THOMM & PAINTER

[2015] FCCA 1001

FEDERAL CIRCUIT COURT OF AUSTRALIA

THOMM & PAINTER [2015] FCCA 1001

Catchwords:
FAMILY LAW – Property settlement – disputed matrimonial debts – valuation of shares in family business being (omitted) business – contributions and adjustment – superannuation splitting order.

Legislation:

Family Law Act 1975, ss.90MT(1)(a), 75(2), 79(1)(a), (2) and (4)

Applicant: MR THOMM

Respondent: MS PAINTER

File Number: SYC 6498 of 2012

Judgment of: Judge Newbrun

Hearing dates: 19 & 20 March, 2 April 2015

Date of Last Submission: 2 April 2015

Delivered at: Parramatta

Delivered on: 10 September 2015

REPRESENTATION

Counsel for the Applicant: Mr Othen

Solicitors for the Applicant: Slater & Gordon Solicitors

Counsel for the Respondent: Mr Jackson

Solicitors for the Respondent: Tomasevic Poljak Lawyers

ORDERS

1. That within two months from this date, the wife pay to the husband $62,288 and concurrently with the payment, the husband do all things necessary to transfer to the wife his interest in the property at Property A, New South Wales, being the whole of the land comprised in Certificate of Title folio identifier (omitted) (the former matrimonial home) provided always:

   (a)that concurrently with the transfer the parties do all acts and sign all documents as are required to discharge registered mortgage number (omitted) to (omitted) Bank and the wife refinance and pay out the joint home loan to (omitted) Bank secured over the former matrimonial home so as to release the husband from all or any liability in regard thereto,

   (b)the wife shall indemnify the husband from any and all liability in relation to the above mortgage,

   (c)that the wife pay as they fall due and payable all outgoings, insurances and mortgage payments in regard to the property pending transfer of the property to the wife.

2. That pending the husband transferring his right, title and interest in the former matrimonial home to the wife:

   (a)the wife have sole right to occupy the former matrimonial home and that during such right of occupation the wife shall pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the former matrimonial home as they fall due; and

   (b)neither party encumber or further encumber the former matrimonial home without the consent of the other party in writing or prior order of the court.

3. That within two months the wife shall do all such acts and things and execute all documents necessary to refinance the car loan to (omitted) Pty Ltd secured over the Ford Fiesta bearing motor registration number (omitted) into the wife’s sole name and the wife shall be liable for and indemnify the husband against all payments and liabilities arising in respect of the motor vehicle including, but not limited to, the loan in respect of the purchase of the vehicle.

4. That within two months the husband shall do all such acts and things and execute all documents necessary to refinance the car loan to (omitted) Financial Services secured over the Ford Focus bearing motor registration number (omitted) into the husband’s sole name and the husband shall be liable for and indemnify the wife against all payments and liabilities arising in respect of the motor vehicle including, but not limited to, the loan in respect of the purchase of the vehicle.

5. Pursuant to section 90 MT (1)(a) of the Family Law Act, whenever a splittable payment becomes payable in respect of the interest held by the husband with (omitted) Super bearing member plan number (omitted), the wife shall be entitled to be paid the base amount mainly $40,000 and that there be a corresponding reduction to the entitlement the husband would have received from (omitted) Super before this Order.

6. That the operative time for the purposes of clause (5) of these Orders shall be calculated from four (4) business days after the date that a sealed copy of these Orders is served upon the Trustee of (omitted) Super.

7. That having been afforded procedural fairness, these Orders bind the Trustee of (omitted) Super to observe the requirements of the Family Law Act and the Family Law (Superannuation) Regulations 2001.

8. That the husband be declared to have the sole right, title and interest in the shares in the company known as (omitted) Pty Ltd ((omitted)) and the husband indemnify the wife and keep her indemnified against all liabilities, claims, demands, proceedings and judgments of whatsoever nature or kind associated with the said company.

9. That as between each other the wife and the husband shall be each respectively entitled to retain their interest or entitlement to personal property in her or his respective possession or control, including furniture.

10. Subject to clauses (5), (6), and (7) of these Orders:

    (a)the wife be declared to have sole right title and interest to any superannuation entitlement or contribution in her name;

    (b)the husband be declared to have the sole right title and interest to any superannuation entitlement or contribution in his name.

11. Except as otherwise provided for by these Orders, each party shall retain to the exclusion of the other, sole entitlement to all monies held in their individual name (or in any company in which they have a controlling interest) in any bank, building society or other financial institution including interest accrued thereon.

