Sugimoto & Sugimoto
[2024] FedCFamC1F 790
•21 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Sugimoto & Sugimoto [2024] FedCFamC1F 790
File number(s): MLC 6976 of 2022 Judgment of: CARTER J Date of judgment: 21 November 2024 Catchwords: FAMILY LAW – PROPERTY – Where the parties disagree as to the quantum of their initial contributions – Where the husband has significantly neglected his taxation obligations – Where it is not possible to ascertain the true financial positions of the parties as a result – Where the self-managed super fund is not compliant – Where the wife is seeking a greater portion of the non-superannuation pool due to the husband’s age and his failure to manage the financial affairs of the self-managed super fund – Where a number of the liabilities were amassed by the husband post-separation or arose as a result of his financial mismanagement and/or neglect of his obligations – Where the husband alleges the liabilities including those of the corporate entity should be shared and paid from personal assets and the assets of the self-managed super fund – Where the wife’s mother had contributed funds into the pool late in the relationship – Where the husband alleges his contributions were made more arduous by family violence perpetrated by the wife throughout the parties’ relationship – Pool divided 52% to the husband and 48% to the wife.
FAMILY LAW – CHILD SUPPORT – Where the husband agreed to pay the child’s school fees – Order for non-periodic child support made.
Legislation: Child Support (Assessment) Act 1989 (Cth) s 124
Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75, 79, 90XT, 106A
Superannuation Industry (Supervision) Act1993 (Cth)
Family Law (Superannuation) Regulations 2001 (Cth) Part 6, r 12, r 13
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 7.10
Superannuation Industry (Supervision) Regulations 1994 (Cth) r 7
Cases cited: Aleksovski v Aleksovski (1996) FLC 92-705
Dickons v Dickons (2012) 50 Fam LR 244
Keating & Keating (2019) 59 Fam LR 158
Kennon & Kennon (1997) FLC 92-757
Stanford & Stanford (2012) 247 CLR 105
Division: Division 1 First Instance Number of paragraphs: 213 Date of hearing: 19–22 August 2024 Place: Melbourne Counsel for the Applicant: Mr Carne Counsel for the Respondent: Mr Peters ORDERS
MLC 6976 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS SUGIMOTO
Applicant
AND: MR SUGIMOTO
Respondent
ORDER MADE BY:
CARTER J
DATE OF ORDER:
21 NOVEMBER 2024
THE COURT ORDERS THAT:
B Street
1.The parties forthwith do all acts and things and sign all documents necessary to sell the real property situate at B Street, Town C, Victoria (“B Street”).
2.For the purposes of the sale of B Street:-
(a)Within seven days the wife nominate in writing three proposed selling agents and three proposed conveyancers;
(b)within a further seven days the husband shall select in writing the selling agent and conveyancer from the wife’s list;
(c)in the event that the husband does not make a selection in accordance with Order 2(b) the wife be at liberty to appoint her preferred selling agent and conveyancer;
(d)the reserve price in respect of the sale shall be that amount agreed upon between the parties within 14 days of these orders and failing agreement it be set at $1,600,000; and
(e)if B Street is not successfully sold as provided for within three calendar months of listing, then the reserve price shall be reduced by five per cent and such cycle of reduction of the reserve price shall continue until the property is sold.
3.The proceeds of the sale of B Street shall be applied as follows:
(a)first, to pay all costs, commissions and expenses of the sale;
(b)secondly, to discharge the mortgage to National Australia Bank registered number … secured against the property (estimated to be $270,182);
(c)thirdly, to discharge any extant rates and/or Victorian state land taxes with respect to B Street;
(d)fourthly, to pay the husband’s credit card liabilities as follows:-
(i)$4,263 to American Express Credit Card (membership number ending …02);
(ii)$8,742 to D Bank Credit Card (account number …74);
(iii)$11,658 to ANZ Credit Card (account number …76);
(iv)$21,039 to ANZ Credit Card (account number …53);
(v)$22,361 to Westpac Credit Card (account number …04); and
(vi)$36,588 to National Australia Bank Credit Card (account number …48).
(e)fifthly, to pay E School the sum of $19,012 being the school fees outstanding as at August 2024;
(f)sixthly, to pay the Australian Taxation Office the sum of $62,135 to be credited against the liability of F Pty Ltd, ABN …;
(g)seventhly the sum of $214,000 to be held on trust by Medson Legal for the purposes of meeting the capital gains tax liability arising from the sale of B Street (“the funds held on trust for B Street capital gains tax”); and
(h)finally as to the balance;
(i)48 per cent be paid to the wife plus the sum of $392,320 from the husband’s share; and
(ii)52 per cent be paid to the husband, less the sum of $392,320 from his share which shall be paid to the wife.
4.By 1 October in the taxation year following the sale of B Street the parties do all acts and things and sign all necessary documents to complete and lodge their personal taxation returns for the relevant financial year, and provide to the other the calculation made by their respective accountants as to the capital gains tax payable by that party arising from the sale of B Street; and thereafter:
(a)The parties authorise and direct the release of sufficient funds from the funds held on trust for B Street capital gains tax to each of the parties to meet their respective liabilities; and
(b)in the event there are funds remaining in trust after payment of the capital gains tax those surplus funds shall be divided 48 per cent to the wife and 52 per cent to the husband. In the event there are insufficient funds to meet the capital gains tax the shortfall shall be met by the parties in the proportions of 52 per cent by the wife and 48 per cent by the husband.
1 G Street
5.From the net proceeds of the sale of the property at 1 G Street, Town C (“1 G Street”), held in the Trust Account of Medson Legal:
(a)The sum of $60,000 be retained on trust (“the funds held on trust for 1 G Street capital gains tax”), to be applied to meet any capital gains tax liability of the husband arising from the sale of the property at 1 G Street pursuant to the Orders made on 9 November 2023; and
(b)the balance be paid to the husband.
6.The husband forthwith do all acts and things and sign all necessary documents to complete and lodge his personal taxation return for the financial year ending June 2024, and provide to the wife the calculation made by his accountant as to the capital gains tax payable by him arising from the sale of 1 G Street; and thereafter:
(a)the parties authorise and direct the release of sufficient monies from the funds held on trust for 1 G Street capital gains tax to the husband to meet that liability; and
(b)in the event there are funds remaining on trust after payment of the capital gains tax, those surplus funds shall be divided 48 per cent to the wife and 52 per cent to the husband. In the event there are insufficient funds on trust, that shortfall shall be met by the husband.
Assets to be retained by the wife
7.The wife retain to the exclusion of the husband all her right title and interest in the following:-
(a)H Street, Town C;
(b)her Motor Vehicle 1; and
(c)her superannuation interests.
Assets to be retained by the husband
8.The husband retain to the exclusion of the wife all his right title and interest in the following:-
(a)2 G Street, Town C;
(b)J Pty Ltd;
(c)K Pty Ltd;
(d)F Pty Ltd;
(e)F Trust; and
(f)J Superannuation Fund.
Caveats
9.Within seven days of the date of these orders the husband shall procure the withdrawal of the caveat … registered on his interest over certificate of title volume … folio … (B Street) by his former solicitors to secure payment of their legal fees.
10.Within seven days of the date of these orders the husband shall effect the withdrawal of the caveat … registered on his behalf over certificate of title volume … folio … (H Street, Town C).
11.Within seven days of the date of these orders the wife shall effect the withdrawal of the following caveats registered on her behalf:-
(a)… over certificate of title volume … folio … (2 G Street, Town C); and
(b)… over Certificate of Title Volume … Folio … (L Street, Town M).
Indemnities
12.The wife indemnify the husband and keep him so indemnified in respect of all debts, liabilities and obligations, if any, relating to or arising out of the monies advanced from the wife’s mother Ms O.
13.The husband indemnify the wife and keep her so indemnified in respect of all debts, liabilities and obligations of the wife (including refinancing or providing a release of any guarantee provided by the wife), if any, relating to or arising out of her interest or involvement, if any, in the following entities:-
(a)J Pty Ltd;
(b)K Pty Ltd;
(c)F Pty Ltd;
(d)F Trust;
(e)the business trading as “[N Company]”; and
(f)J Superannuation Fund;
(hereinafter collectively referred to as “the husband’s entities”) including, but not limited to, all unpaid income taxation assessed or hereafter assessed against the husband or the husband’s entities or any of them in respect of any income received or derived from or credited to the wife’s account with the husband’s entities and/or including income taxation and capital gains tax and in respect of all actions, proceedings, costs, claims and expenses in respect thereof.
Splitting order – Superannuation Fund 1
14.For the purposes of this Order:
(a)“the Superannuation Fund” is Superannuation Fund 1, membership number …87;
(b)the husband is the member spouse;
(c)the wife is the non-member spouse; and
(d)“the Trustee” means the Trustee of Superannuation Fund 2 Pty Ltd.
15.Paragraphs 16 to 20 of this Order are binding on the Trustee.
16.The base amount to be allocated to the wife out of the husband’s interest in the Superannuation Fund is $150,000 (“the base amount”).
17.Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (Cth), whenever a splittable payment becomes payable in respect of the husband’s interest in the Superannuation Fund, the Trustee shall pay to the wife the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 (Cth), using a base amount of $150,000 and there should be a corresponding reduction in the entitlement of the person to whom a splittable payment would have been made but for these orders.
18.Paragraph 17 has effect from the operative time.
19.The operative time for the purpose of these orders is the beginning of the fourth business day after the day on which a certified copy of these orders is served upon the Trustee.
20.The Trustee and the parties in accordance with the obligations set out under the Family Law Act 1975 (Cth), the Family Law (Superannuation) Regulations 2001 (Cth) and the Superannuation Industry (Supervision) Act1993 (Cth) and Superannuation Industry (Supervision) Regulations 1994 (Cth) shall do all such acts and things and sign all such documents as may be necessary to calculate the entitlement and make the payment in accordance with this order.
21.The husband shall do all things necessary, including but not limited to, exercising his request pursuant to r 7A.06 or r 7A.07(2) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) for the payment of the transferable benefits out of his interest in the Superannuation Fund to the wife in accordance with r 7A.12 or r 7A.13 of the Superannuation Industry (Supervision) Regulations 1994 (Cth).
