Thomson and Thomson

FAMILY COURT OF AUSTRALIA

THOMSON & THOMSON

[2010] FamCA 226

FAMILY LAW – PROPERTY SETTLEMENT – determination of asset pool – where husband failed to make full and frank disclosure.

FAMILY LAW – PROPERTY SETTLEMENT – adjustment of property interests – where husband sought loading for his post separation contributions – held inappropriate to award any loading to the husband on account of contributions – no adjustment on consideration of s 75(2) factors – asset pool divided equally

Family Law Act 1975 (Cth) s 75(2), 79(2) & 79(4)(e)

Oriolo and Oriolo (1985) FLC 91-653
Weir and Weir (1993) FLC 92-338
Black and Kellner (1992) FLC 92-287
Chang v Su (2002) FLC 93-117
Kannis and Kannis [2002] FamCA 1150
Gould and Gould (2007) FLC 93-333
Jones v Dunkel (1959) 101 CLR 298
GWR & VAR [2006] FamCA 894

APPLICANT:

Ms Thomson

RESPONDENT:

Mr Thomson

FILE NUMBER:

ADC

2249

2007

DATE DELIVERED:

25 FEBRUARY 2010

PLACE DELIVERED:

Adelaide

PLACE HEARD:

Adelaide

JUDGMENT OF:

BURR J

HEARING DATE:

23 JUNE 2008, 3, 4, 5 JUNE 2009, 30 NOVEMBER 2009, 1, 2, 3 DECEMBER 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR BERMAN

SOLICITOR FOR THE APPLICANT:

DAVID BURRELL & CO

COUNSEL FOR THE RESPONDENT:

MS MOROSINI

SOLICITOR FOR THE RESPONDENT:

DI MOROSINI & CO

Orders

That in full and final settlement of all claims that either party may have against the other by way of settlement of property or variation of settlement of property:-
(a)    the moneys contained in L Real Estate accounts numbered …01 and …19 or otherwise held by L Real Estate on behalf of the parties be forthwith distributed as follows:-
(i)to Mr F, the sum of TWENTY THREE THOUSAND SEVEN HUNDRED AND TWENTY TWO DOLLARS [$23,722] payable to the trust account of Di Morosini & Co for and on behalf of Mr F;
(ii)to the wife, the sum of NINE HUNDRED AND NINETEEN THOUSAND FIVE HUNDRED AND NINETY ONE DOLLARS [$919,591];
(iii)to the husband, the sum of SIXTY TWO THOUSAND FIVE HUNDRED AND TWENTY DOLLARS [$62,520] payable to the trust account of Di Morosini & Co for and on behalf of the husband;
(iv)to each of the husband and the wife, one-half of any balance then remaining with each to be responsible for any taxation liability assessed as due and owing on their one-half share of any accrued interest received by them.
(b)    the husband’s estate and interest (if any) both at law and equity in the following be and the same is hereby vested in the wife:-
(i)the wife’s personal effects, clothing and jewellery;
(ii)the furniture and household effects in the wife’s possession;
(iii)B Pty Ltd plant and equipment;
(iv)B Pty Ltd (including other plant and equipment);
(v)U property;
(vi)D property;
(vii)save as otherwise specified in these Orders, any motor vehicle in the wife’s possession.
(c)    the wife’s estate and interest (if any) both at law and in equity in the following be and the same is hereby vested in the husband:-
(i)the Homestead block;
(ii)T property;
(iii)M Pty Ltd;
(iv)M Pty Ltd plant and equipment;
(v)M land;
(vi)2005 Chrysler PT Cruiser motor vehicle;
(vii)Ford F250 Dual Cab motor vehicle;
(viii)AWB shares and Incitec Pivot shares;
(ix)the husband’s MLC superannuation benefits and entitlements;
(x)farming plant and equipment;
(xi)3 stone rollers;
(xii)40’ x 9” Vennings Auger Self Propelled;
(xiii)Road roller;
(xiv)Hyster forklift;
(xv)Shearer Harrow;
(xvi)John Deere 440 tractor;
(xvii)Hay insurance proceeds;
(xviii)Livestock;
(xix)Crops
(d)    the husband do pay or cause to be paid to the exoneration of the wife:-
(i)all mortgage and loan instalments (if any), rates and taxes and other outgoings in relation to any of the properties to be retained by the husband including (but without limiting the generality thereof):-
(A)the Homestead block;
(B)T property;
(C)M land;
(D)M Pty Ltd;
to the exoneration of the wife and do indemnify the wife against any liability in relation to any such payment;
(e)    The wife do pay or cause to be paid to the exoneration of the husband:-
(i)all mortgage and loan instalments (if any), rates and taxes and other outgoings in relation to any of the properties to be retained by the wife including (but without limiting the generality thereof):-
(A)U property;
(B)D property;
(C)B Pty Ltd
to the exoneration of the husband and do indemnify the husband against any liability in relation to such payment.
(f)    Henceforth each party shall discharge without calling upon the other to contribute thereto the debts and liabilities contracted by them and henceforth each party is restrained and an injunction is hereby granted restraining the parties and each of them from pledging the credit of the other.
(g)    Each party do all such acts and things and sign all such documents as are necessary to give effect to the terms of these Orders, with the costs associated with the transfer of any property to be met by the transferee provided that if the parties or either of them shall refuse or neglect to execute such documentation pursuant to the terms of these Orders within seven [7] days after the same shall have been tendered to him or her by or on behalf of the other party for that purpose then and in such case a Registrar of the Family Court of Australia upon proof by affidavit of such refusal or neglect is hereby appointed to execute and if in his or her opinion it shall be necessary so to do to settle the same and to do all such other acts and things and to execute such other documents as shall be necessary to give full force and effect thereto and shall execute and do the same accordingly.
That all applications be removed from the pending list.