12. Except as otherwise provided for by these Orders, that the wife be solely responsible for all liabilities currently in her name, including credit card liabilities and shall indemnify the husband and keep indemnified with respect to such liabilities.

13. Except as otherwise provided for by these Orders, that the husband be solely responsible for all liabilities currently in his name, including credit card liabilities, secured and unsecured loans, lines of credit and personal loans and shall indemnify the wife and keep her indemnified with respect to such liabilities.

14. That each party do all acts and sign all documents and provide all consents necessary to give effect to these Orders.

15. Liberty to apply as to implementation or enforcement of these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

SYC 6498 of 2012

MR THOMM

Applicant

And

MS PAINTER

Respondent

REASONS FOR JUDGMENT

Introduction

1. These are property proceedings between the applicant husband and the respondent wife.

2. The husband was born on (omitted) 1970 and is aged 45 years. The wife was born on (omitted) 1971 and is aged 43 years.

3. The parties commenced cohabitation in (omitted) 1997 and married on (omitted) 1997. They separated on 20 August 2011 under the one roof until the husband moved out of the former matrimonial home in May 2013.

4. They have two children X born on (omitted) 1998 (17 years), and Y born on (omitted) 2000 (15 years). The child X lives with the husband. The child Y lives with the wife.

5. In 2005 an (omitted) business selling (omitted) was registered in the wife’s name. The husband was primarily responsible for running the business. The wife was responsible for packaging and posting the merchandise. In about March 2012 the wife informed the husband that she no longer wished to assist in the running of the (omitted) business. She told him that she was seeing her accountant to take the (omitted) business off her name. The husband thereafter ran the (omitted) business on his own and arranged for the business to be operated through a company. He continues to operate the business.

6. One of the issues in dispute between the parties is the valuation of the husband’s shares in the above company. The court-appointed joint valuer, a chartered accountant, ultimately found the company to be worth very little, finding that the company’s value was essentially represented by its stock on hand. The wife maintains that the valuation is flawed and that in reality the business is a valuable financial resource in the hands of the husband.

7. The parties are also in dispute, inter-alia, in relation to various liabilities of each of the parties, including the husband’s credit card liabilities (which were used both to purchase merchandise to sell in the (omitted) business and for the parties’ living expenses), the wife’s HECS debt, the wife’s income tax debt and her credit card debt.

Evidence

1. At the trial the husband relied on:

   a)Amended initiating application filed 29 January 2015;

   b)His affidavit filed 27 February 2015

   c)His Financial Statement filed 27 February 2015

   d)Affidavit of the jointly appointed valuer/accountant, Ms F filed 27 February 2015

   e)Affidavit of real estate valuer Mr B filed 27 February 2015

   f)Affidavit of Mr A filed 27 February 2015

2. The wife relied on:

   a)Her Amended Amended Response dated 2 April 2015 (exhibit H);

   b)Her affidavit filed 6 March 2015

   c)Her Financial Statement filed 27 February 2015

   d)Affidavit of Dr V filed 10 March 2015

   e)Affidavit of father filed on 5 March 2015.

3. At the trial of the proceedings the husband and wife were cross-examined as was Ms F, Mr A, and Dr V.

4. At the commencement of the marriage, the husband was working part-time as a (occupation omitted) and also was employed as a (occupation omitted) in a (employer omitted). He was earning about $400 per week whilst also attending TAFE to undertake an (qualifications omitted) in (studies omitted) which he completed in 1998. The husband worked for the first two years of the marriage in these two jobs. These two jobs were with the one employer.

5. The assets of the parties at the commencement of the cohabitation were minimal.

6. At the commencement of the marriage, the wife was working in a (omitted) role as an (occupation omitted). She had a (qualifications omitted) in (occupation omitted). At this time she was earning about $15,000 per year. She was working 4 to 6 hours each day. In early 1998, the wife ceased employment for the birth of X.

7. During the marriage the wife primarily cared for the children, in particular during the first half of the marriage.

8. In October 1999 the husband commenced working full time for (employer omitted) as a (occupation omitted) at (omitted). In April 2000 he was earning about $45,000 a year including overtime.

9. He was made redundant in this employment in December 2012, after the parties separated. At this time he was earning about $75,000 per annum and he received a redundancy package of about $39,000. These funds were used to pay initial valuation costs in the proceedings, $8,800, interim costs paid to the wife for her legal fees, $7,000, and the balance as to his own legal fees. The inference from the evidence is that the husband’s entitlement to the redundancy package substantially accrued during the relationship. Subsequent to its receipt by him, the wife has received some $11,950 from the husband for her share of the initial valuation costs and updating valuation fee, and for her fees.

