intuitive synthesis. As Coleman J said in Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234]:
Given that the evaluation of contribution based entitlements inevitably moves from qualitative evaluation of contributions to a quantitative reflection of such evaluation, there will inevitably be a “leap” from words to figures. That is the nature of the exercise of discretion, whether it be in the assessment of contributions in the matrimonial cause, assessment of damages in a personal injuries case, or determination of compensation in a land resumption case. In some cases, the “leap” is so great, and so unheralded by the discussion which precedes it as to render the reasoning process defective.
Because of my concern that the approach here is difficult, I propose to set out what I consider the current assets are about which the evidence is clear and then to take into account all of the things that have occurred such that there is a recognition of the monies received by the wife and which have no longer any apparent existence.
Percentage or lump sum alteration?
Counsel for the husband approached the issue on the basis of an adding back of all of the various resources and then looking at a division on a percentage basis. The difficulty with that approach is that it is artificial for no other reason than quite a number of the assets have been acquired by the husband subsequent to the cessation of the relationship. So too, it remains now undisputed that the gambling syndicate interest no longer exists.
Sometimes, courts have divided the various assets of the parties on a “global” or “asset by asset” basis and so long as each is explained, either of those approaches is legitimate. Percentage calculations are usually employed by trial judges because it is simpler to do it that way. However, when there are so many competing concepts as here, I do not consider that a global approach or a percentage basis does justice to either party. Such an approach does not take into account what happened to all of the money that the wife has had at her disposal. So too, an asset by asset approach does not assist because some of the assets have an overlap such as the SH investment. Ultimately however, virtually all assets were required with funds provided by the husband. These investment funds occurred well after separation and could only have been obtained from either his efforts in gaining that wealth subsequent to separation or by some form of springboard or “seed capital” approach having regard to the assets that he had in existence when the marriage occurred.
In essence therefore it is difficult to see how a percentage division of all or some of the assets reflects a just and equitable outcome here. In my view, the appropriate course of action is to look at what is available, examine the matters that require consideration in s 79(4) of the Act, take into account what the wife has had and look at what is left. In my view, that is the only reasonable way to see what is a just and equitable result bearing in mind the relationship of the parties and the period of time that has elapsed since the relationship ended.
The evidence
In this unusual case, the assessment is best considered with an examination of four specific time periods. Those are, before the marriage occurred, the period from the date of the marriage until the separation 11 years later, the period of 12 years since separation, and ultimately, the future for each of the parties.
Before the marriage
The evidence of the husband is unchallenged and I accept it is plausible.
The parties married in 1994 and commenced living together. The husband at that time owned properties at Suburb AN and Suburb ZF but also had significant other investments. He had already commenced a business both in Australia and Hong Kong. He estimated that his share of the “float” was about $3 million. He had already created a trust and was running a corporate entity.
The husband had studied at university and completed his tertiary qualifications in 1983. Shortly thereafter, he commenced the business operation which ultimately became extremely successful, making him wealthy.
It was then that the husband and wife met in 1988 and began a relationship but did not live together until their marriage in 1994.
In late 1990, the husband and some other men commenced a syndicate which became CX Company to which I have referred. All of this preceded the marriage with the wife. His success financially enabled the acquisition of the Suburb ZF property and the Suburb AN property. He managed to buy the Suburb AN property without borrowing funds.
The husband also established the Mr Strahan Trust and with accrued savings, invested $1 million in a retirement village venture which later went badly wrong. Thus, when contemplating the parties’ contributions, I have not lost sight of the losses as well as the significant gains.
In 1995, his operations used a software program and OD Pty Ltd was incorporated.
At the time of the marriage, the wife had an interest in a property at Suburb K. That was a property she owned with her sister as tenants in common in equal shares. Some other family members had contributed towards the purchase but a large portion of the price came from a first mortgage. By the time of the marriage, the mortgage outstanding was $161,000. Just prior to the marriage, but after the parties became engaged, the husband paid out that mortgage. In addition to providing that assistance to the wife, the husband also provided $50,000 for chattels and purchased the wife a motor car.
