TJ v SB
[2010] QSC 403
•26 October 2010
SUPREME COURT OF QUEENSLAND
CITATION:
TJ v SB and Ors [2010] QSC 403
PARTIES:
TJ
(applicant)
v
SB
(first respondent)and
B & Co Pty Ltd
(second respondent)and
VE Pty Ltd
(third respondent)and
JL
(fourth respondent)FILE NO:
BS No 7850/06
DIVISION:
Trial Division
PROCEEDING:
Application
ORIGINATING COURT:
Supreme Court of Queensland
DELIVERED ON:
26 October 2010
DELIVERED AT:
Brisbane
HEARING DATE:
6, 7 and 8 September
JUDGE:
Applegarth J
ORDER:
The parties confer in relation to the draft orders appearing in the reasons for judgment, and the applicant submit within 14 days draft minutes of order
CATCHWORDS:
FAMILY LAW AND CHILD WELFARE – DE FACTO RELATIONSHIPS – ADJUSTMENT OF PROPERTY INTERESTS – GENERALLY – where applicant seeks a property adjustment under Part 19 Property Law Act 1974 (“PLA”) – de facto relationship of approximately 22 years – where applicant was the primary breadwinner and homemaker – where the applicant has primary responsibility for the care of three children of the relationship – where the respondent provided minimal monetary or other assistance to the household for the duration of the relationship – where the applicant and respondent both suffer from health problems
FAMILY LAW AND CHILD WELFARE – DE FACTO RELATIONSHIPS – ADJUSTMENT OF PROPERTY INTERESTS – OTHER MATTERS – unreasonable conduct of respondent – where respondent entered into imprudent loan and encumbered assets as security with no prospect of repaying the loan – where trustees for sale appointed to mortgaged properties and substantial trustees’ fees incurred – where the respondent was diagnosed with manic depression or bipolar disorder – where respondent acted with hostility towards the applicant post-separation – where the respondent has exhibited an intransigent attitude towards the resolution of financial matters – whether the respondent’s behaviour has reduced or minimised the effective value of assets - whether there should be “add backs” to the value of the assets on account of the respondent’s unreasonable conductFamily Court Act
Property Law Act 1974 (Qld), s 343Challen & Challen [2007] FamCA 1292, applied
De Sales v Ingrilli (2003) 212 CLR 338
EB v CT [2008] QSC 303
FO v HAF [2007] 2 Qd R 138, [2006] QCA 555, appliedKennon v Kennon (1997) FLC 92-757
COUNSEL:
C J Forrest for the applicant
J C Hall for the first respondent
B G Cronin for the third respondentSOLICITORS:
Hartley Healy Lawyers for the applicant
Robinson & Robinson Solicitors for the first respondent
James Watt & Co for the third respondent
Introduction
[1] The applicant and the respondent[1] began living together as a couple in about late 1983, when the applicant was aged 20 and the respondent was aged 25. They had three children, who were born in 1991, 1992 and 2002. Their relationship ended acrimoniously on 29 March 2005. The applicant seeks a property adjustment order under Part 19 of the Property Law Act 1974 (Qld) (“the Act”).
[1]The parties are not identified by name so as to reduce the risk of identification in a publication in contravention of s 343 of the Property Law Act, 1974 (Qld). However, the narrative of their relationship has an inevitable tendency to identify them, and any publication of an account of this proceeding is subject to s 343. For convenience, the first respondent is referred to as the respondent. The second respondent played no active role. The proceedings against the third respondent were settled and subject to consent orders on 9 September 2010. The proceedings against the fourth respondent were resolved, and discontinued prior to the hearing.
[2] The parties are agreed, and I accept, that the four step approach discussed in FO v HAF is appropriate.[2] This approach involves:
[2][2007] 2 Qd R 138 at 155, [51]-[52]; [2006] QCA 555.
(1) The identification and valuation of the property, resources and liabilities of the parties.
(2) The identification and assessment of the contribution of the parties to their pool of assets and the determination of their contribution-based entitlements in accordance with s 291 to s 295 of the Act.
(3) The identification and assessment of the factors in s 297 to s 309 of the Act to determine the adjustment to the contribution-based entitlement.
(4) Consideration of the result of these earlier steps to determine whether that result is just and equitable in accordance with s 286 of the Act.
A summary of the relationship
[3] Apart from some personal effects, neither party had any substantial assets at the commencement of the de facto relationship. The applicant had $2,000 in cash. The respondent had debts for unpaid loans and outstanding fines. He was receiving unemployment benefits and trying to establish a career as a television and film actor. The applicant had embarked upon a business degree. In late 1984 the applicant began working full time and studying part time. The respondent did some odd jobs, but was mostly unemployed. He obtained some acting work on two television mini-series in 1985 and a telemovie in 1987.
[4] In 1989 the applicant’s mother lent the couple $21,000 towards the deposit on a home at Drummoyne, which was purchased for $210,000. The applicant completed her studies in 1989. At that time the applicant and the respondent each earned around $25,000 to $30,000 per annum.
[5] In 1989 they incorporated a company that operated an accounting business “dealing mostly in the film industry and the legal profession”. The applicant worked full time in the business and the respondent did some part time work in it. Then, and throughout the course of their relationship, the applicant and the respondent pooled their income to provide for their expenses. However, it was the applicant’s accounting work that produced most of their income. Between 1990 and 1996 she worked about 60-80 hours per week and earned between $90,000 and $100,000 per annum. Some of the income that she earned was attributed to the respondent to take advantage of income splitting.