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

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: ADC 2249 of 2007

MS THOMSON

Applicant

And

MR THOMSON

Respondent

REASONS FOR JUDGMENT

The applications

I have before me for determination competing applications for property settlement.
The applications currently before the Court are the wife’s Application for Final Orders filed on 30 April 2007 and the husband’s Further Amended Response filed on 1 July 2008.
The parties’ son S Thomson was named as the second respondent to the proceedings, with the husband seeking a declaration that the son’s interests in certain properties were held on trust for the parties to the marriage and seeking that such interests be transferred to the husband and the wife. However, orders were made by consent on 5 June 2009 finalising the issues between the husband and the parties’ son.

Factual background

The husband was born in 1956 and is now aged nearly 54 years.
The wife was born in 1958 and is now aged 52 years.
In approximately 1970 the husband left school at the age of 14 and commenced working full time on his family’s farming property at T.
The parties met in 1974.
In 1975 the husband’s parents gave to him 75 acres of farming land known as the “Homestead” block.
The parties married in 1976. Following the parties’ marriage the wife resigned from her job as an Accounts Clerk and assisted the husband on the farm as well as undertaking bookkeeping work. The husband continued share farming as well as cropping the Homestead block.
In 1977 the wife also gained part-time employment as a cleaner at a motel.
Early in the parties’ marriage they established a partnership, C & V Thomson, to run the farm operations (“the partnership”).
The parties’ first child L Thomson was born in 1980 and she is now aged almost 30 years. The wife ceased working as a cleaner during her pregnancy.
In 1980/1981 the husband commenced working for the Local District Council for approximately 18 months in addition to carrying out his farm duties.
In 1982 the parties’ second child S Thomson was born and he is now aged 27 years.
In 1982 the parties commenced a sales business, later to become M Pty Ltd. The husband bought products interstate. The wife assisted in the administration of the business. The business was operated from the Homestead block.
In 1982/1983 the parties purchased further farming land from the husband’s family known as the “[E]” block. The land was purchased for $90,000, with $60,000 borrowed from the Commonwealth Bank and the remainder of the purchase price provided by the husband’s father by way of vendor finance.
From approximately 1987 the partnership employed a full time employee, Mr N, to work on the farm.
The parties purchased further farming land known as “[O Land]”. The husband contended the property was purchased in the mid 1980s for approximately $184,000. According to the wife the property was not purchased until 1995 and for $187,000.
The parties’ youngest child Y Thomson was born in 1989 and she is now aged 20 years.
The parties purchased a property at T, borrowing the purchase price in full from the Commonwealth Bank. The wife contended the property was purchased in 1992 for $32,000. According to the husband it was purchased in 1994 for $35,000.
The parties incorporated the company M Pty Ltd which operated the sales business. According to the wife the company was incorporated in 1996. The husband says incorporation occurred in 1998. The husband and wife were the directors and equal shareholders of the company.
In 1998 the parties purchased vacant land at Lot 4 and Lot 2in T for $47,000. The husband developed and subdivided the land.
In October 1999 the parties purchased further farming land known as “[Z Land]” for approximately $265,000 financed by way of mortgage from the Commonwealth Bank.
In 1999/2000 the parties’ son S returned to the property during harvest time to assist the parties.
In 2001 S commenced full time work on the farm.
Also in 2001 the husband suffered health issues, receiving treatment for depression and being placed on medication.
Further, in 2001 the parties placed the two properties at Lot 2 and Lot 4 on the market for sale.
In 2002 the husband was injured in a motor cycle accident while working on the farm. The husband fractured his back in two places and his neck in two places. The husband undertook administrative work until he was able to return to physical activity approximately 3 months later.
The parties sold the vacant land at Lot 2 and Lot 4 in 2002 and subsequently purchased two investment properties D and D2. The purchase was funded in part from the proceeds of sale of the Lot 2 and Lot 4 properties, with the remainder of the purchase price funded by way of a mortgage of approximately $89,400.
In 2002 the parties purchased farming land know as “[V Land]” for $230,000. The purchase was financed in part from the proceeds of sale of the Lot 2 and Lot 4 properties, with approximately $222,000 borrowed by the husband and wife from the Commonwealth Bank. The property was registered in the names of the husband, the wife and the parties’ son S as joint tenants. Following purchase, the parties subdivided the property into five titles.
In 2002 the parties purchased a Ford Fairmont motor vehicle for their son S, registered in the name of the partnership. The parties also purchased a Ford Ute Crew Cab motor vehicle.
In February 2004 the parties purchased farming land known as “[C Land]” from the husband’s father for the sum of $150,000, financed by a loan from the Commonwealth Bank.
In February 2005 the parties purchased a Ford F250 Crew Cab ute for the husband.
At the end of 2005 the parties purchased a Regent Caravan.
In June 2006 the parties purchased a Chrysler PT-Cruiser motor vehicle which was driven by the wife.
The parties sold a property in April 2006 at A1 for approximately $68,000. On 23 June 2006 the parties sold a property at A2 for approximately $70,227.
In August 2006 the parties’ son S relocated to Europe, where he lived until April 2007.
The subdivision of the V land was completed in 2006 and the parties sold one of the parcels of land for approximately $300,000, retaining the remaining four titles.
In mid 2006 the parties purchased a business known as B Business as well as a property at U. The parties’ son S was again named on the title of this property. According to the husband, the parties incorporated the company B Pty Ltd, with themselves as directors and shareholders. Trading commenced under the husband and wife’s ownership on 3 July 2006.
In October 2006 the parties purchased a Ford Courier Utility motor vehicle.