22.Until the happening of any of the following:
(a)The establishment of a separate account in the name of the wife in the Superannuation Fund; or
(b)the transfer or “rolling over” into another superannuation fund or superannuation account of the payment split created by paragraph 17 hereof; or
(c)the wife satisfies the condition of release and is paid the payment split which was created by paragraph 17 hereof; or
(d)the wife executing a waiver of rights within the meaning of s 90XZA of the Family Law Act1975 (Cth) in relation to the payment split created by paragraph 17 hereof;
the husband be and is hereby restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Superannuation Fund a “not splittable payment” within the meaning of r 12 or r 13 of the Family Law (Superannuation) Regulations 2001 (Cth).
Miscellaneous
23.Unless otherwise specified in these orders, and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in possession of such party as at the date of these orders;
(b)monies standing to the credit of the parties in any joint bank account are to be equally divided between the parties and any such account be forthwith closed;
(c)insurance policies remain the sole property of the owner named therein;
(d)each party otherwise retain for their sole use and benefit, their superannuation entitlements;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled, pursuant to these orders; and
(f)any joint tenancy of the parties, in any real or personal estate, is hereby expressly severed.
24.If the husband fails to sign all such documents as may be required to enable the sale of B Street, then pursuant to s 106A of the Family Law Act 1975 (Cth) a registrar of this Court be appointed to forthwith execute for and on behalf of the husband such documents or instruments as prepared by the wife for the purposes of the sale including but not limited to mortgage discharge documents, refinance authorities and any other documents as required by PEXA.
25.The parties have liberty to seek to relist the matter before the Court on at least 48 hours’ written notice to the Court regarding the terms and conditions of the sale of the B Street property.
Child support
26.Commencing 22 August 2024, pursuant to s 124 of the Child Support (Assessment) Act 1989 (Cth) by way of non-periodic child support the husband shall pay all school tuition fees for the child X born 2009 whilst she attends at E School, Town C.
27.Order 26 is conditional upon the child continuing to attend E School, Town C.
28.The payments of non-periodic child support pursuant to Order 26 are not to be credited against the husband’s liability under any administrative assessment of child support relating to the same period.
29.All extant applications are dismissed, and the matter removed from the list of pending cases maintained by the Court.
AND THE COURT NOTES:
A.Pursuant to section 81 of the Family Law Act 1975 (Cth), the parties intend that these orders shall as far as practicable finally determine the financial relationship between them and avoid further proceedings between them.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUSTICE CARTER:
INTRODUCTION
The parties were able to resolve the parenting dispute, regarding their one child who remains under 18 years of age. The matters that remained before me for determination were:
(a)The parties’ competing applications for property settlement; and
(b)the wife’s application pursuant to s 124 of the Child Support (Assessment) Act1989 (Cth) for non-periodic child support to require the husband to pay the school fees for the parties’ now 15 year-old daughter until she completed secondary schooling. That will be at the end of 2026, as she is currently in year 10.
The parties contended for significantly different pools.
On the wife’s case, the pool is about $3,470,058. It was the wife’s position at closing that the pool should be divided 45 per cent to the wife and 55 per cent to the husband – with the wife receiving 70 per cent of the parties’ tangible assets, and 10 per cent of the superannuation pool. It was her case that any liabilities of the self-managed fund – being the J Superannuation Fund (“the SMSF”) should be borne by the husband.
On the husband’s case the pool is approximately $2,151,333, less various potential liabilities of the SMSF. As best I understood his case, the husband proposed he would retain the business F Pty Ltd trading as N Company (“F Pty Ltd”), which he anticipated winding up, and the property at L Street, Town M (“L Street”) owned by the SMSF should be sold. It was the position of the husband at closing that the parties’ contributions to this smaller pool should be assessed 45 per cent to the wife and 55 per cent to the husband. This was in circumstances where he said he made greater initial contributions and that his contributions were made more arduous as a result of the wife’s alleged abusive behaviours. He proposed there should be an adjustment pursuant to s 75(2) of the Family Law Act 1975 (Cth) (“The Act”) in favour of the wife, so that overall, she would receive 55 per cent of the pool.
The most significant differences in the pools as formulated by the parties were:
(a)Whether the wife owed her mother $389,100 – as contended by the wife and denied by the husband; and
(b)the extent of the liabilities of the business F Pty Ltd and how they should be treated. It was the husband’s case that these should be treated as joint liabilities, to be paid off by the parties from personal assets or from the proceeds of sale of L Street prior to them receiving their entitlements.
The husband’s case was somewhat complicated by proposals which at times treated the personal assets and liabilities of the parties, the assets and potential liabilities of the self‑managed super fund (“SMSF”), and the assets and liabilities of the business as intermingled. For instance, he proposed that the proceeds of sale of the property owned by the SMSF should be used to repay personal debts of the parties, and business liabilities.
BACKGROUND AND PROCEDURAL HISTORY
The parties commenced their relationship in 2001. The husband owned properties at P Street and 1 G Street, Town C. The wife owned a property at Q Street, Town C.
The husband and wife both had young children from their previous marriages. The wife’s three children primarily lived with the parties during their relationship. The husband’s two children lived with their mother and spent time with the parties throughout the parties’ relationship.
The husband deposed to having been diagnosed with Attention Deficit Hyperactivity Disorder (“ADHD”) and Post Traumatic Stress Disorder (“PTSD”), and undergoing psychiatric and psychological treatment for these mental health diagnoses. The husband did not adduce affidavits from any of the professionals involved in the husband’s diagnosis or treatment.
At the commencement of the relationship, the husband was employed as a manager with R Limited. In 2002 the husband set up a company, S Company, which purchased a number of R Limited franchises in and around Sydney for nominal value. Shortly after the company was established, the husband moved to Sydney to manage these franchises. Six months after the husband’s relocation, the wife and her children joined the husband in Sydney.
Shortly thereafter, the wife was employed by S Company as a training manager. The wife deposed that her role involved providing induction training to customer service officers who were employed to work at the franchises. At times when she was not training staff, the wife said she assisted with payroll and was responsible for staff uniforms, planning and conducting further staff training events and organising social events and conferences for senior management and staff.
The husband established J Pty Ltd in around 2002.
In about 2003 S Company sold the franchises to T Limited and was subsequently wound up. The husband received $1,300,000 from R Limited from the sales, $500,000 of which was paid to the husband’s superannuation. The husband asserted he received a further $1,140,000 “in bonuses”.
The parties returned to Victoria at the end of 2004 and were married overseas in 2005.
In 2004 the husband purchased the former matrimonial home at 2 G Street, Town C (“2 G Street”). The purchase price of $255,000 was paid from the proceeds of sale of the franchises.
In 2005 the parties purchased the property at B Street, Town C. The purchase price of $340,000 was paid up front. This was also funded in full by the sale of the franchises.
In 2005 the parties’ first child was born.
In 2007 the husband purchased N Company. This business was operated through F Pty Ltd. At that time L Street was purchased by J Pty Ltd as trustee for the SMSF from the payout from R Limited. N Company operates from the premises at L Street. A business loan was secured over the properties at 2 G Street and B Street.
The parties were in agreement that that they operated N Company together during their relationship. It is common ground that the wife has played no role in the business since separation.
In 2008 the wife underwent a termination of a pregnancy. There is much dispute as to the circumstances leading to the termination. The parties were permitted by the hospital to take the remains of the pregnancy, named U, home with them. U was buried at B Street.
In 2009 the parties’ youngest child was born. She is now 15 years old.
In 2017 the property owned by the husband at P Street was sold. It appears the proceeds were substantially paid towards significant credit card liabilities, as well as to meet some living expenses.
In 2018 the wife sold her property at Q Street for $630,000. She received the deposit of $46,835 and then a further $489,837.97 at settlement.
It was the wife’s evidence that the funds from Q Street were paid partly into the parties’ joint “reward saver” account and partially into a joint “i-saver” account. She said the money was then applied in part towards the business, as well as to pay credit card debts in the parties’ names, to reimburse the wife’s mother for monies borrowed to ready Q Street for sale, to meet the children’s school fees, to pay health insurance premiums, to pay land tax and to fund two overseas family holidays.
It was the wife’s evidence that the payments made to F Pty Ltd – of around $90,000 – from the proceeds of sale of Q Street were loans to the business, which she said were always expected to be repaid. She said when the husband requested funds – for instance to purchase stock – she told him she expected the money to be returned from the business into the joint account, and that the husband reassured her that would occur.
It was the husband’s evidence that the business frequently experienced cash flow issues, which in his trial material he attributed at least in part to the wife removing funds from the business to fund a gambling habit. He said the parties were living beyond their means – at the behest of the wife. He said the proceeds of sale of Q Street were also applied towards a Centrelink debt of $52,000 which the wife incurred as a result of incorrectly receiving a parenting allowance. This was not referred to at trial – save that the husband made a comment that the wife required him to identify payments to her from the business as ‘loan repayments’ rather than wages to ‘maximise her Centrelink benefits’.
It was the wife’s evidence that as at April 2019 of the total proceeds of sale of $536,673 only:
(a)$107,000 remained in the i-saver account; and
(b)$202,000 remained in the reward saver account.
The wife then removed funds from those joint savings accounts and deposited $280,000 into a reward saver account in her sole name, and $32,000 into an i-saver account in her sole name. She used those funds to purchase Motor Vehicle 1 for herself for $24,500 in 2019 (which she still drives) and to pay the capital gains tax of $27,694 arising from the sale of Q Street in August 2020.
The wife claimed she moved the funds out of joint accounts and into account controlled by her as she was concerned if the funds remained in the joint accounts they would have been utilised by the husband on “frivolous spending and accumulation of debt”. It was the husband’s evidence that the wife should not have taken the funds from the joint account, and that her doing so “had a huge adverse effect on the business and created additional stress and has added to my mental health decline”.
By August 2020 the amount of $155,850 was all that remained from the proceeds of sale. It was the wife’s evidence that in April 2019 the husband ceased providing her with any funds from the business to meet household expenses – and accordingly she had had to use the proceeds of sale to meet those expenses.
