Swarb and Swarb

[2013] FamCA 404

FAMILY COURT OF AUSTRALIA

SWARB & SWARB [2013] FamCA 404

FAMILY LAW ─ PROPERTY SETTLEMENT ─ Valuation ─ Contentious issue of fact in the proceedings concerned the extent of the husband’s beneficial ownership of real estate in a foreign country ─ Where the difference of opinion between the valuers was of extraordinary ambit (approximately 500 per cent) with respect to the value of the real estate in a foreign country ─ Where although both valuers sought to explain how the system actually works in the foreign country, the Court was less than clear on how valuers can readily have access to reliable evidence of the true sale prices of potentially comparable sales ─ Where the Court was not persuaded on the balance of probabilities that either valuation was correct ─ Where the Court was persuaded that the figure asserted by the wife’s valuer was probably closer to the real value of the husband’s interest in real estate in a foreign country than was the figure asserted by the husband’s valuer and thus preferred the valuation of the wife’s valuer to that of the husband

FAMILY LAW ─ PROPERTY SETTLEMENT ─ Where the wife abandoned her application for orders with respect to foreign lands however any such lands in which the husband had an interest remained relevant to determining a just and equitable apportionment of the only significant asset within the jurisdiction of the Court, the parties’ jointly owned former matrimonial home ─ Where the former matrimonial home had an agreed value and was unencumbered ─ Where on balance, to fail to recognise that the wife has had the sole use and enjoyment of the major asset of the marriage for a period of eight years, when that property has been unencumbered, and the husband has been living in rented accommodation would not be just or equitable ─ Where conversely, the husband’s lack of candour in relation to financial matters, and his ability to access, or realise his substantial interest in real estate in a foreign country since separation required recognition ─ Where the Court concluded that the wife should be granted the first option to purchase the husband’s interest in the former matrimonial property ─ Where given their ages, similar absences of earning capacity, and the quantum and nature of the parties’ property, the Court was persuaded that the requirements of s 79(2) were satisfied

Family Law Act 1975 (Cth) ss 75(2), 79

Black & Kellner (1992) FLC 92-287
Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980) 146 CLR 336
Kessey & Kessey (1994) FLC 92-495
Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705
Manolis & Manolis (No.2) [2011] FamCAFC 105
Oriolo & Oriolo (1985) FLC 91-653
Paino v Paino (2008) 40 Fam LR 96; [2008] NSWCA 276
Stanford v Stanford [2012] HCA 52
Weir & Weir (1993) FLC 92-338
Williams & Williams (1985) FLC 91-628

APPLICANT: Mr Swarb

RESPONDENT: Ms Swarb

FILE NUMBER: PAF 1593 of 2005

DATE DELIVERED: 3 May 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Parramatta and Sydney

JUDGMENT OF: Coleman J

HEARING DATE:

22, 23 & 24 March 2011

12 April 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jackson

SOLICITOR FOR THE APPLICANT: Lamrocks Solicitors

COUNSEL FOR THE RESPONDENT: Mr Campton and Mr Givney

SOLICITOR FOR THE RESPONDENT: Kazi Portolesi Lawyers

Orders

1. That within 90 days of the date of these orders the wife pay to the husband a sum of $174,297 whereupon the husband shall execute all deeds, documents, instruments and writings and do all things necessary to cause to be transferred to the wife the whole of his right title and interest in the property known as and situate at B Street, Suburb E, New South Wales.

2. That in the event of the wife failing or neglecting to pay to the husband the sum provided for by order 1 hereof within the time therein provided, the husband be entitled, by tendering payment in the sum of $315,703 within 60 days thereafter, to acquire the interest of the wife in the said property.

3. In the event of neither the husband nor the wife acquiring the interest of the other pursuant to these orders, the parties shall jointly do all acts and things to execute all deeds, documents, instruments and writings necessary to cause the said property to be sold and the proceeds of sale after payment out of agent’s commission and selling expenses to be divided in shares of 35.57 per cent to the husband and 64.43 per cent to the wife.

4. That the parties otherwise retain all property (real or personal) possessed by either of them.

5. That the parties do mutually indemnify each other as to one half of any liability which the parties or either of them is held by a Court of competent jurisdiction to have incurred to the parties’ son (Mr M) prior to the separation of the parties in March 2005.

6. That costs be reserved.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Swarb & Swarb has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA AND SYDNEY

FILE NUMBER: PAF 1593 of 2005

Mr Swarb

Applicant

And

Ms Swarb

Respondent

REASONS FOR JUDGMENT

introduction  

1. The proceedings before the Court relate to settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”). Mr Swarb (“the husband”) seeks the transfer of the parties’ jointly owned former matrimonial home at B Street, Suburb E (“Suburb E”) to him in exchange for a payment to the wife of $225,000.

2. Ms Swarb (“the wife”) opposes the granting of relief in the terms sought by the husband and seeks in lieu thereof orders that the whole of the title to Suburb E be vested in her and that the husband pay her an additional $500,000. In order to ensure that the $500,000 is paid to her, the wife seeks orders that would facilitate the sale of properties in which she asserts that the husband has an interest in Lebanon. Various other procedural orders are sought by the wife.

3. As the record of the proceedings would confirm, on 12 May 2009 the husband filed an Amended Initiating Application, which was heard before Registrar Tran on 10 June 2009, by which Mr M (“the son”) was joined in the proceedings. The son thereupon sought orders for equitable relief against the parties, inferentially pursuant to the accrued jurisdiction of the Court. The son having withdrawn from the proceedings, with the consent of both parties, on the second day of the trial, the entitlement, if any, of the son as against the parties became moot.

4. To the extent that the wife sought, in effect, to continue to agitate the rights of the son, the Court’s rulings with respect to the affidavit evidence of the son, and, in consequence, paragraphs of passages in affidavits of the husband and wife being struck out, any claim by the son against either or both of his parents will be a matter for another Court at another time in the event of the son commencing proceedings in that court.

5. If agitated in another Court, there is little doubt that, to the extent that the son may have established an entitlement as against the parents until the date of the parties’ separation, that entitlement would have been borne by them equally. The issue having been agitated with Counsel for the parties, it is appropriate to make an order in this Court that the husband and wife mutually indemnify each other as to one half of any entitlement against them established by the son with respect to the equitable claim raised by him in these proceedings, or any judgment or award in his favour as a consequence of such entitlement, judgment or award.