I find the husband’s contribution in 1994 when the marriage occurred, was overwhelming. The wife had the interest in Suburb K but it was limited and minor in comparison to the financial wealth of the husband. The initial contribution of the husband therefore cannot be ignored despite the effluxion of time.
It is significant that the existence of the two properties at Suburb AN and Suburb ZF remain. Whilst the retirement home investment was unsuccessful, the CX Company was well established and creating wealth for the husband as it continued to do for many years thereafter. That significant wealth enabled the lavish lifestyle of the wife to which I have earlier referred. Lavish was the wife’s description to Dawe J on her maintenance application.
It is not necessary, and indeed probably inappropriate, to break up aspects of the contributions of the parties as the assessments should be done holistically (see Fields and Smith (2015) FLC 93-638 at [75]).
This is not a case so much of the erosion of contribution (see Pierce and Pierce (1999) FLC 92-844) but rather, how to attach weight overall to what happened. Significantly, regard must be had to the use to which the parties put those contributions because they can still be seen in what exists today. However, this is not a pure mathematical exercise, nor can it be, having regard to the losses that have occurred along the way including the investments that were unsuccessful and the ultimate loss of the CX Company.
The marriage period
After the parties married, the primary source of income of the parties was the large profit the husband made from the CX Company. He used those resources to acquire properties both internationally and in Australia. Some of those remain in the list shown below. To assist in the management of those investments, further corporate and trust entities were created. Initially, the parties did not pay tax which no doubt contributed to their affluence but that changed later.
In 2004-2005, the marriage was coming to an end and in January 2005, the husband left Australia permanently to live in Hong Kong. Just prior to the parties’ separation, the husband transferred USD2.5 million to an account in the wife’s name in Switzerland and then a further $3.1 million to a Commonwealth Bank account for her. Thus, at the time of separation, the wife had access to substantial money.
The lifestyle to which the parties had been accustomed included the use of credit cards and subsequent to separation, the wife continued their use. The husband paid for those expenses until the accounts were cancelled.
I am satisfied that at separation, there were a number of assets more than what there had been when the marriage occurred ten years before. In the CX Company, the husband had an interest of approximately 14.8 per cent in the float in Australian operations and slightly less interest in the Hong Kong syndicate.
The CX Company was the primary source of the parties’ wealth. There was no formal structure in place giving rise to any specific legal interest but the people involved had managed to cooperate together for 14 years. Distributions were large arising out of the informal arrangement. The husband said that in 2004, his distributions were in the vicinity of $14 million. That was to come to an end with a dispute to which I shall refer below.
Earlier, I mentioned the wife’s interest with her sister in the property at Suburb K. Just after separation, the wife transferred her interest to her mother. That interest has now gone but absent some evidence from the wife as to the basis for the transfer, I ought conclude that if she needed to, she could make arrangements with her mother to assist her financially particularly having regard to the fact that the husband paid the substantial debt to the mortgagee at the time of the marriage. I shall treat that property as a resource of the wife in taking into account the holistic assessment.
Subsequent to separation, the parties’ litigation began in this court. Valuation exercises were undertaken by single expert Ms E. Those reports were first commissioned in 2007 and were completed at a cost of $1.2 million. Subsequent updates of those reports cost $628,000. The valuation exercise was to examine the corporate interests of the parties but their primary focus seemed to be the CX Company.
To assist the wife in that litigation, a variety of payments were made as part property settlement as I earlier described. I find that the wife has already received $12.6 million that way. There is no reason for me to doubt that most of that has gone on legal fees. The fact that various costs orders were also made against the wife in proceedings under which each party is normally expected to pay their own costs unless the circumstances justify otherwise, enables the conclusion that the litigation at least from the wife’s perspective, was not diligently pursued. The husband, as part of his proposed orders, has indicated a willingness to write off more than $100,000 of those costs orders. That is another reason not to “add back” all of his legal expenditure. In addition, the wife has not contributed to all of the single expert fees and those too have to be seen as a resource for the wife because during the litigation, it was expected that she would pay her share.
It is hard to understand how this litigation limped on as long as it did but I accept the husband’s evidence that the parties’ combined costs have exceeded $35 million.