In August 2020, unbeknownst to the husband, the wife purchased a vacant block of land H Street, Town C (“H Street”) for over $250,000. In late 2020, the wife entered into a building contract for $334,311 to construct a dwelling on this land. She used the funds from the accounts in her name to fund the purchase. It is her case that she also borrowed monies from her mother – borrowing a total of $404,974 by way of funds advanced between September 2020 and May 2021.
The husband does not accept that the wife borrowed any monies from her family to fund the purchase of the land or construction of the home.
The parties separated on 15 August 2021. On that date the wife and the parties’ children moved out of the former matrimonial home and into H Street.
The husband continued to operate N Company post-separation. He deposed that over time, due to his PTSD and anxiety, he found it increasingly more difficult to work in the business. The husband resisted the wife’s request in 2022 and her subsequent Court application that the business be wound up. It has continued to accrue liabilities to creditors and to the Australian Taxation Office, which the husband asserts should be treated as joint liabilities. As at the date of the final hearing, it was the husband’s case that a debt of $284,977 “plus provision” was owing to the Australian Taxation Office which he estimated would bring the total amount owing to the Australian Taxation Office by F Pty Ltd to $1,184,977.
The property at 1 G Street was sold in 2024 for $430,000. The parties each received a part property payment. Funds were also disbursed to meet the costs of valuations, mediation, some land tax and another outstanding invoice. The sum of $108,183 remains invested in a controlled monies account. The parties agree the sale will have triggered a capital gains liability of approximately $60,000.
MATTERS UPON WHICH THE PARTIES ARE AGREED
The parties agreed that the husband will retain:
(a)the property at 2 G Street;
(b)the partial property distribution made to him of $110,369.22; and
(c)his Motor Vehicle 2.
They also agreed that the wife will retain:
(a)the property at H Street, Town C;
(b)the partial property distribution made to her of $110,369.22;
(c)her Motor Vehicle 1; and
(d)her superannuation entitlements with Superannuation Fund 3 and Superannuation Fund 1.
In addition, the parties agreed that B Street will be sold.
Lastly, the husband also agreed that he would pay the child’s school fees moving forward. Initially it was his proposal that school fees should be paid from the proceeds of sale of B Street. In his closing address, counsel for the husband advised his client no longer sought the fees be paid from the proceeds of sale and said his client would meet those school fees himself.
ISSUES IN DISPUTE
The issues that remained in dispute can be broadly described as:
(a)Issues as to the calculation of the pool;
(b)issues as to the assessment of contributions and s 75(2) factors including:
(i)The quantum of the husband’s initial contributions;
(ii)the weight that should be given to the husband’s initial contributions;
(iii)whether the wife engaged in a course of conduct that made the husband’s contributions more arduous; and
(iv)whether the wife wasted funds gambling.
(c)how the proceeds of the sale of various properties should be applied; and
(d)what orders sought be made in relation to the SMSF fund and the husband’s Superannuation Fund 1 entitlements.
THE EVIDENCE
It has not been possible to include every aspect of each of the parties’ evidence. However, I have taken all the evidence into account. Just because I have not mentioned something in these reasons does not mean that I have not considered it.
Section 140 of the Evidence Act 1995 (Cth) sets out that the standard of proof in these proceedings is to a balance of probabilities.
The wife
The wife relied on the following material:
(a)Her Further Amended Initiating Application filed 26 March 2024;
(b)trial affidavit filed 26 March 2024;
(c)Financial Statement filed 12 August 2024;
(d)affidavit of Ms O filed 26 March 2024 being the wife’s mother. She was not made available for cross examination;
(e)affidavit of Ms V filed 26 March 2024 being the wife’s friend. She was not required for cross examination. Her affidavit was not of any real utility as it focussed on parenting issues; and
(f)affidavit of Ms W filed 22 April 2024. That affidavit was filed pursuant to r 7.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). She was not required for cross examination.
The husband
(a)Trial Affidavit filed 13 August 2024;
(b)his Amended Response to Final Orders filed 16 August 2024; and
(c)Financial Statement filed 16 August 2024.
I also had regard to the affidavit and report of Mr Y, single expert, filed 26 March 2024. He was also not required for cross examination.
The affidavits of Ms Z and Ms AA, both filed on 13 August 2024, were struck out by consent. The additional objections made by the wife to the husband’s material contained in the wife’s notice of objection were all conceded.
The wife gave her evidence in a straightforward manner.
The husband was a less impressive witness. He was frequently unable to simply answer the question put to him. He made few concessions, and took the opportunity to make speeches, and deride the wife. His answers were often rambling and at times difficult to follow.
ALLEGATIONS OF NON-DISCLOSURE
There was at the outset an assertion by the husband that the wife had not made full disclosure of her bank accounts. That belief arose in circumstances where the bank statements included payments into and out of an account identified as Ms BB. It was the husband’s belief that the wife had not disclosed the account in that name or a similar name and that the wife had been draining cash from the business and funnelling monies into those undisclosed accounts.
That was denied by the wife who said she had disclosed all accounts in her name.
Regrettably, some Court time was wasted on the wife being cross examined regarding various bank transactions which the husband viewed as suspicious.
It transpired that whilst the wife’s bank statements identified transfers into and out of an account described in the statements as “Ms BB” or a similar name, that was simply because when she first established the accounts, they were in her then married name of Ms BB. She is now Ms Sugimoto. There was no separate account in the name of Ms BB: it was same account as she had disclosed – it was simply that the shorthand reference to the account had not changed from her previous name to Sugimoto.
The husband and his counsel, at the direction of the Court, re-considered the wife’s discovered documents during the course of the trial. It was then conceded the wife had made full and frank disclosure of her accounts and there was nothing suspicious regarding the transactions which the husband had previously identified as problematic, and there were no undisclosed accounts.
Conversely the wife said the husband has not met his obligations to make full and frank disclosure. She asserted he failed to disclose key documents including the SMSF trust deed (which he said the wife had, an assertion she denied), taxation returns of the SMSF, correspondence between the husband and the Australian Taxation Office, and numerous bank statements. The husband made no disclosure in his trial material as to the financial arrangements between himself and his current partner. The only reference in his trial material to having a partner at all is at [143] of his trial affidavit in which he referred to having purchased a tracking device “for my dog and my partner’s dog”. At trial he said they live separately and maintain separate finances.
As already outlined the husband’s failure to keep the financial affairs of the SMSF and the business in order has made it impossible to decipher what the true financial position is.
The case law makes it clear that the Court ought not be unduly cautious about making findings against a party who has failed in their duty to disclose.
ASSETS, LIABILITIES AND FINANCIAL RESOURCES AS AT THE DATE OF FINAL HEARING
I had understood from discussions with counsel for the husband during the course of the hearing that his client had abandoned his assertion he had a personal loan to F Pty Ltd of $100,000 which should be included on the balance sheet. This was on the basis that if that liability was included in the balance sheet, the value of F Pty Ltd would need to be increased by the same amount – making no difference to the overall balance sheet. However, the parties’ further amended balance sheet – provided after the parties’ final submissions were made – continued to include that liability as a debt to the husband without a corresponding increase in the value of the business.
The valuation prepared by Mr Y already included the following table showing monies owed to the business by the husband ($78,974) and monies owed by him back to the business.
Description
Amount ($)
Owner A Drawings
65,742
Personal Mr Sugimoto
13,232
Loan Mr Sugimoto
(53,284)
NET RECEIVABLE ($)
$25,690
The net value of those amounts has already been included in the value of the business.
No evidence was adduced by the husband as to whether the asserted $100,000 loan was in addition to the monies he already owed the business or whether this was a separate loan altogether.
Assuming this alleged liability is separate and additional to the amounts already identified in the valuation, if I were to include the husband’s asserted liability to the business of $100,000, there would be a corresponding asset of F Pty Ltd – and the overall assets and liabilities of the parties would remain unchanged.
There was no evidence given regarding this alleged liability, and no submissions were made as to why it should be included (and if so, why a corresponding asset of the business would not also be included). There is no utility in including it in the balance sheet where F Pty Ltd’s value would increase by the same amount. Accordingly it will not be included in the list of assets and liabilities.
The remaining issues in relation to the pool are as follows:
(a)whether the wife’s mother loaned monies to the wife which are required to be repaid;
(b)whether the husband has borrowed funds from family members or third parties which are required to be repaid;
(c)the liabilities of the business and whether they should be treated as joint liabilities for the purposes of determining the pool; and
(d)the liabilities of the SMSF and how these should be treated.
The funds the wife asserted are owed to her mother
As already observed, there is a dispute as to how the purchase of the land (for over $250,000) and the payment for the construction of the home (for $334,311) at H Street was funded. The total cost for the land and house was therefore $591,811.
It was the wife’s evidence that she sourced the total funds from:
(a)Funds in her personal bank accounts (which as at August 2020 had been reduced to $155,850);
(b)the sum of $405,000 borrowed from the wife’s mother; and
(c)a further sum of $25,000 borrowed from the wife’s daughter, Ms CC.
The wife asserted the monies to her mother must be repaid. She deposed that from September 2021 she transferred $100 per week into a separate NAB account to “accumulate funds to repay my mother”. No actual repayments were made to the wife’s mother until 2 and 3 November 2023, at which time the wife transferred $9,000 and then $3,000 to her mother. She has continued to transfer $100 per week since that time.
As at the date of trial the wife said she still owed $389,100 to her mother, Ms O. Whilst the wife maintained she had borrowed funds from her daughter which had to be repaid, she did not seek to include that as a joint liability in the asset pool.
The husband denied the wife borrowed funds from her mother and her daughter. Alternatively, if funds had been advanced, it was his case that they were not a genuine liability that had to be repaid.
It was his assertion that the purchase and construction were funded from joint monies; funds transferred into an account he said the wife did not disclose (which he conceded at trial had been disclosed); and a government grant. I do not know to what government grant the wife would have been entitled and no evidence was adduced by the husband to support his assertion in this regard.