6. So that there can be no doubt about the matter, the proposed indemnity relates only to any claim by the son arising out of or in relation to the alleged provision of funds by the son to the parents jointly between 2001 and the time the parties separated. It does not extend to any monies which the wife may owe the son pursuant to agreements made between them after the parties separated, the wife asserting that she is indebted to the son in the sum $143,868 by virtue of such post separation advances.

7. The issues for trial have ultimately been few in number and, with one significant exception, of comparative simplicity. Regrettably, the husband’s conduct throughout the proceedings, through misdisclosure, non-disclosure and/or refusal to admit facts which he clearly should have admitted, has resulted in the wife incurring far greater legal expenses than she should have. Those matters potentially have dual relevance. They are obviously relevant to the assertion of Counsel for the wife that the Court find that the husband’s conduct enlivens “principles” emerging from cases such as Oriolo & Oriolo (1985) FLC 91-653, Black & Kellner (1992) FLC 92-287 and Weir & Weir (1993) FLC 92-338. The second, which is more appropriately dealt with after judgment in the substantive proceedings is delivered, relates to costs.

8. The wife’s application for orders with respect to foreign lands has been abandoned, sensibly in the Court’s view. Any such lands in which the husband has an interest however remain potentially relevant to determining a just and equitable apportionment of the only significant asset within the jurisdiction of this Court, the parties’ jointly owned former matrimonial home, Suburb E. To what extent such apportionment should be increased in the wife’s favour by virtue of the husband’s foreign land interest depends upon the Court’s findings as to the beneficial ownership and value of those interests, and the wife’s contributions to their acquisition, conservation and improvement.

9. The wife seeks the whole of the equity in the Suburb E property. The husband seeks that the equity be divided as to 57 per cent to the husband and 43 per cent to the wife at a time when the husband asserted that the value of Suburb E was $520,000. In final submissions, the husband’s Counsel confirmed that the husband sought to acquire the wife’s interest in Suburb E by paying to her $225,000 based upon the agreed value of the property of $490,000. Such a division approximates a 54 per cent share to the husband and 46 per cent share to the wife. On either basis, the apportionment sought by the husband was predicated on his interest in property in Lebanon being excluded from the asset pool for the purpose of calculating the parties’ entitlements. As both parties wish to retain the property in specie, and there are no dependent children of the marriage, the fate of Suburb E also requires consideration.

credit

1. The issue of credit assumes significance in the proceedings, particularly with respect to the evidence of the husband and his sister, both of whom were     cross-examined in relation to their affidavit evidence.

2. With respect to her, the evidence of the wife, to the extent that it is in conflict with that of the husband, does not ultimately impact upon the probabilities with respect to the major contentious issues of fact in the proceedings. The major contentious issues of fact in the proceedings have been the extent of the husband’s beneficial ownership of real estate in Lebanon, and the extent to which certain of that property was acquired as a result of direct or indirect contributions by the husband and/or the wife. The evidence of the husband’s sister is relevant to the former issue but not to the latter.

3. The husband’s evidence generally is also relevant in relation to the extent and veracity of his financial disclosures throughout the proceedings. The husband’s inconsistent sworn statements as to the extent of his interest in property in Lebanon, referred to throughout the evidence as Property C, leave him open to an adverse credit finding. So do his repeated sworn assertions of what he clearly knew was an understatement of his interest in that property, and his refusal to admit the true extent of his interest. No credible explanation for the husband’s failure to truthfully and accurately disclose his interest in Property C has ever been advanced.

4. The husband’s evidence in relation to a number of financial matters, albeit none in isolation is of great significance, necessarily creates “suspicion” as to the reliability of his evidence wherever money is concerned.

5. On the other hand, the marriage produced six children, all of whom undertook tertiary education. Until 1987 the husband was the sole breadwinner for the family. There is no clear evidence as to the extent of his earnings whilst employed by a government agency, but the evidence, confirmed by admissions made by the husband, suggests that his earnings were modest whilst in that employment.

6. From 1991 the husband was on a disability pension. From 1993 the wife was on a disability pension. Until perhaps 2005, or possibly even later if one does not accept the husband’s evidence, the husband also derived, or may have derived, modest income from casual work.

7. Apart from one “windfall”, being a damages/workers compensation settlement received by the husband well prior to separation, the parties did not receive any significant capital or cash injections during their cohabitation.

8. The scope for the husband to have accumulated significant funds in undisclosed repositories, or to have repatriated significant sums to his mother or uncle in Lebanon prior to their deaths, must have been quite limited, given that there is no suggestion that the parties managed to support themselves and their children other than in reliance upon what must have been a modest availability of funds. Significantly, save to the extent to which reference will shortly be made, there is no suggestion of any wastage or “leakage” of funds for impermissible purposes during cohabitation.

9. In declining to accept that the husband should be viewed through the prism of decisions such as Oriolo, Black & Kellner, and Weir, the Court is influenced by the matters referred to above. It could fairly be said that the circumstantial evidence provides a basis for exonerating the husband, which his own evidence falls short of providing.

10. Whilst the Court does not consider that there has ultimately been significant                 non-disclosure or misdisclosure on the part of the husband, in terms of the provision of funds to his late uncle, the unsatisfactory nature of the husband’s evidence leaves him exposed to a finding that, albeit to an extent which cannot be quantified, the interest in Property C, which the husband acquired from his late uncle, ought not be regarded as purely a contribution by or on behalf of the husband, but rather one which, in ways that cannot ultimately be quantified was, at least to some limited extent, referable to financial support which the husband had afforded his uncle during his lifetime.

11. In circumstances where the means of the parties are as modest as the evidence suggests that they would have been in this family, the provision of even modest financial assistance to the uncle assumes greater significance than would be the case were the means of the household greater than the evidence suggests them to have been.

12. To the extent that the husband’s disavowal of any interest in the properties which have been referred to throughout the trial as Lots F and G remained controversial at the conclusion of the trial, as the Court understands that it did, the husband’s own evidence, particularly in the light of the less than compelling evidence given by him with respect to other topics, provides a less than compelling, or even convincing evidentiary foundation for declining to find that the husband has any beneficial interest in those lots.