[6] The respondent has had a lengthy problem with drugs and alcohol and throughout their relationship used drugs and alcohol to excess. He has a history of admissions to psychiatric units. He was eventually diagnosed with manic depression which is also known as bipolar disorder. His history of abusing drugs and alcohol limited the extent of his financial and non-financial contributions to the relationship. He contributed very little work to the accounting practice. He was able to work part time when he was not ill.
[7] The respondent assisted with the renovation of the Drummoyne property, including some “hands on” work and also organising work undertaken by tradesmen. The Drummoyne property was sold in 1993 and the proceeds of sale were used to acquire a property at Lane Cove. Extensive renovations were undertaken on the Lane Cove property.
[8] In about 1996 the respondent commenced an acting role on a television series, from which he earned about $80,000 per annum until 1999. The applicant continued to work full time in her accounting business, and her income exceeded the respondent’s income.
[9] In 1998 the accounting business was sold and a new accounting business with a different focus was established. B and Co was incorporated in 1998 with the respondent as its sole director and shareholder. Its purpose was to provide various business services.
[10] In early 1999 the respondent stopped working on the television series, and effectively retired from acting. He had one small acting role on another program which lasted only a few weeks, from which he earned about $8,000. Otherwise, the respondent did not work from 1999 until 2005. The applicant remained the primary source of financial support for the family.
[11] In about February 1999 the applicant and the respondent purchased a property at Thora not far from Coffs Harbour. Renovations were started on this property which had not been completed at the time of their separation.
[12] Shortly after the birth of her third child in late 2002, the applicant suffered a severe medical condition, peritonitis, and medical complications from this have prevented her from working since then. She has received income from income protection insurance policies.
[13] In July 2004 the applicant and the respondent purchased a property at Sanctuary Cove on the Gold Coast for $922,500. They sold the property at Lane Cove shortly afterwards for $1,900,000. A mortgage debt of about $800,000 was repaid to the Commonwealth Bank. In October 2004 the second respondent, B & Co, bought a Trilogy Riviera cruiser for $470,000, using some of the balance of the proceeds of sale from the Lane Cove property.
[14] The Sanctuary Cove property was eventually sold in May 2005 for $1,030,000.
[15] The applicant, the respondent and their family moved to the Gold Coast in November 2004 and purchased a property at Labrador. The property was registered in the names of the respondent and a friend, JL, as tenants in common in equal shares. However, the respondent’s interest in the property was held on trust pursuant to a deed of trust in equal shares for himself and the applicant. Renovations were undertaken on the Labrador property and these cost approximately $35,000.
[16] In December 2004 the applicant and the respondent purchased a “Euroboat” and trailer for about $25,000.
[17] Throughout their relationship the applicant assumed responsibility for the family’s finances and the preparation of financial accounts and tax returns. The personal tax returns of the respondent include income earned as a director of, or employee of companies that conducted the accounting business. The income recorded does not necessarily reflect the extent of his personal endeavours. Although the respondent worked from time to time in the accounting practice, it was the substantial professional work undertaken by the applicant, and the long hours of work performed by her, that predominantly produced the income that the applicant and the respondent derived. Apart from the period of about three years when the applicant worked on a television series between 1996 and 1999, the respondent’s income from acting was relatively small. His acting work was sporadic.
[18] The assets that the applicant and the respondent accumulated prior to March 2005 when the relationship ended were predominantly accumulated as a result of the applicant’s work as an accountant, and, in later years, from income protection insurance following her illness after September 2002.
[19] Despite living at home for lengthy periods during the relationship when he was unemployed or underemployed, the respondent contributed very little to the welfare of the family as a homemaker. Bouts of depression and drug and alcohol abuse rendered him either incapable or unwilling to contribute significantly as a home-maker. He provided limited care to the children. A nanny was employed. He rarely undertook other domestic tasks such as shopping. He did not even mow the lawn. A gardener was employed. The respondent’s counsel described the employment of domestic staff as reflecting the couple’s lavish lifestyle. I find that staff were employed because the applicant was busy as a “breadwinner” and because the respondent was unable or unwilling to act as a homemaker and responsible parent. I prefer the applicant’s evidence that throughout the relationship she made significant contributions as a homemaker to the welfare of the respondent and their children by, amongst other things, undertaking weekly shopping, preparing most of the meals that were cooked at home and carrying out other domestic chores. I accept that the applicant was the parent primarily responsible for the care of the children when they were not under the care of a nanny. Nanny expenses were on average $750 per week.
[20] I accept that the respondent made some contribution towards renovations on the properties that were renovated. However, I find that he tended to exaggerate his role, and that the applicant also was involved in organising tradesmen and paying for their work.
[21] I accept the applicant’s evidence that the respondent would regularly abuse drugs and alcohol, possibly as a form of “self-medication” for his depression, and go missing. During one such period of disappearance in 1994, he spent $26,000 on an American Express card. On other occasions his behaviour was so erratic that the applicant and her children would leave home and stay in motels. The respondent’s behaviour had an adverse effect upon the applicant’s ability to work, attend meetings and retain clients. His behaviour, especially when ill, drunk or drug-affected, required her to assume greater responsibility for the welfare of her family, as well as maintain her role as the primary “breadwinner” of the family.
[22] Because of the respondent’s psychological problems and his abuse of drugs and alcohol, the applicant’s contributions to the family’s finances and welfare was more arduous than it would have been had the respondent not had these behavioural problems and made a greater contribution to the welfare of his family.