The Australian CX Company
Having regard to the amount of focus on the primary source of the parties’ wealth, it remains uncertain just what present view the wife has about the husband’s interest in the Australian CX Company.
The post separation period
Shortly after separation, the wife’s solicitors sought a split of the husband’s entitlement in the company and that, combined with the intervention of the Australian Federal Police and the Australian Taxation Office, created a problem for the members of the company. It seems from the husband’s evidence that he ascertained that it was the wife who was the agitator for intervention by authorities. Similar intervention occurred in Hong Kong where accusations were made against the husband of illegal operations.
The various problems then circling CX Company led to the husband’s expulsion in August 2006. Litigation followed in Hong Kong.
In the course of the fallout between the participants, the Australian Commissioner for Taxation issued personal income tax assessments for the years 2005 to 2011. That led to a dispute as to whether or not the business proceeds were taxable income because the husband had not declared his distributions as such.
Initially after the Commission of Taxation moved in, a claim was made for $71.5 million tax and a deed of settlement was ultimately executed in November 2013. That issue was resolved with a payment of $17 million.
In Hong Kong, the arrangements concluded with the husband being “expelled from”, or withdrawing from, participation in the Australian CX Company and surrendering participation in the float and other interests. In respect of the Hong Kong syndicate, the other participants surrendered their interests to the husband and a Mr TA in equal shares.
In May 2015, the husband commenced proceedings in Hong Kong against Mr TA. He sought orders for the appointment of a receiver or trustee to liquidate the syndicate or alternatively, damages or restitution. This dispute was settled and the husband was to receive AUD20 million which money was paid into the husband’s lawyers in Hong Kong and after payment of expenses, the balance of the settlement money was HKD68.8 million or AUD9.3 million. That money is now available to the husband for distribution and alteration.
In 2007, the husband remarried. He acquired an apartment in Hong Kong as his new family’s home. That property too has been valued and the husband’s interest in it is shown as AUD3.9 million.
The husband also acquired an Adelaide property at Suburb G through SDA Pty Ltd.
Other property along the way was acquired including by Strahan Trust. The various properties in the trust are proposed to be transferred by the husband to the wife. The wife otherwise does not have assets in her name other than the jointly held interest in the property at HS Street Suburb AN.
The KC Trust
In about July 2013, the husband said that he received a package of documents from STL Limited. This package was accompanied by a letter indicating that he was eligible to become a discretionary beneficiary of a trust known as the KC Trust. The trust was set apparently in the UK and the trustees were said to be professional trustees. He completed the documents including the incorporation of a company IY Ltd to act as beneficiary of the trust. Thus, IY Ltd owns nothing other than that it acts as the beneficiary of the KC Trust. It does not have a bank account. In December 2013, the husband received notice that payment was about to be made to IY Ltd and those distributions thereafter have come through his lawyers in Hong Kong.
IY Ltd was a company incorporated in the British Virgin Islands and therefore according to the husband, there was difficulty establishing a bank account for it in Hong Kong. Hence, the distributions were made to the Hong Kong lawyers.
Between December 2013 and November 2016, the husband received distributions from this trust of USD10.5 million.
The husband’s evidence about the KC Trust was breathtakingly simple. He said:
[102]I know very little about the [KC Trust], and have not been given any documentation relating to it, apart from the “package of documents”. My involvement with the [KC Trust] is a precarious one. My company, [IY], is a discretionary beneficiary – the trustee determines whether or not it will receive a distribution and how much that distribution will be. As I understand it, the trustee has no legal obligation to continue making distributions to [IY] and I have no ongoing “right” or entitlement to receive distributions. At present, without these distributions from the [KC] Trust I would not be able to fund the lifestyle that the wife and [Mr S], on the one hand, and my family and myself on the other, enjoy.
The implausibility of that statement is self-evident. Why would an unknown benefactor invite the husband to become a beneficiary of a trust, the details of which remain a mystery? However, apart from those distributions, the husband disclosed income of $7384 per week which he estimated came from other means. His income when averaged through IY Ltd as the beneficiary of the KC Trust, for the 2016 calendar year, were estimated to be $82,480 per week.