On 30 November 2006 the parties sold the property at D2 for approximately $145,000.
The parties separated on 12 February 2007. The wife left the Homestead property where the parties had lived. The husband remained living on the property with the parties’ youngest child Y. Y moved to live with the wife after approximately 6 months.
Following separation the wife withdrew $50,000 from the parties’ bank account. The husband withdrew money from the farming overdraft account and opened another account in his sole name to run M Pty Ltd and the farm.
In February 2007 the husband commenced cohabitation with his current partner, Ms H.
On 10 April 2007 an incident occurred at the farm between the husband and the wife, with the wife alleging she was assaulted by the husband. The husband was subsequently charged with assault. No conviction was recorded against the husband with respect to this charge but he was placed on a good behaviour bond and fined $300.
The wife commenced proceedings for property settlement in this Court on 30 April 2007. The husband filed a Response on 24 May 2007.
On 30 May 2007 Forbes JR made orders by consent inter alia allowing the parties to continue the “ordinary operation” of the farming business M Pty Ltd and B Pty Ltd. The parties were also at liberty to deal with assets in the ordinary course of the business. The sale of “significant plant and machinery” was precluded.
In August 2007 the husband purchased vacant land known as Allotments 55 and 59 for a purchase price of approximately $100,000. The purchase was financed in full through two loans from the Commonwealth Bank.
On 22 May 2008 the husband filed an Amended Response to an Application for Final Orders, naming the parties’ son S Thomson as the second respondent to the proceedings and seeking orders in addition, inter alia, that S’s interest in the property at Allotment 91 and the “V Land” land be included in the pool of assets to be distributed between the husband and wife.
On 7 June 2008 the parties’ divorce became final.
On 19 June 2008 S Thomson filed a Response to an Application for Final Orders seeking that that paragraph of the husband’s Amended Response seeking orders with respect to his interests in the named properties, be dismissed.
On 23 June 2008 a first day of trial was held in this matter.
On 1 July 2008 the husband filed a Further Amended Response to an Application for Final Orders, seeking in addition to orders with respect to property settlement against the wife, a declaration that the second respondent held his interest at law or equity in the Lot 91 and V properties on trust for the husband and wife and that he transfer such interests to them.
On 1 August 2008 the second respondent filed an Amended Response again seeking the dismissal of that part of the husband’s application in which he sought the declaration with respect to, and transfer of, his property interests.
In October 2008 the husband was injured in a farm accident, breaking his pelvis and shattering his hip joint. He was not expected to return to full strength or mobility before October 2009.
On 22 December 2008 I made orders, inter alia, for the husband to sign such documents as was necessary to facilitate the wife obtaining a $20,000 overdraft facility in connection with the business of B Pty Ltd, on the basis that the wife was to be solely responsible for the overdraft facility. I also made orders that B Pty Ltd be excused from the obligation to pay rental to the partnership of C&V Thomson for the use of the business premises and the wife was to receive the rental income from Mr W.
On 19 March 2009 I ordered that the net proceeds of sale of the E Block, C Land, Z Land and O Land properties be placed in an interest bearing bank account in the joint names of the parties pending final resolution of this matter. I also ordered that the net proceeds of the sale of a portion of the V property be placed in an interest bearing account in the names of the husband, the wife and the second respondent pending final resolution. The parties were restrained from further encumbering or establishing further loan facilities pending the final resolution of this matter. The husband and wife were restrained from selling any of the remaining plant, machinery, crops, sheep and/or wool produced on the land owned by them or pursuant to the farming operations without the consent of the other party or a Court order. If any such items were to be sold the proceeds were to be deposited into an interest bearing bank account in the joint names of the husband and the wife.
On 21 April 2009 settlement occurred with respect to the sale of all farming land save for three scrub blocks of V land and the Homestead property. The net proceeds of sale of the portion of the V land was placed in an interest bearing account with L Real Estate in the names of the husband, the wife and the son S Thomson. The net proceeds of sale of the other farming land was placed in an interest bearing account with L Real Estate in the sole names of the husband and the wife.
The trial continued on 3, 4 and 5 June 2009. On 5 June consent orders were made finalising the husband’s claim again the second respondent. Those orders provided:-
1.The first respondent’s claim against the second respondent as detailed in paragraphs 4 and 5 of the Further Amended Response filed on 1 July 2008 be dismissed.
2.The first respondent do pay the second respondent’s costs fixed in the sum of THIRTY THOUSAND DOLLARS ($30,000).
3.The applicant and the first respondent forthwith do all things necessary to cause one-third of the balance of the proceeds of sale of Lot 4 […] held on account of the parties in [L Real Estate] Limited interest bearing account number […]19 to be paid to Howe Martin & Associates Trust Account for and on behalf of the second respondent.
4.The first respondent do pay the second respondent’s costs pursuant to paragraph 2 hereof within six [6] calendar months of the date hereof or upon settlement of the sale of the three “scrub blocks” being the land in Certificates of Title […] (Lot 2), […] (Lot 3) and […] (Lot 10), whichever is the earlier.
5.The applicant, the first respondent and the second respondent effect the sale of the “scrub blocks” detailed in paragraph 4 hereof, such sale to be documented by [L Real Estate], and such sale to be on terms and conditions as are agreed between the parties or as ordered by the Court to the intent that upon sale, the second respondent be paid one-third of the net proceeds of sale and the balance be held pending agreement or further order of the Court in [L Real Estate] account number […]01.
The conclusion of the trial was heard on 30 November, 1, 2 and 3 December 2009, when Judgment was reserved.