[23] When he worked between 1996 and 1999, the respondent’s behaviour was much better. However, he retired from that work in 1999 and announced to the applicant “[i]t’s the biggest relief of my life, not to be an actor anymore”. The applicant was concerned about the risk posed by the respondent having too much time on his hands and the absence of a regular routine. Unfortunately, his condition worsened with increasing resort to drugs and alcohol.
The separation
[24] On the night of 28 March 2005 the respondent was heavily intoxicated. The applicant and the respondent had a verbal argument over money. The argument escalated into a violent episode. The respondent admits that he assaulted the applicant by slapping her once with the palm of his hand across her cheek, by grabbing her by the hair, shaking her and throwing her onto the sofa. The applicant alleges that the respondent threatened to kill both her and one of their daughters, who was aged 13 at the time. She alleges that he held a handgun to her head: something which he vehemently denies. Police were called. The applicant alleges that the respondent secreted the handgun in a pipe or some other place in the vicinity. He denies this, and he was not charged with any weapons offence. The respondent accompanied the police to the local police station, and police subsequently applied for a Domestic Violence Order.
Assessment of the reliability of the parties’ evidence
[25] With some exceptions to which I will refer, I found the applicant to be a reliable witness. I found the respondent to be far less reliable in his evidence. It is unnecessary to resolve many of the minor, inconsequential conflicts between their evidence. Each had an understandable inclination to emphasise the extent of their contribution to the relationship, and to diminish the contribution of the other. Where their evidence conflicts, I prefer the evidence of the applicant. With one exception in relation to the value of her interest in an uncle’s estate, the applicant’s evidence was given in a frank and convincing manner. The applicant had a good recollection of detail. The respondent, by contrast, presented poorly as a witness. He unconvincingly and grossly exaggerated the extent of his non-financial contribution to the family. He attempted to minimise the impact of his psychological problems and his abuse of alcohol and drugs on his ability to contribute, both financially and otherwise, to his family’s welfare. If, as he said, he “played a large part in caring for [the three children] and carrying out general domestic duties” for his family, then it would not have been necessary to employ a nanny, a gardener, a pool cleaner and a house cleaner at great expense.
[26] His evidence concerning the circumstances under which he borrowed $150,000 from a moneylender, Veduta Estates Pty Ltd (“Veduta”), was completely unsatisfactory, confused and contradictory. He was unconvincing in his denial of having padlocked the Trilogy with a chain after he moored it at Ballina.
Events following separation
[27] After the applicant and the respondent separated the applicant had intended to live on the Trilogy with her children at Sanctuary Cove and had pre-paid 12 months mooring fees. In about May 2005, the respondent removed the Trilogy and took it to Ballina. The applicant, her father and two of his friends travelled to Ballina after the applicant found out where the boat was. They planned to motor it to Sydney. During the voyage a wave hit the tender that was stowed on board, resulting in a broken windscreen. After entering South West Rocks the occupants noticed it was rapidly taking water. They surmised that the hull had been damaged shortly beforehand. The boat was placed onto a dry dock. The applicant’s evidence is that she observed a chain and padlock had been attached “to the propeller and bottom of the vessel”. When the motor started, the chain and padlock came loose from the bottom of the vessel and spun, with the propeller striking the hull and causing damage. The applicant says that the vessel did not take on water when it was moving fast at sea and the situation was only noticed when it stopped for fuel at South West Rocks. The vessel was transported to the Gold Coast for repairs.
[28] The applicant asserts that the respondent was responsible for placing the chain and padlock on the vessel, and was able to do so because he is familiar with the use of scuba diving equipment. She says that she later found the key to the padlock in the console of a truck that he had used. The respondent denied having chained and padlocked the vessel as alleged.
[29] The parties engaged solicitors in relation to their property in around April 2005. The applicant says, and I accept, that she attempted to resolve their financial affairs in September 2005 with an offer of settlement, following which the respondent telephoned her and said words to the following effect:
“Fuck off I want the lot, you can get fucked with your offer. If I can’t have you, then you will have nothing, if I don’t get the money, then it’s going to end in a train wreck, I’ll sink you, you’ll crash and burn and be left with nothing you fucking cunt.”
[30] In late 2005 the respondent borrowed $150,000 from Veduta. He purported to give Veduta security over the Trilogy and the Labrador property. His entry into this transaction was imprudent, to say the least. His account of his understanding of the transaction and the reasons why he entered into it are confusing. On the one hand, he says that he decided to borrow the money until his property affairs with the applicant were resolved. On the other hand, he says that he never expected the applicant to compromise. He gave incredible evidence that he thought that the interest rate was only 3.3% per annum. No-one could have thought that a bank, let alone a fringe lender like Veduta, would have advanced money at such favourable rates. Contrary to his oral evidence, the respondent’s affidavit notes that $18,000 was taken by Veduta out of the $150,000 “as interest payments in advance”. The loan was for six months with $11,200 taken out of the loan as fees for Veduta’s solicitors in Brisbane and Sydney. Another $22,000 of the advance was spent on a Ford Falcon vehicle which the respondent still uses. The rest was spent by the respondent. It is unclear whether it was spent on ordinary living expenses or extraordinary items including legal fees. In any event, he has nothing to show for it.
