Summerfield & Summerfield

[2006] FamCA 1238

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

AT No. SYF3067 of 2003

IN THE MATTER OF:	SUMMERFIELD	MR	Applicant Husband
AND	SUMMERFIELD	Mrs	Respondent Wife

REASONS FOR JUDGMENT

CORAM:	O’Ryan J
DATE OF HEARING:	15, 16, 17, 19, 22, 23 August 2005 and 3, 4, 5, 6, 7 and 10 April 2006 and 3 July 2006.
DATE OF JUDGMENT:	23 November 2006

APPEARANCES:

Mr Lloyd of Counsel	(instructed by Foulsham & Geddes, Solicitors
Mr Hodgson of Counsel	(instructed by ES Lawyers.

CATCHWORDS:

FAMILY LAW – PROPERTY SETTLEMENT – Value of property – Conflicting evidence

IT IS NOTED that publication of this judgment under the pseudonym Summerfield & Summerfield is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

Introduction

Proceedings

Before me for hearing are applications for settlement of property. The proceedings were commenced by Application filed on behalf of Mr Summerfield on 7 April 2003. The Respondent is Mrs Summerfield.
A number of amendments were made to the order sought by each party. However, what the Husband seeks is set out in a Minute that was sent to me on 14 July 2006 and the order sought by the Wife is set out in a Minute sent to me on the same day.
The Wife was born on in 1936 and the Husband was born on in 1941. The parties commenced to live together in either 1980 or 1982 and were married in June 1995. They separated in March 2003.
There are no children of the relationship. However, both parties were previously married and each had children.
This was a very difficult case for reasons that will become apparent. There are a number of areas where I preferred the evidence of one witness over another. However, with the exception of the expert accountants overall I found the evidence of the parties and some witnesses to be unsatisfactory.

Property Proceedings - Relevant Principles

The approach to the determination of an application pursuant to s 79 of the Family Law Act 1975 (Cth) is well established by authority: In the Marriage of Lee Steere (1985) 10 Fam LR 431; In the Marriage of Ferraro (1992) 16 Fam LR 1; Davut and Raif (1994) 18 Fam LR 237; In the Marriage of Prpic (1994) 18 Fam LR 388; In the Marriage of Clauson (1995) 18 Fam LR 693; In the Marriage of Whitely (1996) 20 Fam LR 590 and Hickey and Hickey and Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143.
Section 79(2) provides that the court shall not make an order, under the section, unless it is satisfied, in all the circumstances, that it is just and equitable to make the order. I am required, in considering what order, if any, I should make, to take into account the respective contributions of the parties referred to in paragraphs (a), (b) and (c) of s 79(4); the effect of any proposed order upon the earning capacity of the parties; the matters referred to in s 75(2), so far as they are relevant; any other order made under the Act affecting a party or a child, and any child support under the Child Support (Assessment) Act 1989 (Cth).

Step one

At step one of the preferred approach to the determination of an application pursuant to s 79 there is a significant issue as to the extent and value of the net assets of the parties. The Husband contended that the assets have a net value of $8,591,881. The Wife contended that the assets have a net value of $6,554,031.
The parties have shares in D Pty Ltd, F Pty Ltd and S Pty Ltd. These companies are collectively called the D Group. The D Group owns and operates a wholesale importing business of stock lines sourced from China which are sold to retailers in Australia and New Zealand.
On behalf of the Husband evidence was given by Mr S, Chartered Accountant and on behalf of the Wife evidence was given by Ms E, Chartered Accountant. Both experts prepared a number of reports and joint statements. The Husband contended that the shares are valued at $2,900,000 and the Wife contended that the shares are valued at $920,905 being a difference of $1,979,095.
There was also an issue about the notional inclusion of amounts for unexplained debtors and unexplained stock. There was also an issue as to whether there should be included an amount of $312,600 the Husband had the benefit of since the parties separated and also an amount of $250,000 which the Husband received by way of partial property settlement.
As to liabilities, although I was informed that there was substantial agreement as to the quantum of liabilities, there was an issue as to whether certain liabilities should be deducted in order to ascertain the net assets available for distribution. The Husband contended that there should be included a number of unsecured liabilities of both parties. He also contended that there should be included an estimated $914,000 which he owes to the Australian Taxation Office. The Wife contended that both the unsecured liabilities and the debt to the Australian Taxation Office should not be included in the net assets.
In addition to the use of its showrooms in Sydney and Melbourne the D Group markets its products by participating in trade fairs and also employing sales representatives in New South Wales, Victoria, South Australia and Queensland. It also has sales agents in Western Australia and New Zealand.
The D Group has a large spread of customers and is not dependent on any one client. The customers include a variety of retail outlets. The group’s largest customers account for less than 7 per cent of its annual sales. Large customers include major retailers.
D Pty Ltd is the main trading entity in the Group. Its sales revenue in 2003 represented approximately 85 per cent of the Group’s turnover.
D Pty Ltd was incorporated in 1983. The Wife is currently the Managing Director. The Directors are currently the Wife, Mr R and Ms K. Mr R is the Wife’s son. The issued shares are held by the Wife as to nine ordinary shares and Mr R as to one ordinary share.
D Pty Ltd product lines include items of giftware. It also includes furniture. F Pty Ltd sells product lines similar to D Pty Ltd which are said to be of a higher quality and more exclusive. S Pty Ltd sold electrical products.
D Pty Ltd has its head office, showroom and warehouse facilities at U and previously an office and showroom in Melbourne. Prior to the Husband ceasing work in the business on 10 March 2003 the Company also made use of premises in Brisbane which served as an office and showroom. The parties jointly own the property at U. The Husband owns the property in Brisbane and the Wife owned the property in Melbourne.
D Pty Ltd has approximately 19 suppliers. It commenced selling electrical products in July 2002 after acquiring the business of S Pty Ltd. It utilises the services of a freight forwarding company, AV Pty Ltd, to ship and clear its consignments through customs once they arrive in Australia. AV Pty Ltd pays amounts on behalf of D Pty Ltd, including the goods and services tax required to clear the goods through customs, later sending the Company an invoice detailing its charges and disbursements.
Ms E said that the Wife advised her that approximately 70 per cent of D Pty Ltd’s non electrical related supplies are sourced through entities overseas called A & Co Ltd and H Ltd. The suppliers are based in China. Suppliers generally provide terms of 45 days with payments made by way of telegraphic transfers.
Ms E said that key staff members include Mr R, who performs a general management role; Ms K who has joint responsibility with Mr R for design and buying; a national sales and marketing manager; a warehouse operations manager and an office manager. There are eight sales representatives. Ms E said the Wife advised her that in total there are 18 full time employees. There are also casual staff for packing and warehousing functions. The number of packers varies between five and 12 depending on the time of year.
F Pty Ltd was incorporated In July 1995. The directors are currently the Wife, Mr R and Ms K. The share register of F Pty Ltd reveals that the issued shares of the Company are held as to 1.5 ordinary shares by the Husband, 1.5 ordinary shares by the Wife and one ordinary share by Ms K.
F Pty Ltd sells similar product lines to D Pty Ltd but differentiates itself by promoting its lines as being of a higher quality and more exclusive. F Pty Ltd shares the same premises, customer base and suppliers and utilises the services of the same employees as D Pty Ltd.
S Pty Ltd was incorporated in September 1999. The directors are currently the Wife, Mr R and Ms K. The share register of the Company reveals that the issued shares are held as to one ordinary share by the Wife, one ordinary share by the Husband and one ordinary share by Ms K.
It was contended that S Pty Ltd sold electrical products until June 2002 when its business, being debtors plus stock less creditors, was transferred at book value to D Pty Ltd. D Pty Ltd continues to use the “[S]” brand name for its electrical products collection.
Ms E said that she understood there to be just one business although it was divided into three cost centres and now two. She was of this opinion because:
·The products are not easily distinguished, other than by packaging and are not stored separately in the warehouse.
·The Companies source their products from the same trading companies.
·The Companies often sell products to the same customers.
·The same sales force is utilised to generate sales.
·The Companies operate as cost centres.
She gave other reasons. D Pty Ltd, as the main operating company, provided the management and administration support for both F Pty Ltd and S Pty Ltd by way of business premises being office and warehouse functions and employees. It also maintained the debtor’s ledger for both F Pty Ltd and S Pty Ltd. It paid all customs duty and freight on imported goods received from overseas on behalf of F Pty Ltd.
There was an issue about a quantified liability for unpaid taxation for the Companies to the Australian Taxation Office in relation to an understatement of trading profits for the financial year ended 30 June 2003 and prior years. The understatement of profit related in the main to understatement of closing stock values, directors’ private expenses treated as company expenses and overseas profit skim in relation to purchases of imported goods.
As to the understatement of closing stock values and directors’ private expenses treated as company expenses, Mr S said that the Companies in the past have traded successfully, making substantial profits, and from information available to him it appears that the financial reporting to the Companies bankers and the Australian Taxation Office reflected a financial picture of depressed profits to reduce Australian taxation expense. Notwithstanding this, in past years, significant inter-company charges occurred between the Companies transferring profits from one company to another. For example, in the years ended 30 June 2001, 30 June 2002 and 30 June 2003 D Pty Ltd received management fees from S Pty Ltd and F Pty Ltd. Mr S was informed by the accountant, Mr J that these inter-company charges were arbitrary and were done to transfer revenue into D Pty Ltd as the main operating company.
As to the overseas profit skim Mr S said that he was advised by the Husband that it was business practice to profit skim on goods purchased from overseas. Profit skimming occurs where a payment is made that is greater than the actual cost of goods and the overpayment is then deposited in an overseas bank account for the benefit of the payer. The effect of this is to decrease trading profits because the amount paid is claimed as the actual cost and thus avoid paying Australian income tax. Mr S was advised that an overseas supplier in Hong Kong comprised approximately 70 per cent of total purchases of goods. An amount equal to 10 per cent of the cost of goods was paid to the overseas supplier as a “commission” and this was deposited by the overseas supplier into an account with Standard Chartered Bank in Hong Kong in the name of the Husband which in effect deflated the trading profit in Australia and thus moved money offshore tax free.