10. As at the date of trial, the husband had spent about $75,000 in legal fees. Some $33,220 of this $75,000 figure was sourced by the husband as to $13,000 borrowed from his (omitted) line of credit in January 2015, and the balance from his savings.

11. In about 2001 the parties moved to (omitted) from (omitted).

12. In about 2005 the wife started studying at TAFE doing a (qualifications omitted) in (studies omitted) and attended classes during the evenings. She completed this course in 2007. In about 2009 the wife commenced part-time evening studies in a (studies omitted) course.

13. In 2005, the party started an online business selling (omitted) on (business omitted). The husband’s credit cards were used for the payment of expenses relating to the online business. These credit cards were also used for the payment of the parties’ general living expenses. Any profits obtained through the business were used towards repayment of debts on these credit cards. The husband had started this business as he was in need of a second income to meet the parties’ living expenses. The business was registered in the wife’s name for beneficial tax purposes.

14. The husband was primarily responsible for running the (omitted) business from its inception, including being its financial controller. The wife was responsible for physical duties in relation to the business, including packaging and posting the merchandise. The husband generally spent at least 5 to 6 hours every day outside of his full-time employment attending to the running of the business. The wife on average spent at least 7 hours each week attending to the business.

15. For the first 3 years of the (omitted) business it was losing money. The parties continued to operate the business.

16. In about 2006 the wife returned to the workforce and worked four hours a day on and off on a casual basis as a (occupation omitted) earning about $200 per week.

17. In May 2007 the parties purchased the former matrimonial home at Property A (the property). The purchase price was $265,000. The parties paid a deposit of $19,500 which consisted of $12,500 in joint savings and $7,000 from the first home owners grant. The remainder of the funds were met by way of a joint mortgage to (omitted) Bank. The husband was responsible for all mortgage repayments during the marriage until he moved out in May 2013, apart from 4 of 5 half payments that the wife made after separation in August 2011.

18. In about 2009 the wife became a full-time student studying a degree in (studies omitted) at (omitted) University. The husband paid about $3,000 per year towards her education expenses.

19. By 2009 the parties’ financial circumstances had deteriorated significantly. They did not have any savings and all their credit cards had reached their limit and there were insufficient funds to meet the families’ living expenses. The husband could only afford the repayment of one credit card and then ended up using this card to make repayments on other cards as well as basic expenses such as food and petrol. The husband was unsuccessful in loan applications to consolidate their debts.

20. In mid 2009 and again in 2010, the husband was able to obtain funds from (omitted) bank in the amount of $10,000 each time. These funds were then invested into the (omitted) business with the intention of growing the business.

21. During the entire relationship and even post separation until on or about 31 March 2012, the wife had full access to all the parties’ bank accounts and loans whether in the husband’s sole name or in their joint names. Up until about 31 March 2012, the parties were still, according to the husband, together “in a financial sense”. On or about

    
    

    31 March 2012, the wife told the husband that she no longer wanted to work in the (omitted) business. She ceased involvement with the business at this time and had nothing to do with that business thereafter. Thereafter, from about 31 March 2012, the wife had no access to the husband’s bank accounts or accounts in the company’s name.

22. The husband, being concerned that he could go bankrupt, set up a company to continue trading the (omitted) business; the company was named (omitted) Pty Ltd (the company). The husband was advised by his tax agent to do that because it was more beneficial for tax purposes. The husband also established the company because he wanted to keep trying to pay off the matrimonial debts. There was never a wage set aside for the husband in the business since April 2012. Since April 2012 the company has not paid the husband a wage but otherwise the husband has been able to draw against his loan account in the company. In the 2013 financial year he took out an extra $35,877 and, as stated by the joint valuer of the company, this amount should be regarded either as a wage or a dividend to him to avoid tax penalties.

23. In about May 2012, being after separation, the wife commenced full-time employment as a (occupation omitted) and continues to work full time. She earns about $70,000 per year.

24. The husband works full time as a (occupation omitted) and earns about $70,000 per year.

25. Throughout the marriage, the husband struggled to meet the expenses of the family. For the majority of the marriage, the family’s living expenses were met by the use of credit cards in the husband’s name in addition to his wages.

26. In April 2012 there was $27,202 outstanding on all the credit cards in the husband’s name as a result of the purchase of stock for the business and meeting the families’ living expenses. By this time the husband had made significant post separation contributions to reduce the credit card debt of about $68,917 existing at separation in August 2011. By January 2015, due to the husband’s financial circumstances and inability to meet the existing outstanding debt, he had to redraw on funds he had made by way of repayment, and the balance owing on the credit cards was some $61,687.