I prefer the evidence of the wife regarding how the H Street was purchased and the build funded. I accept her evidence as to the monies remaining in the various accounts, how those monies came to be in the accounts, and that she utilised additional monies from her family to finance the build. She was a far more credible historian than the husband and had far better recall as to various transactions.
The husband’s version included ‘double counting’ – he counted both the funds withdrawn from the joint accounts and the remaining balance from the sale of Q Street – ignoring that the funds transferred by the wife into her own accounts in April 2019 were the balance of the proceeds of sale of the Q Street property, and not additional to the proceeds. His evidence also overlooked that the parties had depleted the proceeds, paying funds into F Pty Ltd, towards credit card debts, repaying the wife’s mother for monies advanced to ready Q Street for sale, and to meet general living expenses.
Accordingly, I am satisfied that the wife was advanced monies from her mother to fund the purchase and build at H Street.
The question then is whether that is a genuine liability which the wife is legally required to repay.
The wife’s mother was on affidavit. In that affidavit Ms O deposed she had assisted the wife financially by lending a total of $404,974, and she expected that to be repaid in full. However, I was advised at the outset of the trial that Ms O’s cognitive capacity had rapidly diminished in the weeks leading up to the final hearing, such that she would not be capable of being cross examined.
No loan agreement was entered into between the wife and her mother. No repayments were actually made to the wife’s mother until November 2023, although the wife said she was accumulating monies to repay her mother at the rate of $100 per week in another bank account in the wife’s name. It was the wife’s evidence that she approached the repayments in this fashion because it was more convenient to make repayments to her mother by way of lump sum repayments rather than on a regular basis. This was not particularly persuasive. However, I accept that since November 2023 the wife has been paying monies to her mother on a monthly basis.
There was no substantive evidence that if the wife did not make repayments that the loan would be enforced by her mother. I accept the wife feels morally obliged to repay her mother. But that is not sufficient; see Stanford & Stanford (2012) 247 CLR 105 at [52].
In all the circumstances I am not prepared to include the funds as asserted by the wife as owing to her mother as a liability when calculating the asset pool. However, it is plain that funds were advanced, towards the end of the parties’ relationship. Moreover, the advanced funds are reflected in the asset pool in the value of H Street. Accordingly, the contribution of funds into the pool by the wife’s mother can be appropriately taken into account when assessing the wife’s contributions.
The business
As set out, F Pty Ltd operated N Company, a business in Town C. The parties operated that business during the relationship, and the husband continued to operate the business post separation. It was unclear at trial whether or not the husband wanted to continue operating F Pty Ltd or wind it up. Different scenarios were proposed throughout the proceedings.
It was not in dispute that the liabilities of F Pty Ltd – both to the Australian Taxation Office and to creditors – have increased since the date of separation.
It was the husband’s case that:
(a)monies owing to creditors of the business as at the date of hearing, and
(b)all asserted and anticipated liabilities to the Australian Taxation Office
should be included in the pool as joint liabilities to be shared between the parties, and paid from the proceeds of sale of B Street, 1 G Street and L Street. It was his case that many of the business difficulties arose as a result of the funds the wife applied towards the purchase of her home, rather than to meet business debts. He also asserted she should have agreed to the sale of B Street earlier than she did – which he said would have provided him with funds to meet business debts. He also claimed the wife’s abusive behaviours towards him caused him significant mental health issues, including PTSD, and that her abuse has continued post separation evidenced by her alienating the children from him. He said the damage inflicted on his mental health by the wife resulted in him being unable to appropriately manage his financial affairs or operate the business and accordingly, this should be taken into account.
These allegations were substantially denied by the wife. It was her case she played no role in the business after the parties’ separation in August 2021. She asserted she should not be held responsible for the husband’s failure to meet taxation obligations – or other creditor debts – accumulated thereafter. Moreover, in 2022, the wife requested – and then made application for – N Company be wound up. The husband refused to agree and resisted the wife’s application. Instead he continued to run the business, and in doing so, the business has accrued further debt, which the wife said should be borne entirely by the husband. She denied that she caused the husband to have significant mental health issues, and that she has continued to abuse him post separation.
I will return to the allegations of family violence later in these reasons.
The parties engaged Mr Y as a single expert to value F Pty Ltd. He was provided with financial statements for the financial years ending 30 June 2019-2022 and a Profit and Loss Statement, and Trial Balance sheet for the financial year ending 30 June 2023.
Mr Y was not required for cross examination with the parties accepting that the valuation of F Pty Ltd was neglibile/nil for the purposes of the balance sheet.
For the reasons that follow, I am not satisfied that the proceeds of sale of L Street, 1 G Street or B Street should be applied to any liability of the business save to discharge the business loan which is secured over B Street, and to meet the taxation liability that existed for the business as at the date of the parties’ separation.
Australian Taxation Office liability
Both during the relationship and post-separation, the husband substantially neglected to complete his personal taxation returns and the taxation returns for the various entities he operated. He also did not audit the SMSF. He claimed his failure to attend to these tasks was a byproduct of his PTSD and the stress he felt – substantially as a result of the wife’s treatment of him.
On 8 August 2022, consent orders were made whereby the husband was to appoint an accountant to prepare all outstanding taxation returns and financial statements for himself and his entities, and to do all things necessary to enable that accountant to provide an estimate as to when the outstanding taxation returns and financial statements would be completed.
Some, but not all of the returns and statements were completed. At the time of the final hearing before me, there remained outstanding taxation returns and financial statements for the business. The husband claimed he did not have the funds to attend to completing all the various returns. Additionally, the husband asserted that many historical business activity statements had been incorrectly submitted and had to be amended and relodged – which he had also not attended to by the commencement of the final hearing.
The husband claimed F Pty Ltd currently owed the Australian Taxation Office $284,977. He estimated once all the returns and business activity statements were correctly filed and lodged the amount owing to the Australian Taxation Office would balloon to over $1,184,000.
The Australian Taxation Office statements
The Australian Taxation Office activity statement ledger for F Pty Ltd that was tendered into evidence makes it plain that prior to separation, the GST and PAYG withholding payments were generally regularly made. As at the date of separation the Australian Taxation Office statements showed no GST or PAYG withholding was owed. However, as a result of the husband filing various amended historical Activity Statements in 2023, the Australian Taxation Office liability for GST and PAYG holding was retrospectively increased so that as at 25 November 2021, the amount of $62,135 was owed.
Since separation the husband has continued to operate the business entirely in the absence of the wife – and continued to receive the business income. The liability has now increased to $165,571 for unremitted GST and unpaid PAYG according to the Australian Taxation Office activity statement ledger.
The husband also failed to make payments to the Australian Taxation Office superannuation guarantee fund. As at 1 July 2024 the sum of $42,361 was owed. That liability was incurred after August 2023. Penalty payments are accruing on those amounts.
The husband’s assertion as to the likely Australian Taxation Office liability
The figure of $1,184,977 was not calculated by the Australian Taxation Office, or an accountant. It was the husband’s ‘best guess’ as to what he thinks might be owing when he finally completes the taxation returns for the business as he was ordered to do more than 24 months ago, and otherwise brings the taxation affairs of the company up to date.
The husband did not adduce any expert evidence as to the amount owing or likely to be owed to the Australian Taxation Office by himself, or the business, nor any evidence as to when those amounts were asserted to have accrued. No application was made by the husband for the trial to be adjourned so that the liabilities could be properly ascertained.
It was the husband’s case that the monies owed to the Superannuation Guarantee debt (accrued after August 2023) should be paid from the proceeds of sale of 1 G Street. He sought orders that when the additional amounts owed to the Australian Taxation Office had been finalised (once the various returns have been completed and statements resubmitted) the whole amount owing should be paid from the proceeds of the sale of B Street, and L Street.
There are many difficulties with the manner in which the husband presented this issue.
First, as noted no professional evidence was adduced as to the likely quantum of the debt. It was not broken down into component parts. I do not know what is unpaid PAYG, what is unpaid GST, what is unpaid superannuation guarantee fund contributions, what amounts are asserted to be triggered as a result of the anticipated filing of amended activity statements, or what might be interest or late payment penalties. Nor did the husband adduce any evidence as to what portion of his ‘estimated tax liabilities’ could be attributable to the time the parties operated the business together, or what portion was referrable to when he ran the business alone.
If the entire Australian Taxation Office liabilities, whenever incurred, were paid from the proceeds of the sale of 1 G Street and B Street prior to the balance being divided between the parties, as sought by the husband, the wife would be contributing to the payment of liabilities generated in circumstances where, post separation, the husband operated the business to her exclusion, where he alone had the benefit of the income of the business, and he had retained the GST paid.
It is difficult to see how the husband’s proposals that all taxation liabilities, however and whenever they were incurred, should be treated as joint liabilities is just and equitable.
Additionally, Mr Y already included an amount for taxation liabilities in his valuation of the business. No submissions were made to me by counsel for the husband regarding the interaction of the taxation liabilities noted by Mr Y as at 30 June 2023 and the taxation liabilities the husband asserted as at the final hearing. For instance, Mr Y’s valuation of the business as at 30 June 2023 includes liabilities for PAYG. If the husband’s estimate of taxation liabilities includes unpaid PAYG (which appears to be the case as there are multiple months identified in the Australian Taxation Office statement in which PAYG was not paid) and I included the liability as asserted by the husband as a separate liability it seems likely there would be a double counting of at least some of that liability.
Moreover, and as already observed, the wife had urged the husband to stop operating the business which he refused. He continued to trade, and simultaneously continued to fail to meet his obligations to the Australian Taxation Office. The wife’s application that the business be placed into external administration was opposed by the husband. He advised through his lawyers at that time that the wife’s application would deprive him of his income. He was operating the business solely at that time, and wholly responsible for managing the business’ finances. He did not, at that time, raise any issues that the business was struggling financially. If the business was unable to meet its outgoings, the husband was obliged to act accordingly. In his trial affidavit the husband deposed that the wife’s request for the business to be placed into administration was a “futile [claim] and threat…made deliberately to affect my mental state” and part of the wife’s attempts to abuse and control him. However, at trial he acknowledged that it may have been appropriate for the business to have been wound up as requested by the wife.