13. The evidence of the husband’s attorney in Lebanon, Mr Elie Wadih El-Tiny, provides some support for the husband’s assertion that he lacks an interest in these properties.

14. The evidence of the husband’s sister, Ms N, which was not challenged in a number of material respects in this regard, was that the late mother of the husband and his three sisters directed her to transfer interests in property to each of them, the property being transferred to the husband being a 20 per cent interest in Property C.

15. It is not in doubt that aspects of Ms N’s oral evidence were directly in conflict with her affidavit evidence, the starkest example in that regard being her assertions with respect to travelling to Lebanon to give effect to property transfers in 2002.

16. Ms N’s evidence in relation to her late mother’s intentions cannot be disputed. Nor is there any doubt that those intentions were implemented in full, in the case of Property C and a property which was referred to throughout the trial as Property A. The properties Lot F and Lot G have not been transferred to the other two sisters of the husband and Ms N. The evidence is deficient as to why those sisters have not called for the transfer of the interest to which they are entitled. There has been no challenge to the evidence of Ms N that she has not been requested by either of her two sisters to effect those transfers.

17. There are undoubtedly some curious and unexplained aspects of Ms N’s evidence. On balance however, there is no reason to suggest that Ms N was other than an essentially honest witness. Quite properly, Counsel for the wife did not suggest to Ms N that she was engaged in some subterfuge with the husband pursuant to which, when these proceedings have concluded, the husband will receive the properties Lot F and Lot G, or Property A for that matter, or an interest in some of them.

18. Although the affidavit evidence of the parties suggests some difference of recollection in relation to the early years of their cohabitation, experienced Counsel representing the parties, sensibly in the Court’s view, did not agitate those issues with any relish. Objectively, the evidence leaves little room for doubt as to the essential course of life in the household of the parties until separation, and in their separate households thereafter.

material facts

1. Some material facts provide background to the proceedings. The Court is indebted to Counsel for the parties, each of whom has provided a thorough and essentially balanced chronology of relevant dates and events.

2. The husband was born in 1952. He is 60 years of age.

3. The wife was born in 1955 and is 57 years of age.

4. Both parties were born in Lebanon and married there in 1973.

5. Shortly after the parties married they travelled to Australia, and have been domiciled in Australia since that time.

6. There were six children of the marriage, those children being born in 1974, 1976, 1977, 1979, 1980, and 1985. The children are currently aged 38, 37, 35, 34, 33 and 27. The children are all self-sufficient.

7. Neither party had any assets of substance at the commencement of                 co-habitation. The husband and his cousin operated a retail shop in Suburb H from shortly after the parties commenced to reside in Australia. The termination of the retail shop business, within a year of its commencement, did not produce any significant funds for the parties.

8. The husband commenced to be employed by a government agency some time after the parties commenced to reside in this country. In 1986 the husband was injured in the course of his employment by the government agency. The following year he returned to light duties.

9. Suburb E was purchased in 1989 in the parties’ joint names for $179,000. The parties had previously owned a house at Suburb I which they purchased in 1982, borrowing virtually the whole of the purchase price of the property in order to do so. The net proceeds of sale of that property, at about the time of the purchase of Suburb E, provided the bulk of the purchase monies for the Suburb E acquisition.

10. By 1991 the husband’s employment with the government agency ceased. The husband at that time received a settlement from the government agency in relation to the termination of his employment. The evidence is unclear as to how much the husband received net of workers compensation payback. It is not in doubt that the husband utilised approximately $26,000 of his compensation monies to discharge the mortgage over Suburb E. The balance, whatever it was, has not been established to have been other than applied for family purposes of an indeterminate nature.

1. The husband had a modest superannuation entitlement as a consequence of his government agency employment. The evidence suggests that the husband did not access that entitlement until December 2001, at which time his exit benefit from the government agency superannuation fund was $5,394.58.

2. In 1991 the husband commenced to receive the disability pension from Centrelink or its precursor. From that time to the present, except for some modest income from part time work, the husband has had no income or employment.

3. In 1993 the wife became eligible to receive the disability benefit. The wife continues to receive that benefit. There has been no real issue that the wife has no capacity for employment.

4. In 1992 the husband received a 20 per cent interest in the property known as Property C in North Lebanon from his uncle Mr W, who has since died. He also later received a 20 per cent interest in the same property from his mother.

5. The husband’s evidence in relation to the acquisition of these interests has been inconsistent and, given the absence of doubt about what he received, from whom, and when, surprisingly, lacking in candour. The husband’s case has been that both interests were gifted to him.

6. The wife’s case is ultimately that the evidence falls short of establishing that the interest in the property was gifted to him by his mother, and that the unsatisfactory nature of the husband’s evidence with respect to the repatriation of funds to Lebanon would lead the Court to find that, in some undisclosed way, the husband acquired the 20 per cent interest in the property from his uncle at least in part as a consequence of contributions made by him from funds of himself and the wife.

7. For reasons which will be suggested later in these reasons, the Court is not persuaded that the interest acquired from the husband’s mother was simply a gift, as he asserts.

8. On 17 April 2003 the husband’s mother, Ms J died. The late Ms J had been living in Australia with her daughter, Ms N, for the last eleven or twelve years of her life. During that time Ms N had “cared” for her mother.

9. In 2002, the husband caused proceedings to be commenced in Lebanon in relation to transfer of property belonging to his late mother. The husband ultimately discontinued those proceedings, albeit not until 2009, at a time when the proceedings before this Court were on foot. Discontinuance of the proceedings does not preclude the husband from recommencing the proceedings. The husband denies that he will recommence the proceedings. The wife asserts that the husband is likely to. The evidence of the husband in relation to this issue, as with his ownership of land in Lebanon generally, was less than convincing.