Steps two and three

The Husband contended that the contribution based entitlements of each party expressed as a percentage of the net assets of the parties should be assessed as equal. The Husband contended that there should be no further adjustment to the contribution based entitlements of the parties having regard to the matters in s 79(4)(d), (e), (f) and (g) of the Family Law Act.
The Wife contended that the contribution based entitlements of each party expressed a percentage of the net assets should be assessed as to 55-60 per cent to the Wife and 40-45 per cent to the Husband. During final submissions I was informed by counsel for the Wife that it was submitted that the Wife should receive a greater contribution based entitlement namely, between 55 per cent and 60 per cent of the net assets of the parties because towards the end of the relationship the Wife’s contributions were greater than those of the Husband as he was distracted by his affair with Ms C. Further, the Wife was entitled to a greater contribution based entitlement because of the manner in which the Husband conducted the financial and taxation affairs of the business which resulted in the tax debts for understatement of profit because of understatement of closing stock values, directors’ private expenses being treated as company expenses and the overseas profit skim in relation to purchases of imported goods which assessments included penalties and interest.
On behalf of the Wife it was submitted that in the event that I found that the contribution based entitlements of the parties expressed as a percentage of their net assets was 60 per cent to the Wife and 40 per cent to the Husband there should be no further adjustment to the contribution based entitlements having regard to the ‘other factors’. However, in the event that I found that the contribution based entitlements expressed as a percentage of the net assets of the parties was 55 per cent to the Wife and 45 per cent to the Husband then there should be a further adjustment of 5 per cent of the net assets of the parties to the contribution based entitlement of the Wife. Thus, the Wife would receive an entitlement of 60 per cent and the Husband would receive an entitlement of 40 per cent.
In a joint statement of counsel I was informed that in relation to the parties’ contributions the issues are as follows. First, as to the parties’ assets at the commencement of cohabitation. Next, the contributions during cohabitation, and in particular, in relation to the D Group and the Husband’s role therein. Next, the contributions after separation. Next, the use the Wife has had of the D Group and whether in those circumstances, the Husband should receive some form of notional financial credit. Finally, the extent of the Wife’s contributions to the D Group and meeting the parties’ liabilities.

Australian Taxation Office

There is a significant liability of both the Husband and the D Group to the Australian Taxation Office and one of the issues was the most effective manner for protecting the interests of the Australian Taxation Office.

Background

In 1973 the Wife, with another person, established and thereafter conducted a personnel agency business through RS Pty Ltd. The Wife produced no documents in relation to the financial circumstances of this company.
The Wife was divorced in 1975 from her first husband and received a property settlement of about $60,000.
In 1975 the Wife acquired a unit in a beachside suburb for $64,000.
In 1975 the Husband joined BMCH Pty Ltd. It carried on an engineering business and the Husband was mainly responsible for design and construction of materials handling equipment. The business undertook large scale engineering projects.
In 1976 the Summerfield Family Trust was established and the trustee was T Pty Ltd. By 1977 T Pty Ltd, as trustee, had acquired a one third interest in a group of companies known as “BMCH Company”.
There is an issue about when the parties commenced cohabitation. The Husband contended it was in 1980 and the Wife contended it was in 1982.
In an affidavit the Husband swore on 2 April 1986 (Exhibit G), which was filed in proceedings in the Family Court between the Husband and his first wife, he said they separated on 30 November 1981 and were divorced on 4 February 1983. The Husband was cross examined about what he said in this affidavit in relation to the date of separation from his first wife and he said that the date in the affidavit was wrong and he adhered to the evidence he gave in these proceedings. In fact, at the end of 1980 the Husband and the Wife went on a trip together to Tahiti.
The Husband contended that at the commencement of cohabitation he had an interest in assets comprising the matrimonial assets of himself and his first wife. Those assets comprised real estate and a one third share in the five companies that comprised the BMCH Company. The interest in the five companies was held by T Pty Ltd as trustee of the Summerfield Family Trust.
The Wife’s assets comprised an interest in RS Pty Ltd and the home unit in the beachside suburb. This was conceded by the Husband.
The Husband was a Director of companies that included BMCH Pty Ltd and BMS Pty Ltd. In the early 1980s a dispute arose between the Husband and his co-directors. As a result, the Husband commenced proceedings in the Supreme Court of New South Wales to recover the value of the shares of the Summerfield Family Trust in the “[BMCH] Company”.
In 1982 the Husband purchased a racing yacht for $110,000 from Mr O using funds received by him from the BMCH Service Trust. He raced the yacht for about two years.
The Husband’s employment with BMCH Pty Ltd was terminated on 9 December 1982. The Husband contended he was then unemployed for about six months in 1982-1983 and received unemployment benefits of about $100 per fortnight. The Wife contended that the Husband was “on the dole” for about two years. In an affidavit the Husband swore in April 1986, that was filed in his family law proceedings with his first wife, he said that for two and a half years after his dismissal he sought employment and was in receipt of unemployment benefits from July 1983 to February 1985. This corroborates the Wife’s version.
By Memorandum of Transfer dated 3 December 1982 the Wife sold her home unit. In her evidence in chief the Wife contended that the sale price was $240,000. In cross examination the Wife at first adhered to this evidence. The Husband contended it was sold for a sale price of $169,000 and this was corroborated by the Memorandum of Transfer. I do not accept the Wife’s evidence as to the sale price of the unit. There was also a mortgage debt. The Wife guessed that the debt was about $15,000 to $17,000 but provided no documents to corroborate what she said. On one version the Wife’s contention was that, subject to costs, she had about $223,000 or $225,000 from the proceeds of sale of her unit. However, it was probably less than $154,000 or $152,000.
In her evidence in chief the Wife contended she invested $70,000 from the proceeds of sale of her unit into the initial capital for D Pty Ltd with the balance, perhaps $153,000 or $155,000, into funding the Husband’s costs of proceedings in the Family Court and the Supreme Court. This contention was disputed by the Husband. In cross examination the Wife said that she may have invested $25,000-$30,000 in D Pty Ltd and thus, what she said about investing $70,000 in the Company was wrong. At first she could not recall how much she invested in D Pty Ltd.
The Husband contended that the Wife spent the net proceeds of sale of the unit of about $75,000 on day to day living expenses and rent on a unit at Sydney’s lower North Shore. He conceded that the Wife put some of the proceeds of sale into D Pty Ltd. Neither party produced any documents to corroborate their respective contentions. However, I prefer the evidence of the Husband as to the amount the Wife received from the sale of her unit and how she spent the proceeds of sale. I note that in final submissions counsel for the Wife submitted that the Wife contributed $65,000 from the proceeds of sale of the unit.