The husband’s proposed orders would require substantial funds to remain on trust pending the completion of the various returns necessary to bring his financial affairs up to date. The wife would have to wait until he had lodged returns and taxation liabilities calculated before she could receive her settlement monies. I have little confidence that the husband would attend to the preparation of the various returns in a timely manner. He has failed to do so to date, despite Court orders. Had he complied with the Court orders, the quantum, and the years in which the debt was accumulated, would have been known. The completion of the documents was a matter that was entirely in the husband’s hands – and it would be unfair to require the wife to continue to wait for the matter to be concluded.
I am satisfied that the only appropriate Australian Taxation Office liability that should be included in the pool is the sum of $62,135. That is an amount which has a proper evidentiary foundation – being what was owed as at the date of separation after activity statements were amended as reflected in the Australian Taxation Office Activity Statement ledger tendered into evidence.
However, it has been described by the Full Court as a “serious misstep” for a court to make orders that do not properly take into account taxation consequences where one party omitted to adduce evidence as to the quantum of such taxation consequences; see Elgin & Elgin(2015) Fam LR 31 at [156] (“Elgin”). In that matter the capital gains taxation consequences had been entirely overlooked by the husband and his legal team, and no evidence was adduced at trial regarding potential liabilities in that regard. The Full Court said it was an appealable error that the primary judge made orders that did not refer to the capital gains taxation consequences, leaving them entirely to fall on the husband.
The extant matter can be distinguished as follows. First, the parties were well aware that taxation liabilities would be relevant in these proceedings and orders were made for the husband to bring his affairs up to date. He did not fully comply with those orders. This is different to taxation issues being inadvertently overlooked.
Secondly, in Elgin the capital gains tax could be readily quantified following the sale of the various properties. In the extant case, the husband has simply ‘guessed’ what the liabilities might be. He could have – and should have – adduced expert evidence about this matter. It may be that some of the amounts incurred are late payment penalties; some amounts might be forgiven; some agreement might be reached with the Australian Taxation Office. Those matters remain in the husband’s hands.
Thirdly, there was no real dispute in Elgin that the capital gains tax was a joint liability, accumulated substantially during the course of the parties’ relationship. It did not arise in any way out of the mismanagement of the assets by one party. In this matter it is impossible to ascertain what part of the liability asserted by the husband is referable to the marriage, and what has been accumulated by him since separation. A number of the taxation liabilities appear to have been incurred as a result of the husband’s post separation failure to pay GST, PAYG contributions and superannuation contributions, in circumstances where the husband solely operated the business and resisted the wife’s calls to wind up the company.
Notwithstanding those observations, I accept that the husband will have additional liabilities to the Australian Taxation Office. In circumstances where he has failed to adduce admissible evidence as to what the full extent of those liabilities might be, the best I can do is consider this issue pursuant to s 75(2)(o) of the Act.
The debt to DD Pty Ltd and other suppliers
It was the husband’s case that the business creditors should be paid from the proceeds of the sale of 1 G Street and B Street. The husband asserted those liabilities were:
(a)$274,000 being “outstanding supplier invoices”; and
(b)a separate amount of $156,590 being the amount sought in a Writ filed in the County Court of Victoria dated mid-2024 by the supplier DD Pty Ltd.
The writ was filed against F Pty Ltd and the husband. In that writ the sum of $156,590 is claimed for outstanding invoices owed by N Company to DD Pty Ltd, as well as an amount incurred by DD Pty Ltd in appointing a debt collection agency to pursue the debt.
The husband’s proposal to include the “outstanding supplier invoices” as a joint liability of the parties for the purposes of the balance sheet is flawed for a number of reasons including;
(a)The husband provided no documentary evidence to support his assertion that the amount of $274,000, or indeed any amount, was owing to suppliers as at the date of hearing, or when that asserted liability was said to have accrued;
(b)he has made no provision for the inclusion of the stock or other inventory. It would be unfair to deduct the liabilities to the suppliers without also including the value of the stock held by the business;
(c)the adjusted balance sheet prepared as part of the valuation of the business already included an amount for creditors; and
(d)the value of the plant, equipment and inventory and the trade creditors as at 30 June 2023 were all factored into the nil valuation by the single expert. No meaningful submissions were made to me by counsel for the husband as to why these particular supplier invoices should be separately included in the list of liabilities for the purposes of calculating the asset pool available for division between the parties as at August 2024. Nor were any submissions made or evidence led to support a finding that these were additional liabilities that were not already ‘captured’ in the valuation.
In relation to the asserted liability to DD Pty Ltd of $156,590 that also cannot be included as a joint liability of the parties for the purposes of calculating the balance sheet:
(a)The husband adduced no evidence to support a finding that that liability, or part of the liability was incurred when the parties were operating the business together. The writ refers to the entering into of nearly 40 contracts between mid-2023 to mid-2024 – being years after the parties separated;
(b)the writ was issued against F Pty Ltd and the husband in his personal capacity. In a defence filed mid-2024 it was asserted that none of the contracts were made by the husband in his personal capacity. Accordingly, it may be that none of the monies are able to be recovered against the husband personally. There was some suggestion by the husband that he may have provided director’s guarantees, but those were never disclosed and when they may have been given was never revealed. That would be in conflict with his assertion in documents filed in the County Court that he is not personally liable; and
(c)in the defence it is admitted that the sum of approximately $100,000 only was owing as at the date of filing of the proceedings.
The wife played no role in the business since separation and in 2022 she proposed the business be wound up which the husband resisted. It is difficult to see how, in these circumstances, it would be just and equitable that the wife share in responsibility for liabilities accrued when the husband continued to trade, increasing the liabilities, without ensuring that he could meet the business outgoings.
Moreover, no meaningful submissions were made to me as to why unsecured third-party creditors of a corporate entity would be paid out with priority as against the wife receiving her entitlement to the parties’ property. There was no suggestion that any creditors sought to be joined to these proceedings. Nor was there any application that the trial before me be adjourned pending the outcome of the debt recovery proceedings.
The asserted liability to Mr EE and Mr FF
The husband also asserted he owed monies to Mr EE and Mr FF totalling $42,258. He said those post separation loans to him should be included as a joint liability in the parties’ pool of assets. That was opposed by the wife.
The husband adduced no evidence as to the existence of these loans beyond his assertion that he borrowed monies from these individuals. He did not refer to the alleged loans in his trial affidavit – they simply appear as asserted liabilities in his Financial Statement and on his contended asset pool. Neither Mr EE nor Mr FF were on affidavit. No purported loan agreements were produced. I do not know when the monies were said to have been advanced, what they were used for, or the asserted terms of repayment.
In the circumstances they are excluded if they exist at all.
THE SMSF
The husband established the SMSF in 2002.
The husband is the director of J Pty Ltd, the trustee company. The SMSF has never been audited. The husband has failed to file returns with the Australian Taxation Office on an annual basis. I understand that in around February 2023 the husband lodged unaudited taxation returns for the SMSF for the financial years ending 2019 to 2022. As a consequence, the fund remains non-compliant, although no formal notice of non-compliance has been issued by the Australian Taxation Office.
The parties appointed Mr Y to prepare a valuation of the SMSF. The SMSF owns L Street. This is the premises from which N Company operates. Mr Y noted there was no written lease between the SMSF and N Company and I am unaware of the rental income derived by the fund from that lease agreement.
L Street is valued at $1,265,000 – which is in effect the only asset of the SMSF save for a small amount of cash of $298. Accordingly, Mr Y concluded the SMSF was valued at $1,265,298 as at 30 June 2023. No more up to date valuation was provided to the Court. A sale of L Street will trigger a capital gains tax liability.
The wife relied on an affidavit of Ms W, auditor. Ms W’s evidence was necessary to address any taxation issues arising out of a splitting order and potential taxation consequences the fund may face. Ms W’s report articulated inter alia the following:
(a)There are a number of steps the husband would need to undertake, including engaging with the Australian Taxation Office to place the SMSF on the ABN lookup in order for any amount to be rolled out of the SMSF into an industry superannuation scheme in the wife’s name;
(b)if L Street was sold, the proceeds could not be treated as non-super property;
(c)if L Street was sold at the amount valued (and using an assumed cost base of $500,000), she estimated the capital gains tax would be between $74,000 and $222,000. The level of taxation depended upon whether the husband was able to reach an agreement with the Australian Taxation Office for the concessional rate of 15 per cent to be applied, rather than being taxed at 45 per cent;
(d)if the Australian Taxation Office issued a notice of non-compliance, this would likely trigger significant taxation liabilities for the fund. Those liabilities would be a 45 per cent taxation on the fund income in each financial year the fund was non-compliant, and a one off 45 per cent taxation on the market value of the fund for the first year of non-compliance. I do not know what income the fund generates, but I assume there must be some rental income paid by N Company. Using the current valuation of Town M, Ms W calculated that a one off 45 per cent taxation liability would be in excess of $590,000; and
(e)any administrative penalties imposed as a result of not preparing returns as required would be against the husband as director of the trustee company, rather than imposed against the fund.
These are obviously significant potential liabilities.
In his Financial Statement the husband proposed the figure of $965,298 be used for the value of his entitlements in the SMSF, which allowed for $300,000 “for ATO tax and penalties”. No explanation was provided as to how that figure had been reached.
The husband conceded at trial that he would bear the cost of ensuring the SMSF became compliant.
It is very obviously in the husband’s interests that he forthwith engage with the Australian Taxation Office and do all he can to avoid a notice of non-compliance being issued, to make the fund compliant and to minimise the consequences of his failure to comply with his obligations as director of the SMSF trustee.
It is not possible to know what liabilities the fund may incur as a result of non-compliance. I am not prepared to simply adopt the $300,000 amount included in the husband’s Financial Statement – as there is no basis for that figure. There is much force in the wife’s submissions that any liabilities or financial consequences for the fund or for the husband should remain with the husband in circumstances where those liabilities arose as a result of the husband’s failure to properly manage the fund. However, it is plain that capital gains tax will be payable upon the sale of L Street – if the husband determines to sell it – although again it is difficult to predict the amount.