The wife had been aware of the husband’s assertion through his affidavit from at least March 2017 and presumably earlier from disclosures he made. Whilst the simplicity of the husband’s evidence might be seen to be implausible, the absence of any approach by the wife as to how she would establish that the husband’s evidence was untrue or that he had some control over, or was the owner of, the capital proceeds that gave rise to these distributions, must mean that his evidence is unchallenged. The husband has disclosed that the trust is based in the UK so presumably, the wife would need to investigate whether or not she could get access to those details. I do not know and am not prepared to guess, whether banking and/or corporate structures in the UK can be investigated. The difficult problem is whether the court can presume that consistency and reliability of payments under the trust would mean that the husband has a secure income stream for the future.
Throughout 2014, three distributions were made; in 2015, there were four. In 2016, there were three distributions. In each case, the payments varied markedly albeit each was a large sum of money. The court knows no more than that.
I find in the circumstances that it is a significant income stream albeit irregular but that the husband can rely upon it to provide him with an affluent lifestyle when I come to consider his financial circumstances under s 75(2) of the Act.
The future
Despite the uncertainty of the KC Trust payments, the husband’s future will be secure. The wife’s future depends entirely upon what she does with the assets with which she is left. On the basis of the transfer of the properties proposed by the husband, the wife will still have substantial assets in her name but absent her evidence as to what she will do with them, I see no reason why I should not conclude that she could adequately support herself from either the capital or indeed, income from their use. I find in the circumstances that each party will have an affluent lifestyle into the future.
What do the parties have?
Extrapolated from a helpful summary of the assets, prepared by counsel for the husband which I accept, I find the parties have the following:
JOINTLY OWNED PROPERTY
HS Street, Suburb AN $2,500,000
THE STRAHAN TRUST
Real properties $8,040,000
Listed investments 2,221,768
Non-specific assets 432,002
Liabilities (6,905,812) $3,787,958
HUSBAND’S ASSETS
Real properties 2,500,000
Company and other loans 11,465,434
Investments 1,669,179
Accounts 2,679,684
Motor vehicles 40,000
Wine collection 50,000
Allied Finance AG 81,070
Hong Kong Lawyers Trust 9,311,069
Receivables 3,774,645
Hong Kong Apartment 3,879,198
SDA Holdings 1,689,330
Insurance policies 856,659
Superannuation 55,647
SH Pty Ltd (net) 182,720 38,234,635
WIFE’S ASSETS
The Strahan Trust Loan 2,664,020
Vehicles 575,000
Superannuation 72,675
Liability to WS (790,690)
TRF Pty Ltd 834
SH Pty Ltd 1,013,380
Bank accounts 118,644
Husband’s Solicitor’s trust funds 300,000 3,953,863
NET ASSET VALUES $48,476,456
WIFE’S “RESOURCES”
Husband’s costs and expert costs written off ($293,164)
I have deleted the interim distributions made to the wife from the assets because apart from anything else, those funds are gone and it is conceivable that the “accounts” referred to as being held by the wife disclosed in her financial statement in July 2016, may be the remnants of those interim distributions. It may be that those accounts are savings that she has accrued from the monthly payments made by the husband but I am not prepare to guess.
Some of the assets have unquantified values (such as motor cars and the wine collection) but I will treat those as an admission against interest and it applies to both parties.
Various loans may very well be inter-company/trust loans but it is the best evidence I have.
I find in the circumstances that the schedule above identifies the interests of the parties in property owned by them or, in the case of the Strahan Trust, those controlled by the husband. I have also included as a resource, the husband’s cost entitlements relating to orders made by the court and what would be expected to be paid by the wife towards single experts. I only propose to take those into account on the basis that they are benefits that the wife is receiving by not having to pay those obligations.
In the list of the wife’s assets, I have included the $300,000 shown as held by the husband’s solicitor’s trust account but that order was made on the basis that upon the conclusion of the hearing, the wife would have access to that money. Obviously, the husband had that money and it should either form part of his assets or those of the wife. In my view, it is somewhat academic but in any event, the wife should have those funds.