The evidence

The wife gave evidence in support of her application and further called evidence from agronomic consultant Mr RP.
The husband too gave evidence in support of his application and called further evidence from Mr F of K Machinery and Mr N who was a farm worker on the former partnership property.
Also before me in evidence given on behalf of the husband were the affidavits of Ms H filed 22 May 2009, Dr BT filed 9 October 2008 and Associate Professor PL filed 3 June 2009. None was required by the wife for cross-examination.

Where any issues of conflict arise as between the evidence of the parties, I prefer the evidence of the wife.
As the evidence unfolded, particularly during cross-examination of the husband, it became obvious that the husband had failed in many respects to discharge his duty of full and frank disclosure. This has implications for the manner in which I approach my determination in a number of respects.
It is the duty of each party to make full and frank disclosure of their financial circumstances (see Rule 13.04 and also Oriolo and Oriolo (1985) FLC 91-653). Authority has established that the Court may draw an adverse inference against a party who has deliberately failed to make full and frank disclosure (see Weir and Weir (1993) FLC 92-338, Black and Kellner (1992) FLC 92-287, Chang v Su (2002) FLC 93-117 and Kannis and Kannis [2002] FamCA 1150 (reported in edited form at (2003) FLC 93-135).
In Weir and Weir (supra) the Full Court said at 79,593:-
“It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party.”
In Kannis and Kannis (supra) the Full Court, after reviewing the authorities said:-
“Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.”
More recently, the Full Court in Gould and Gould (2007) FLC 93-333 confirmed that the authorities establish that in cases of non-disclosure a “robust” approach may be taken by the Court (at [26]).

Assets and liabilities

The parties were able to agree a significant proportion of the assets that comprise the pool available for division between them, and also the values of same as follows:-
70.1.Bank account number …01 L Real Estate
(as at 13 November 2009) (net proceeds of sale
of farming land and clearing sale)   $809,507.00
70.2.Additional funds held by L Real Estate  $9,969.00
70.3.Bank account number 301529319 L Real Estate
(as at 17 November 2009) (net proceeds of sale
of part of “V Land”)  $186,357.00
70.4.Homestead block  $235,000.00
70.5.B Ltd plant and equipment (including
Landcruiser with aluminium tray and bull bar)                $48,600.00
70.6.Commercial property at U (2/3^rd share) (land)             $153,318.00
70.7.T property (subject to my findings below)  $148,000.00
70.8.D property (net)  $68,807.00
70.9.B Pty Ltd (including other plant and equipment)          $153,000.00
70.10.M Pty Ltd (subject to my findings below)  $4,118.00
Plant and equipment M Pty Ltd  $47,000.00
70.11.M land purchased by husband post separation (net)        $17,834.00
70.12.2005 Chrysler PT Cruiser motor vehicle  $20,000.00
70.13.Ford F250 Dual Cab motor vehicle  $55,000.00
70.14.AWB shares and Incitec Pivot shares  $8,500.00
70.15.Husband’s MLC superannuation (as at 21 May 2009)     $14,422.00
Sub-total A.  $1,979,432.00