The parties resided in rented accommodation at lower North Shore. The unit was owned by T Pty Ltd as trustee of the Summerfield Family Trust. The Wife contended that she paid the rent of $350 per week and all other living expenses. In an affidavit the Husband swore on 2 April 1986, that was filed in his previous family law proceedings, he said that he and the Wife paid the rent. The rent was paid by direct payment or reduction of the Husband’s loan account with the Summerfield Family Trust. No documents were produced by either party to corroborate their respective contentions. However, I prefer the evidence of the Husband as to the source of payment of the rent of the lower North Shore unit.
In 1983 the business of importing and wholesaling products was established. There was an issue as to who established the business. The Husband contended that he started the business. The Wife contended that it was the “brain child” of Mr R who decided to set up a company. The Wife also contended that she believed that the idea would sell in the market so she provided the initial capital for her son to travel overseas to develop relationships with suppliers and also purchase stock. Mr R gave evidence on behalf of the Wife corroborating her version of what happened.
The Husband contended that in 1983-1984 he went into the Wife’s office at the north shore and started the business. He contended that neither the Wife nor Mr R did anything to assist him in this period. The Husband sent telexes and made telephone calls to suppliers located in various parts of the world including Asia, Scandinavia and the United States. The Husband contended that from the very beginning he managed the business and continued to do so until 11 March 2003. For reasons which I will shortly give I prefer the evidence of the Husband in relation to the establishment and management of the business.
L Pty Ltd was registered in New South Wales in February 1983. In August 2003 this company changed its name to D Pty Ltd. Mr X, Chartered Accountant, gave evidence on behalf of the Wife in relation to the establishment of the business and the incorporation of L Pty Ltd. His evidence did not alter the conclusions I have reached as to the role of each party in relation to the establishment, operation and management of the business.
In March 1983 the Husband, the Wife and Mr R were appointed as Directors of L Pty Ltd. The shareholders were the Wife and Mr R. The Husband contended, which I accept, that he and the Wife decided that he would not be a shareholder because he was involved in family law litigation with his first wife.
The business of D Pty Ltd commenced to operate from the rented accommodation at the north shore also occupied by RS Pty Ltd.
The Wife contended that in early 1983 Mr H lent $20,000 to D Pty Ltd to help with the initial set up of the Company. This was denied by the Husband. There were no documents produced to corroborate the evidence in relation to the alleged loan from Mr H. For example, there were no financial statements such as a balance sheet or a profit and loss statement of D Pty Ltd which presumably would have identified this advance to the Company. Further, Mr H did not give evidence.
The Wife also contended that in early 1983 Mr P enabled the Company to obtain a line of credit with Westpac Banking Corporation for $100,000 by becoming a guarantor of the facility. Again, there were no documents provided to corroborate this evidence such as a balance sheet of D Pty Ltd showing the advance from the Westpac Bank. Further, Mr P did not give evidence.
In 1983 the Wife opened a bank account with the then State Bank in the name of the Company and the signatories on the account were the Wife and Mr R. I observe that the account was not with the Westpac Bank.
The Wife contended that in 1983-1984 she sold RS Pty Ltd for approximately $95,000 and received this amount. She contended that from the proceeds of sale an amount of $65,000 was applied towards the Husband’s legal costs of the proceedings in the Family Court and Supreme Court. This was disputed by the Husband. In her evidence in chief the Wife contended it was sold for $90,000. The Husband contended it was sold for $60,000. The Wife contended that with the exception of an amount of $25,000, being a retention amount, the balance namely $65,000 was used to pay the Husband’s legal fees. In cross examination the Wife contended that some or all of the proceeds of RS Pty Ltd went into D Pty Ltd. The Wife provided no documents to corroborate her evidence notwithstanding she said that she “enjoyed…keeping old history” as her “old records” were thrown out in October 2002 in a skip bin.
In any event, according to one version the Wife contended that she received the amount of $90,000 or $95,000 from the sale of RS Pty Ltd and $223,000 or $225,000 or $152,000 or $154,000 from the sale of her unit. Further, that the amount advanced to the Husband, by this time, to pay his costs was $218,000 or $220,000. All this evidence is confusing and no attempt was made to clarify it. The Husband contended that the Wife applied most of the proceeds of sale towards payment of “our living expenses” and invested the balance into the business of D Pty Ltd. I prefer the evidence of the Husband.
I accept that the Wife sold her home unit and also RS Pty Ltd. However, I do not accept her evidence as to the amounts she received or how the money was spent. There were no documents provided corroborating what the Wife received or the amounts she invested in D Pty Ltd or the amounts she gave the Husband. For example, there are no financial statements of the Company which disclose any loans by the Wife to the Company. A striking feature of this case is the lack of reliable corroborative documentary evidence. The Wife contended that there are missing company and business records such as tax returns, financial statements, wage records, purchase orders, purchase invoices and payroll records. There was an issue as to why these documents are missing. From the time the litigation commenced the Husband and his lawyers sought the documents from the Wife and others. In cross examination, for reasons I will shortly identify, the Wife said that prior to separation the Husband was exclusively responsible for all financial matters. I should add that the series of events in 2002 and 2003 of documents being thrown out in a skip bin, documents destroyed by a sewerage spill and the computer crash do not adequately explain the lack of documents.
In 1984-1985 the business commenced to occupy premises in N. The Wife said it was 1984 and the Husband said it was 1985.
D Pty Ltd commenced to trade in 1984 and lodged its first tax return for the year ended 30 June 1985. When D Pty Ltd first started business it was importing products from Finland, Japan and “from the East”. I did not have a copy of the tax return and financial statements of D Pty Ltd for the year ended 30 June 1985 which may have corroborated the financial history the Wife contended for.
The Husband contended that not only did he establish the business but he was the Managing Director and Chief Executive Officer. He also contended that the business was conducted predominantly by Ms K and “to a very small extent” by the Wife. He gave evidence of what his “roles” were in the Group.
The Wife made a number of very broad allegations. She contended:
·The Husband was on the dole for about two years.
·The Husband spent most of his time from 1982 to 1989 involved in Family Court and Supreme Court proceedings.
·The profits of D Pty Ltd were diverted to pay the Husband’s legal fees. In fact the Wife contended that the Company funded $300,000 in payment of legal fees.
The Husband conceded that D Pty Ltd paid his legal expenses and the amount may have been about $200,000. However, again there were no documents corroborating the amounts actually paid. Further, no evidence was given as to how the payments were treated in the accounts of the Company. The Wife contended that the Husband was supposed to repay the amounts paid for legal costs and that there was to be a settling up in 1991. However, she had no knowledge as to how the amounts were accounted for in the balance sheet of the Company nor how, if relevant, the amounts were treated as expenses in the profit and loss statement of the Company. Amongst other things, the issue would be whether the amounts paid were treated as a loan to the Husband or as a trading expense of the Company.
The Wife in her evidence in chief also contended that the Husband was in no way involved in the day to day managerial decisions of running the Company. She did say that, from time to time, the Husband would help by packing orders and invoicing customers. For reasons I will give I reject the contentions of the Wife.
It is instructive to consider precisely what the Wife said the Husband did in relation to the establishment, conduct and management of the business of the Group and the business. Her evidence in chief is contained in an affidavit she swore on 8 April 2004. I refer to what she said about the role of the Husband and in particular in paras 39, 42, 51, 80, 97 and 102 of the affidavit. The Wife said that:
·Mr R would talk to the Husband about some matters pertaining to RS Pty Ltd and D Pty Ltd.
·From time to time the Husband would help by packing orders or invoicing customers.
·In 1989 the Wife and her son “took” the Husband “onboard”.
·When the Husband came onboard in about 1989-1990 he predominantly worked in the warehouse invoicing stock and occasionally helping out with sales.
·The Husband ensured that the electronic equipment was moved to premises at U.
·From 1995 to 2000 the Husband’s role was mainly limited to duties in the warehouse.
·The Husband predominantly did work in the warehouse invoicing of stock and occasionally helping with sales.
·His daily duties consisted of input of stock into the computer system, pricing and helping pack orders.
·From 2000 the Husband lost interest in the Companies.
In further evidence in chief the Wife contended that the Husband was good with electronics. She also contended that both she and the Husband “signed cheques”.
In my view, the Wife’s evidence in chief contrasted starkly with her oral evidence. In cross examination the Wife said that prior to separation the business was equally managed by the parties - it was equal management, an equal partnership, a “…team effort. Mr [Summerfield] took the mantle of managing director”. The Wife also said the Husband was in charge of the finance of the business both nationally and internationally. The Husband was basically exclusively responsible for “all matters financial.” This was confirmed during cross examination by Mr R who volunteered that the Husband “certainly controlled the financial side of the business.” The Wife said that her main job was to look at expenses. Then on 3 April 2006 the Wife said that the Husband had a ‘”penchant” for buying from overseas suppliers and in answer to a question I asked as to “who was running the business” prior to the Husband leaving in March 2003 the Wife said the Husband. I observe that Ms E said that a valuation conducted at 30 June 2003 incorporates the trading results of the business while under the “joint stewardship” of the Husband and the Wife.
I considered why the oral evidence of the Wife was so different from her evidence in chief and concluded that she probably realised that her earlier evidence was against her interest given the consideration by the Australian Taxation Office of the affairs of the parties and the D Group.
On behalf of the Wife evidence was given by Ms K, which, in my view, also contradicts the evidence in chief of the Wife in relation to the role of the Husband. Ms K swore affidavits on 21 April 2004 and 20 March 2005 and considering what is in these affidavits I wonder why she gave evidence. In any event, in the affidavits she gave no evidence about the role of either the Husband or the Wife. However, in cross examination she volunteered that the Husband was the Managing Director. This corroborated what the Husband said as to his role.
As I have said, the effect of the Wife’s oral evidence as to the role of the Husband is opposite to the impression the Wife sought to give in her evidence in chief. This change was probably to support the Wife’s contentions as to which party was primarily responsible for the tax evasion. Further, it corroborates what the Husband said as to the extent of his involvement in the establishment and subsequent management and operation of the business. In conclusion, where the evidence of the parties is in conflict in relation to the establishment and subsequent management and operation of the D Group I prefer the evidence of the Husband.
The Husband contended that in the first few years the Wife looked after wages and payroll records. Thereafter these tasks were undertaken by employees and the Wife’s role was limited to paying creditors. The Husband contended that the Wife went to work with him each day but she did very little work and read the paper most of the day. The Wife shared an office with the Husband and sat at a desk opposite his desk. The Husband contended that the Wife’s role was limited to opening the mail, looking after staff matters and drawing cheques to pay accounts. The Wife said that her “big job” was “keeping expenses”. Ms C also gave evidence which corroborated what the Husband said as to the duties of the Wife. Ms C said that the Wife had responsibility for writing cheques in payment of company accounts. The Wife also had responsibility to complete the BAS Statements. I accept the evidence of the Husband as to the role of the Wife.
I am satisfied that from the establishment of the business until March 2003 the Husband played a far greater role than the Wife in relation to the establishment, management and operation of the business.
The parties usually spent ten months in Australia and two months overseas at Christmas time on a combined holiday/buying trip. They also attended trade shows in Sydney, Melbourne and New Zealand. The Husband negotiated any purchases. As the Wife said the Husband had a “penchant” for buying overseas.
In 1984 the parties commenced to live in rented accommodation at B. The Wife contended it was in 1986. The Wife contended that she paid the rent of $1,700 per month which increased to $3,000 per month. Again, no evidence was given as to the source of money to pay the rent. The Wife’s version as to when the parties moved to B is probably correct given that in an affidavit the Husband swore on 2 April 1986, that was filed in previous family law proceedings, he said that at that time he and the Wife were living in the lower north shore unit.
On 24 July 1984 the Husband resigned as a director of D Pty Ltd. He did so because of the proceedings in this Court with his first wife.
In 1984 the Husband settled the Supreme Court litigation with the former directors of BMCH Pty Ltd and BMS Pty Ltd and Anors. The proceedings were settled on 7 November 1984 (Exhibit F).
The Husband contended that he then received an award of between $800,000 and $1,000,000. The terms provided for payment of $32,213 to the Husband and $797,787 to T Pty Ltd as Trustee of the Summerfield Family Trust and this is what was paid.
In 1984-1985 the Husband sold the yacht “[…]” for $59,000 and invested the funds in D Pty Ltd. The Wife admitted the Husband sold the yacht but denied he put the proceeds in the Company. There were no documents provided to corroborate what each party said.
In 1985 the Husband visited overseas suppliers of the business and was accompanied by Mr R. The Husband contended that Mr R commenced employment as a sales representative in 1985 and later became what was called the foreign buyer.
In 1985 Ms K was employed by the Company. Then in about June 1985 Ms K went to Melbourne to establish and manage the business in that city.
As seen, D Pty Ltd commenced trading in the financial year ended 30 June 1985.
In about 1986 the Wife opened a bank account at the Hong Kong and Shanghai Bank in Hong Kong. The Wife then transferred funds from Australia to the account to pay for expenses the parties incurred when they were in Hong Kong. The Wife however, gave no evidence in chief about this account.
The Wife said that by 1989 D Pty Ltd was a successful company. She described it as a very successful business.
The Husband contended that by 1989 he had received approximately $300,000 to $400,000 from the proceeds of sale of properties which were sold in consequence of the family law settlement with his first wife. He also contended that he spent approximately $300,000 to $400,000 less his legal costs of family law proceedings “in setting up the business of [D]”. There were no documents provided for the period 1 July 1984 to 30 June 1989 to corroborate the Husband’s contentions.
The Husband was appointed a director of D Pty Ltd in February 1990 and on the same day Mr R resigned as a director. The Husband’s family law proceedings had been resolved by this time.
The Wife also said that in 1990 D Pty Ltd was a “successful company”. She described it as a very successful business despite the fact it was required to constantly pay the Husband’s legal fees.
In April 1990 the Husband deposited $180,000 into a Commonwealth Bank Term Deposit as a guarantor facility for a line of credit from the Bank to D Pty Ltd. The Wife contended that this was the only financial contribution the Husband made to the D Group.
The Wife contended that in May 1990 Mr R resigned as a director of D Pty Ltd to take up a position of president of design and product development of TH Inc. This company was an importer and distributor of products in the United States. Mr R in fact resigned in February 1990.
In 1990 the D Group business commenced to occupy premises at an eastern suburb of Sydney. This move occurred due to the growth of the business and demand for more space.
In 1992 the Husband acquired the Brisbane property for $140,000. He paid a deposit of $14,000 and the balance was financed by a loan from the Commonwealth Bank. The repayments due under the mortgage were paid by D Pty Ltd and the mortgage was discharged in 2002. In fact, the mortgage loan had been repaid at an earlier time. The property is presently unencumbered and is the residence of the Husband.
The first financial year that accounts for D Pty Ltd were available was for the year ended 30 June 1993.
The Wife contended that in 1993 Mr R and two others formed a company in the United States called Z Ltd. The Wife gave extensive evidence explaining how her son’s involvement with Z Ltd opened opportunities for D Pty Ltd. They included introducing A & Co Pty Ltd as a buying agent for D Pty Ltd. Ms E said that approximately 70 per cent of the non electrical supplies of D Pty Ltd are sourced from A & Co Ltd and H Ltd.
In May 1995 accounts were opened with the Standard Chartered Bank in Hong Kong. One account was a savings account no. … and the other was a current account no. …. The Husband gave extensive evidence about the circumstances surrounding opening the accounts. The Husband contended that he opened the accounts at the suggestion of Ms L of H Ltd and A & Co Ltd. At a meeting in Hong Kong in 1995, in the presence of both parties, Ms L suggested that the D Group should over pay H Ltd and A & Co Ltd invoices by 10 per cent. She offered to then pay to a Hong Kong bank account an amount equal to 10 per cent of the value of all goods which the D Group purchased from H Ltd and A & Co Ltd. Ms L said “We do this with all our major accounts. You can then take advantage of the increase in sales value of all the business we do”. The Husband also contended that Mr R told him about the idea and that he had a similar arrangement for his business in the United States. This was denied by Mr R although he admitted that he introduced the Husband to Ms L and that he had been introduced to her “many years ago”. As well, the Wife contended that Mr R introduced A & Co Ltd as a buying agent for D Pty Ltd.