27. At the time of change over of the (omitted) business to the husband’s new company, in April 2012 and as at 30 June 2013, there was about $15,000 in stock on hand.

28. The month of April 2012 marked the financial separation of the parties. The wife started working in May 2012 and she did not contribute anything towards the mortgage payments, bills or ongoing family expenses until May 2013; during this one year period the husband was paying for these items.

29. The husband now works in the (omitted) business after he finishes his full-time job. He works between five and six hours every day in every week in the (omitted) business.

30. For the financial year ending 30 June 2014, the (omitted) business operated by the company made a net profit of almost $15,000 before tax. However, after the GST was paid on the income received by the (omitted) business, a loss was incurred in that financial year in the sum of about $4,451. The husband did not receive a wage and spent about 40 to 45 hours each week carrying out the functions of the business.

31. There is increased competition from overseas sellers which has required the husband to significantly reduce the prices of the (products omitted) decreasing profit margin. There has also been a new (business omitted) policy since mid-2013 that all sellers must provide free postage to remain competitive. Accordingly, the postage fee is now the second largest cost for the (omitted) business. The postage expenses for the (omitted) business in 2014 financial year were some $24,000. Further, as the (omitted) business involves the buying and selling (products omitted) overseas, the profitability of the (omitted) business is significantly influenced by the exchange rate. The reduction in value of the Australian dollar has had a direct effect on the (omitted) businesses buying power and cash flow and level of profits. The husband is considering ceasing trading the (omitted) business to prevent any further losses.

32. The husband stated that he has existing stock in the business but it is not significant. It is only maybe one month worth of stock.

Property Adjustment

1. Pursuant to section 79 (1)(a) of the Act, in property settlement proceedings, the court may make such order as it considers appropriate, in the case of proceedings with respect to the property of the parties to the marriage or either of them, altering the interests of the parties to the marriage in the property. Such order may include an order requiring either or both of the parties to the marriage to make, for the benefit of either or both of the parties to the marriage, such transfer of property as the court determines.

2. The court, in determining property proceedings, should firstly identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property that is available for distribution between them. The court should then determine whether it is just and equitable to make an order altering the parties’ interests in such property. If the court is satisfied that it is so just and equitable, the court should then consider the contributions made by each of the parties pursuant to section 79(4) of the Act before looking at their future needs by reference to the factors set out under section 75(2) of the Act.

Balance Sheet-Parties’ contentions

1. The husband’s draft balance sheet (referred to as Table 1), contained within his written submissions of 1 April 2015, comprises the following assets and liabilities. The court has bracketed the wife’s alternate proposition. The matters the subject of contention between the parties are marked *, and are considered below.

ASSETS
Joint	The property	$380,000
Husband	Ford Focus	$18,000
Wife	Ford Fiesta	$7,000
Husband	(business omitted) Pty Ltd/	$5,313*
Husband	(omitted) Bank Accounts	$10,000* ($19,441)
Husband	Furniture	$1,500*
Wife	Furniture	$1,500*
Wife	Paid Legal Fees	$11,950*

LIABILITIES
Joint	Mortgage Loan to AMP	$223,760
Joint	(omitted) Loan for Ford Focus	$8,088
Joint	(omitted) Finance for Ford Fiesta	$5,612
Husband	Credit Card Debts	$61,698* (Exclude)
Wife	Business Tax	$6,530
Wife	HECS Debt	Exclude *($13,229)
Wife	Credit Card Debt	Exclude* ($26,862)

SUPERANNUATION
Wife	$16,827
Husband	$95,809

Husband's (omitted) Bank accounts

1. The husband holds a (omitted) Bank account ((omitted)). The last bank statement in evidence (exhibit N) for that account dated

   
   

   1 March 2015 shows a balance of $217.28. That amount will go into the balance sheet.

2. The husband holds a (omitted) Bank account ((omitted)). The last bank statement in evidence (exhibit N) for that account dated 26 December 2014 shows a balance of $12,819.42. That amount will go into the balance sheet.

3. The husband’s company (omitted) Pty Ltd holds a (omitted) Bank transaction account ((omitted)). As at 22 December 2014 there was a credit balance of $6,405.06. The wife submitted that that credit balance should go into the balance sheet as representing the husband’s savings. The husband submitted to the contrary; it was contended that that credit balance “should be disregarded, since it would constitute a partial revaluation of the husband’s company. If the bank balance is included, then so should the current liabilities of the company. Since the parties conducted their case on the basis of a valuation of the company as at 30 June 2013, it would not be appropriate to update only part of that valuation.” The court accepts the husband’s submission and the credit balance of the company account will not go into the balance sheet.