Assets not agreed

The parties own a property at T. They have agreed its market value at $148,000. The husband seeks to take account of the mortgage registered on that property agreed as presently securing the sum of $81,202. The security on that property is not in relation to borrowings for that property but rather to secure the overdraft for M Pty Ltd, a business previously operated by the parties jointly but now operated solely by the husband. A valuation of M Pty Ltd was undertaken by Mr MN on 1 November 2007. In valuing that business at $4,118, Mr MN had regard to the amount of the overdraft then due at a figure of $68,000. Since that time the overdraft has increased to the point where an amount of $81,202 is now owed. That is the amount secured by mortgage.
Thus the dispute between the parties is as to an amount of $13,000 being the difference between the amount due and owing on the overdraft at the date of Mr MN’s valuation on 1 November 2007 and the amount due and owing now. However, given that the valuation of the assets of the business was conducted some two years ago, it is my view that it is appropriate to have regard only to the overdraft amount which was due at that time. Otherwise it will require a revaluation of the assets which comprise the business. Thus I am satisfied that it is appropriate to have regard to the value of T property as $148,000 without making any deduction for the mortgage due and owing on the property and to take account of the value of the M Pty Ltd business at $4,118.
The largest area of disagreement between the parties was as to the value I ought to attribute to the plant and equipment of the former partnership between the husband and the wife, C&V Thomson, being plant and equipment either retained by the husband or sold by the husband. It is the husband’s contention that such plant and equipment has a value of $178,810. It is the wife’s contention that the true value is $251,464.
Again the parties were in agreement with respect to the majority of those items of plant and equipment as follows:-
74.1.Regent caravan  $20,000.00
74.2.Versatile 946 4WD tractor 15,500 hrs  $35,454.00
74.3.International 4586 4WD tractor  $8,000.00
74.4.Fiat Allis grader  $15,000.00
74.5.John Deere 975 header with 24’   $2,500.00
74.6.Claas header  $28,000.00
74.7.Woolford prickle chain 48’  $2,000.00
74.8.Loxton 18’ slasher  $5,000.00
74.9.40’ x 9” Venning Auger mechanical lift  $3,000.00
74.10.Mobile fuel tank  $400.00
74.11.Nuffield cement mixer  $1,500.00
74.12.Lister 17 KVA generator with a 3 cylinder
Lister diesel engine  $6,000.00
74.13.Trailer spot spray unit with a Vanguard engine  $500.00
74.14.Stamford ride on lawn mower  $1,500.00
74.15.All sundry workshop equipment and tools  $8,910.00
74.16.Antique tractors  $43,800.00
Sub-total B.  $181,564.00
A major area of contention between the parties on this issue is in relation to three stone rollers. It is the husband’s evidence that he sold the rollers to his nephew and a Mr P of P Pastoral on 17 March 2009 for $41,500 (Exhibit 14). However, in the depreciation schedule annexed to the financial report for the year ended 30 June 2009 for the husband and the wife’s partnership of C&V Thomson, it is disclosed that the stone rollers were in fact sold and disposed of for a total of $62,900 on 1 April 2009. All of the information provided to the accountant for the preparation of that financial report was provided by the husband.
Thus on the one hand the husband’s evidence to this Court was that he sold the rollers for a total of $41,500, but on the other hand he told his accountant that he had sold them for $62,900. The husband’s evidence and explanation as to the difference in the two figures, was simply implausible. Further, the husband did not take the opportunity to call evidence from his nephew or Mr P of P Pastoral, either in person or by telephone link in order to rebut the inference that the correct figure was that which is shown in the depreciation schedule attached to the financial report and in that regard I refer to the High Court decision of Jones v Dunkel (1959) 101 CLR 298 which has been cited numerous times in decisions of this Court. As the Full Court summarised in the unreported decision of GWR & VAR [2006] FamCA 894 at paragraph 29:-
“The decision of the High Court in Jones v Dunkel does little more than confirm what common sense suggests would be the case, namely that where it would be reasonable to expect a party to have called evidence from a witness in relation to an issue, the unexplained failure to do so could justify drawing the inference that the evidence of that witness would not have assisted that party’s cause.”
A further item of plant and equipment in dispute between the parties was a 40’ x 9” Venning Auger Self Propelled which the husband said belonged to a Mr F of K Machinery. The husband tendered an invoice dated 18 June 2008 in respect of what he said was the Auger (Exhibit 19). However, I do not accept the husband’s evidence in that regard for at least a couple of reasons. For one, the Auger described in the invoice from Mr F (Exhibit 19) is described as a 50’ x 10” Auger not a 40’ x 9”. The Auger in dispute, and the one alleged by the wife to have been sold by the husband was that valued by Mr W on 24 September 2007. To state the obvious, it was simply not possible for the husband to have acquired on 18 June 2008, an Auger valued by Mr W on 24 September 2007. Thus I am satisfied it is appropriate to add the 40’ x 9” Venning Auger Self Propelled to the list of assets to be divided between the parties at a figure of $7,000, being the figure at which it was valued by Mr W.
The husband agreed that it was appropriate to add another road roller to the list of assets for division being the road roller referred to in “Annexure A” being part of Exhibit 10. The value agreed is $1,500.
The husband has further agreed that a Hyster forklift agreed at $2,500 should be added to the assets for division, being also an item mentioned in “Annexure A” being part of Exhibit 10.
There was further agreement to add a Shearer Harrow at $900.
The wife also seeks to include in the asset pool a Versatile 555 Series 3 tractor. The tractor was purchased from a farmer in Victoria apparently on 18 February 2009 (Exhibit 20). It was the husband’s case that the tractor was the property of Mr N, a farm hand who has worked for the parties for some 20 years. Mr N gave evidence and was cross-examined. He told an unusual tale. He alleged that he found the tractor in Victoria whilst on a purchasing trip with the husband. After discussing the condition of the tractor with the husband, he decided to purchase same and returned about a month later and paid cash for it. He said that his mother-in-law kept cash for him at her house as he did not trust the banks. He said that when a healthy balance was accumulated into his bank account, he withdrew those sums and gave them to his mother-in-law for safe keeping. He said that at the time that he purchased the tractor for $10,000, his mother-in-law was holding $15,000 for him. He said that he also had “a heap of money left” after selling a house about a year ago.
The tractor appeared in an advertisement inserted by the husband in the Stock Journal on 16 April 2009 (Exhibit 18). Both the husband and Mr N gave evidence to the effect that the tractor belonged to Mr N but that it was included in the items that the husband otherwise advertised to sell as it was convenient to do so. Mr N said that he had dealt in second hand cars for some time and that this was his first venture into trying to make money out of the purchase and sale of a tractor. The tractor was not sold and Mr N said it now remained on his property.
Whilst there are certainly some unusual elements to Mr N’s tale, supported in part by the husband, there was a certain unaffected and innocent quality about the manner in which Mr N gave his evidence. I cannot be satisfied that he is not telling the truth. I do not therefore intend to include that tractor in the net assets for division between the parties.
Another item in dispute between the parties is a John Deere 440 tractor. The parties agree it has a value of $14,000. It was the husband’s evidence that the tractor belonged to a Mr OS who had left it with him to fit two new rear tyres. He said though that Mr OS did not attend to collect his tractor for many months as he had no need for it at the time.
However, I was not satisfied with the husband’s explanation. The husband acknowledged that he used the tractor during the period of time that it was at his property. He did not produce any consignment book or any invoices directed to Mr OS for the tyres that he allegedly fitted to the tractor. More significantly, he did not produce Mr OS. He did not seek to call him to give evidence either in person or by telephone link. Again, on the Jones v Dunkel (supra) principle, I am entitled to draw an adverse inference. I do so and indicate that I am satisfied that the said John Deere tractor is another item which should be included in the net pool of assets for division between the parties.

Hay

The husband acknowledged that in a shed fire on his property he had lost a significant quantity of hay. He acknowledged further under cross-examination that he intended to make an insurance claim of $15,000 for that hay. He had not previously disclosed that fact. It is appropriate to add that sum of $15,000 to the net pool of assets for division between the parties.

Livestock

I accept that the exercise for the wife of establishing the value of the livestock for the purposes of these proceedings, was an extremely difficult one. I accept that the husband was reluctant to disclose relevant information that would have assisted the wife in the preparation of her case. It was not until the husband filed his Financial Statement on 20 November 2009, only 10 days before the resumption of trial, that livestock accounts were produced by being annexed to the financial statements for the husband’s and the wife’s partnership for the year ended 30 June 2009. That livestock account indicates that the total amount achieved for sales, including opening stock, totalled $144,965. The balance of the exercise in the livestock account is purely an accounting one constructed on the assumption that the partnership would be ongoing. That is not the case. The property has now been sold. It is therefore appropriate to take that figure of $144,965 into the net pool of assets for division between the parties.