[31] The applicant was not informed of the loan or the security given to Veduta. She became aware of this in mid-2006. The original security documents were invalid because they were witnessed by someone pretending to be a solicitor. The respondent re‑executed a chattel mortgage over the Trilogy in August 2006 and Veduta registered a mortgage over the Labrador property in August 2006. It commenced proceedings against the respondent in New South Wales.
[32] The applicant thereafter embarked upon protracted litigation involving Veduta. The Veduta proceedings were transferred to Queensland. Veduta was made a party to these proceedings. The respondent did little or nothing to support the applicant’s challenges to the validity of the Veduta transaction and Veduta’s claim to be owed $320,000. As a result of the applicant’s litigation against Veduta, there was an eventual compromise with Veduta. It agreed to settle upon payment to its solicitors of $125,000 from funds paid into court without any order as to costs.
[33] In short, the respondent obtained the benefit of a $150,000 loan from Veduta and through the applicant’s considerable endeavours and at substantial legal costs to her, Veduta agreed to accept only $125,000 in repayment.
[34] In the meantime, the realisation of assets, namely the Trilogy and the Labrador property, was complicated by the security that the respondent had granted. The registered co-owner of the property, JL, was willing for the property to be sold and took steps to find a buyer with the applicant in mid-2006. However, the respondent delayed any sale and the presence of the Veduta mortgage over the property partially explains his intransigence. It became necessary for the property to be sold and trustees were appointed to effect the sale. The trustee’s fees were very high. They said that they were $147,000 and that substantially more costs would be incurred in producing an itemised bill. Eventually, in September 2009, the relevant parties agreed to consent orders whereby the trustees agreed to be paid a fixed sum of $125,000 after the applicant disputed the quantum of their fees.
[35] A trustee was also appointed for the sale of the Trilogy. This proved to be a protracted matter and the costs of the trustee were $168,181.29. The vessel was eventually sold for $285,000. The balance of the proceeds of sale of the Trilogy and the Labrador property were paid into court.
[36] The respondent’s hostility towards the applicant was demonstrated by his defamation of her on a nationally-broadcast current affairs program. The program identified their children, apparently in breach of the Family Court Act 1975 (Cth). The respondent also took it upon himself to inform one of the applicant’s income protection insurers that she was not as disabled as she claimed. This resulted in the termination of benefits under the policies. The applicant had to engage in litigation to restore her benefits and recover unpaid amounts. She incurred legal fees of $70,762 in doing so.
[37] Following the sale of the Santuary Cove property the respondent arranged for the balance of the deposit money of $22,000 to be paid to him. He used it for his own purposes.
[38] After separation, the applicant continued to fund the substantial health and education expenses of her children, as well as her own substantial medical expenses. She maintained insurance over the properties. She funded the maintenance and improvement of properties, and the leasing of motor vehicles, including a motor vehicle that was used by the respondent. The applicant expended about $381,000 on completing the renovations and improvements to the property at Thora. The property is valued at $750,000 and this is where the applicant lives.
[39] The respondent was in a de facto relationship from October 2005 to January 2010. He was financially supported by his partner. He gained employment as a labourer between February and May 2007 and as an upholsterer between June 2007 and mid‑2008. He returned briefly to his acting career when he was cast in three episodes of a television series in late 2008. He earned $15,000 before tax from this work. It was the last paid work that he has undertaken.
[40] In about May 2009 the respondent was diagnosed with throat cancer. He underwent chemotherapy and radiotherapy along with other treatments. The treatments were physically and emotionally exhausting. The parties have been involved in Family Court proceedings in Sydney in relation to their children. The onset of cancer led to the adjournment of proceedings on the basis of certain orders which required the respondent to provide evidence concerning his prognosis. By arrangement the respondent had contact with his children. However, he has not abided by the orders of the Court.
[41] Fortunately, his treatment for cancer has been effective. The disease is in remission and the respondent has regained his voice. However, there is no reliable evidence concerning his prognosis and whether the past occurrence of the cancer substantially increases his chance of the disease returning and reducing what would otherwise be his life expectancy. No reasonable attempt was made by the respondent to call his consultant oncologist as a witness or to produce a current report from that specialist concerning his prognosis.
[42] The respondent is keen to resume his acting career, has maintained contact with his agent and says that once he is physically recovered from his illness he could quickly obtain employment. He gave the following evidence at the hearing:
“I’ve got a body of work behind me that speaks for itself. After I had been out of the workforce in terms of my acting career for an eight year period, I walked straight back into one of the highest profile television shows, you know, and I was cast in a heartbeat. So I have no doubt that once I’m free of my cancer, as it stands now, I’ll go back to that career and I’m looking forward to doing so.”
[43] Presently, he is in receipt of social security benefits from Centrelink and resides in accommodation at the Gold Coast that is provided by a religious organisation for homeless people. The respondent aspires to live in his own accommodation.
[44] I would not wish to trespass upon matters that are the responsibility of the Family Court of Australia at any adjourned hearing concerning the parties’ children. For at least the immediate future, if not for a substantial time, the respondent is likely to have little contact with his two youngest children. Even if his financial and health situation improves, it is likely that the applicant will have primary care of their children. At some stage, she may decide to relocate to Sydney or elsewhere to enable the children to have better access to educational opportunities than they presently have in their rural residence.
The identification and valuation of the property, resources and liabilities of the parties at the date of hearing
[45] Save for certain chattels, the present value of the parties’ assets and the extent of their liabilities are not in dispute. The following table is based upon Exhibit 2 and the parties’ submissions.