Valuation of the husband’s shares in the company, (omitted) Pty Ltd

1. The joint valuer for the former sole trader (omitted) business and the company was Ms F, chartered accountant.

2. The valuer valued the sole trader (omitted) business, as at 31 March 2012, at $16,894.

3. She valued the company, (business omitted) Pty Ltd, which acquired the (omitted) business from the wife, as at 30 June 2013, in the sum of $5,313.

4. The husband submits, for the purpose of the balance sheet, that his shares in that company should be valued at $5,313.

5. The wife submitted that the valuation is flawed. She contends that therefore there is no relevant evidence before the court as to the value of the shares.

6. The wife submitted that the valuation is flawed because the company was more profitable than what is revealed in its financial statements and taxation returns, such records being relied upon by the valuer.

7. The wife also submitted, albeit in a different context, that the valuer’s estimate of likely stock on hand in the business as at 31 March 2012 and 30 June 2013 of $15,000 was incorrect and that such stock was far greater at those times.

8. The court is satisfied that the valuer has fairly valued the company as at 31 March 2012 and 30 June 2013. The wife’s submissions are discussed below.

Estimate of stock on hand by valuer

1. There was no formal valuation of the stock on hand as at

   
   

   31 March 2012 and 30 June 2013. The stock on hand was not referred to in the company’s balance sheet for either of the 2012 or 2013 financial years.

2. The court accepts the valuer’s estimate of stock as at 31 March 2012 and 30 June 2013 as being some $15,000, finding her reasoning persuasive.

3. The valuer referred to the conflicting information provided to her as to the value of stock on hand (being the stock purchased that remains unsold at the relevant balance date) as at the two balance dates, being $200,000 to $300,000 according to the wife and $15,000 according to the husband.

4. The valuer noted in her report that the financial accounts do not show any stock on hand.

5. The valuer considered it likely that at least one month’s supply of stock was held as stock on hand. She had summarised the (omitted) businesses’ historical profit and loss statements (Schedule 5 of her report). Based on the average annual stock purchased of $155,594 (for the 3 financial years 2011-2013), this equated to about $13,000 for one month’s supply.

6. The valuer stated that based upon her experience (as an accountant who had been working in the accounting industry for 30/40 years), businesses maintain the minimum stock on hand to satisfy customer demand and avoid shortages. This stock level is based on knowledge of customer demand, the time taken for new stock to arrive once ordered, the risk of stock obsolescence and the cost of holding the stock.

7. The valuer, based on her analysis of the business, did not consider it likely that the value of the stock on hand to be $200,000-$300,000 because this would represent some two years of stock purchases being held and no sales.

8. The valuer had also considered the purchases of the (omitted) business. They were quite small purchases, some $1,000 at a time, which purchases were not consistent with purchasing a large amount of materials.

9. The court notes that the wife had agreed that there was a fast turnover of stock in the business.

Wife’s contention that (omitted) business was profitable

1. The wife submitted that the figures relied upon by the valuer for calculation of the (omitted) business’s net profit in the 2012 and 2013 financial years (being the formal figures contained in the wife’s 2012 income tax return relating to the business, the company’s financial statements and the company’s 2012 and 2013 tax returns) were incorrect.

2. This submission is without substance.

3. The court accepts the husband’s evidence that he accurately completed, with the assistance of his accountant, the company’s financial statements and tax returns for the financial years 2012 and 2013 (and also 2014) relating to the (omitted) business.

4. The court notes the wife’s calculation errors for gross revenue sales, GST, and postage charges, referred to in her affidavit. When confronted in cross examination, the wife would not concede the most basic errors. She conceded in cross-examination that she was only partway through a process of examining records relating to the activity of the (omitted) business.

5. The court notes the wife herself in her income tax return for the financial year 2012 represented to the Australian Taxation Office the trading circumstances of the (omitted) business.

6. The court further notes the husband’s voluminous credit card transactions (which included expenses incurred for the (omitted) business) referred to in exhibit B and the accompanying transaction summaries. The husband was not cross-examined in relation to exhibit B. The court accepts this evidence as reliable.

7. In closing addresses, counsel for the wife conceded that the wife had made an attempt to provide a picture as to the financial viability of the (omitted) business during 2011-2013 and, “perhaps she wasn’t wholly successful in respect of accuracy” and had presented, “a holistic picture rather than an accurate one that the court has to consider.”