Crops

In the husband’s Financial Statement filed on 20 November 2009, in the attached farm profit and loss statement for the year ended 30 June 2009, the husband disclosed crop sales of $129,467 and hay of $7,261. He disclosed no other figures even though the same accounts showed that in the previous year he had received payments for crop 1 of $147,298 and $169, being a total of $147,467. Further, he failed to disclose until his cross-examination in these proceedings that he had retained crops which he sold separately at later times for $21,911 (Exhibit 21). Thus on the husband’s case alone the total that he had received for the sale of crops and hay for the year ended 30 June 2009 and subsequent thereto was the sum of $158,639. This, despite the previous year’s sales being recorded in these financial statements as totalling $203,823.
It was the wife’s case that I should include a figure for crops of $300,593, being represented by a figure for crop one of $157,514 and for crop two at $143,079. I accept that the wife was forced to go to extraordinary lengths to establish the value of the crop harvest given the history, previously referred to, of reluctant, late or no disclosure by the husband. The wife employed the services of Mr RP an agronomic consultant. His report is Exhibit 11. At page 5 of his report, Mr RP estimated the total tonnage of crop 1 likely to be harvested from the property at 587.74 tonnes and crop 2 at 1,083.93 tonnes. At page 6 he identifies a range of prices for crop 1 and crop 2. The average price for crop 1 calculated across the three grades indicated is $268 per tonne and for crop 2 $132 per tonne. Thus Mr RP expected a yield for crop 1 of a value of $157,514 and for crop 2 of $143,079.
The husband contended that Mr RP’s calculations were inappropriate in a number of respects, namely that:-
90.1.Mr RP did the best that he could but that it was an estimate only;
90.2.Mr RP acknowledged that he had less experience in valuing marginal farming areas;
90.3.the rainfall at M was even less than the rainfall at T upon which Mr RP purported to rely;
90.4.there was variability within individual paddocks;
90.5.there was a significant weed problem;
90.6.the paddocks were undulating causing the loss of some crops in the harvesting process;
90.7.the harvesting was undertaken by their farm worker Mr N, who was an inexperienced operator of the machinery;
90.8.in the last few years the farm never yielded the average shown in Mr RP’s report;
90.9.M was indeed a marginal area and more so than T;
90.10.Mr RP acknowledged that the partnership farm was probably the most marginal that he had assessed.
The credentials of Mr RP and his expertise to give evidence in this area, were not challenged. I too am satisfied in that regard. Mr RP holds a bachelor degree in agricultural science and has had five years experience as an agronomic consultant. Mr RP has undertaken yield assessments on many occasions before but never within the context of a matrimonial dispute. His expertise is ordinarily required to assist clients in insuring their crops or in crops marketing.
I am satisfied that Mr RP satisfactorily accommodated all of the husband’s abovementioned concerns and that I should accept Mr RP’s evidence and hence valuations.
It was Mr RP’s evidence that he used two methodologies in order to reach his final determination on crop yields on the partnership farm, those being the “French-Schultz model” and the “Plant Counts model”. Those methodologies are described on pages 3 and 4 of his report (Exhibit 11).
The French-Schultz model only takes account of rainfall in developing an estimate of crop yields. It does not take account of issues such as farm management, weed disease and pest control or other constraints. Mr RP indicated that it was used as a cross check as against a determination made on the Plant Counts model, which is deemed as the primary and more appropriate method. The Plant Counts model takes account of all of the other factors not accommodated in the French-Schultz model.
Mr RP inspected the subject property on 7 November 2008 in the presence of the wife and the parties’ son S. They provided the estimates of paddock areas but otherwise the calculations were his based on information that he secured for himself and from his own visual inspection. As can be seen from pages 3 and 4 of his report and as emerged from his oral evidence, Mr RP took account of a wide variety of adverse factors, including most of those raised by the husband. For example at page 3 he notes:-
“Upon inspection of the property and its crops, it was noted that there was a substantial weed burden and patchy emergence in some paddocks. The cropping program is large and there is a large variation between time of sowing in different areas of the farm. These two factors will make it difficult to achieve 100% of the potential outlined in the table above.”
At page 4 he takes account of varying crop size, seed weight, harvest inefficiencies, losses and soil types. Mr RP said that what he saw on 7 November 2008 was a fairly mature crop ready for harvest within a few weeks of his inspection. He indicated that nothing further needed to be done prior to the harvest. Thus the likelihood of those adverse factors being relevant at that late stage was minimal if not non-existent. Mr RP further indicated that he was not aware of any adverse factors which had occurred in the region of the subject farm after his valuation.
The Plant Counts model is effected by taking a snap shot of the crops by sampling from each paddock at three locations in each paddock. He said that he factored into his calculations that parts of some paddocks were not likely to yield or not yield much at all. He said that was part and parcel of the usual assessment process. He further indicated that it was not possible to be confident of crop prices as there were too many variables. In the end result his conclusion was achieved by calculating the yield on the basis of the Plant Counts model and then validating it by checking it against the range offered by application of the French-Schultz model.