The Husband contended that he and the Wife then went to the Q Branch of Standard Chartered Bank. The Wife said “Why don’t you open the account in your name? I already have an account in my name at the Hong Kong and Shanghai Bank”. The Husband gave evidence that it was a requirement of the Hong Kong authorities that the holders of bank accounts should have a local Hong Kong address. Bank statements and correspondence from the Bank were sent to the business address of Ms L in Hong Kong and she then sent the documents to the Husband in Australia. The Husband filed the documents he received in what he described as the “Hong Kong Standard Chartered Bank file” which he kept on his desk in the office at U that he shared with the Wife. The Husband contended the Wife opened the mail everyday in the office and she handed the Standard Chartered Bank statements and correspondence to the Husband after she opened the mail. The Husband then put the documents in the file which he described as a multi levered manila type folder with a red cover, about 40mm thick. It had different sections for bank statements and correspondence. It contained all the correspondence he had with the bank in Hong Kong and all the bank statements since the accounts were opened in 1995. It also contained copies of excel spreadsheets which he produced on his computer. They listed every invoice for stock and all payments due to the D Group by H Ltd and A & Co Ltd. The payments equated to 10 per cent overpayments on the invoice price of all purchases made by the D Group from H Ltd and A & Co Ltd. The Husband contended that on a weekly basis he showed the spreadsheets to the Wife.
For a significant period the invoices from H Ltd and A & Co Ltd disclosed the costs of goods plus a commission charge of 10 per cent. This was the profit skimming scheme described by Mr S.
In further evidence in chief, the Husband contended that funds were transferred from the account in Hong Kong to the credit of an account in the name of D Pty Ltd with a bank at …. There were two accounts – one an Australian dollar account and the other a United States dollar account. As the accounts were in the name of D Pty Ltd the Husband and the Wife were the only signatories on the accounts. The funds were then used to pay expenses of D Pty Ltd including the purchase of stock.
The Wife contended that she was not in Hong Kong at the time the accounts were opened. She purported to annex to her affidavit of evidence in chief a copy of her passport. However, it was not annexed. A call was then made for the original passport and at first it was not produced and it was contended that it could not be located. Ultimately, there was put into evidence the Wife’s New Zealand passport issued in 1988 (Exhibit R) and it revealed that the Wife was not in Hong Kong in May 1995.
In her affidavit the Wife contended that she first became aware of the Hong Kong bank accounts when they were disclosed by the Husband in his Financial Statement of 7 April 2003. However, in cross examination the Wife said that she always knew the Husband had overseas bank accounts. She said “I knew that he had an account in Hong Kong”. She also regularly saw invoices from H Ltd in which the 10 per cent commission was recorded. She could not recall observing a commission on any invoice prior to that time. She could not recall when she first saw it. In her oral evidence the Wife contended that she thought that it was an appropriate payment to H Ltd for services provided by that company however, she said it did not come as a surprise, I assume, referring to the profit skim scheme. Further, she contended that the Husband explained to her that it was a commission for work done. The Wife contended that she never raised any question about this expense with the supplier. For example, she contended that she never spoke to Ms L about it. On behalf of the Wife evidence was given by Ms L. However, as it transpired Ms L was not made available for cross examination and I rejected her affidavit.
In August 1994 Ms C was employed by the Group. She was the office administrator and subsequently the Office Manager.
The parties were married in June 1995.
In 1995 the parties acquired the U property for $1,400,000. The deposit was advanced to the parties by the D Group. The balance of $1,300,000 was financed by an interest only mortgage loan from the Commonwealth Bank. The Wife contended that the Company pays rent of $7,000 to $8,000 per month dependent on interest rates. The Wife gave evidence of what she did in relation to the establishment of the U premises for the business and relocation of the business. The Wife contended the U property was acquired due to the success and growth of D Pty Ltd. I have no doubt that at this time the business was very successful and was making a lot of money.
The Wife contended that she and Ms K developed an idea involving the sale of accessories. They agreed to start a new company with a view to a brand that would be “more upmarket”. In July 1995 F Pty Ltd was registered in New South Wales. The Husband, the Wife and Ms K were appointed the directors. The original shareholders were the Husband, the Wife, Ms K and Mr Y. However, in September 1999 Mr Y transferred his share to the Husband or perhaps to the Husband and the Wife.
The Wife contended that D Pty Ltd provided the funds to set up F Pty Ltd. She contended that she very quickly came to realise the accessories were not as successful as first projected and that thereafter “we concentrated solely on upmarket [products]”.
On 28 January 1997 the Husband authorised the Wife to withdraw funds from the accounts with the Standard Chartered Bank in Hong Kong. He annexed to his affidavit copies of two authorities to sign cheques dated 28 January 1997 which he contended were signed by the Wife. The Husband usually made all of the withdrawals. In cross examination the Wife said it appeared to be her signature but she could not recall signing the document. She said it looks like “my signature”, “very much like” her signature. It was not put to the Husband in cross examination that he forged the Wife’s signature on the documents. The Wife could not recall signing the documents or ever being at the bank before May 2004. However, the Wife was in Hong Kong on 28 January 1997 (Exhibit R). I am satisfied that the Wife did sign the “Authority to Sign Cheques” (Exhibit S). Ms C gave evidence which corroborated the Husband’s contentions that the Wife was aware of the Hong Kong Bank accounts. Ms C saw the Wife in possession of statements from the Hong Kong Bank. She also overheard the Husband and the Wife talking about the accounts. I also observe that although the accounts were opened in 1995 Mr X only carried out an investigation of transactions from August 1997 onwards.
I accept that at the suggestion of perhaps Mr R, and the participation of Ms L, the Husband initiated the profit skim scheme and organised the opening of bank accounts in Hong Kong to facilitate the scheme. I also accept that the Wife was not in Hong Kong at the time when the bank accounts were opened. However, I do not accept the Wife’s contentions as to her awareness of the profit skim scheme and the bank accounts in Hong Kong. I am satisfied that she was always aware of the existence of the profit skim scheme and the overseas bank accounts and I reject her denials.
In 1997 a property in Melbourne in Victoria was purchased in the Wife’s name for $340,000. The deposit was advanced by the D Group and the balance was financed by a loan from Citibank Ltd. The Melbourne property became the Victorian office of the D Group and the Wife was paid a rental equivalent to the monthly mortgage repayments.
In May 1998 the parties moved to rented accommodation in M and the rent was $1,000 per week. The Wife contended the parties lived in this property for about seven to eight months. The Wife gave extensive evidence of what she did in relation to moving into the property and making it suitable for occupation.
In 1998 the parties purchased, in joint names, M property for $1,465,000. The Wife contended that the 10 per cent deposit of $145,000 was paid by her through the refinance of an existing Citibank loan secured over the Melbourne property to O Corporation Ltd. She contended the refinance resulted in the debt increasing from $216,000 to $328,000. In August 1998 the Wife obtained a loan from O Corporation Ltd to refinance the existing loan of $216,000 from Citibank Ltd and advance a further $112,000. The loan was guaranteed by the Husband, D Pty Ltd and F Pty Ltd. The Wife contended that she paid the shortfall in the deposit of $33,000 however, she gave no evidence identifying the source of this money. The Wife contended that the Husband paid the stamp duty of $65,244. The Wife contended that on settlement the amount due was $1,307,148.38. To pay this shortfall a loan was obtained from ING for $1,113,695. The balance of $193,435.38 was paid by D Pty Ltd. The mortgage repayments were, and still are, paid by D Pty Ltd.
The parties resided in this M property until 11 March 2003 when the Husband left the home. However, the Wife continued to reside in the property and still does.
In August 1998 a debit was made from one of the Hong Kong Bank accounts of AUD100,000 to the credit of an account in the Husband’s name. The Husband contended that the amounts were sent by telegraphic transfer to bank accounts in the name of D Pty Ltd at … and …. Thus, it was contended by the Wife that the Husband’s assertion that all funds were sent to D Pty Ltd is incorrect. The Husband however, denied that he kept the funds and contended that the amounts went to the Company.
From about 1999 many of the parties’ private and living expenses were paid directly by the D Group. As to credit cards and charge accounts the parties used an American Express Platinum Card, American Express Gold Card, American Express Business Card, Commonwealth Bank MasterCard, National Australia Bank Visa Card, Citibank Sydney Club Visa Card, David Jones charge account and Neiman Marcus charge account. These accounts were in the name of D Pty Ltd.