8. The court is not persuaded that the above formal figures are unreliable. The court accepts the valuer’s conclusions as to net profits earned by the (omitted) business in the financial years 2012 and 2013.

9. The valuer, in her report, concluded that as the (omitted) business incurred losses in both entities after allowing for a commercial salary in the trading operations, the business did not generate an operating profit under either entity; the net realisable assets method was the appropriate basis to value the business. The valuer confirmed that the business did not appear to be profitable enough to pay a market value salary for the people who work in it. The court accepts these conclusions and finds that the business did not generate an operating profit under either entity.

10. Accordingly, the court rejects the wife’s submission that the business was profitable.

11. The valuer’s valuation of the company as at 30 June 2013 in the sum of $5,313 will go into the balance sheet as representing the value of the husband’s shares in the business at that time.

Wife’s paid legal fees

1. As stated previously, the wife received some $11,950 from the husband to assist in paying her share of the joint valuer’s fees and for her own legal costs. The husband’s redundancy package was about $39,000 and his entitlement to the redundancy package accrued during the relationship. Accordingly, the wife has in effect received less than half of her notional share of that redundancy package. The balance of some $7,550 can be taken into account as an adjustment in the wife’s favour under s75(2). Accordingly, the amount of $11,950 will not go into the balance sheet.

Husband’s credit card debts

1. The parties are in disagreement as to whether certain credit card debts in the name of the husband should be included in the balance sheet.

2. These credit cards were used by the husband during the marriage for both business and living expenses of the parties. All purchases for the (omitted) business were made online using these credit cards.

3. Again, the husband’s voluminous credit card transactions were contained within the five volumes of exhibit B. Each volume representing each of the husband’s credit cards contained a transaction summary for the period from 16 July 2011 (the approximate time the parties separated under the one roof) to 15 January 2015 (being a date shortly prior to the trial).

4. In the husband’s trial affidavit (paragraph 46), the husband refers to a total figure of $27,202 as being outstanding for all credit cards in his name as at April 2012 (being the date of financial separation of the parties) as a result of purchase of stock for the (omitted) business and meeting the parties’ living expenses. The court accepts this evidence as reliable.

5. The court is of the view that this figure of $27,202 should go into the balance sheet, representing marital debt at the time of financial separation of the parties.

6. The husband has not proved that the increase in his credit card debt following the financial separation of the parties in April 2012 by January 2015 it was some $61,687-relates to marital debt. The court notes, for example, that the husband borrowed some $13,000 from the (omitted) line of credit, for his own legal fees, in about January 2015. The court notes that after financial separation of the parties in March 2012 the husband had the sole financial benefit of the business.

Furniture

1. The wife, in final submissions, did not include any amount for household contents in her balance sheet and submitted that the court should just ignore the furniture for the purpose of dealing with the net asset pool. The husband’s submission as to the final balance sheet, based upon the parties’ respective amounts for household contents and referred to in their respective Financial Statements, contained figures of $1,500 each.

2. Given the modest pool of assets and the absence of any valuation evidence regarding household contents, the court proposes to order that each party will simply retain the household contents in their respective possession and will not include these items in the balance sheet.

The wife’s HECS liability

1. The wife submits that her HECS liability of $13,229 should go into the balance sheet. The husband submits that this debt should not go into the balance sheet because it is a liability contingent on income earned, and then only payable by instalments.

2. The wife’s affidavit stated that she was financially affected by her continuing HECS debt and she referred to her salary from (employer omitted) which has HECS deductions made from it in the sum of about $150 each fortnight.

3. The HECS debt was built up during the marriage; the wife’s studies included the (omitted) course which commenced in about 2009.

4. The wife’s 2012 tax return records income from her work with (employer omitted) in the sum of only $1,269 gross. In that employment she works as an (occupation omitted).

5. The HECS debt did not contribute to the wife’s earning capacity before the parties’ financial separation at the end of March 2012 and, accordingly, the HECS debt will not go into the balance sheet.

Wife’s credit card liabilities

1. The wife has credit card liabilities in the sum of $26,862. The husband submits that these liabilities should be excluded from the balance sheet as they represent borrowings for legal fees and post separation discretionary expenditure. The wife submits that the credit cards were used exclusively for her personal use during the years where the parties were living separately and she financially struggled to maintain a separate financial existence.

2. In cross examination, the wife conceded that the bulk of her credit card liability related to legal fees that she had paid. There is no evidence that such credit card liability was used to pay marital debt up to the date of the parties’ financial separation in March 2012 (or thereafter). Accordingly, the wife’s credit card liability will not go into the balance sheet.