Consequently, Mr RP calculated that total tonnages to be expected from a harvest of the crops he had visually inspected were 588 tonnes of crop 1, 1,084 tonnes of crop 2 and 117 tonnes of hay.
In his explanation of the French-Schultz model, Mr RP indicated (at page 3 of his report):-
“ … It is generally accepted that leading farmers will consistently achieve 70% - 80% of French-Schultz predicted yields.”
In his oral evidence he indicated that 60% was more common but that with cereal crops you would not see below 40%. Mr RP further identified (at page 3) that 100% of potential for crop 1 would achieve 1,170 tonnes and for crop 2 2,331 tonnes. At 40% of potential, 468 tonnes of crop 1 would have been yielded and 932 tonnes of crop 2. After application of the Plant Counts model, Mr RP calculated the total tonnage he would expect from the farm property at the end of the harvest in 2008 (at page 5) as 588 tonnes of crop 1 and 1,084 tonnes of crop 2. Thus I calculate that the figures that he has adopted for tonnage yields represent 50% of potential for crop 1 and 47% of potential for crop 2. Thus it is apparent that Mr RP has used conservative figures as against the French-Schultz model, in arriving at his conclusions. As I said earlier, that produced, by application of an average of the crop prices identified by him on page 6 of his report, $157,514 for crop 1 and $143,079 for crop 2 being a total of $300,593.
I am further encouraged to the view that this is the appropriate finding by the earlier cited decisions in Oriolo and Oriolo, Weir and Weir, Black and Kellner, Chang v Su, Kannis and Kannis, and Gould and Gould (paragraphs 66 – 69 inclusive hereof). The effort to which the wife had to go in establishing the proper asset pool in the face of the husband’s non-disclosure, was significant.
Whilst at pages 5 and 6 of his report Mr RP estimated a yield for hay of 116.60 tonnes, no price for hay was offered in either Mr RP’s report or his oral evidence. Thus the best I can do in relation to hay is simply take account of the insured value of the hay earlier identified by me as having been destroyed in a fire on the farm property, being a figure of $15,000.

Fuel debt

Among the documents which constitute Exhibit 19, are three documents related to a debt which the husband alleges is due by the partnership to Mr F of K Machinery of South Australia. Those documents purport to indicate that the husband requested that Mr F purchase fuel for him in the sum of $23,722. It was the husband’s evidence that he was unable to access sufficient funds, due to the matrimonial dispute, in order to purchase fuel to operate all of the farming machinery. The documents in Exhibit 19 indicate that indeed an amount of $23,722 for fuel was charged to Mr F’s account with a petroleum company and that the fuel was delivered to the partnership farm property.
Mr F gave evidence by telephone link. He was an impressive witness. I accept his evidence unreservedly and am satisfied that it is appropriate that the liability of $23,722 for fuel ought to be a liability to which I should have regard in making my determination in these proceedings. I accept that the debt to Mr F has not been paid and remains outstanding.

Summary of assets and liabilities

103.1.Agreed net assets (paragraph 70)  $1,979,432.00
103.2.Agreed items of plant and equipment
(former partnership of C&V Thomson)
(paragraph 74)  $181,564.00
103.3.3 stone rollers (paragraph 76)  $62,900.00
103.4.40’ x 9” Venning Auger Self Propelled
(paragraph 77)  $7,000.00
103.5.Road roller (paragraph 78)  $1,500.00
103.6.Hyster Forklift (paragraph 79)  $2,500.00
103.7.Shearer Harrow (paragraph 80)  $900.00
103.8.John Deere 440 tractor (paragraph 85)  $14,000.00
103.9.Hay (destroyed) (paragraph 86)  $15,000.00
103.10.Livestock (paragraph 87)  $144,965.00
103.11.Crops (paragraph 98)  $300,593.00
Sub-total  $2,711,254.00
LESS:
103.12.Mr F fuel debt (paragraph 102)        $23,722.00            $23,722.00
Total net assets  $2,686,632.00

Contributions

The parties are in agreement that their respective contributions to the point of separation ought to be recognised as having been equal. However, the husband seeks a loading of 5% for his post separation contributions. The wife is opposed to any loading in favour of the husband and seeks no loading for herself in relation to the events which occurred after separation.
The husband contended that he was entitled to a loading for a number of reasons:-
105.1.that he continued the farming operation after separation until its sale in April 2009;
105.2.that he managed all farming partnership accounts by collecting the amounts due and paying debts as and when they fell due;
105.3.that he maintained the farming assets;
105.4.that he serviced part of the debt and expenses due by the wife’s business B Pty Ltd;
105.5.that he continued to operate the business of M Pty Ltd.
However, I deem it inappropriate to award any additional loading to the husband. In my view it would be inappropriate to recognise any additional contributions by the husband in that regard for a wide variety of reasons but specifically:-
106.1.the husband took action to prevent the wife accessing the partnership accounts by driving up the overdraft to its limit;
106.2.the husband permitted the wife to only access the modest income generated through B Pty Ltd and not the farming partnership;
106.3.for a lengthy period after separation the wife continued to pay rental from B Pty Ltd into the partnership bank account;
106.4.the husband failed to disclose sales of significant assets including plant and equipment and denied the wife any access to the proceeds of sale of same;
106.5.the wife obeyed all Orders of the Court and brought to account all moneys received by her in the operation of B Pty Ltd;
106.6.the husband’s conduct in terms of obedience of the Court’s Orders was in direct contrast to that of the wife. On 30 May 2007 Forbes JR made an order (paragraph 3) restraining the sale of significant plant and machinery. On 19 March 2009 (paragraph 4) I made injunctions restraining the sale of any remaining plant, machinery, crops, sheep and/or wool. Despite those Orders, as I indicated earlier and as is clear from the calculation of the net asset pool, the husband completely ignored those Orders and sold significant plant, machinery, crops and livestock without the written permission of the wife;
106.7.the husband had total control of all assets of the parties bar B Pty Ltd. He used that control to benefit himself only;
106.8.his obstructive attitude, deliberate flaunting of the Orders of the Court and failure to provide full, frank and adequate disclosure of all relevant financial transactions and other relevant detail made it extremely difficult for the wife in the presentation of her case to the Court.