Assets Ownership/
ControlValue Thora property
TJ & SB $750,000 Balance of Proceeds of sale of Labrador Property
Paid into Supreme Court (before pay out to Veduta Estates Pty Ltd of $125,000 as agreed)TJ & SB $365,153.82 MISA account balance TJ & SB $7,766 IAG shares (419) @ $3.47 TJ & SB $1,453.93 Shares in B & Co Pty Ltd* SB Nil* Balance of Proceeds of sale of “Trilogy”, Riviera 42 foot Aft Cabin Cruiser
Paid into Supreme Court ($116,818.71)
Debt owed to TJ and SB by B & Co Pty Ltd loaned to company for purchase of the “Trilogy” (the only part of the $500,000 advanced that is recoverable is now the money paid into Court)
The parties’ interest in the recoverable debt owed to them by B & Co Pty LtdTJ & SB $116,818.71 Conrick Pty Ltd (the corporate trustee of the self-managed superannuation fund of TJ and SB) TJ Nil Z Pty Ltd TJ Nil Mazda 121 TJ $4,000 TJ furniture, chattels and personal effects
TJ In contention SB furniture and personal effects including chattels, plant and equipment removed by SB’s agents from Thora (and any add back of funds obtained by his unauthorised unilateral sale of any such property) SB In contention Total $1,245,192.46 *Trilogy –was an asset of B & Co Pty Ltd
[46] The applicant asserted that the furniture and personal effects that she retains have minimal value, however advanced no reliable evidence concerning their actual value.
[47] She says that in May 2005 the respondent’s daughter from an earlier relationship and other members of his family attended at the property at Thora and removed a large amount of chattels, furniture, plant and equipment and other property. The respondent purported to estimate the value of these items at $200,000 by reference to insurance policies for some of the items, a depreciation schedule and a list of the items as noted by the caretaker who witnessed their removal. However, these documents do not support a valuation in that measure. The respondent’s affidavit contains a schedule of the property that he says was removed. Some of the items are retained by him in storage. However, many of the items were sold, and it is said that their sale yielded $33,600. However, no documents were put into evidence corroborating this sale price. The respondent made an impermissible, late attempt on the morning of the trial to introduce further evidence. Apart from being too late and prejudicing the fair trial of the proceeding, the late affidavit was not based upon a proper valuation. In the circumstances, there is an absence of reliable evidence from both parties concerning the value of the items taken. In the light of the parties’ submissions, I am inclined to adopt a broad-brush approach and proceed on the basis that each party has or had chattels valued at $50,000. On this basis their total assets have a value of $1,345,192.46.
[48] Their liabilities are as follows:
Liabilities Ownership/
ControlValue Mortgage over Thora A/c No 506 as at 19.08.2010 TJ & SB ($80,736.01) Mortgage over Thora A/c No 702 as at 19.08.2010 TJ & SB ($109,428.71) Mortgage over Thora A/c No 709 as at 19.08.2010 TJ & SB ($176,777.08) TJ Visa – 2091 as at 12.01.10 TJ ($19,965.37) TJ Visa - 2009 as at 19.08.2010 TJ ($19,787.72) TJ – Master Card 0572 as at 12.01.10 TJ ($37,875.83) Total ($444,570.72)
Add backs:principles
[49] In Challen and Challen[3] Murphy J considered a number of authorities concerning the principles that govern “add backs” to the pool of assets. I again respectfully adopt his Honour’s helpful summary of relevant principles. The parties accepted the correctness of this statement of principle. As Murphy J observes, the decision of whether to add back to the pool of assets property disposed of, or money spent, occurs against a legal framework where the general principle is that the Court takes the property of the parties or either of them as it finds it at the date of trial.[4] Adding back to the pool is the exception, not the rule. An exception can exist “where one party has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or where one of the parties has acted recklessly, negligently or wantonly with the property of the relationship, the effect of which has reduced or minimised their value or the pool of assets”.[5] The exercise of adding back in an appropriate case is but part of the overall exercise of adjusting property interests, which is governed by principles of justice and equity. The fact that a party has expended money realised from the disposition of assets that existed as at the date of separation will not necessarily result in the expenditure being added back. What is crucial is an assessment of the reasonableness or otherwise of the expenditure.[6]
[3][2007] Fam Ca 1292 at [72] to [81].
[4]Ibid at [72].
[5]Ibid at [72] to [74].
[6]Ibid at [78] to [79].
The Euroboat
[50] This inflatable boat and a trailer were purchased by the parties for $24,190 in December 2004. It was registered. It was hardly used prior to separation. The respondent took possession of it and in April 2007, in breach of an interlocutory injunction obtained by the applicant in October 2006, the respondent gave it to his then solicitor. The boat was transferred to the solicitor in discharge of legal fees incurred by the respondent of $13,723. The respondent did not obtain a valuation of the boat at the time and there is no evidence that his former solicitor did. There is no valuation evidence before me. The applicant contends that the vessel would have depreciated very little because of its lack of use. I am unable to accept this submission. On the other hand, the possibility exists that the respondent’s former solicitor managed to catch a bargain. The use of property and financial resources to pay legal fees may fall within the principle governing “add backs”.[7] The source of the funds used to pay legal fees is important in deciding whether the amount should be added back. The source of funds used to pay legal fees in this case was the jointly owned property of the parties. The respondent’s use of the boat to pay the legal fees and doing so without obtaining a reliable, independent valuation, was a reckless, negligent or wanton use of the asset. The principles governing add backs are engaged. In the absence of evidence concerning the value of the boat at the time it was transferred, being a valuation that the respondent and his former solicitor should have obtained, I am not prepared to simply accept that the value of the boat was $13,723. I take account of its minimal use in arriving at a reasonable value that takes account of depreciation. In the circumstances, an appropriate figure to add back is $17,000.