Various loans have also been shown as being due to the husband by companies or others and I have accepted his calculations on the basis that they are unchallenged by the wife. These figures were provided to the court on 10 November 2017 so I have presumed that they are up to date.
The SH Pty Ltd’s investment comes with an encumbrance because it has not been fully paid for but that is a matter that can be rectified by the adjustments for those liabilities.
The assessment of contribution
On the basis of the acceptance by the husband that it is just and equitable to make an order, it is important to make an assessment taking into account the matters set out in s 79(4) of the Act.
Section 79(4) requires the court to take into account a number of matters if it is to determine what order should be made. For the purposes of that exercise, I find that the financial contribution made by or on behalf of the husband not only to the wife but also to the support of Mr S has been overwhelming. The wife has made no such similar financial contribution. As I earlier observed, she gave away the Suburb K property. It was conceded by the husband that the wife had some superannuation referrable to her period prior to the marriage but that has been included as part of the list of assets. I have included the superannuation notwithstanding my preferred practice to separate it from the other assets because it is generally not accessible by the parties. It is of minimal consequence here but on the assumption that in the case of the wife, the superannuation has accrued since prior to the marriage, it will no doubt be a growing asset, albeit modest by comparison to the other assets, that she will have. In the case of the husband, I have no understanding of how, if at all, he can access his superannuation but it was not an issue raised. Thus, notwithstanding it is often inappropriate to include superannuation as part of one “pool” of assets, it is of little consequence here.
The contributions made by or on behalf of the parties to the acquisition, conservation or improvement of their property of a non-financial nature are hard to assess. Here, it must be seen that the husband’s capacity to use his skills has enabled that significant wealth to be achieved. It would not have been possible for the parties to have that sort of wealth without his ability.
There is no evidence from the wife as to what role she played in the conservation of the assets of the parties but she has had the use of the various properties for years.
The court is also obliged to consider the contribution made by the parties to the welfare of the family including any contribution in the capacity of homemaker and parent. In respect of the homemaker, the duration of the period subsequent to separation has exceeded the marriage itself but in terms of the role that the wife has fulfilled in caring for Mr S, I treat it as a significant contribution. However, I cannot ignore that the wife has had significant paid help in the care of Mr S not to mention the fact that she had significant resources made available to her by the husband in terms of treatments for Mr S. Now, Mr S is an adult and there is no application before me for any formal support by the husband of Mr S. As his counsel made clear, the husband will continue to provide support for Mr S in any event.
Section 79(4)(d) requires the court to take into account the effect of any proposed order upon the earning capacity of either party of the marriage. In this case, there is no such impact on the husband. He has not relied upon the assets under the control of the wife nor those that he is anticipating transferring to her and he currently has significant cash resources arising out of the Hong Kong litigation. In the case of the wife, whilst I accept she has no earning capacity in the employment market, effective use of the capital in any property settlement will enable her to live comfortably albeit that she may now have to pay tax depending upon how her investments are structured. Thus, any order does not affect the “earning capacity” of the wife so much as how she is so advised to maximise her access to income that would not substantially reduce her lifestyle or her capital base.
Section 79(4)(f) requires the court to take into account any other order made under the Act affecting a party to the marriage or a child of the marriage. At the moment there is an extant interim order for spousal maintenance and the wife has shown no inclination to agitate the continuation of that order by participating in the proceedings as she should have.
Section 79(4)(e) requires the court to take into account the matters referred to in s 75(2). I shall deal with those below.
Thus taking all of those matters into account, an assessment needs to be made of all of those contributions holistically. Taking into account the very significant contribution made by the husband at the commencement of the relationship, his business acumen during the marriage and his significant contributions for the support of the wife and the family after the separation, I find that the assessment of contributions overwhelming favours him. As earlier mentioned, it is tempting to undertake that assessment on a percentage basis but having regard to the disparity of types of assets let alone their value, in my view it would be artificial to do so. I am content to find that the contributions overwhelmingly favour the husband even taking into account the role that the wife fulfilled as a parent of Mr S in the trying circumstances that prevailed throughout his childhood.