The Husband contended that the parties spent between $2,000 to $3,000 per week on restaurants, wines, spirits, dry cleaning, travel, hotels and clothing. Thus, the parties enjoyed a very high standard of living. The Husband also contended that the Wife spent a lot of money playing poker machines and he estimated she spent about $1,000 per week. The Husband also contended that the parties spent up to $1,000 per week on alcohol. The Wife denied what the Husband said in relation to the level of expenditure on alcohol and restaurants. The Wife also denied what the Husband said about poker machine losses and cash drawn by the parties from the D Group. She gave evidence in which she sought to demonstrate that the amount of money spent on alcohol and eating out was modest or minimal. However, on 8 August 2003 the Wife gave evidence before a Judicial Registrar that the parties would eat out at restaurants three to four times per week because they were late leaving the office of an evening. She said “we were always together”. I am satisfied that during the relationship the parties enjoyed a very high standard of living.
The Wife said that in 1999 Mr R discovered a company in China called V. The Company manufactured products that Mr R believed would sell in Australia. It was then decided to establish a company to import and sell lighting products. In September 1999 S Pty Ltd was registered in New South Wales. In September 1999 the Husband, the Wife and Ms K were appointed as Directors. They also each hold one ordinary issued share. The Wife contended that the Husband’s role in relation to this business was mainly limited to duties in the warehouse. I do not accept the Wife’s evidence as to the role of the Husband
In November 1999 the parties acquired a … Yacht for $320,000. It was named “[F]”. To pay part of the cost they obtained leasing finance from Esanda Finance Corporation Ltd. Up until separation the Husband paid the monthly instalments due under the loan agreement from his bank account with National Australia Bank into which his weekly salary of $615 from the D Group was deposited. The Husband contended that an amount of $120,000 paid as a deposit was withdrawn from the accounts in Hong Kong and this was denied by the Wife. The Husband gave further evidence that an amount of $123,000 was transferred from the accounts with the Standard Chartered Bank in Hong Kong and applied towards to the cost of purchase of the yacht. The Wife contended that the total cost was financed and no deposit was paid or equity contributed to the cost. However, evidence was given by Mr X that on 4 November 1999 an amount of $110,625.55 was transferred from the Hong Kong bank accounts to acquire the yacht. Thus what the Wife said was wrong and no satisfactory explanation was given explaining why she gave misleading evidence. In summary, I accept the evidence of the Husband as to the source of funds to acquire the yacht.
Before proceeding given what the Wife had said about the success of the Group, and amongst other matters the ability of the parties to acquire a yacht for $320,000, I will identify what is shown in the tax returns of the parties:
Wife  30/06/2000       30/06/2001       30/06/2002
$                    $                    $
·Salary  41,780.00         41,600.00        42,400.00
·Tax  (11,307.40)        (9,630.00)        (9,805.00)
Net  30,472.60         31,970.00        32,595.00
·Rent  90,564.00         90,422.00        88,534.00
·Expenses  (79,042.00)       (77,788.00)      (74,739.00)
Net Rent  11,522.00         12,634.00        13,795.00
Taxable  53,302.00         54,234.00        56,195.00
Average per week  1,025.04          1,042.96          1,080.67
Husband
·Salary  41,828.00         41,617.00        42,400.00
·Tax  (11,307.40)        (9,630.00)        (9,805.00)
Net  30,520.60         31,987.00        32,595.00
·Rent  51,491.00         51,350.00        49,461.00
·Expenses  (51,491.00)       (51,350.00)      (49,461.00)
Net rent  -  -  -
Taxable  41,828.00         41,617.00        42,400.00
Average per week  804.38             800.33             815.38
These were the only tax returns of the parties put into evidence. The parties received a modest disclosed amount of income from the business. For example, in the year ended 30 June 2002 the Husband’s sole income was $626.83 net per week and the Wife received the same amount of salary.
Ms E said that on 30 June 2002 S Pty Ltd transferred its business to D Pty Ltd and no longer trades. She contended that at the date of the sale the following assets and liabilities were transferred.
$
·Debtors  301,103
·Stock  218,019
Total  519,122
·Trade creditors   (3,000)
Net assets transferred  $516,122
Mr S said that it appears that the business activity of S Pty Ltd including stock on hand was transferred to D Pty Ltd and he had no knowledge or explanation for why this occurred. Mr S contended that as a stand alone company the closure of S Pty Ltd was detrimental to the interests of the Husband. This was correct given that the Husband was a shareholder. The parties separated in March 2003 and I have no doubt that after separation the transfer of the business activity of S Pty Ltd, including stock on hand, to D Pty Ltd was backdated to 30 June 2002.
In 2002 the Wife donated $30,000 to a school she attended. This was very generous given her disclosed income. For example this gift represented about 53 per cent of the Wife’s taxable income for the year ended 30 June 2002.
The Wife contended that in October 2002 Mr R lent $100,000 to the D Group. It has now been repaid. The Wife contended it was repaid in 2004. In September 2002 Mr R lent about $106,000 to the D Group.
The Wife contended that in October 2002 a number of documents were thrown out in a very large skip bin. The Wife contended that it included company and business records. In cross examination the Wife contended that Ms C ordered a skip to remove rubbish and the Wife approved the invoice. The Wife contended she still had the invoice. It was contended by the Wife that Ms C disposed of company records in a “skip bin”. This was denied by Ms C and I accept her evidence. It was the Wife who authorised the removal of the “rubbish”.
The Wife contended that the destruction of the records caused and had the potential to cause serious accounting problems with the Australian Taxation Office and the Companies could not answer any requisitions. The Wife did not describe or identify in anyway the missing documents. However, in further evidence in chief, after attempting to identify the missing records, the Wife contended that the missing records were not hampering the Australian Taxation Office enquiry or the running of the business. This was contrary to the suggestions put to the Husband in cross examination and also put to Ms C in cross examination by counsel for the Wife. The books and registers fall into two categories. First, those required by law to be kept. Second, those required to record satisfactorily the transactions peculiar to the operation of the Company. Another classification is those which concern the financial transactions of the Company and those which concern the share dealings, meetings and matters of a like nature. The records include the register of members, the minute book of meetings of members, the minute book of meetings of directors, the register of directors and secretaries, the register of charges and accountancy records. None of these documents were put into evidence. The Wife contended that she believes the records are retained by Storier Blackwood.
In early 2003 the yacht acquired in 1999 was gifted to Mr R for his birthday. Subsequently there were proceedings in the Supreme Court between the Husband and Mr R in relation to the ownership of the yacht.
Mr X said that in early March 2003, with the parties, Ms K and her husband, and Mr R, he travelled to Hong Kong to acquire or establish a company in Hong Kong for the purpose of this company acquiring the issued share capital of D Pty Ltd, F Pty Ltd and S Pty Ltd. A company resident in Hong Kong was acquired. The shareholders were companies registered in Hong Kong. The shareholders of the shareholder companies were the principals of the firm of accountants resident in Hong Kong introduced by Mr X. The directors were also Hong Kong residents. Mr X contended that the ultimate beneficial shareholders were the Wife and Mr R. He said that declarations of trusts were executed by the Hong Kong resident shareholders. It is to be noted that in his affidavit evidence Mr X said that in about February 2003 he travelled to Hong Kong “to assist them in the commercial benefits of operating out of Hong Kong for exporting goods worldwide”. He did however say “there were discussions about selling D into a Hong Kong based company”.
In cross examination the Wife contended she knew nothing about how the proposal was organised or that there were declarations of trust. The Wife said that the Husband was there and “pushing the buttons and whatever he said” and “I’m from the old school” and “I thought we had a companionship for life”. Ms K gave evidence and she said she knew nothing about what Mr X said in his oral evidence. It was her understanding that the idea was to assist in the commercial benefits of exporting goods worldwide. Mr R gave evidence that he understood the arrangement was to undertake what was suggested by Ms K. I understand that the proposal did not proceed. However, in the absence of explanation I have no doubt that the so called “commercial benefits” probably involved attempting to avoid Australian tax and during the hearing everyone involved was trying to distance themselves from what happened. I also observe that both Mr X and Mr R said that Mr X went to Hong Kong on “short notice” at the request of Mr R.