10. The parties finally physically separated in about March 2005, having separated under the one roof a few months earlier. In the post separation period the wife has had the sole use and enjoyment of the unencumbered former matrimonial home at Suburb E, albeit she has paid outgoings on the property. The wife has received substantial financial assistance from the eldest child of the parties in the post separation period. In the post separation period the husband has lived in rented accommodation with other children of the marriage.

the property of the parties

1. The major asset of the parties is Suburb E, the agreed valuation of which is $490,000. The property is unencumbered.

Property in Lebanon

1. The husband has a 40 per cent interest in Property C in Lebanon. The valuation of that interest is highly contentious. In the early stages of the trial Counsel for the wife asserted the value of the interest to be approximately $342,000 whilst Counsel for the husband asserted the value to be approximately $23,000. The figures ultimately asserted were US$460,000 and US$90,000 respectively.

2. Save to the extent to which reference will be shortly be made, there are no other assets of the parties of significance.

3. The Court is not persuaded that the husband has any beneficial interest in the Lebanese properties referred to in evidence as “Property A”, “Lot F” or “Lot G”.

4. The unchallenged evidence of the husband’s sister is that the husband’s late mother instructed Ms N to effect the transfers of the four interests in property owned by her to each of her four children. Whether that constituted an equal or unequal distribution is not revealed by the evidence. It is clear, given the date of death of the husband’s mother, that these instructions were communicated to Ms N prior to the breakup of the marriage between the husband and wife in these proceedings. There is no evidence that, at the time the instructions were given, there was any reasonable apprehension that the marriage between the parties would end. Thus, any suggestion that the distribution was with a view to defeating a claim by the wife in proceedings in this Court could have no foundation. Nor is there a basis for finding that, irrespective of intention, the transaction would have that effect.

5. Whilst, as a reading of the evidence of Ms N would confirm, there are some incongruous aspects of the husband’s version of events, and her corroboration of that version of events, which the documentation in relation to it does not remove, the Court is not persuaded on the balance of probabilities that the husband has any entitlement to receive, or will receive, land in Lebanon from his late mother in excess of that which he has already received.

6. Given the evidence of Ms N, which the Court accepts, as to her care for her mother during her final years, and the absence of any suggestion in cross-examination that the late Ms J lacked the capacity to execute a power of attorney, or give the instructions which she gave to Ms N, the assumptions underpinning the expert opinion evidence as to the entitlement of the husband to the properties “Lot F” and “Lot G” are unsupported.

7. It is not in doubt that the late Ms J executed a power of attorney in about 2002 in the presence of an Australian consular official. In the absence of evidence suggesting it, and there is none, it is improbable that a consular official would have allowed Ms J to execute a power of attorney had he or she any reason to doubt either Ms J’s mental capacity to do so, or that so doing would be in the exercise of a will removed by way of duress, undue influence or other pressure.

The value of the husband’s 40 per cent interest in Property C in Lebanon

1. Each party relied upon an appropriately qualified expert in relation to the valuation of the husband’s 40 per cent interest in property known as Property C in Lebanon. The wife’s valuer Mr L asserted that the husband’s interest was worth US$460,000 whilst the husband’s valuer, Mr K asserted that the interest was worth US$90,000. Given that the AUD and US dollar are almost of equal value, the dispute can be regarded as whether the property is worth $460,000 or $90,000 or, if it be permissible to do so, regarded as being worth a figure somewhere between those two sums. It is readily apparent that the difference of opinion between the experts is of extraordinary ambit-approximating 500 per cent. It will also become readily apparent given the conclusions which the Court has reached with respect to the parties’ contributions to the interest, and the modest value of the parties’ other assets, that the Court’s conclusion with respect to the valuation of Property C could have potentially far reaching consequences.

2. Apart from the disputed property being in Lebanon, each of the valuers who were cross-examined was, sensibly, in Lebanon whilst that process took place by telephone from Sydney. Further complicating the issue was the understandable reality that both experts were cross-examined through an interpreter, albeit a clearly extremely competent and helpful interpreter.

3. There has been no expert opinion evidence before this Court as to the basis upon which valuation disputes are determined pursuant to the laws of Lebanon. Evidence before this Court suggests however that the concept of “highest and best use”, or something which appears similar to it, is known to the law in Lebanon. The evidence before this Court also suggests that reference to comparable sales is a recognised aspect of valuation practice in Lebanon. Reference to comparable sales in Lebanon however seems to have the added complexity, as both experts appeared to suggest, that what appears on transfer documents frequently bears little or no resemblance to either the actual price paid for real estate, or its true valuation. Although both valuers sought to explain how the system actually works, the Court is less than clear on how valuers can readily have access to reliable evidence of the true sale prices of potentially comparable sales.

4. Without in any way criticising either expert, as their terms clearly reveal, the valuation reports provided to the Court differ somewhat from those with which the Court is familiar, particularly in relation to the methodology apparently adopted by each of the valuers. With the benefit of cross-examination by skilled and experienced Counsel, and, as noted earlier, an extremely competent and helpful interpreter, the valuation issue has been clarified to some extent. The shortcomings revealed with respect to each valuation however do not render preferring the expert opinion evidence of one valuer over that of the other an option which is readily available to the Court, however attractive doing so might be.

5. The cross-examination of each valuer revealed a number of difficulties in accepting without qualification the expert opinion evidence of that valuer. It is reasonably apparent that it is not in dispute that the land known as Property C is located approximately 600 metres from what in this country might be called a “ski resort” known as Resort P. It is common ground that there is accommodation and facilities of the kind which might be found at a ski resort at Resort P, and that people travel from “all over the world to ski at [Resort P]”.

6. The photographic evidence from the wife’s valuer suggests the land is located adjacent to a ruggedly beautiful downhill ski facility. Whilst the valuers disagree as to whether the land is as close as 300 or 400 metres from Resort P, or as far away as 700 metres, it is common ground that the highest and best use of Property C lies in its future development as accommodation for skiers or for the purposes associated with skiing activities at Resort P. The photographic evidence supports the evidence of the wife’s valuer that a new road has recently been constructed to service Resort P. The buildings revealed by the photographs provided by the wife’s valuer appear to be substantial and, at least from an external perspective, built to a high standard.