Section 75(2)
Section 75(2) requires the court to consider a number of factors so far as they are relevant. These are all matters that look to the future economic circumstances of the parties. On some occasions, this court has described these factors as “future needs”. In circumstances where they are not “needs” in any sense of the common language, in my view it is preferable to look at them from the perspective of whether there is another factor here that justifies an adjustment to achieve fairness.
In respect of the matters set out in s 75(2), I find that the parties are both of middle age and although the wife is said to suffer from anxiety and stress, there is no evidence before me to indicate that there is any longevity in that difficulty. It is apparent that in early 2017, both parties together with their entourage, travelled to the United States of America for the purposes of treatment. Nothing in that episode indicated that there was any difficulty relating to the wife’s health.
Each of the parties, albeit at different levels, has substantial property and has the capacity to earn significant income. Neither of them appears to have any difficulty in earning an income. To the extent that the wife may not have any skills in the employment sense, even on the basis of investing her money in a bank, she could earn substantially more than any possible employment situation that she might contemplate.
Whilst the wife has no longer a child under the age of 18 years, the husband has responsibilities for a family in Hong Kong. His remarriage to his present wife saw the birth of QQ who is now 8 years of age. There is a step-child as well aged 13 years of age but I do not take her into account because the husband may have a moral, but not legal, obligation to support her.
Section 75(2)(d) refers the court to the commitments of each of the parties necessary to enable the party to support himself or herself and a child or other person that that party has a duty to maintain. This would be a very significant factor in the wife’s favour but for my acceptance that the husband will make adequate provision of Mr S’s needs. In respect of commitments, an examination of the wife’s financial circumstances shows that she has an affluent lifestyle. Whilst this particular factor should be looked at through the eyes of the lifestyle to which the parties have become accustomed, I have no understanding of why someone in the wife’s position would need $1500 each week for clothing and shoes or a similar amount for “other” commitments which are undefined in circumstances where she is predominantly caring for her adult son with the assistance of others and there is no indication of how she otherwise spends her time. Subjectively, I can only presume that there is a limit to what money can be spent and I do not accept that the figures she has portrayed in her statement of financial circumstances in July 2016 give an accurate picture of what her “commitments” are.
I accept that the wife has the responsibility for the support of Mr S but the husband has the responsibility for the support of his wife and child. That will be a longer obligation than the one that the wife has depending upon how financial arrangements are made for the care of Mr S. I do not have the benefit of that evidence.
There are no public purse issues here such as pensions to be taken into account.
Section 79(4)(g) requires the court to take into account the standard of living that in all the circumstances is “reasonable”. The husband has been paying the wife an allowance of almost $7000 per week and as I have already said, her financial statement is not sufficiently clear to enable me to understand how that money is spent. In July 2016, she had over $100,000 in the bank but at the same time, was involved in litigation with her own lawyers and spending money on others. I find in the circumstances that whilst she has an affluent lifestyle, there is no basis for me to find that the sort of order that I am contemplating would not enable her to live consistently with the lifestyle to which she has been accustomed.
There are no issues that are affected by any evidence arising out of matters in s 79(4)(h), (ha), (k), (m). However, I accept that the wife wishes to continue her role in caring for Mr S. Section 79(4)(l) does not refer to a party’s role as a parent of a child so much as a parent. That must take into account the fact that Mr S does have a disability and it will be long lasting. However, as I have already said earlier, the husband will continue to provide financial assistance. The requirement to care for Mr S will not affect the wife’s earning capacity and the husband has been paying for the carers so she has the opportunity to obtain respite.
Section 79(4)(n) requires the court to consider the terms of any order . There will be a number of properties involved in the transfer to the wife and as such, she will enjoy a secure future both in terms of capital and income.
Taking all of those matters into account under s 75(2), there is no basis for me to say that any significant adjustment needs to be made other than in two areas. The first relates to the husband’s income stream. On the basis of the capital sum to be provided to the wife, she could not earn what the husband can obtain from his inconsistent distributions from the KC Trust. Even absent that money, the husband seems to have the capacity to use his skills to earn money albeit at this stage in a modest way. I have no doubt that the husband could use the other assets which are under his control and which will remain in his care, so that he will have an affluent lifestyle and be able to support his new family.