The parties separated on 11 March 2003.
After the parties separated the Wife changed the locks of the U building and the Husband was thereafter unable to obtain access to the business. On 11 March 2003 the Wife also froze all bank accounts.
The Husband was removed as a director of D Pty Ltd on 11 March 2003. The Wife contended that the Husband’s dismissal from the Board of D Pty Ltd was a result of his disinterest in the welfare of the Company, his lack of work ethic and his disruptive influence. I reject these contentions. Submissions were made on behalf of the Wife to support a contention that the Husband’s behaviour towards staff and so on was somehow relevant. I do not agree. The submission lacked any logical argument or conclusion. However, I accept, and it is not controversial, that the Husband ceased an active role in the business.
In March 2003 the Husband spoke to Ms L and requested that she calculate the final amount of outstanding payments due to the Companies up to 11 March 2003 and thereafter talk to the Wife about what to do with the payments in the future as he would not be in the Company office. The Husband sent an email to Ms L on 27 March 2003 about the accounts. I infer from what the Husband said in the email to Ms L that she contacted the Wife about what to do with the so called commissions.
Ms E said that Mr R returned from the United States in April 2003 and thereafter resumed an active role in the business.
In about April 2003 C Pty Ltd was retained to review the existing computer system used for the importation and wholesale distribution business.
The proceedings in this Court were commenced when an application was filed by the Husband on 7 April 2003.
On 7 April 2003 the Husband was removed as a director of F Pty Ltd and S Pty Ltd and Mr R was appointed as a director of these companies.
The Wife gave extensive evidence about the improvement in the conduct of the business since the Husband ceased to be involved. Ms E also gave evidence about changes that have occurred in the operation of the business since 30 June 2003. The Wife contended the Group is now run more efficiently. The Wife contended that the previous computer was unstable and there is now a new one to streamline the input of stock and invoicing of orders. The Wife said there are now new and efficient procedures for stock control, invoicing, debt collection and distribution of sales marketing material. The Wife contended the warehouse has now being reorganised to be more efficient. The Wife said the website has been uploaded. Mr R also gave evidence about how things have improved. Mr R contended that the Group was run more efficiently and that the departure of the Husband has resulted in a marked increase in the morale of “[D]”. Further, that the directors have implemented new and efficient procedures for stock control, invoicing, debt collection and distribution of sales marketing material. Further, the warehouse has also been reorganised to be more efficient and a website has been uploaded. Ms K gave evidence that since March 2003 the Companies have continued to trade successfully and in fact have upgraded and improved all systems to implement more accountable and best practice management. I am not sure what all of this evidence was directed to as my understanding of the evidence of the Wife is that the D Group was very successful for some time prior to March 2003 and at least since 1989. I had trouble trying to follow the relevance of a great deal of the evidence and this is an example. An inference I could draw is that the Wife contended that the business has been more successful since separation. However, interestingly this was not borne out by the valuations undertaken by the accountants.
On 7 April 2003 the Husband filed a Financial Statement that he swore on that day. In the Statement he disclosed the account with Standard Chartered Bank in Hong Kong. The account was in his sole name. The Wife said the account was opened in 1995. Further, that at the same time the Husband opened a second account with the Standard Chartered Bank in Hong Kong. The Wife contended that the monies in both accounts were obtained by the Husband by misappropriating “commissions” due to the D Group. The Wife contended that this was the first occasion she became aware of the bank accounts in Hong Kong or that there were any problems in relation to the invoices which were received from H Ltd and paid. In cross examination the Wife was shown the Husband’s Financial Statement and she said she had never seen it before. She was then shown her affidavit of 8 April 2004 and in particular paragraph 166 and then said she had seen the Financial Statement before it was shown to her in cross examination. I have already found that I reject the Wife’s evidence in relation to her knowledge of the profit skim scheme and the Hong Kong bank accounts.
In cross examination on 3 April 2006 the Wife said that it was in late March 2003, not late April or May 2003, that Ms L telephoned her. The main trading account of the Company was with the Commonwealth Bank. However, the Wife gave Ms L the identity of an account in the name of D Pty Ltd with the National Australia Bank. This account was an overdraft in reduction and had not been used for some time. On 4 April 2003 an amount of $127,912.19 was deposited to the credit of the account. The Wife then went to the Westpac Bank and opened an account in the name of D Pty Ltd. On 23 April 2004 the Wife drew a cheque for $130,000 on the account with the National Australia Bank, and deposited the money to the credit of the new account with Westpac Bank. The Wife also drew $50,000 from an account in her sole name with the National Australia Bank and deposited this money to the credit of the Westpac Bank account.
In the period May 2003 to January 2004 the Husband utilised funds in the Standard Chartered Bank account for various purposes. He used the funds to contribute to the cost of purchase of a motor vehicle, pay credit card debts, day to day living expenses, travel expenses, legal costs and the costs of renovation to the Brisbane property. In May 2003 the Husband purchased a Mercedes Benz motor vehicle for $130,677. To pay the cost he paid a deposit of $20,000 and the balance he obtained from a loan by Daimler Chrysler Services.
On 2 May 2003 the Husband acquired shares in V Pty Ltd. He is the sole director and shareholder. The Company has not commenced to trade and has not earned any income. It has no stock however, it does have a bank account with the National Australia Bank. The Husband deposited funds which he had withdrawn from the bank accounts in Hong Kong to the credit of this bank account. He also deposited amounts he received when he surrendered certain superannuation entitlements.
The Wife contended that in May 2003 a sewer pipe burst in the business premises and flooded the floor in the main office. It occurred on a weekend and was observed on the following Monday. All of the cheque butts were stored in a box on the floor. The box also contained bank statements. There were other items in the box. The Wife contended that she was collecting items required by the Husband’s solicitors. The Wife could not recall periods covered by the cheque butts but they did cover more than two years.
There is an issue about debtors and stock. On behalf of the Husband it was submitted that between 27 May 2003 and 30 June 2003 the debtors of the business decreased by about $520,000. In this period sales were completed and funds received were banked. However, the amounts banked were not recorded until the end of June 2003. The debtors however, reduced from about $1,800,000 to about $1,300,000. It was submitted that the reduction in the amount of debtors could only be because they were either written off or paid. However, in the same period the business was continuing to raise debtors by issuing accounts for stock sold. It was submitted that there is no evidence of debtors raised in this period.
Mr S received instructions on about 6 June 2003 to prepare a valuation report and on 17 June 2003 he undertook an initial inspection of some of the Companies’ records at the office of the D Group accountants. He set out documents which he contended at that time were not available for his inspection. He also gave evidence about difficulties he experienced in obtaining information and documentations from Mr J.
On 9 June 2003 Mr G, who is the Managing Director of a stocktaking company, and seven employees, did a stocktake at the U warehouse. Mr G gave evidence on behalf of the Husband. The stocktake was undertaken at the request of Mr R. In Annexure “F” to his affidavit Mr G disclosed the variance between what the Company records show the business had (Annexure “A”) with the outcome of the stocktake (Annexure “E”). In Annexure “G” to his affidavit there was identified what is disclosed in Annexure “F” as recorded in a report of the stocktaking company. There were a significant number of items missing from the Company records. However, Mr G did not find this unusual. He was also confident that his stocktake was reliable otherwise he believes he would have been told the report only recorded items where there was a variance. The report did not show what he called “matching items”.
On 20 June 2003 an application was filed on behalf of the Husband in which he sought an order for urgent maintenance. The application was later dismissed.
As seen, S Pty Ltd did not carry on business for the year ended 30 June 2003 and subsequent years.
On 23 July 2003 Mr S spoke to Mr J and said that he was asked to inspect all the Company cheque butts for the year ended 30 June 2001 to date. Mr S also requested cheque butts for prior years. Mr J said he was informed that the cheque butts were not available and that they must have been discarded in a skip bin. No cheque butts for any company for any period prior to May 2003 were provided to the Husband and/or his legal and accounting representatives notwithstanding requests for same. The Wife contended that such documents do not exist as they were thrown out after the sewerage spill in May 2003.
On 27 August 2003 Mr S swore an affidavit in which he gave further evidence of difficulties experienced in obtaining documents.
The Husband contended that in October 2003 he commenced an intimate relationship with Ms C.
On 22 October 2003 the Husband sold the Mercedes Benz C320 motor vehicle to a car dealership for $92,000. The Husband paid the shortfall between the sale price and the finance debt of $15,568.
In late 2003 and 2004 the Husband spent approximately $140,000 on improvements to the Queensland property. He was not challenged about what he said.
In the period October to December 2003 the Husband and Ms C undertook market surveys and travelled overseas. The Husband had four trips and Ms C had three trips.
On 8 March 2004 the Husband cashed in a superannuation entitlement with F Pty Ltd of $2,476.86 and on 12 March 2004 cashed in a superannuation entitlement with D Pty Ltd of $18,519.24.
Mr S swore an affidavit on 22 March 2004 and amongst other things he dealt with the issue of profit skimming. He also identified information and documents which he contended were not available and included cheque payment butts and credit card statements.
By March 2004, with the exception of about HK$3,000, the Husband had expended the money in the two bank accounts in Hong Kong. The amount spent between March 2003 and March 2004 was about $300,000.
In relation to the funds in the Hong Kong bank accounts Mr X swore two affidavits, the second on 3 April 2006 and a great deal of what is in this affidavit is inadmissible. However, he prepared a report in relation to the accounts. He attached to his affidavit a copy of the report together with what he described as a detailed spreadsheet of the work that supported his conclusions. In his report, which was addressed to the Australian Taxation Office, he summarised the results of his investigations and split the income paid into and earned by the accounts over financial years ending 30 June in each year covered by the analysis. His analysis revealed the following total commissions received and interest earned:
$
·30 June 1998  126,965.47
·30 June 1999  9,389.02
·30 June 2000  175,346.96
·30 June 2001  149,301.53
·30 June 2002  144,697.48
·30 June 2003  211,345.24
·30 June 2004             4.37
Total  $817,050.07
The total of commissions received was $808,805.82 and the total of interest earned was $8,244.25.
Mr X also did an analysis of the debits to the accounts which he summarised as follows:
$
·30 June 1998 bank charges  10.83
·30 June 1999 husband  134,217.21
·30 June 2000 husband  1,002.63
·30 June 2000 boat  110,625.55
·30 June 2001 bank charges  12.27
·30 June 2002 husband  666.95
·30 June 2002 D Pty Ltd  268,070.73
·30 June 2003 husband  108,720.09
·30 June 2004 husband  164,453.25
Mr X contended that a total of $788,465.91 was debited which comprised $709.50 for bank charges, $409,060.13 to the Husband and $378,696.28 to D Pty Ltd and for the yacht that was gifted to Mr R. Mr X did not include the amount of $127,962.19 that was sent by Ms L to the Wife in March 2003. However, this amount was included in the relevant accounts for the financial year ended 30 June 2003.
The Wife swore her affidavit of evidence in chief on 8 April 2004. In my opinion, a great deal of what is in this affidavit was inadmissible. However, as I have already made clear the Wife was at pains to say that the Husband had no involvement with the business and very little, if any, involvement with the establishment, management and operation of the business. The investigation by the Australian Taxation Office had not commenced.
In June 2004 Ms C acquired a Mercedes Benz motor vehicle for $188,000. She leased the vehicle and the lease is guaranteed by the Husband. She meets the repayments from money she borrowed in July 2004. Ms C acquired the vehicle at the suggestion of the Husband. Ms C gave evidence that she is hopeful that the Husband will ultimately repay her what she has paid in relation to the vehicle.
In July 2004 Ms C obtained a mortgage loan on the security of her home at P. She borrowed $350,000 and gave $209,000 to the Husband to enable him to pay legal costs and also credit card debts. Ms C used the balance of the loan to meet expenses she pays on behalf of the Husband and she paid in excess of $70,000. Ms C expects that she will be repaid by the Husband. She has also used the amount borrowed to pay motor vehicle lease commitments.
Ms E swore an affidavit on 26 July 2004. In this affidavit Ms E provided her first valuation. However, she also raised a number of issues which, amongst other things, related to the gross profit margin and the reported net profit and certain expenses of the business. Ms E concluded that she was concerned that the reported results may not reflect the true trading results of the Group between 2001 and 2003. Then when she was considering the maintainable earnings she dealt with other matters of concern. She dealt with the value of the closing stock and the reduction by $1,000,000 of the closing stock value as at 30 June 2003. Ms E said that she was instructed that the Wife relied upon the Husband and Mr J to maintain the accounting records and prepare the financial statements and income tax returns for the Group. However, the Wife gave no evidence about this in her affidavit of April 2004.
Ms E and Mr S conferred and prepared a joint statement on 10 August 2004 (Exhibit A) in which they identified the areas of agreement and the areas of disagreement. Ms E valued the business at $2,841,000 and Mr S valued the business at $4,983,741 (low) and $5,339,723 (high). Consideration of the statement reveals that the accountants used different financial statements. The main area of disagreement related to the maintainable earnings. Mr S used a post interest and tax amount of $1,423,926 and Ms E used an earnings before tax and interest of $491,000. Mr S said that there has to be an adjustment against trading profits for directors’ private drawings and an understatement of stock as at 30 June 2003.
On 24 September 2004 a letter was written to the Australian Taxation Office making a voluntary disclosure about the possible understatement of taxable income of the D Group. This is understandable given the evidence by that time.
On 4 November 2004 Ms E swore an affidavit in which she gave evidence as to the potential taxation liabilities, penalties and interest to which the Companies may be exposed.
On 8 November 2004 I made an order that the Wife do all acts and things necessary to enable the financial statements and income tax returns of the Companies for the financial year ended 30 June 2004 to be completed by 31 January 2005 and a copy of such documents provided to the Husband and his representatives. I gather that this did not happen by the specified date.
On 17 February 2005 Mr S swore a further affidavit in which he gave evidence about the write off of stock, a discrepancy between the amount of gross sales for 30 June 2003 disclosed in BAS Statements and what was recorded in the financial statements and discrepancies in trade debtor figures. Mr S concluded that generally there appears to be a trend in the Companies’ financial statements prepared prior to 30 June 2003 of an understatement of asset values when compared with the other financial records of the Companies.
On 16 March 2005 Mr S swore a further affidavit to which he attached a report dated 16 March 2005 in which he dealt with discrepancies and missing financial information to do with the Companies.
On 23 March 2005 the Husband swore a Financial Statement and he disclosed no income and no expenses. However, he said that Ms C pays on his behalf living expenses, a mortgage, rates, levies, home insurance and MasterCard. This was corroborated by Ms C.
On 24 March 2005 an order was made by a Judicial Registrar that the Wife pay $250,000 to the Husband by way of interim costs.
In April 2005 orders and declarations were made in the Supreme Court in relation to the yacht “[F]”. It was found that the yacht was given by the parties to Mr R as a gift. An order was made that the Husband pay costs and these have been assessed at $72,547.56. The yacht is now called “[B]”.
On 27 April 2005 Mr S swore a further affidavit in which he gave evidence in relation to what Mr J said in an affidavit of 21 April 2005 and the financial statements for 30 June 2004.
In about May/June 2005 the Husband leased the Queensland property for $400 per week. He retains the use and benefit of a bedroom and bathroom. The rent will increase to $500 per week if the Husband ceases to have the use and occupancy of part of the property.
In July 2005 Mr R and the husband of Ms K purchased a commercial property at W in Victoria. Ms K said that this was because the business needed larger showroom space to accommodate expansion and the increase in larger products. Ms K gave evidence that D Pty Ltd and F Pty Ltd occupy W rent free. She did not corroborate the Wife’s contention that the Companies may be evicted because they are not paying rent.
On 15 July 2005 the Wife swore a Financial Statement and she disclosed a weekly income of $6,927 being:
$
·Salary  1,980
·Rent  2,535
·Mortgage  2,412
She disclosed personal expenditure of $5,979 per week which comprised:
$
·Tax  646
·Superannuation  99
·ING Mortgage  2,412
·Rates and levies   230
·Mortgages, ANZ and CBA  2,535
·Insurance   7
·Credit cards   50
The Wife therefore contended that she pays $5,177 per week in rates and mortgage repayments. The Wife gave no evidence of her living expenses including food, clothing and so on. Regretfully she was not required to complete Part N of the Financial Statement as there are no proceedings for spousal maintenance.