7. It is also common ground between the experts that the planning laws permit the construction of a two storey building upon the larger portion of Property C, the property having been bisected by the new road to Resort P. However what the experts do not agree upon is whether, the two storey building which could be constructed upon the land can have a total floor area of 600 square metres, as the husband’s valuer suggests, or 747 square metres, as the wife’s valuer suggests. It seems that the difference arises from calculating whether the 15 per cent footprint, which both experts agreed to be applicable, is determined by reference to the land upon which the building would be constructed, as the husband’s valuer suggested, or by reference to the whole of the land, including the small portion which now sits on the other side of the bisecting road, as the wife’s valuer suggested. There is no evidence, or statutory instrument which enables this Court to determine which expert is correct in relation to this issue.

8. What impact the potentially greater, by 25 per cent, developable area has on the value of Property C cannot be determined, although it might reasonably be thought that it would be significant, given that the footprint of any building which could be constructed upon the land is comparatively small for the purposes of building a ski lodge/ hotel or the like.

9. The wife’s valuer was criticised for not having sought to have regard to comparable sales in order to support his opinion of the valuation of Property C. In his report, the wife’s valuer suggested that he had not been aware of any sales of comparable land in the vicinity of the subject property within the previous two years. Nothing arising in cross-examination of the wife’s valuer, or otherwise, provides any basis for disputing that proposition. The husband’s valuer purported to support his valuation by reference to comparable sales. In       cross-examination, it emerged that the sales relied upon by the husband’s valuer were of dubious comparability.

10. Having conceded that a hotel or chalet could be constructed on Property C, the husband’s valuer testified that whether such development could take place on the land which constituted the comparable sales relied upon by him depended upon the planning laws which governed those sites. The husband’s valuer was unable to say that planning permission for a hotel or chalet would be granted for those sites. The comparable properties relied upon by the husband’s valuer were not on a road. The husband’s valuer conceded that his comparable properties were 750-800 metres from Resort P and that they were in a “bush area” where there was no skiing.

11. With respect to the husband’s valuer, the comparable sales upon which he relied provide little or no support for his opinion as to the value of Property C. It can be said, and was inferentially by Counsel for the wife, that if properties in the location and with the features to which the husband’s valuer referred sold for sums similar to the suggested value of Property C, that provided support for concluding that Property C must have been worth substantially more. There is force in that submission.

12. It is unnecessary to refer in further detail to the cross-examination of the respective valuers. Whatever a Court applying the laws of Lebanon might conclude, by the standards of Australian law, and by reference to the principles of valuation which Australian courts have long accepted, the Court is comfortably satisfied that the valuation of each expert was shown to have significant shortcomings, and that neither could be accepted without qualification on the balance of probabilities in the light of those shortcomings.

13. As is clear from the written evidence of each valuer, the wife’s valuer’s inquiries and research was more extensive than was that of his counterpart. Even so, in the absence of underpinning, by reference to comparable sales, that thoroughness does not necessarily translate as correctness, or a greater probability of correctness. To prefer the expert opinion evidence of one valuer to that of the other would in the circumstances of this case be potentially unfair. The Court is simply not persuaded on the balance of probabilities that either valuation is correct. The probabilities are that, for reasons which are not hard to understand, the wife’s valuer’s figure represents the top of the range, whilst the husband’s valuer’s figure represents the bottom of the range. It is unlikely to be coincidental that this is so.

14. The Court raised with Counsel for the parties whether it might permissibly conclude a valuation other than that advanced by either expert. Counsel for the wife made no specific submissions in that regard. Counsel for the husband relied upon the passages of the judgment of Hodgson and McColl JJA in Paino v Paino (2008) 40 Fam LR 96; [2008] NSWCA 276 in which their Honours said:

    78.    In the present case, on the assumption that the valuation evidence was correctly excluded, it could be said that the appellant had not produced evidence of value although she could have done so; and so the approach that the court should “do its best” has no application. However, although it is true that the appellant, seeking an adjustment in her favour, had the ultimate onus of proof, in our opinion there were further factors which would have justified the court in arriving at a figure for these properties that had a reasonable chance of approximating a correct result, rather than adopting a zero figure which was certainly wrong.

    79.    We have already referred to the obligation on parties in cases such as this to be frank and to disclose their property; and although this obligation does not mean that parties must go to the expense of having a valuation made, it does mean that they should provide to the court evidence of prices paid and obtained for properties acquired and sold.

    80.    In this case, there was annexed to the valuation provided by the appellant and rejected by the primary judge substantial material, including copies and translations of official records, describing the properties and giving various sale and purchase prices; and although the appellant’s counsel did not seek to tender that material separately, in our opinion the primary judge, before removing from evidence the whole of the valuation report (which had previously been admitted into evidence), should have considered whether that material should have been left in evidence.

    81.    Another factor supporting the “do its best” approach in this case is that the appellant had, obviously at great expense, sought to provide evidence of value; while the respondent had tendered its own evidence of value and then withdrawn it.

    82.    For those reasons, in our opinion, this was a case where the court should have done its best. In doing so, it could have had regard to the circumstance that the Filicudi properties were of very substantial interest, including interest as a matter of business, to a person dealing with other assets worth in the order of $20m, to which that person devoted substantial time, effort and attention. The properties comprise extensive land on a Mediterranean island, and were obviously increasing in value having regard to the notorious expansion of tourism in that area.

15. Whilst the case provides support for the “do its best” approach, the Court perceives the thrust of the judgment to be that, by failing to have regard to available evidence, the court below failed to “do its best” to determine the valuation of the property in question. It appears to be stretching what Hodgson and McColl JJA said in Paino to suggest that it supports the Court, in effect, determining the valuation for its self.