As already observed, it would be a serious misstep for the Court to make orders that do not properly take taxation consequences into account. Again the best I can do is take this into account pursuant to s 75(2)(o) of the Act.
DETERMINATION AS TO THE POOL
For all these reasons I am satisfied the pool is comprised as follows:
ASSETS
Balance of the net proceeds of sale of 1 G Street, Town C, invested in a controlled monies account
$108,183
2 G Street, Town C, registered in the husband’s name
$530,000
3 H Street, Town C, registered in the wife’s name
$690,000
Proceeds of sale of B Street, Town C, registered in joint names. Valued at $1,600,000
TBD
Wife’s Motor Vehicle 1
$20,000
Husband’s Motor Vehicle 2
$1,000
F Pty Ltd (including N Company business at L Street, Town M
nil
ADD BACKS
Part property settlement to the wife from the sale of 1 G Street, Town C
$110,369
Part property settlement to the husband from the sale of 1 G Street, Town C
$110,369
LIABILITIES
Credit Card Debts in the husband’s name
$104,651
Debt to E School
$19,012
Australian Taxation Office - F Pty Ltd as at date of separation
$62,135
NAB mortgage/business loan - F Pty Ltd secured over B Street
$E 270,182
Estimated outstanding council rates for husband’s property at 2 G Street, Town C
$18,566
Estimated outstanding council rates - L Street, Town M
$6,529
Estimated outstanding council rates – for joint property at B Street, Town C
$21,112
Land Tax – B Street, Town C
$5,565
Estimated Land Tax - L Street, Town M
$8,037
Estimated capital gains tax from Sale of 1 G Street, Town C
$60,000
Estimated capital gains tax from Sale of B Street, Town C
$214,000
As already observed it is impossible to properly identify the taxation liabilities or additional liabilities facing the business. The husband has failed to adduce evidence that could enable the Court to properly undertake this task.
Superannuation
Similarly, as already observed, as a result of the husband’s failure to meet his obligations as director of the trustee company it is not possible to know what liabilities the SMSF may incur. The husband’s entitlement has been valued at $1,265,298.
The parties’ entitlements in various industry superannuation funds are as follows:
wife’s Superannuation Fund 1
$38,127
wife’s Superannuation Fund 3
$12,170
husband’s Superannuation Fund 1
$151,337
IS IT JUST AND EQUITABLE THAT AN ORDER BE MADE?
In these proceedings, both of the parties urge the Court that it is just and equitable that orders be made to alter their interests in their property. In my view, this is a matter in which the requirements of s 79(2) of the Act are fairly readily satisfied. The parties’ relationship spanned over 20 years and produced two children. The parties operated a business together and provided care for each other’s older children. In all the circumstances I am satisfied it is just and equitable to make an order pursuant to s 79 of the Act in these proceedings for a division of property between the parties.
SECTION 79(4) OF THE ACT
In determining what orders are to be made pursuant to s 79(4) of the Act, I must weigh and assess the contributions made by the parties of “all kinds and from all sources” and “to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship; Aleksovski v Aleksovski (1996) FLC 92-705 at [894] and [910].
This is not a mathematical or accounting process. It is to be approached holistically, by analysing the contributions of all types, and by reference to the particular circumstances of that particular relationship; Dickons v Dickons (2012) 50 Fam LR 244 at [21].
Initial contributions
At the commencement of the parties’ relationship the husband had not completed the property settlement with his first wife. Ultimately, in about 2003, he retained a property at P Street, Town C. He asserted the equity in that property was about $36,000. He also had the property at 1 G Street, in which he said he had equity of $38,000. He also had superannuation of about $113,500.
The wife had a property at Q Street, Town C. She said it had equity of approximately $95,000. The husband asserted the equity was closer to $66,000. She also had a car of modest value.
Contributions during the marriage
As set out, the husband acquired business franchises, which were subsequently sold by him in about 2003. It was the husband’s case that his experience and expertise in management that he had acquired in the years prior to the parties’ relationship had enabled him to acquire and run multiple franchises – and then ultimately sell them at a considerable profit.
The wife conceded that upon the sale of the franchises in late 2003 the husband received $1,300,000, of which $500,000 was designated superannuation. She said from those monies the husband also paid taxation, $40,000 to his former wife by way of property settlement and his legal fees.
It was the husband’s case that he received approximately a further $1,140,000, in addition to the payout of $1,300,000. However, on cross examination, the husband conceded that $600,000 of that asserted $1,140,000 was actually his income over the years preceding the transfer of the franchises.
The husband did not adduce any evidence to support his assertion that he received more than $1,300,000. His 2004 taxation return showed he received a total income of $1,143,916 that financial year, made up mostly by way of wages, dividends and $790,000 as “attributed personal services income” – being his payment when he sold the franchises.
The payment of $790,000 and the $500,000 superannuation contribution were received more than two years into the parties’ relationship, and in circumstances where the wife had relocated to Sydney and had worked in the business for over 12 months. I accept that the husband’s experience and expertise in the business meant he had the ability to contract with R Limited as he did. However, these were not contributions made wholly by the husband.
The parties remained living in Sydney for about a year, using the funds from the sale of the franchises to meet their living expenses, and to purchase vehicles.
The parties returned to Victoria in 2004. They also purchased 2 G Street in late 2004, B Street in 2005, and a business franchise (which never ran at a profit). By that time the funds paid from R Limited had been substantially depleted.
The parties then purchased N Company in 2007, financed by a NAB business loan secured against the properties at 2 G Street and B Street. The husband operated the business, with the wife providing assistance as bookkeeper and undertaking administration. The SMSF purchased L Street from which the business operated, using the monies from R Limited that were paid as superannuation.
Both parties had children from previous relationships. The wife’s children lived with the parties. The husband’s children spent time in the household on alternate weekends. In addition, the parties had two children together.
The wife was the primary carer for the children of their relationship, and the husband the primary income producer. I accept that the husband was involved with the care of the children outside work hours. Whilst the husband asserted the wife would “disappear for hours…sometimes days, sometimes weeks”, leaving him with the care of the children, this was not put to the wife.
The wife had the benefit of $404,974 advanced to her from her mother (of which $15,874 has been repaid). This was a significant contribution on behalf of the wife very late in the relationship, and is reflected in the equity of the property in which the wife resides.
Contributions post-separation
Since separation the husband has made no payments to the wife by way of child support. Accordingly, the wife has met the children’s living costs without contribution from the husband, save for some contributions by him towards school fees. That contribution ceased when the school the children attended closed down, and they were then enrolled at a new school, E School.
As indicated the husband continued to operate N Company. However, it is abundantly clear that the business is financially struggling.
The husband neglected to pay rates and land taxes on the property occupied by him, on the other property he owned, and for L Street. When 1 G Street was sold unpaid rates of $9,415 were collected. The rates on B Street have also not been paid for some time. There is currently over $18,000 owing by way of unpaid rates in relation to the property occupied by the husband. The unpaid rates and land tax in relation to L Street are in excess of $14,500.
RELEVANT CONSIDERATIONS PURSUANT TO SECTION 75(2) OF THE ACT
The wife is 56 years old. It was her assertion she has back pain as a result of injury. She did not adduce medical evidence in relation to her health issues. She said her health, her age and her obligations to provide care for her elderly mother and stepfather impact on her ability to obtain employment. She relies wholly on Centrelink. I accept the wife’s income earning capacity is limited.
I do not accept the husband’s assertion that the wife generates an income of any significance through providing a service. The wife’s evidence was that she did some of the service for family and friends. There was no evidence of this being more than a hobby.
The wife is the primary carer for the parties’ youngest child who is 15 years old. The husband has not paid any child support to the wife, and she will likely remain substantially, if not wholly, financially responsible for meeting their daughter’s needs – although the husband has agreed to meet school fees.
The husband is 60 years old. He asserted he suffers from poor mental health, including post‑traumatic stress disorder and attention deficit hyperactivity disorder. He said these mental health issues make it difficult for him to attend to his financial affairs in an orderly fashion. He did not adduce any medical evidence regarding his mental health. I note the husband also asserted the wife’s abusive behaviour of him is the cause of his post-traumatic stress disorder. I will consider this issue shortly.
The husband has re-partnered. However, I have no knowledge of the financial arrangements between the husband and his partner. In his oral evidence the husband denied living with her, sharing accounts with her or owning any property with her.
The husband is continuing currently to operate the business. Whether he continues to do so, or the business is wound up, I accept the husband’s income earning capacity is limited. He currently works a maximum of 15 hours each week in the business earning $574 a week. He previously worked 60 to 70 hours each week and blamed the wife’s treatment of him as the cause of his inability to work longer hours.
ALLEGATIONS OF WASTAGE AND GAMBLING
The husband alleged the wife engaged in gambling from 2018 to 2020 – drawing cash totalling $12,000 from “gambling establishments” over the course of 18 months. He said in addition the wife took an unquantified amount of cash from the business or from the home over a number of years. He said there was “missing cash” from the business, and that the parties “were always short”. He did not ascribe any figure to the asserted ‘missing cash’. It was his case and that an adjustment should be made in the parties’ property entitlements to account for the wife’s asserted unexplained expenditure.
Upon cross-examination the wife conceded that she spent around $12,000 gambling over a period of approximately two years. She denied removing cash from the business.
The evidence fell well short of establishing any wastage by the wife either by gambling or by removing funds from the business. As already referred to, after being directed to reconsider the wife’s discovered documents, the husband was able to concede many transactions in the wife’s accounts were not suspicious. Further, as already set out, I accept the wife’s evidence as to the application of the proceeds of sale of Q Street.
FAMILY VIOLENCE
The husband alleged that he has been diagnosed with post-traumatic stress disorder as a result of family violence perpetrated against him by the wife stemming from her jealousy and mistrust of him. As already observed, the husband did not adduce any medical evidence that he has been diagnosed with PTSD, nor the possible causes of that.
It was the husband’s evidence that the wife verbally, physically, psychologically and emotionally abused him and subjected him to coercive control and surveillance. He said she isolated him from friends and family, including his children from his first marriage and now this marriage. He said the impact of the wife’s behaviours upon him prevented him from being able to undertake tasks such as attending to the financial returns and this impact was ongoing. It also impinged his ability to work in the business.