Balance Sheet

1. As at trial date, the court finds the parties had the following assets and liabilities for adjustment purposes:

ASSETS
Joint	The Property	$380,000
Husband	Ford Focus	$18,000
Wife	Ford Fiesta	$7,000
Husband	(omitted) Bank Accounts	$13,037 (rounded up)
Husband	(omitted) Pty Ltd	$5,313
Wife	Superannuation	$16,827
Husband	Superannuation	$95,809
Total Assets	$535,986

LIABILITIES
Mortgage Loan	(omitted) (Jt)	$223,760
(omitted) Loan	Ford Focus (Jt)	$8,088
(omitted) Finance	Ford Fiesta (Jt)	$5,612
Business Tax	(W)	$6,530
Husband	Credit Card debt	$27,202
Total Liabilities	$271,192

NET ASSETS: $264,794

1. The court finds the parties net assets, including superannuation, to be $264,794.

Section 79 (2) of the Act

1. The court is satisfied that it is appropriate in this case to alter the property interests of the parties in light of the breakdown of their marriage, the fact that they will no longer have the joint use and enjoyment of the property, and that the continuance of the current legal ownership of the property would not afford them justice and equity. The parties join in seeking orders for property adjustment.

Contributions to assets

1. The court proposes to adopt a single pool approach in relation to non-superannuation assets and superannuation assets. The court will now assess contributions.

2. The parties had no assets of significance at the commencement of the relationship nor had they accrued significant superannuation at that time. The parties’ marriage subsisted for some 14 years. There are 2 children of the marriage.

3. The property was purchased in May 2007 utilising $12,500 in joint savings and a first home owners grant. The joint mortgage to (omitted) Bank was serviced through the husband’s income up until May 2013 (when the husband moved out of the property). The husband was in full-time paid employment for most of the marriage.

4. The wife’s paid employment during the marriage was limited to a short period of employment in 1997/1998 until about May 1999. The wife also had some part-time employment from about 2005 until about the end of 2009.

5. Because the husband was the primary income earner and was employed on a full-time basis during the marriage, the wife primarily attended to the domestic chores and caring for the children, in particular during the first half of the marriage. The husband attended to various household chores during the weekends and during weeknights after returning from work. The husband would take the children to school of a morning.

6. During the marriage, certain renovations were carried out to the property. The husband carried out the majority of this work with the wife assisting in painting the stairway handrails. The husband’s brother assisted the husband. The husband asserts no increase in value to the property by reason of these renovations nor that the renovations themselves had a particular value.

7. A previously stated, both parties contributed to the operation of the (omitted) business from its inception, up until financial separation in March 2012, although the husband was primarily responsible for its operation and made a greater contribution than the wife whose efforts were limited to the packaging and posting side of the business.

8. Since about November 2013, the child X has been living with the husband. Y remained living with the wife.

9. The court finds that each of the parties contributed to the fullest extent of which they were capable to both the financial and physical benefit of their family and the (omitted) business. Whilst the husband serviced the mortgage and made a greater contribution to the operation of the (omitted) business, the wife made a greater contribution to the welfare of the family through being the primary carer of the children and substantially carrying out the household domestic duties. Accordingly, the court finds that the parties’ personal contributions during cohabitation were equal.

10. The court notes that after the parties’ financial separation in March 2012 and up to May 2013 (when the husband left the property), the husband continued servicing the mortgage, the wife made 4-5 half payments on the mortgage after she obtained full-time employment in about May 2013, and the husband paid most of the household bills.

11. After May 2013 the wife serviced the mortgage whilst occupying the property in the absence of the husband. The husband was paying rent after May 2013.

12. The wife had a tax bill of about $17,555 at the time of financial separation in March 2012. Thereafter she reduced that debt to $6,530.

13. In the circumstances, after cohabitation the court finds that the parties’ respective contributions were also equal.

Section 75 (2) factors

1. The youngest child, Y, resides with the wife. She is now aged 15 years. The oldest child, X, resides with the husband. She is now aged 17 years of age. Accordingly, the wife will bear a slightly longer period of time caring for a child of the relationship.

2. In respect of the (omitted) business, now owned and operated through the husband’s company, the wife contends that it is a significant financial resource from which the husband solely benefits. The husband contends to the contrary, submitting that the (omitted) business’ capacity to generate an income is directly related to the husband’s personal exertion rather than any intrinsic value and it is equally open to the wife to take a second job in the evenings and weekends should she choose to supplement her income.

3. However, the evidence before the court is that the husband continues to trade the (omitted) business through the company. It is noted that he continues to service his credit card debts through the income from the (omitted) business; the husband conceded that he needed the (omitted) business to be able to maintain his credit card liabilities.