16. As is not in doubt, valuation of real estate involves expertise. It is also the reality that, although empirical in approach, the hypothetical valuation of a property also involves elements which can less readily be classified as “science”. In Federal Commissioner of Taxation v St Helens Farm (ACT) Pty Ltd (1980) 146 CLR 336 Mason J said at 381:

    This Court has consistently applied the rule that on a question of valuation an appellate tribunal is not justified in substituting its own opinion for that of the court below unless it is satisfied that the court below acted on a wrong principle of law or that its valuation was entirely erroneous (The Commonwealth v. Milledge; Commissioner of Succession Duties (S.A.) v. Executor Trustee and Agency Co. of South Australia Ltd.; The Commonwealth v. Reeve). See also Emerald Quarry Industries Pty. Ltd. v. Commissioner of Highways). As with the assessment of damages, especially in personal injury cases, the valuation of property by a court has many of the characteristics of a discretionary judgment. Valuation is a matter of estimation, not of precise mathematical calculation. It certainly involves the making of a value judgment in the metaphorical as well as the literal sense. (Footnotes omitted)

17. As Heydon J explained in Makita (Australia) Pty Ltd v Sprowles [2001] 52 NSWLR 705 at 731, it is for the Court to ultimately determine the valuation of property where that is disputed, and to do so by reference to, and with the assistance of expert opinion evidence. Drawing the line between exercising that judicial function without purporting to exercise expertise which the Court lacks is, as this case demonstrates, not always easy. That is particularly so given the shortcomings which the Court has identified in the valuations relied upon by each party.

1. With all due respect to the Lebanese valuers, and accepting that what this Court finds to have been shortcomings in their valuations may well in the case of either or both of the valuers not be so regarded by a Lebanese court, the Court struggles to identify particular factors in the valuation reports by reference to which some empirical determination of the value of the subject property was reached, or could be suggested.

2. Whilst the Court finds a regrettable element of  “the valuation is what I say it is” in the valuations of each valuer, any attempt by this Court to suggest a different valuation would be immediately open to the same criticism, if not to the further criticism that it involves the purported exercise of expertise which the Court lacks.

3. In the circumstances of this case, the Court must fix a valuation for the husband’s interest in Property C. Given the disparity in the valuations relied upon by the valuers, declining to do so, or suggesting a range of valuations, however convenient, would not be appropriate. It is not in doubt that the Court cannot resolve the current dilemma by simply taking the mean of the two valuations. The more vexed question, however, is whether, given the reservations the Court has about each of the valuations, as articulated earlier in these reasons, the Court can adopt the mean of the valuations if each valuation has been shown to have similar shortcomings.

4. For the reasons which have earlier been articulated, whilst the Court is unable to accept without qualification the expert opinion evidence of the wife’s valuer, the Court is persuaded that the figure asserted by the wife’s valuer is probably closer to the real value of the husband’s interest in Property C than is the figure asserted by the husband’s valuer.

5. The absence of any suggested sales of properties directly comparable to the subject property is supportive of the assertion of Counsel for the wife that properties such as Property C are “tightly held” and likely to achieve a substantial price if and when it is made available for sale.

6. The Court has not been referred to any evidence of properties in the immediate vicinity of the subject property, which is on, or has languished on the market. The absence of such evidence is not insignificant. In addition, the evidence of what properties, which were conceded to be inferior in various respects sold for, provides support for concluding that the subject property is likely to be worth substantially more than those properties were sold for. These factors persuade the Court that the valuation asserted on behalf of the wife is probably closer to the value of Property C than is the figure asserted by the husband’s valuer.

7. On balance, and without suggesting that the issue is beyond doubt, the Court concludes that it should prefer the evidence of the wife’s valuer to that of the husband’s valuer, and ought not attempt to exercise expertise which the Court does not have, particularly in the context of there being insufficient data available to rely upon in any purported valuation exercise by the Court.

8. Given that there has not been no suggestion that there were truly or directly comparable sales to which the wife’s valuer could have had regard which would have posed difficulties for his opinion of the value of Property C, the absence of reference to comparable sales by him becomes less significant than might otherwise be the case.

9. In all the circumstances, the Court prefers the valuation of the wife’s valuer to that of the husband. So doing, the valuation of the husband’s interest in Property C is $460,000. As will be seen, and fortunately, a just and equitable determination of the present proceedings does not turn decisively or even significantly upon so concluding.

Other assets

1. There are no other assets of significance. To the extent that paid legal fees are sought to have been added back on either side, they could only, on balance, have come from borrowings, presumably from an adult child or children. To notionally include such paid fees, only to immediately offset them, would not be sensible, or of any utility.

2. The wife was requested to make her jewellery available for valuation. That exercise produced a figure of $2000. It has been agreed that the wife’s jewellery is worth $1988.

3. There is no reliable evidence of the value of personalty such as cars, household effects and the like. Given the state of the evidence, and years since the parties separated, the Court does not take those matters into account when determining the property of the parties to the marriage. In all probability, doing so would not significantly change the figures.

4. The wife claims, as a debt, monies owed by her to the eldest child of the parties, the former intervener in the proceedings. Whilst the wife may have borrowed those monies in the post separation period, and the evidence does not establish that any funds provided by Mr M were necessarily by way of repayable loan, the Court does not propose taking those into account when determining the net property of the parties.

5. Given that the wife has occupied the former matrimonial home for what is now a period of six years, during which time it has been free of encumbrance, whilst the husband has rented premises elsewhere, albeit with the considerable assistance of the children of the marriage, to allow financial assistance voluntarily provided by the child, Mr M, as a liability of the wife, thereby reducing the net value of the property of the parties, would not be appropriate.

6. It is not seriously in doubt that, in the post separation period, the daughters of the parties have substantially sided with the husband and financially assisted him, whilst the wife has had the very considerable financial support of the son, Mr M. Those matters should not impact upon the determination of this case.

7. The husband’s exit benefit with respect to his superannuation, in the sum of $5,394.58, should in the Court’s view be notionally added back. That is because, notwithstanding that it was available a few years prior to the parties’ separation, the evidence before this Court (see Exhibit R7) raises doubt as to what actually became of those monies. The husband, who clearly had control of those monies, has not adequately explained what became of them, or when. In the circumstances, albeit the sum is not great, to fail to add those funds back would be unfair to the wife.

8. The net assets of the parties are thus accordingly worth:

Assets
1.	B Street, Suburb E (J)	$490,000
2.	Property C – Lebanon (H)	$460,000
3.	Jewellery (W)	$1988
Addbacks
4.	Husband’s superannuation	$5,394.58
Total net assets of the parties		$957,382.58

contributions

1. The foregoing chart is somewhat deceptive. For reasons which have to some extent already been referred to, and to which reference will later be made, to consider the Suburb E property and the husband’s interest in Property C in the same way would not be just or equitable.

2. The Court will evaluate the parties’ contributions to the properties separately. It is appropriate to view contributions by reference to two “pools”: the Australian and the overseas assets.