I understood his case to be that as a result of the wife’s asserted behaviours his contributions were made more arduous. It was also his case that the increased indebtedness of the parties arose in circumstances where his functioning was impaired as a result of the wife’s abuse of him. He contended the wife had deliberately alienated the children from him post separation, which was a form of ongoing abuse and further impacted his ability to operate the business and prepare for these proceedings. It was also his case that the wife had tactically engaged in behaviours as a litigant that were designed to trigger and abuse him. That included requests for discovery and the application she brought for the business to be placed into administration and for a litigation guardian to be appointed.
The husband tendered evidence of text messages between the parties. He also tendered a number of text messages from the wife without the corresponding messages from him, explaining in his oral evidence that “I didn’t feel like putting my part in there because I sounded like a wimp”. It appears somewhat selective that only part of the exchanges were tendered by the husband.
The wife was frequently verbally abusive and highly denigrating of the husband in those messages – which the wife acknowledged at trial. She otherwise denied the husband’s allegations that she was the perpetrator of abuse and he the victim of it. She admitted that the parties did argue and that she swore at the husband a lot. She said she found it frustrating at times when there were matters that needed to be attended to, including completing taxation returns, and the husband would not engage in the conversation.
It is clear that the husband’s failure to attend to the financial affairs of the business were a source of conflict in the marriage. In his oral evidence the husband complained that he did not have time to attend to taxation returns as he was too busy running the business, that the wife refused to help him complete returns when he asked her to do so and that he had not filed taxation returns ‘because she constantly hassled and abused’ him. He refused to take responsibility for failing to complete taxations returns even though he was the company director and said that was “on both our shoulders”. He also refused to take any responsibility for any conflict between the parties, save to say he should not have ‘put up with it for so long’.
The wife also deposed to having been subjected to family violence by the husband. She claimed the husband was controlling of her. She asserted that the husband dictated how she wore her hair, what makeup she wore, tracked her location and monitored her emails and social media use. She claimed the husband also physically abused her. She adduced photographic evidence at the final hearing of a handprint on her body. However, at trial the wife did not run an argument that the husband’s conduct made her contributions more arduous.
The husband denied the wife’s allegations. At trial he said he had not perpetrated any family violence against the wife. However I also note:
(a)during cross examination the husband conceded that the photograph tendered by the wife depicted a red handprint on the wife’s bottom/leg following an occasion on which he had struck her. He said the parties were being intimate and he took a call from his son. He said the wife was upset he took the call, and he responded by slapping her. In his affidavit he deposed “it was meant to be a smack on the backside, nothing more”. In his oral evidence he said he meant to slap her backside and “missed and got her thigh”, that it was “to get things back on track” and “wasn’t intended to hurt”. He said the wife was “incensed” when he took the telephone call;
(b)he had complained about the wife leaving the house having straightened her hair and put on make-up. He deposed she did this “to make me jealous to make me think she was either going out with other men or pretending to”. He deposed further that he told her “I had an issue with her straightening her hair”, but “she would still do it and I believe she enjoyed knowing it had an effect on me”; and
(c)the husband also deposed to a physical altercation between the parties over the wife’s phone, and that whilst the wife “wrestled with me to get her phone back” he sent a Facebook message from her account to a Mr GG telling him to “fuck off”. The wife said Mr GG is a long-time friend and godfather to her three eldest children. The husband admitted he “had an issue” with the wife speaking to Mr GG, saying “she did it to make me jealous, to taunt me and belittle me”. In his oral evidence the husband said the wife was either having an affair with this man, or pretending to, and said the wife had a “smug smile on her face” when she showed him her Facebook page that had no messages from Mr GG. He said when he then saw messages from Mr GG under another name, the wife flew into a rage and they wrestled over her phone. He could not recall whether he deleted Mr GG from the wife’s list of friends on Facebook.
The husband’s evidence and explanations as to his behaviour was troubling.
The husband also did not respond in his affidavit to a number of serious allegations made by the wife including:
(a)that he retained the older child when she was a breastfed baby after assaulting the wife. He retained the baby for a number of days. In his oral evidence he said this was ridiculous and that the wife “beat the shit out of me” when he was holding the baby;
(b)that he threw a brick through a glass door on one occasion. In his oral evidence he denied that;
(c)that he lay down on the driveway under the wheels of the wife’s car when she was trying to leave on one occasion, repositioning himself several times over the course of half an hour whenever the wife tried to manoeuvre the car to leave;
(d)that he slapped the wife hard on the face in 2012 and in 2016, and on that later occasion he also punched her with a closed fist; and
(e)that he tipped a full glass of water over her head shortly prior to separation.
The husband also exhumed the remains of U. Under cross examination the husband adamantly refused to acknowledge this would have caused the wife any distress at all. Instead he insisted the wife was trying to use the interment of U’s remains at B Street “for her own benefit”, which he found horrifying and “sickening”. He said the wife’s position at that time – being that she retain B Street – was without consideration for him. Although the husband said in hindsight he should not have removed the remains, he plainly felt he was entitled to act as he did. He expressed no real remorse and had absolutely no insight into the distress he caused the wife. He said the wife had “misrepresented” the situation “for her financial benefit”.
The husband obtained an interim Intervention Order naming himself and the children as protected family members in mid-2021, immediately following separation. That order was granted on an ex parte basis. The wife subsequently applied for and obtained an interim Intervention Order in late 2021. The parties’ competing applications were resolved by consent in early 2022, with mutual orders made without admission for 12 months. Both orders lapsed in early 2023. The husband’s application to extend the Intervention Order against the wife was refused.
The case law makes it clear that I must be firstly satisfied that a party engaged in a course of violent conduct, and secondly, that the violence had an impact on the other party’s capacity to contribute; Kennon & Kennon (1997) FLC 92-757 and Keating & Keating (2019) 59 Fam LR 158. When serious allegations are made, the Court should be cautious about relying on inexact proofs, indirect references and indefinite testimony.
On the evidence before me, I am not satisfied that the wife engaged in a course of violent conduct. This was not made out. I accept that the parties argued, and each engaged in family violence at times. But the evidence falls short of establishing that the wife engaged in a course of violent conduct during the relationship and post separation as asserted by the husband. As already observed the husband was not a compelling witness. He had no insight into his behaviour and the impact that had on the wife, and instead reported the various incidents in a way that demonised the wife and utterly minimised his role in the conflict.
I am also not satisfied that the wife’s behaviour impacted the husband’s ability to contribute, to operate the business, to manage his financial affairs or to participate in these proceedings, or that it caused or exacerbated his mental health issues.
SUPERANNUATION
It was the husband’s proposal that L Street be sold and the proceeds applied to meet various debts including business debts, the husband’s credit cards, and school fees. I remain entirely unclear as to the basis upon which the husband proposed the proceeds of sale of a property owned by the SMSF could be liquidated to meet the parties’ personal liabilities, or liabilities of the business.
The husband did not make any proposal for a splitting of his superannuation entitlements in either the SMSF or with Superannuation Fund 1.
The wife proposed that she receive a split of $100,000 from the husband’s entitlements with Superannuation Fund 1. That would leave her with superannuation entitlements totalling $150,297. On her proposal the husband would retain the balance of his Superannuation Fund 1 entitlements of $51,337, together with his entitlements in the SMSF. It was the wife’s case that:
(a)given the husband’s age and ability to access his superannuation entitlements, and
(b)his failure to ensure the SMSF remained compliant, which has affected the ability to implement a superannuation splitting order from that fund;
she should receive most of her entitlement in the pool as tangible property, with the husband’s share of the pool to be made up substantially by his retention of his entitlements in the SMSF.
I am satisfied it is appropriate that the wife’s entitlements be substantially paid out of the tangible pool for the following reasons:
(a)At 60 years old, the husband has reached his preservation age and is now able to access his superannuation entitlements if he meets the relevant requirements;
(b)the husband has at all times been the director of the trustee company of the SMSF. In that role he failed to comply with the legislative obligations to file taxation returns to ensure the fund remained compliant. According to the unchallenged evidence of Ms W there would be difficulties with any industry fund accepting a rollover from the SMSF without certain steps being taken by the husband. Given the shambles of the husband’s financial affairs, I have little confidence that he would address the necessary issues in a timely manner. This would most likely result in any rollover to the wife pursuant to a splitting order being significantly delayed; and
(c)that returns have not been filed is as a consequence of the husband’s failure to do so. It falls to the husband to work with the Australian Taxation Office to ensure the SMSF is compliant and to minimise any taxation liabilities that the fund may face. As already set out, these could be quite substantial.
I also accept however that the husband does require some cash. I also have to take into account that L Street will likely to be sold for the husband to access further cash and this will attract capital gains tax – the quantum of which is unknown.
ASSESSMENT OF CONTRIBUTIONS AND PROSPECTIVE NEEDS
Doing the best I can, and weighing all the contributions made by the parties over the course of their relationship I am satisfied that the parties’ contributions to the pool are appropriately assessed at 55 per cent by the wife and 45 per cent by the husband. In particular this takes into account;
(a)the additional contribution of funds by the wife’s mother towards the wife’s residence (being net $398,100), late in the parties’ relationship;
(b)the wife shouldering the majority of the care of the children and the costs of caring for them post separation, with limited financial contributions by the husband; and
(c)the relationship the husband had with R Limited at the commencement of the relationship, which led to him receiving a significant payout.
The wife remains the primary carer for the parties’ child, and her income earning capacity is limited. If the husband’s income remains modest, his ability to contribute financially towards the cost of the parties’ child will be limited. I note however he has indicated he is agreeable to being responsible to meet the tuition costs for her to complete high school. The rest of the costs of maintaining the child will likely fall to the wife.
The husband’s income earning capacity is also modest. I do not know anything about the financial circumstances of the husband’s partner. The husband said he does not live with her and they do not own properties or bank accounts together.