[7]Challen and Challen (supra); EB v CT [2008] QSC 303 at [48].
Loss on the sale of the Labrador property
[51] The Labrador property was sold in March 2008 for $650,000. The applicant’s evidence is that she and JL found a buyer for it in June/July 2006, and communicated this offer of $700,000 to the respondent. The respondent declined to facilitate the sale, probably because of his knowledge of the existence of the mortgage that he had granted to Veduta. The applicant complains that his frustration of a possible sale meant that $50,000 was lost and that the sum of $50,000 should be added back.
[52] No signed contract of sale constituting an unconditional offer to buy the property for $700,000 was produced to the Court. There was inadequate evidence of a binding written offer to purchase which, if accepted in mid-2006, would have led to a completed sale. Accordingly, I accept the respondent’s submission that the evidence does not support an add back of $50,000.
Trustee’s costs
[53] Add backs are sought by the applicant in respect of trustee’s costs associated with the Labrador property and trustee’s costs in respect of the vessel Trilogy. Both claims for an add back involve common issues concerning frustration and delay in the realisation of assets due, in large measure, to the respondent’s conduct in imprudently entering into transactions with Veduta and granting securities to Veduta that prevented and delayed the orderly sale of these items.
[54] As to the Labrador property, both the applicant and JL wanted to sell it. Given the financial circumstances of the parties, including the applicant who had an interest in the property by virtue of the trust instrument signed by the respondent, it was in everyone’s interest to realise the property. If the respondent had facilitated sensible arrangements for the early sale of the Labrador property, then it would not have been necessary for trustees to be appointed by the Court on the application of the applicant. However, the respondent did not facilitate the sale and I find that he neglected to do so for two main reasons. The first was his declared desire to “sink” the applicant. The second was his knowledge that any sale would require the release of the mortgage granted to Veduta, being an advance that attracted extremely high rates of interest. It was only after the applicant discovered that the respondent had mortgaged the property without her or JL’s consent that an application was made to appoint trustees. The respondent’s entry into the Veduta loan was reckless. The loan attracted exorbitant interest rates and the securities given by the respondent frustrated and delayed the sale of the properties. The protracted nature of the dispute with Veduta meant that the costs of the trustees were enormous. The costs of the trustees of the Labrador property were compromised, through the applicant’s endeavours, at $125,000. These costs were lost to the parties because of the reckless conduct of the respondent, the effect of which reduced the value of the pool of assets. The fact that the applicant initiated the application is not to the point. Such an appointment was the consequence of the respondent’s reckless actions. There should be an add back of $125,000 in respect of the trustee’s costs in relation to the Labrador property.
[55] The same applies in respect of the trustee’s costs in respect of the vessel Trilogy. There was some substance in the respondent’s submission that a trustee was appointed under circumstances where there was in effect a “tug of war” in relation to the boat, disagreement about its sale and dispute about which of the parties should have possession of it. The respondent says that he took possession of it in order to protect it from the applicant. However, he did not take it into his possession to simply protect it from damage or devaluation. He moved it to Ballina so that he could live on it near to where his eldest daughter lived. Significantly, the respondent did not face the reality that the resolution of financial matters between the parties necessitated the sale of the vessel as soon as possible. Such an item is a rapidly-depreciating asset. It was an extravagant form of accommodation for the respondent who earned no income. I accept the evidence that it was not attended to and had empty beer bottles on it when the applicant located it at Ballina.
[56] Given the respondent’s conduct in relation to the boat and his intransigent attitude towards the sensible resolution of financial matters between him and the applicant, the applicant could not reasonably have expected the respondent to list the vessel for sale and to sell it. If he had been truly interested in protecting the vessel from the applicant, then he could have placed it into the custody of ship brokers or some agent on the Gold Coast and listed it for sale. Although the vessel was registered in the respondent’s name, his legal ownership of it was due to the sensible practice of insulating the property of the relationship from potential legal claims that might be made against the applicant for professional negligence and the like. It was the applicant’s endeavours rather than the respondent’s that had built up the assets, the proceeds of which facilitated the sale of the vessel. The applicant had a good claim to an interest in the vessel and the proceeds of its sale. I apprehend that the applicant’s intention and those of her agents, including her father, to move the vessel was that it be transported to Sydney where it could be sold.
[57] In short, there was a “tug of war” in relation to the boat, but this was largely due to the respondent’s refusal to face reality and his stated intent that the applicant should be left with nothing.
[58] The windscreen of the vessel was damaged at sea when a wave crashed the tender back onto the windscreen. The issue of whether the boat sustained damage when it hit a sandbank at Southwest Rocks is a matter which I am unable to easily determine. Evidence was not given by those who were on board. However, I was not conducting a Marine Board of Inquiry, and the objective of civil proceedings is the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.[8] The containment of costs is especially important in a jurisdiction in which the starting point is that there be no order as to costs.[9]
[8]Uniform Civil Procedure Rules 1999 (Qld), r 5 (emphasis added).
[9]The Act, s 343.