3. So far as Suburb E is concerned, a finding of equality of contribution to the date of separation is almost irresistible. So saying does not overlook the reality that it was the husband’s damages or workers compensation settlement which enabled the mortgage over the property to be discharged in 1991.

4. On the other hand, the evidence of the wife, which the Court substantially accepts, establishes that, during the period that the husband was convalescing from his injuries and thereafter, the wife contributed materially in the ways detailed by her in her affidavit evidence.

5. To the extent that the award may have represented past or future financial loss, that loss would have been visited upon the family, although (see the High Court’s decision in Williams & Williams (1985) FLC 91-628) the Court may view a settlement such as the husband received as more a contribution by the husband than the wife, in the circumstances of this case the Court does not do so.

6. Counsel for the wife submitted that, in circumstances where, at least from 1991, neither party had earned income from employment or personal exertion, the wife’s greater contributions as home-maker and parent should be reflected in the Court’s determination of the contribution based entitlements of the parties. That submission was based on the number of children who were then resident in the matrimonial home. Counsel for the husband submitted that, having regard to the children’s ages at that time, it could not be assumed that the wife’s contributions were greater than those of the husband. Whilst accepting that the disparity could only be minimal having regard to the paucity of the evidence before the Court in relation to it, the Court concludes that the wife’s contributions should be regarded as modestly enhanced over those of the husband, at least for a period of a few years subsequent to 1991 by reason of this factor.

7. Since separation the wife has had the rent free use and enjoyment of the former matrimonial home to the exclusion of the husband. That has clearly been a considerable benefit for the wife. There is no suggestion that the wife has had any income during that period.

8. The husband has had some modest income from casual work, at least until 2005. Whilst the husband has been in rented accommodation, it is clear that he has received considerable financial assistance from his daughters.

9. Determining the extent to which the contribution based entitlements of the parties to that property should be varied as a consequence of the post separation period is less than simple or straightforward. That is particularly so given the time which has passed since the parties separated. Counsel for the husband submitted that, in all the circumstances, a substantial adjustment in the husband’s favour was appropriate by reason of the wife’s rent free occupancy of the Suburb E property. Counsel for the wife submitted that it had always been open to the husband to seek to have the proceedings finally determined much sooner than he had. Counsel for the wife also submitted that, given what he asserted were the demonstrated inadequacies and inaccuracies in the husband’s financial evidence, to adjust in his favour by reference to the post separation period, would not be just or equitable.

10. On balance, to fail to recognise that the wife has had the sole use and enjoyment of the major asset of the marriage for a period of eight years, when that property has been unencumbered, and the husband has been living in rented accommodation would not be just or equitable. Conversely, the husband’s lack of candour in relation to financial matters, and his ability to access, or realise his substantial interest in Property C since separation require recognition. Save in relation to the husband’s interests in Property C in Lebanon, the Court is persuaded that the parties’ contributions to the Suburb E property, the superannuation and the wife’s jewellery should be regarded as equal.

11. Whilst the husband may have repatriated a very small amount of money in cash to Lebanon for the support of his mother prior to her coming to Australia to live with Ms N in about 1992, the acquisition of the 20 per cent interest in Property C from his mother can be, seen as overwhelmingly a contribution by or on behalf of the husband (see Kessey& Kessey (1994) FLC 92-495). Counsel for the wife submitted that the Court would, and it does, prefer the evidence of the wife to that of the husband in relation to the parties’ intentions with respect to the husband’s interest in Property C, that intention being asserted to be to provide for the parties in their retirement. Whilst the parties’ intentions are relevant, the issue ultimately turns upon contributions. On any view of it, the contribution of the interest in Property C was overwhelming by or on behalf of the husband. If the husband did not realise the interest, assuming that it were possible for him to have done so prior to separation, all that could flow from that is that the husband thereby forfeited, or otherwise lacked the ability to make a contribution from his interest in Property C.

12. As suggested to Counsel during the course of the trial, albeit by that time some of the children of the marriage would have been undergoing tertiary education, the cost of which their parents materially contributed to, it is very difficult to see, in a case where no complaint is made that the parties did not devote substantially all of their funds for the benefit of the family, any significant scope for either party to have repatriated funds to relatives in Lebanon, or indeed to have deployed any significant amount of money beyond the immediate family.

13. The Court concludes that the contribution of the 20 per cent acquired from the husband’s mother was an overwhelming contribution by or on behalf of the husband.

14. So far as the 20 per cent interest in Property C which was transferred to the husband by his uncle is concerned, somewhat different considerations apply. The evidence of the husband in cross-examination generally with respect to financial matters was not compelling. It was least compelling in relation to the acquisition of the interest of his uncle. As is not in doubt, the husband was persistently and consistently evasive in relation to his interests in property in Lebanon.

15. The husband’s evidence in relation to why his uncle benefited him rather than his siblings was less than convincing. The husband’s late uncle Mr W apparently never married or had any children. If accepted, the husband’s proffered explanation for his late uncle’s largesse would suggest that the husband and his siblings would all have shared in such largesse when that clearly was not what happened.

16. The husband’s evidence in relation to requests for money, and the remission of funds by his uncle, Mr W, during his ailing final years, was less than convincing, as were the husband’s answers to cross-examination about letters from his uncle requesting money.

17. The husband has known that this issue was controversial at all times during the proceedings. The husband produced no documentation in support of his assertion that the property had come to him solely by way of gift.

18. The husband’s unsatisfactory evidence in relation to this topic, combined with his generally evasive or misleading evidence prior to trial with respect to the Lebanese properties generally, leave the Court unable to accept that, albeit in ways which the wife has never been able to prove, or could be expected to have proved, the acquisition of the 20 per cent interest in Property C from the husband’s uncle was not referrable in some way, and to some extent, to contributions made by him. Of necessity, those contributions must have been from the funds of the husband and wife and, as such, indirectly contributed to by the wife.