Conclusion on contributions

I am satisfied that an appropriate recognition of the parties’ respective contributions is to divide the asset pool equally between them.

Section 75(2) factors

I turn now, as I am obliged to do by Section 79(4)(e), to the factors enumerated in Section 75(2).

(a)the age and state of health of each of the parties;

The parties are in their early 50’s. The wife is in good health but the husband less so. He is an insulin dependent diabetic with some complications, including in relation to his eyesight. He suffers hypertension, anxiety and depression.

(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;

The settlement that each will achieve will provide them with significant property and financial resources. Each has the capacity to, and continues to, secure gainful employment through their respective tyre businesses. Despite the husband’s poor state of health, he has been able to continue the operation of the business and indeed has employees who are able to assist him in that regard. I am satisfied that each of them will be able to satisfy their income needs into the future. Each will have a healthy asset pool which they can use for further investment or upon which they may rely in any difficult times.

(c)whether either party has the care or control of a child of the marriage who has not attained the age of 18 years;

and

(d)commitments of each of the parties that are necessary to enable the party to support:-
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;

and

(e)the responsibilities of either party to support any other person;

No matters of relevance emerge for my consideration pursuant to these sub-sections.

(f)subject to sub-section (3), the eligibility of either party for a pension, allowance or benefit under-
(i)any law of the commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;

and the rate of any such pension, allowance or benefit being paid to either party;

Apart from a modest superannuation policy that the husband has with MLC, there is no other pension or superannuation entitlement of the parties.

(g)where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;

and

(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;

and

(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant;

and

(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;

and

(k)the duration of the marriage and the extent which it has affected the earning capacity of the party whose maintenance is under consideration;

and

(l)the need to protect a party who wishes to continue that party’s role as a parent;

and

(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;

and

(n)the terms of any order made or proposed to be made under section 79 in relation to the property of the parties;

and

(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;

and

(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;

and

(p)the terms of any financial agreement that is binding on the parties;

None of the aforementioned sub-sections is relevant to my determination in these proceedings.

Conclusion on Section 75(2) factors

It is not, in my view, appropriate to make any further adjustment in favour of either party. I am satisfied that the husband’s ill-health will have no relevant impact upon his capacity to earn an income through his M business. He retains significant other assets to cater for his financial needs.
Thus I am satisfied that the parties are entitled to share equally in the net asset pool.

Just and equitable

It remains for me to consider whether or not the orders I propose in relation to the property settlement issue between the parties are just and equitable (Section 79(2) of the Act).
The total net assets of the parties amount to $2,686,632 (paragraph 103). Shared equally, the husband and the wife would each be entitled to a settlement of $1,343,316. The wife has or is entitled to:-
117.1.B plant and Equipment (paragraph 70.5)     $48,600.00
117.2.B Pty Ltd (including other
plant and equipment) (paragraph 70.9)  $153,000.00
117.3.U property (paragraph 70.6)  $153,318.00
117.4.D property (by agreement
with the husband) (paragraph 70.8)  $68,807.00
Total  $423,725.00
There is thus a balance of payment due to the wife of $919,591.
The moneys held in the L Real Estate accounts total $1,005,833 and are thus ample to satisfy the balance of settlement due to the wife.
The husband will retain or be entitled to:-
119.1.The Homestead block (paragraph 70.4)  $235,000.00
119.2.T property (by agreement
with the wife) (paragraph 70.7)  $148,000.00
119.3.M Pty Ltd (paragraph 70.10)  $4,118.00
119.4.M Pty Ltd plant and equipment) (paragraph 70.11)         $47,000.00
119.5.M land (paragraph 70.12)  $17,834.00
119.6.2005 Chrysler PT Cruiser motor vehicle
(paragraph 70.13)  $20,000.00
119.7.Ford F250 Dual Cab motor vehicle
(paragraph 70.14)  $55,000.00
119.8.AWB shares and Incitec Pivot
shares (paragraph 70.15)  $8,500.00
119.9.MLC superannuation (paragraph 70.16)  $14,422.00
119.10.Farming plant and equipment (paragraph 74)                $181,564.00
119.11.3 stone rollers (paragraphs 76 and 103.3)  $62,900.00
119.12.40’ x 9” Vennings Auger Self Propelled
(paragraphs 77 and 103.4)  $7,000.00
119.13.Road roller (paragraphs 78 and 103.5)  $1,500.00
119.14.Hyster forklift (paragraphs 79 and 103.6)  $2,500.00
119.15.Shearer Harrow (paragraphs 80 and 103.7)  $900.00
119.16.John Deere 440 tractor (paragraphs 85 and 103.8)        $14,000.00
119.17.Hay (paragraphs 86 and 103.9)  $15,000.00
119.18.Livestock (paragraphs 87 and 103.10)  $144,965.00
119.19.Crops (paragraphs 99 and 103.11)  $300,593.00
Total  $1,280,796.00
The husband is entitled to receive a settlement of $1,343,316. There is thus a balance of payment due to him from the L Real Estate accounts of $62,520. The fuel debt due to Mr F can also be met from the L Real Estate accounts.
There will have been some interest which has accrued due on the L Real Estate accounts. It is appropriate that the parties share that interest, and any tax liability attached thereto, equally in accord with my earlier findings.
I am satisfied that this result represents a just and equitable outcome for the parties. Each will be left with an income providing business and a significant asset backing.

I certify that the preceding one hundred and twenty (122) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Burr

Associate:

Date:

[2010] FamCA 226

25 FEBRUARY 2010

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Injunction

Costs

Remedies