The second issue is the disparity based on an assessment of the contributions of the parties must favour the husband and therefore to achieve a just and equitable outcome, the court needs to take into account whether some adjustment needs to be made back having regard to that capital disparity. In my view, some adjustment needs to be made simply on the basis that I find the husband will go on to build on his capital base whereas it is unlikely that the wife would do so absent some investment outside of the property market and again, I am bereft of any evidence that might indicate what her intentions are.
How then to divide the assets?
The next table shows the husband’s proposal.
THE HUSBAND’S PROPOSED ALTERATION OF INTERESTS
Real properties from the Strahan Trust $5,340,000
The jointly owned Adelaide real property 2,500,000
The solicitors’ trust funds 300,000
Motor vehicles 575,000
SH Pty Ltd 1,013,380
Superannuation 72,675
Savings 118,644
TRF Pty Ltd 834
$9,920,533
It will be seen that the proposed transfer includes money that the wife already has and her superannuation. It also ignores what the husband included in the proposed orders as the money that the wife had already received by way of partial property settlement, retention of cash at the separation and the waiving of the entitlements of the husband to recover the costs and experts’ fees. Those matters can all be taken into account in terms of the necessary adjustment.
As can be seen, the husband is proposing that the wife retain $9.9 million of the existing assets but he urges the court to take into account that she has had the benefit of $20 million by way of various payments that would now appear no longer to exist. It must not be forgotten however that he has also paid over $1.5 million in spousal maintenance since the interim orders were made leaving aside any money that was used to support Mr S directly and indirectly. But, I must also take into account that he has used significant resources for his own legal fees.
Taking into account the overwhelming contribution of the husband but the disparity of the future economic circumstances of the parties, my view is that $9.9 million is not a just and equitable outcome.
If the assets as shown in the first table are a true reflection of what currently exists, the wife is receiving something in the vicinity of 20 per cent of what currently exists. When I factor in that she has received something in excess of $20 million, if that were added to what she is being offered by the husband, she would have something in the vicinity of $30 million. However, for the husband to be able to pay that amount of money, one would have to take into account that he had that amount of money in the first place so the net assets of $48 million as shown in the first table would not be a true indication of the division of the parties’ wealth.
There is no simple way of resolving this issue however I am satisfied that with the absence of spousal maintenance because of the discharge of the extant interim order, the wife will need funds to live the affluent lifestyle to which she has been accustomed.
Counsel for the husband suggested that if the court used a 4 per cent interest consideration, the wife would be very comfortable but there is no evidence before me to enable me to draw that conclusion either as to how the wife would be comfortable or indeed that the 4 per cent interest rate is available. If I took a more conservative approach, but factored in that the wife will have to pay tax for the first time because she will no longer have maintenance, her lifestyle would need to be adjusted immediately.
Whilst the husband has agreed to continue the spousal maintenance payments until the transfer of the properties he proposed, I consider that the wife will need some immediate capital to continue the lifestyle to which I accept she has become accustomed. In my view that figure should be $1.7 million cash to be added to the $300,000 sitting in the trust account leaving her with $2 million case to enable her to re-establish herself until the assets can otherwise be reconstructed. That will then give her $11.6 million worth of assets leaving the husband with approximately $35 million worth of assets by the time the farm is taken into account and the liabilities in the Strahan Trust.
The assessment of what is just and equitable must look at the underlying value to each of the parties. Taking into consideration what the wife has received in partial property settlement and cash taken at separation with what she is now receiving, that adjustment to which I have referred amounts to almost 47 per cent of the notionally reconstructed list.
I am satisfied that the transfer of the assets proposed by the husband together with a further $1.7 million in cash is a just and equitable outcome having regard to all of the matters set out above.
Spousal maintenance
As the interim orders were only until the final determination and the wife’s response has been now struck out, that order will be discharged as proposed by the husband upon the transfer of the properties.
I certify that the preceding One Hundred and Fifty-Two (152) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 22 November 2017.
Associate:
Date: 23 November 2017
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