The wife will take the majority of her entitlements by way of tangible assets, and the husband will retain the business and his entitlements in the SMSF. However there are risks attached to the business and the SMSF. As already set out, in the course of continuing to operate the business post separation, the husband has incurred additional liabilities with the Australian Taxation Office. If he files amended business activity statements there may be further liabilities. Whether the husband will be personally liable for any of the business debt, for instance by way of a director penalty notice, is unclear. In closing the husband’s counsel suggested (without any evidence) that the husband could also face additional penalties if he was trading insolvent post separation.
In relation to the SMSF the liabilities could be significant – and potentially more than $590,000 if the Australian Taxation Office issues a notice of non-compliance. Capital gains tax will be triggered when L Street is sold – although again the husband failed to adduce evidence that would enable that amount to be estimated with any certainty. The only evidence I have is that depending on what it was purchased for, and what it sells for, capital gains tax could be somewhere between $74,000 and $220,000. It seems likely the husband will sell the property in the near future as he will need to access cash – and in those circumstances it is appropriate that I take capital gains tax into account.
Whilst the husband has not provided sufficient evidence for me to particularise the various potential liabilities with any certainty that does not mean that I can ignore them entirely.
Conversely, I accept that many of these liabilities could have been minimised, and others avoided, had the husband attended to his financial matters in a timely manner, or had he agreed to wind up the business when the wife sought that he do so.
These are all matters that I am satisfied need to be taken into account in the interests of justice.
I take all of these considerations into account when determining that the just and equitable and otherwise appropriate outcome is that:
(a)there should be an adjustment in favour of the husband such that the pool as determined by me shall be divided 52 per cent to the husband and 48 per cent to the wife; and
(b)that the wife’s 48 per cent will be made up of substantially by way of tangible assets and a more modest share of the parties’ superannuation entitlements (although I am of the view she shall receive more from the husband’s entitlements with Superannuation Fund 1 than she proposed).
PROPERTY ORDERS TO BE MADE
F Pty Ltd
The husband will retain the business. As best as I understood, the husband seemed to say the business was unlikely to continue to operate as a going concern and he would likely wind it up in an orderly manner. However, his proposed orders did not contain any detailed orders articulating how that would occur and there was some prevarication. His oral evidence was that he would continue to trade and sell off as much of the stock as possible, to pay out employees and creditors. It will be up to the husband whether he continues to trade or whether he will now wind up the business.
The proceeds of sale of 1 G Street
The husband will retain the funds from the sale of 1 G Street – save for the sum of $60,000 which will be held on trust and applied to meet the capital gains tax liability triggered by the sale. He said he would use the funds to settle the debt to DD Pty Ltd and pay out any other urgent creditors – suggesting also that if he received these monies there was some small chance he could keep trading. That is a matter for him to decide.
If there are funds remaining after the payment of capital gains tax they shall be divided 48 per cent to the wife and 52 per cent to the husband. If the capital gains tax exceeds the amount of $60,000, that will be met by the husband. He could have obtained expert evidence as to the precise amount he would be required to pay prior to the final hearing and he did not do so. Given the husband’s tardiness in attending to his financial affairs I have some concern that the husband will not attend upon his accountant in a timely fashion. I am of the view that the wife should not be saddled with the uncertainty as to whether any further monies are to be paid by her. There is some degree of certainty that the agreed figure will be reasonably accurate given the property has already been sold.
The proceeds of sale of B Street
I have determined that from the proceeds of sale of B Street the costs of the sale, and the NAB business loan of $270,182 secured over that property should be paid. In addition – and as proposed by the wife – the proceeds shall be applied to meet the outstanding rates and land tax ($21,112 and $5,565), the husband’s credit card liabilities (which total $104,651), the outstanding school fees for E School (of $19,012). Additionally the Australian Taxation Office liability for the business that I have found existed at the date of separation shall be paid ($62,135). The sum of $214,000 will be set aside for the purposes of meeting any capital gains tax liabilities.
I do not agree with the husband’s proposal that further business liabilities be paid from the proceeds of B Street for the reasons already set out. Nor should the husband be reimbursed for paying creditors from his part property distribution for those same reasons. Instead, I am satisfied the proceeds should be divided 52 per cent to the husband and 48 per cent to the wife, with a cash adjustment of $392,320 paid to the wife from the husband’s share to ensure an overall adjustment in the percentages determined. If the property sells for $1,600,000 after paying the anticipated costs of the sale, the business loan and the other liabilities as determined, the net proceeds will be around $853,000.
I do not agree it is appropriate that the wife alone conduct the sale of this property. I do have concerns that the parties have a limited ability to work cooperatively, and that the husband may be tardy in attending to all the necessary documents to effect the sale in circumstances where the wife will receive the vast bulk of the proceeds of that sale. His own evidence was that at times of stress his mental health issues impact his ability to function. However, at this point I am not prepared to exclude him from the process. There are a number of joint liabilities that will be met from the proceeds of sale. It is a jointly owned property. The husband will also likely receive some cash payment from the sale if it sells for the amount it has been valued.
If there are difficulties, it may become necessary to appoint the wife as trustee to have sole conduct of the sale. Any such application – if successfully prosecuted – could attract an order for costs. I have included a s 106A order so that if the husband does not attend promptly to the execution of documents to facilitate the sale, those documents can be signed on his behalf.
I have adopted the wife’s proposals for the selling price to be reduced every three months – as that appears a sensible way to ensure the sale of the property. Counsel for the husband did not make any submissions against the making of such an order. I have included an order giving the parties liberty to apply in relation to the terms and conditions of the sale if there are difficulties.
Indemnifications
I am making orders for indemnities as sought by the wife. The husband’s financial affairs were not in order. It does not seem to me appropriate that the wife might, down the track, face claims for any debts arising out of entities that the husband has controlled and continues to operate, including if he has been delinquent in his duties as director. He was ordered to file all relevant returns so that all liabilities could be known by now, and he did not do so. The parties’ financial entanglement needs to be brought to an end, and the wife needs to have some certainty going forward.
U’s remains
The wife sought an order that the husband reimburse her for the costs of cremation. However, no evidence was provided as to the costs of that cremation and this was not a matter that was ventilated at the hearing. Accordingly I am not making the order sought.
The parties’ superannuation entitlements
The husband will retain his entitlements in the SMSF – and the liabilities that will attach to that, either as a result of his failure to keep the fund compliant, or as a result of capital gains tax triggered in the event he elects to sell the property. In addition, the husband will retain liability for the land tax and rates arrears for L Street. He will also retain a very modest amount in his Superannuation Fund 1 – after the wife’s entitlements are split.
Together with her industry superannuation entitlements after the splitting order to her, the wife will have superannuation entitlements of approximately $200,000.
Restraints
The husband sought orders restraining the wife from coming within 100 metres of his residence or attending at N Company or any other place at which the husband is employed. There were no submissions made to me about these proposed orders – and there was no suggestion at trial that there had been any recent behaviour that would provide a basis for such orders. The parties have previously had state Intervention Orders and if they require such protection any application can be made at the Magistrates’ Court.
Conclusion
I am satisfied that the property orders I am making are just and equitable.
I do not agree with the submissions by counsel for the husband that these orders will leave the husband with nothing except debt. He will have cash from the sale of 1 G Street; his credit card liabilities will be paid out; he will retain his property at 2 G Street; along with the business; a modest amount by way of his Superannuation Fund 1 entitlements; and his entire entitlements in the SMSF. Depending on the sale price achieved for B Street the husband will also receive cash from those proceeds.
The husband will be responsible for liabilities – many of which are unknown to the Court as a result of the manner in which the husband conducted his financial affairs and the litigation. I accept that the husband will need to meet any capital gains tax liability as a result of selling L Street, although it is difficult to determine what that liability might be. I have taken that liability – and the reality that there may well be other liabilities – into account. At the same time, I have also had regard to the fact that many of the additional liabilities and potential liabilities have arisen largely as a result of the husband’s decisions and poor financial management of the business post separation, or in relation to the potential liabilities of the SMSF as a result of his failure to meet his obligations as director. I do not accept the wife contributed to the husband’s failings in these regards. He will retain a slightly larger percentage of the overall pool as a result of the wife taking more of the tangible pool, and because it seems likely the husband will have additional liabilities to meet. It will be a matter for him to work productively with the Australian Taxation Office to minimise the financial consequences to him.
CHILD SUPPORT
The arrears of school fees of $19,012 will be paid from the proceeds of sale of B Street.
The wife sought an order pursuant to s 124 of the Child Support (Assessment) Act 1989 (Cth) that the husband pay non-periodic child support by way of meeting their child’s tuition fees, as well as paying for all her school books, stationery, camps, excursions, school uniforms and the like. In addition, she sought that the husband maintain private health insurance for their child.
The wife tendered the current child support assessment issued on 15 April 2024, covering the assessment period 14 March 2024 to 13 June 2025. Pursuant to that assessment the husband is to pay $1,720 per annum to the wife towards their child’s support. I note the wife is in receipt of an income tested pension. The child is in year 10, and has two years left of secondary schooling. She has already had to change secondary schools once, when the school she was previously attending closed down.
I was advised by counsel that the Registrar had been served with the application and had not sought to be heard.
In the course of his closing submissions, counsel for the husband advised that his client would meet the school fees going forward. That appears to be a concession on the part of the husband that he has the financial capacity to meet those fees. Counsel did not assert the school fees would be credited against the periodic assessments – and I agree that they should not be.
In light of the husband’s position that he will assume responsibility for those fees moving forward, I will make that order.
In relation to health insurance, it was the husband’s evidence at trial that the child remained on his health insurance, which he was doing his best to keep paying but that “every month it falls back into the lapsed period”. I was not told what the costs of maintaining health insurance for the child would be.
In circumstances where there was no evidence as to the costs of the other non-periodic payments sought (such as school books and camps or the costs of the health insurance), my order will be limited to the tuition fees only. Accordingly, I make the orders for non–periodic child support for the child’s school fees to be paid by the husband for the balance of 2024 and until she concludes her schooling. I am satisfied in the circumstances of this case that it is just and equitable and otherwise proper to make that order.
For all of the foregoing reasons, I make the orders as are set out.
I certify that the preceding two hundred and thirteen (213) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Carter. Associate:
Dated: 21 November 2024
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