19. Albeit somewhat arbitrary, and significantly dependant upon the deficiencies in the husband’s candour and explanation with respect to the topic, the Court concludes that the parties’ contribution based entitlements to the 20 per cent of Property C acquired from the husband’s uncle should be seen as favouring the husband, albeit by no means overwhelmingly. The contribution by or behalf of the husband of the acquisition of the interest can safely in the Court’s view be regarded as substantially greater than the indirect contributions of the wife to the acquisition of the interest.

20. Such a conclusion is significantly reliant upon the reality that, having regard to the incomes of the parties at the time of the acquisition, the number and ages of their children then, and the stages of their education, the parties must have had very limited capacity to make any financial contribution towards the acquisition of the interest. The interest accordingly remains rather more referrable to the largesse of the husband’s uncle than to the contributions of the parties.

21. Whilst it would be desirable to make a finding with respect to the contribution based entitlements of the parties to the 20 per cent transferred by the husband’s uncle, so doing is, for reasons which have been suggested, necessarily extremely arbitrary. Moreover, as will be seen, there is a nexus between a finding in this regard and s 75(2). That is not to suggest some direct financial interaction, but simply to acknowledge the reality that, the greater the wife’s contribution based entitlement to this interest pursuant to s 79, the less the scope for it operating in a significant fashion pursuant to s 75(2) becomes, and vice versa.

22. As the reasons the Court has earlier articulated suggest, the husband can be seen as having made a far greater contribution, albeit via his deceased mother and uncle, to the acquisition of his 40 per cent interest in Property C than the wife can be seen as having made. Quantifying the respective contributions is necessarily arbitrary. The exercise is not complicated by any contributions to the parties to the conservation or improvement of the assets. There is no evidence that the parties contributed by personal exertion or the payment of money to the conservation or improvement of the husband’s interest in Property C. The property has been neither the source of income nor other tangible benefits for the parties or a drain on their modest resources.

23. To regard the contributions of the parties to Property C as favouring the husband by a margin of four to one, or 85 per cent to 15 per cent would, in the Court’s view, be a reasonable if necessarily somewhat arbitrary reflection of the evidence in relation to that interest.

24. As is common ground, whatever the Court finds to be the wife’s contribution based entitlement to Property C should be reflected in her entitlement to Suburb E, there being no suggestion, to the extent that this Court possibly could, that any orders should be made altering the husband’s interest in Property C. The Court having concluded that the value of Property C is $460,000 the wife’s contribution based entitlement to the property is accordingly $69,000 (15 per cent of the value).

25. The wife is accordingly entitled to receive 50 per cent of the Suburb E property ($245,000), plus half the value of her jewellery ($994), plus 50 per cent of the husband’s superannuation ($2,697.29), and 15 percent of Property C ($69,000) which translates as a total of $317,691.29.

26. The husband is entitled to receive 50 per cent of the Suburb E property ($245,000), half the value of the wife’s jewellery ($994), and half the value of his superannuation ($2,697.29) and 85 per cent of Property C ($391,000) which translates as a total of $639,691.29.

27. In order to achieve this division, the wife would have to pay the husband $174,297 if she is granted the first option to acquire Suburb E. The husband would have to pay the wife $315,703 if he is granted that option.

section 75(2)

1. As is not in doubt, the only scope for the operation of s 75(2) to alter the contribution based entitlements of the parties relates to the husband’s interest in property in Lebanon. The Court is not persuaded that, despite the deficiencies in the husband’s financial disclosures, and the veracity of those which he has made, the husband has, or is likely to have materially more than he has disclosed by way of property or financial resources.

2. Given that the wife has been less successful in relation to her contribution based entitlement to Property C, it remains her position that a further adjustment should be made in her favour by virtue of s 75(2) given the value of the financial resource which the husband undoubtedly has, and will retain, in the 85 per cent of Property C which the Court has concluded to be his entitlement on a contribution basis. Other than by something akin to a “Robin Hood principle”, the Court discerns no proper basis upon which, in the circumstances of this case, it would be legitimate to make a further adjustment in the wife’s favour pursuant to s 75(2) with respect to Property C.

conclusion

1. Overall the Court concludes that the parties contribution based entitlements as determined by the Court represent a just and equitable apportionment of their property. To adjust the wife’s interest in the Suburb E property by increasing it would, given the Court’s findings with respect to the husband’s interest in Property C, be unjust and inequitable.

2. It remains to consider whether either party should have the option to acquire the Suburb E property, or whether the earnestness of the parties to acquire the property should be tested in the auction room. Given that the property has been occupied by the wife for such a lengthy period since separation, and that, by virtue of the old oration to the parties interest in the property resulting from the Court’s conclusion with respect to the wife’s contribution based entitlement to the husband’s interest in Property C, the wife has a substantially greater equity in Suburb E than does the husband, the Court concludes that the wife should be granted the first option to purchase the husband’s interest in that property. Given that the husband will retain his superannuation interest, and that the wife will retain her jewellery, the wife should tender to the husband ($174,297) in order to acquire the husband’s interest.

3. It remains only to consider whether the proposed orders are “just and equitable”. The expression now appears to have two incarnations: the broader requirement discussed by the High Court in Stanford v Stanford [2012] HCA 52 and the seemingly narrower requirement imposed by s 79(2) of the Act.

4. As the Court’s reasons reveal, the only basis for the proposed alteration of the parties’ interests in the Suburb E property is its conclusion with respect to the parties’ contribution based entitlements to Property C. In reality, and largely by agreement, all the Court proposes doing is to alter the husband’s interest in Suburb E to reflect the wife’s entitlement to Property C. In the circumstances of this case, to fail to do so would be unjust, and not in the interest of either party.

5. So far as the s 79(2) or “standing back” (see Manolis & Manolis (No.2) [2011] FamCAFC 105) exercise is concerned, the proposed positions of the parties reflect their contribution based entitlements. Given their ages, similar absences of earning capacity, and the quantum and nature of the parties’ property, the Court is persuaded that the requirements of s 79(2) are satisfied. Whilst the husband will have significantly greater property than the wife, that is largely referrable to the “skewing” impact of the value the Court has determined for Property C, and reality that, on any view of the evidence, the contributions by or on behalf of the husband to the acquisition of the interest in Property C greatly exceeded those of the wife.

I certify that the preceding one hundred and twenty three (123) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman delivered on 3 May 2013.

Associate: 

Date: 03.05.2013