[59] The respondent submits that it is implausible that the vessel could have undertaken the voyage from Ballina to Southwest Rocks with the chain and padlock in place, causing damage to the vessel, and without the crew noticing this. However, I find it plausible and probable that the respondent did in fact padlock the vessel with a chain. He wished to prevent it being removed from his chosen location. In his evidence he referred to the vessel being locked up. When I sought clarification of this he referred to locking up the cabin and adhered to his denial. I found his denial unconvincing. The respondent was an experienced scuba diver and I find that he did lock the vessel with a chain and padlock. It is surprising that the crew did not detect its presence during the voyage. When they noticed that the vessel was taking water when they stopped at Southwest Rocks, they may have understandably inferred that it had been damaged in the course of the voyage without knowing that the chain and padlock contributed to this damage. Although the applicant does not qualify as an independent witness, I accept her evidence of having observed the chain and lock when the vessel was placed in the dry dock. Her evidence was not contradicted by any other witnesses who were present and saw the vessel when it was taken out of the water. The apparent refusal of the insurance company to pay for the damage is consistent with the damage having been sustained by the padlocked chain. Such a cause of loss presumably placed the claim outside of policy coverage.
[60] I find that the vessel sustained damage as a result of the respondent’s conduct in padlocking a chain to its hull and drive shafts and possibly to some part of one of its propellers. The damage sustained to the vessel was occasioned during a voyage that was necessitated by the need to take possession of the vessel and to realise it by sale before it depreciated further. The damage that was sustained to its hull would not have occurred had the applicant not intervened and arranged for the vessel to be taken from Ballina. However, the occasion to do so only arose because the respondent had acted recklessly, negligently or wantonly by removing the vessel from the Gold Coast, taking no steps to sell it and then placing a chain and lock under its hull so as to frustrate any attempt to retrieve it and sell it. I conclude that the damage to the vessel was caused by the reckless, negligent and wanton conduct of the respondent. The loss caused by damage to the vessel should be the subject of an add back.
[61] The respondent says that he paid two insurance excesses in respect of the vessel. This may be so, although there is no documentary proof of it. The evidence of the applicant, which I accept, is that the trustee’s ledgers record that the cost of repair work to the vessel was $43,310.74. This evidence was not contradicted by other evidence or the subject of cross-examination. I accept it. Accordingly, there will be an add back of $43,310.74.
[62] I should add that any further damage or deterioration that was sustained by the vessel when it was stored in an outside location was an unfortunate consequence of the tug-of-war that was initiated by the respondent. There is insufficient evidence before me to conclude that the manner in which the vessel was stored involved negligent or reckless conduct on the part of the applicant.
[63] I turn to consider the trustee’s costs in relation to the vessel. Again, these costs were sustained in large measure because of the impossibility of selling the vessel whilst it was encumbered to Veduta. It was encumbered to Veduta as a result of the respondent’s recklessness. The trustee’s costs of $168,181.29 attract the add back principle.
The $22,000 balance of the deposit
[64] There is no contest that the balance of the $22,000 deposit that was used by the respondent without the applicant’s knowledge and authority after it was paid directly to him by the stakeholder attracts the add back principle.
Realisation of superannuation benefits
[65] Some reliance was placed by the respondent upon the fact that the applicant caused assets held by the parties’ self-managed superannuation fund to be realised so as to reduce debts that were secured by mortgage over their home. I do not understand that a submission that this should be the subject of an add back was pressed. However, I add that at the relevant time the parties were experiencing obvious cash flow problems. Their mortgage debts were substantial. The realisation of their interests in superannuation was a prudent step. The realisation of the superannuation assets did not have the effect of reducing the pool of assets. It had the effect of reducing a debt that attracted substantial interest. It was a prudent, rather than a reckless course of conduct. It does not engage the add back principle.
Add backs summary
[66] The add backs may be summarised as follows:
Add Backs Value The value of the Euroboat $ 17,000.00 Add Back – The respondent’s refusal to join in selling the Labrador property for $700,000 Nil The costs of the trustee who sold the vessel “Trilogy “ $ 168,181.29 The cost of repair work to the vessel “Trilogy” $ 43,310.74 The costs of the trustees who sold the Labrador property $ 125,000.00 The balance of the deposit paid by the purchasers of the Sanctuary Cove property $ 22,000.00 Total $ 375,492.03 Total of the assets and addbacks $1,720,684.49
Financial resources
[67] I shall address the applicant’s financial resources in the form of her income protection insurance entitlements in the course of considering her financial resources (s 298) at a later stage. The applicant has an interest in the estate of an uncle. She was left a one-quarter interest in the residue of his estate. The administration of his estate has been the subject of family provision applications. These matters have been recently resolved. There are some matters to be finalised in relation to taxation and legal fees. In her affidavit sworn 19 February 2010, the applicant stated that her understanding was that she was likely to receive something in the range of between $0 and $210,000 calculated on the basis of a net estate of $1 million less $150,000 of estimated estate liabilities. She exhibited a solicitor’s letter. The applicant was examined about this matter at the hearing. I found her answers evasive. It is remarkable that an individual with her financial acumen and interest in her own financial affairs should be so poorly informed about the likely value of her inheritance. It is remarkable that she apparently took no steps to inform herself about the current value of this financial resource. In the absence of more information from the applicant, I estimate its value at $200,000. Of course, the respondent made no contribution to this resource. I will have regard to it at a later stage (s 298) but will not include it in the net asset pool in arriving at the parties’ contribution-based entitlements.
[68] The respondent has no financial resources. He apparently owns the car that was purchased from the Veduta loan.