4. In the circumstances, the court is persuaded that the (omitted) business represents a modest financial resource available to the husband.

5. The wife is aged 43 years and the husband 45 years. They both have remunerative employment. The wife’s average weekly income is about $1,629 per week gross in her employment. Her weekly expenditure, amounts to some $2,143 and includes regular payments relating to the mortgage, credit card debts and car loan debt.

6. The husband earns an average of $1,428 gross per week. His weekly personal expenditure is some $2,772, which includes repayment obligations for credit card debts and loans in his name. The husband has weekly rental obligations of $400. The wife continues to live in the property and pays the mortgage.

1. In the above circumstances, the income disparity between the parties is not so great that there should be any adjustment.

2. The husband states that he has very poor vision in both eyes. He works as a (occupation omitted) and continues to operate the (omitted) business. He adduced no medical evidence. No adjustment is justified under section 75(2).

3. The wife has suffered from stress, anxiety and depression since at least September 2011. There is an affidavit of her treating psychiatrist, Dr V, in evidence annexing the doctor’s medical report dated 9 December 2014. That doctor commenced treating the wife on 27 September 2011. It is noted that the parties separated under the one roof on a final basis in August 2011. The doctor states that the wife is fit to work in her present occupation as an (occupation omitted). He states that she still suffers from insomnia, anxiety and feeling of being under constant pressure that is related to the current legal stresses. She also suffers from stress related headache that affects her working capacity. The doctor states that although the wife holds full-time employment as an (occupation omitted) at this stage, she needs ongoing treatment to recover from her long-term depression. He states her prognosis is uncertain at this stage in terms of the time and degree of her recovery.

4. The doctor gave oral evidence. The doctor confirmed that the wife’s depression has taken a fluctuating course, with periods of overt symptoms and periods of stability. The doctor confirmed clinical depression in about August 2011. He confirmed that in a few months prior to December 2014, the wife’s depressive illness returned, triggered by her ongoing legal case and stress associated with it. The doctor referred to the wife displaying clinical features of major depression at that time. The doctor stated that the end of legal proceedings can significantly assist in the recovery of persons from their depression however, that would not necessarily be the case because depression is a multi-factorial condition and depends on some other stresses and resilience of the patient in the presence of ongoing depressive symptoms. The doctor confirmed that the fact that the wife has held down a full-time employment position (since about mid 2012) is a positive sign for an improvement of symptoms.

5. The wife incurs out-of-pocket expenses of $90 on each occasion that she consults with her psychiatrist. She presently visits that doctor about once every two months. She states that she is required to attend this doctor every month in relation to her anxiety and depression but that she cannot afford monthly visits. The court is not persuaded, on the evidence before it, that there should be any adjustment by reference to the wife’s stress, anxiety and depression.

6. The wife submits that the husband used his redundancy payment of about $40,000 to pay legal costs in the proceedings; the redundancy payment covered the period from 7 October 1999 to 12 December 2012. Of this sum, about $11,950 was used to pay costs of the proceedings on behalf of the wife. The husband confirms that he has also used the redundancy payment to pay his own legal fees. There should be a modest adjustment in favour of the wife.

7. In consideration of the above matters, the court is satisfied that there should be a modest adjustment in favour of the wife, pursuant to section 75(2) of the Act, of 5%. This adjustment creates a disparity of 10% between the parties equivalent to some $26,479 in favour of the wife.

Justice and equity

1. To achieve justice and equity between the parties, each of the parties should retain half of the parties’ total superannuation entitlements. The parties’ total superannuation entitlements amount to $112,636 and half of that amount is $56,318. A superannuation splitting order of $40,000 in favour of the wife would bring her superannuation entitlements approximately equal to those of the husband.

2. The net asset pool is $264,794. The wife should receive 55% of the net asset pool being $145,637 (rounded up).

3. On the basis that the wife retains the property, $380,000, her car, $7,000, superannuation, $56,827, and retain debts being the mortgage, $223,760, her car loan, $5,612, her business tax debt $6,530, her net position would be $207,925. Because her 55% share of the net asset pool is only $145,637, she should be ordered to pay the husband the difference, being $62,288.

4. The court’s proposed orders should not affect the earning capacity of the parties.

5. In the circumstances of this case, and for all the reasons set out above, the court considers that the orders proposed to be made will produce a just and equitable result as between the parties.

I certify that the preceding one hundred and twenty three (123) paragraphs are a true copy of the reasons for judgment of Judge Newbrun

Associate: 

Date:  10 September 2015