I am satisfied that during the relationship the Husband made a greater contribution to the establishment, management and operation of the business of the D Group. I reject the contentions that he made a “negative contribution” in the sense that he engaged in conduct that adversely affected the Company. This refers, amongst other things, to the relationship with Ms C. As to the effect of the tax fraud I am satisfied that the Wife knew about what was happening and directly and indirectly gained benefit from it.
I accept that since the parties separated the Wife has made a greater contribution to management and operation of the business of the D Group. However, she has had the benefit of the D Group and also occupation of the matrimonial home.
I accept that during the relationship the Wife made a greater contribution to domestic tasks.

Conclusion - Contributions

In all the circumstances, I am of the view, that the contribution based entitlements of each party, expressed as a percentage of the net assets, should be assessed as to 50 per cent to the Wife and 50 per cent to the Husband.

Other Factors

In relation to the matters in s 79(4)(d), (e), (f) and (g) on behalf of the Wife it was submitted that in the event that I found that the contribution based entitlements of the parties, expressed as a percentage of the net assets, should be assessed as to 55 per cent to the Wife and 45 per cent to the Husband then there should be a further adjustment in favour of the Wife of 5 per cent of the net assets to her contribution based entitlement because of the financial circumstances of the relationship of the Husband with Ms C. However, in the event that I found that the contribution based entitlements, expressed a percentage of the net assets of the parties, were 60 per cent to the Wife and 40 per cent to the Husband then there should be no adjustment in favour of either party to reflect the other factors.
The Husband is 65 years of age and the Wife is aged 70 years.
The Wife is in good health. The Husband has had health problems.
Given that the Wife will have the benefit of the D Group she has a greater opportunity for employment and a greater income. However, I take into account that she is 70 years of age and this capacity is finite.
So far as the Husband is concerned he has some capacity for gainful employment. However, this is not a matter to which I attach any significant weight given his age, state of health, and that, in my opinion, he probably has a very limited capacity for gainful employment except if he were to operate his own business.
As a result of my findings as to the contribution based entitlements each party has an entitlement to one half of the ascertained assets.
I also take into account the financial circumstances of the Husband’s cohabitation with Ms C. She has, since the parties separated, given significant financial assistance to the Husband.
There are then two further important matters that I have to consider. First, my finding in relation to the unquantified goodwill value of the D Group of Companies. Next, my finding as to the Wife’s failure to make a full and frank disclosure in relation to debtors raised in the period May/June 2003. These are matters to which, in all the circumstances, I am satisfied significant weight should be given. Obviously, for reasons I have already expressed as to the value of the shares in the D Group of Companies, I believe that the value contended for by Mr S was far too high and that the value contended for by Ms E was too low. In so far as it could be said that there was a possible range then, in my view, it would be towards a value less than the mean between the two valuations and probably closer to the value propounded by Ms E than the value propounded by Mr S. In relation to the debtors I am unable to quantify the amount. However, I do not accept that it was as much as $500,000.
I am satisfied that the orders I propose to make will have no effect on the earning capacity of either party.

Conclusion – Other Factors

In all the circumstances, I am of the view, that there should be an adjustment of 2.5 per cent or approximately $141,000 of the net assets of the parties to the contribution based entitlement of the Husband. This is mainly to reflect my findings in relation to the unquantified goodwill value of the shares in the D Group and also the unexplained debtors. It represents a disparity of entitlement of $281,957 and this adequately reflects the weight I have given to these matters.

Effect of Orders

The Wife will receive an entitlement of 47.50 per cent or $2,678,587 which will comprise the following:-
Assets  $
·U property   2,700,000
·Melbourne property (sold)   900,000
·Funds NAB a/c (…)   3,129
·Household contents   30,450
·Jewellery   10,000
·Commonwealth Life Superannuation Master Trust   18,000
·Shareholding - D Pty Ltd   868,359
·Shareholding of husband - F Pty Ltd  18,213
·Shareholding - F Pty Ltd   18,213
·Shareholding of husband - S Pty Ltd   8,060
·Shareholding - S Pty Ltd   8,060
·Credit loan accounts of husband, D Group   259,318
·Annual/long service leave entitlements   86,377
·Funds at Commonwealth Bank (w)         2,006
Total4,930,185
Liabilities
·Mortgage – U property - CBA   1,300,000
·Mortgage – Melbourne property – Orix-discharged   515,000
·Loan account, D Group   42,857
·Payment to Husband  393,741
Total(2,251,598)
Balance$2,678,587
The Husband will receive an entitlement of 52.50 per cent or $2,960,544 which will comprise the following:-
Assets  $
·M property   3,100,000
·Brisbane property   685,000
·Annual/long service leave entitlements   40,553
·Funds at Bank   550
·Shares Striker   1,100
·Monies expended from Hong Kong bank accounts   172,600
·Partial property settlement   250,000
·Payment by wife  393,741
Total4,643,544
Liabilities
·Mortgage – M property - ING   769,000
·Australian Taxation Office      914,000
1,683,000
Balance$2,960,544
Now as with just about every aspect of this case there are some issues. Subsequent to 14 July 2006 neither party sought to make any submissions in relation to the order sought by the other. Thus on one view the parties have had the opportunity to make submissions.
The Husband sought that the parties do all acts and things as necessary to divide between themselves the contents, paintings and furniture in their respective possession and in the absence of agreement the Wife prepare two lists of contents and paintings, the combination of which identifies all of the possessions, paintings and furniture of the parties. The Wife would then provide the Husband with both lists and the Husband would immediately thereafter select one list and the property contained therein would thereafter be regarded as his assets. The parties would then make joint arrangements for the collection of those items forming part of this order. I am not going to do this. There were no submissions.
The Husband sought an order that the Wife cause the D Group of Companies to pay him in lieu of salary an amount equivalent to the salary that the Wife received from the D Group from 11 March 2003 to the date of the orders. No submissions were made in relation to this order and I am not going to make it. In any event, I have taken into account the benefits which the Wife received in consequence of her remaining with the D Group of Companies and also having occupation of the former matrimonial home at M.
I am going to make an order, as sought by the Husband, that he receive the property at M. The transfer by the Wife of her interest in this property shall be subject to the mortgage which the Husband will have to thereafter bear sole responsibility for. The Wife cannot complain because she was seeking that the property be sold. The equity in the home is $2,331,000.
The Husband sought orders in relation to the parties’ responsibility for payment of income tax penalties and interest (par 12 and par 14). I do not understand these orders and thus, I am not going to make them. I am going to make an order in relation to capital gains tax assessed as a result of sale of the Wife’s property in Victoria. I am also going to make orders that I believe will deal with the consequence of the objection by the Husband against the assessment that he pay tax of $914,000. I will also attempt to deal with the accruing interest. There are three possible outcomes. First, that the Husband’s objection is not successful in which event he will be liable to pay the amount of $914,000, as this is reflected in the net assets and the entitlements of each party, and the Wife will have to pay to the Husband an amount equal to one half of the interest which has accrued on this tax indebtedness to the date of the ultimate discharge of the liability. In other words, the parties shall be jointly liable for and pay an equal one-half share of all interest accruing on the amount of $914,000 assessed against the Husband. The second scenario is that the Husband’s objection is successful and the amount of $914,000 and interest accruing is reduced to an amount less than $914,000. In that event the Husband would have to pay to the Wife a sum equal to one half of the amount which represents the difference between the total current indebtedness namely, $914,000 and the ultimate amount which has to be paid on the basis that this latter amount is less than the former amount. The third scenario is that as a consequence of the second scenario coming to pass the D Group of Companies are reassessed by the Australian Tax Office and required to pay further tax in consequence of the D Group having to pay tax in respect of the income which is currently the subject of the assessment of $914,000. In that event the Husband would be required to pay to the D Group of Companies an amount equal to one half of the increased income tax including penalties and interest assessed against the D Group in consequence of the amended assessments for the financial years ended 30 June 1998 to 30 June 2003 inclusive.
As seen, in the Minute I received on 14 July 2006 on behalf of the Wife it was stated that counsel for the Wife was unaware at the time when submissions were made on 3 July 2006, that in accordance with orders made by a Judicial Registrar on 16 March 2006, an amount of $72,547 was paid to Mr R from the net proceeds of sale of the Melbourne property in satisfaction of the Husband’s liability. The order sought by the Wife was served on the Husband and no attempt was made to seek to have the matter listed before me. Thus I will assume that what was said was correct and accepted by the Husband and I will order that the Husband pay $72,547 to the Wife.
In all the circumstances, having regard to all relevant statutory considerations, I am of the opinion that the outcomes identified above are just and equitable.
I note that on 28 June 2006 the Husband gave an undertaking to pay to National Transcription Services Pty Ltd the cost of providing his solicitors with a copy of the transcript of the hearing before me on 16, 17, 19 and 20 August 2005 and 3, 4, 5, 6, 7 and 10 April 2006 out of his ultimate entitlement. He will have to comply with this undertaking and in the order I will note that the Husband will comply with this undertaking by a specified date.
I will give the parties and the Australian Taxation Office liberty to apply within 14 days of the date of delivery of this judgment, and the making of a final order, with respect to whether or not the Order I make accurately reflects the findings I have made and any other machinery aspects of the Order.

Orders

By 4.00 pm on 16 January 2007 the Wife do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Husband all of her right, title and interest in the property situate at and known as M property in the State of New South Wales being all of the land contained in Folio Identifier … subject to the mortgage to ING secured on the title.
By 4.00 pm on 16 January 2007 the Wife do all acts and things and execute all deeds, documents, instruments and writings necessary to cause to be paid to the Husband all annual leave and long serve leave entitlements to which the Husband is presently entitled from D Pty Ltd, F Pty Ltd and/or S Pty Ltd such entitlements being approximately $40,553.
By 4.00 pm on 16 January 2007 the Wife pay to the Husband, by payment to the trust account of his solicitors, the sum of $393,741.
By 4.00 pm on 16 January 2007 the Wife do all acts and things and execute all deeds, documents, instruments and writings and pay all moneys necessary to discharge the parties’ joint indebtedness to the Commonwealth Bank of Australia secured over the property situate at and known as U property in the State of New South Wales being all of the land contained in Folio Identifier ….
By 4.00 pm on 16 January 2007 the Wife do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Husband all of her right, title and interest in the Striker shares.
Contemporaneously with the Wife complying with the provisions of pars 1, 2, 3, 4 and 5 above, the Husband do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Wife all of the Husband’s shareholding in F Pty Ltd and S Pty Ltd, and otherwise assign to the Wife any other interest the Husband might have in the D Group of companies including D Pty Ltd apart from annual and long service leave entitlements referred to in para 2 hereof.
Contemporaneously with the Wife complying with the provisions of pars 1, 2, 3, 4 and 5 above, the Husband do all acts and things and execute all deeds, documents, instruments and writings necessary to transfer to the Wife all of the Husband’s right, title and interest in the property situate at and known as U property, subject to the mortgage secured on the title to the Commonwealth Bank of Australia.
Contemporaneously with the Wife complying with the provisions of pars 1, 2, 3, 4 and 5 above, the Husband do all acts and things and execute all deeds, documents, instruments and writings necessary to assign to the Wife the credit loan account(s) of the Husband in D Pty Ltd, F Pty Ltd and/or S Pty Ltd being the sum of $259,318.
By 4.00 pm on 16 January 2007 the Husband pay direct to the Wife the sum of $72,547.
It be noted that the amount referred to in par 9 hereof may be credited against the amount in par 3 hereof.
The Wife do all acts and things and execute all deeds, documents, instruments and writings and pay all moneys necessary to indemnify and keep indemnified the Husband in relation to all claims, actions, suits or demands that may be made against the Husband in relation to or arising out of any loan account which might be standing to the Husband’s debit in D Pty Ltd, F Pty Ltd and/or S Pty Ltd.
The Wife do all acts and things and execute all deeds, documents, instruments and writings and pay all moneys necessary to indemnify and keep indemnified the Husband in relation to all claims, actions, suits or demands that may be made against the Husband in relation to or arising out of his having been a director, shareholder and or employee of D Pty Ltd, F Pty Ltd and or S Pty Ltd.
Upon compliance by the Wife with pars 1, 2, 3, 4 and 5 above the Husband do all acts and things and execute all deeds, documents, instruments and writings and pay all moneys necessary to indemnify and keep indemnified the Wife in relation to all claims, actions, suits or demands that may be made against the Wife in relation to or arising out of the indebtedness to ING secured over the property situate at and known as M property.
The Wife be declared the sole legal and beneficial owner of the proceeds of sale of the property situate at and known as …, Melbourne in the State of Victoria being all of the land contained in Certificate of Title Volume … Folio … subject to the Wife discharging all existing mortgages over the Melbourne property in the sum of approximately $515,000.
The Wife do all acts and things and execute all deeds, documents, instruments and writings necessary to diligently lodge her personal income tax return for the year ended 30 June 2006 and to obtain from the Australian Tax Office an assessment of her liability for tax for the year ended 30 June 2006 and forthwith upon receipt of the assessment provide to the Husband a copy of the assessment together with a copy of the tax return and also a calculation certified by her accountant as to the amount of the assessable tax that was referable to the inclusion in the Wife’s assessable income of the taxable capital gain made from the sale of the Melbourne property.
Within 14 days of receipt by the Husband from the Wife of the documents in par 15 hereof the Husband pay direct to the Wife an amount equal to one half of that portion of the assessable tax of the Wife for the year ended 30 June 2006 that represents the capital gains tax only in relation to the taxable capital gain from the sale of the Melbourne property.
The Husband be declared the sole legal and beneficial owner of the Brisbane property in the State of Queensland.
In respect of the amount of $914,000 assessed against the Husband by the Australian Taxation Office:
18.1In the event that the Husband’s objection to the Australian Taxation Office against the said assessment for $914,000 is not successful then the Husband and the Wife be jointly liable for and each pay an amount equal to one half of all penalties and interest assessed by the Australian Taxation Office in consequence of the amount of $914,000 not being paid by the due date.
18.2In the event that the Husband’s objection to the Australian Taxation Office against the said assessment for $914,000 is successful and amended assessments are issued against the Husband for income tax, penalties and interest assessed and the total amount of such assessments including penalties and interest is less than $914,000 then the Husband pay to the Wife an amount equal to one half of the difference between $914,000 and the total amended assessments assuming that the quantum of the amended assessments is less than $914,000.
18.3In the event that the Husband’s objection to the Australian Taxation Office against the said assessment for $914,000 is successful and in consequence amended assessments are then issued by the Australian Taxation Office against D Pty Ltd , F Pty Ltd and/or S Pty Ltd for the financial years ended 30 June 1998 to 30 June 2003 inclusive or any one year in that period by reason of the inclusion in the assessable income against D Pty Ltd, F Pty Ltd and/or S Pty Ltd of income that was previously included in the assessable income of the Husband then the Husband pay to each of the said companies one half of the additional amount which is assessed against each of the said companies by reason of the amended assessment.
The Husband do all acts and things and execute all deeds, documents, instruments and writings necessary to diligently and expeditiously prosecute with the Australian Taxation Office the objection identified in par 18 hereof.
Otherwise than provided for in this Order each of the Husband and the Wife be declared the sole legal and beneficial owner of all other property including superannuation interests in his/her possession, control or ownership as at the date of this Order.
Pending the discharge of the parties’ liabilities to the Australian Taxation Office identified in the affidavit of Mr T, who is an employee of the Australian Taxation Office, sworn on 31 March 2006 the Husband and the Wife each be restrained from encumbering by mortgage, charge or otherwise or assigning, transferring or disposing of or in any way dealing with their assets except for the express purpose of complying with this Order and discharging their respective liabilities to the Australian Taxation Office.

Subject to par 18.3 hereof the Wife do all acts and things and execute all deeds, documents, instruments and writings and pay all moneys necessary to indemnify and keep indemnified the Husband in relation to all claims, actions, suits or demands that may be made against the Husband in relation to or arising out of any claim, action, suit or demand that may be made by any person or entity including the Commissioner of Taxation against D Pty Ltd, F Pty Ltd and/or S Pty Ltd.
Subject to the terms of this Order as between the parties, the Husband and the Wife each be solely responsible for the payment of all liabilities, which they have personally incurred or which stand in their sole name.
Save as this Order provides to the contrary the party receiving property be responsible for registration fees, legal costs and disbursements in relation to effecting the transfer of any property pursuant to the terms of this Order.
Liberty be granted to either party and the Australian Taxation Office to apply within 14 days of the date of this Order for the purpose of submissions as to whether or not this Order reflects the findings in the judgment delivered on the day of this Order and any other machinery or implementation aspects of the Order.
Within seven days of the date of this Order the solicitors for the Husband serve a sealed copy of this Order on the Commissioner of Taxation.
Upon compliance by the Husband with pars 6 and 7 hereof the Wife forthwith vacate the property situate at and known as M property and thereafter the Husband be entitled to exclusive use and occupation of the said property.
In the event that the Wife fails to pay to the Husband the amount in par 3 hereof by the due date then thereafter the Wife also pay to the Husband interest on the said amount in accordance with the Family Law Rules.
Contemporaneously with compliance by the Wife with par 3 hereof the Husband forthwith comply with the undertaking he gave to this Court on 28 June 2006 to pay to National Transcription Services Pty Ltd the cost of providing his solicitors with a copy of the transcript of the hearing before me on 16, 17, 19 and 20 August 2005 and 3, 4, 5, 6, 7 and 10 April 2006.

[2006] FamCA 1238

23 November 2006

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