Summary – property, liability and financial resources of the parties
[69] In summary, the assets of the parties are $1,345,192.46. To this should be added “add backs” of $375,492.03 leading to a total of assets and add backs of $1,720,684.42. The liabilities total $444,570.72. The pool of net assets including add backs is $1,276,113.77. I also assess the applicant’s financial resources in the form of her interest in her late uncle’s estate to be $200,000.
Stage 2 – identification and assessment of contributions
[70] The financial contributions of the applicant made directly or indirectly to their property and financial resources far outweigh those of the respondent. While the parties tended to pool their income, however, for a substantial part of the relationship the respondent was unemployed or underemployed. A notable exception was a few years between 1996 and 1999 when he earned a substantial income on a television series. Otherwise his financial contribution was sporadic and small.
[71] The respondent’s non-financial contributions were also small. His contributions included work on home renovations. His limited contribution to the welfare of his family was due, in part, to mental illness in the form of manic depression and his frequent resort to drugs and alcohol. One can have sympathy for a person whose life is blighted by mental illness and addiction. One must also have sympathy for those who are affected by these conditions, including the person’s family. In this case, the respondent’s psychological problems led to drug and alcohol abuse and imprudent expenditure. They also made the applicant’s contributions as a breadwinner and homemaker more arduous. One of the parties’ children has significant health problems that create special needs. The applicant has had primary responsibility for the care of the children and has been required to care for them while suffering her own significant disabilities since 2002.
[72] I take into account both the quantity and quality of the respective contributions of the parties to their property and financial resources and to family welfare. The contributions of the applicant, both to finances and to family welfare during the course of the relationship, completely overwhelm those of the respondent.
[73] The respondent’s counsel submit that their contributions should be treated as equal. This is an untenable submission. It advances the proposition that unlike the “usual” situation of a wife who is a homemaker and a husband who works, to some extent the roles were reversed in this relationship, but the principle nevertheless applies. Of course, there is no starting principle of equality. If there was it would be quickly displaced in this case. This is not a situation of one partner who acts as the breadwinner and one who acts as the homemaker. It is a case in which the applicant for most of the relationship acted as both predominant breadwinner and predominant homemaker. During the many years in which the respondent was not in employment, he did not act as a homemaker. He was of little practical benefit to the family. The income generated by the applicant was required to pay for domestic services performed by others.
[74] I also must take account of the respective contributions of the parties to their net assets in the period since separation. The applicant’s evidence indicates that she has expended a large amount of money to preserve the family’s income and its resources. This has included extraordinary expenditure on legal fees to reverse the decision of an income protection insurer to not pay her entitlements under the relevant policy, and to thereby provide an income stream to support herself and her children. It includes expenditure to complete renovations on the family’s residence. It includes substantial legal costs which were necessitated by the applicant’s imprudent transactions with Veduta. Since separation, the applicant has financed and attended to the welfare of herself and her children.
[75] The respondent has failed to pay amounts by way of child support. He directed income that he earned on a television program in 2008 to his de facto partner at the time, rather than to himself where it might be claimed for unpaid child support
[76] Pursuant to s 293 I must consider the effect of any proposed order on the earning capacity of the parties. I propose to do so in my consideration at stage 4 of the facts and circumstances that the justice of the case requires to be taken into account. The respondent submits that an order that he receive a distribution of the moneys in Court would not affect the earning capacity of the applicant, whose income protection is likely to continue. He also submits that such a distribution to him will permit him to “start again” with some financial resources after a 23 year relationship. It is submitted that it will give him the ability to travel for screen tests and to pursue his acting career. This, the applicant’s counsel submits, will be the “springboard” for the rejuvenation of a worthwhile and productive life. I shall take these matters into account at the later stage. At this stage I intend to reach a conclusion concerning an assessment of the contribution of the parties to their pool of assets and a determination of their contribution-based entitlements in accordance with ss 291, 292, 294 and 295. I shall defer considering the effect of any proposed order on the earning capacity of the parties (s 293).
[77] I conclude that the overwhelming financial and non-financial contribution of the applicant to the parties’ pool of assets and her contribution to family welfare should lead to a contribution-based entitlement of 75%:25% in her favour.
Third stage adjustment based on the factors in ss 297-309 of the Act
[78] I must consider the matters mentioned in ss 297-309 to the extent that they are relevant in deciding what order adjusting interest and property is just and equitable. In considering the specific matters contained in ss 297-308 and, in accordance with s 309, “any fact or circumstance the Court considers the justice of the case requires to be taken into account”, it is necessary to not treat these matters as providing a basis to achieve some form of economic justice between the parties, unrelated to the purpose of Part 19 and the purpose of s 278 in particular, which is to “ensure a just and equitable property distribution at the end of a de facto relationship”. Neither party has an obligation to maintain their former partner at the end of the de facto relationship.
[79] The fact that the applicant has a reasonable stream of income through income protection insurance whilst the respondent is presently dependent upon social security is not in itself a reason to redistribute the applicant’s income to the respondent in the form of a property adjustment. However, when all relevant matters are considered, it will be necessary at the final stage to consider whether the result arrived at is just and equitable in accordance with s 286 of the Act. This will include consideration of whether it is just and equitable that the applicant and her children enjoy the comfort of a reasonable income in the home in which they live, whilst the respondent lives in accommodation provided by a charity and depends on public welfare.
[80] Not all of the matters referred to in ss 297-308 are relevant in the present case. I shall refer to those that are.
Age and health
[81] The applicant is aged 46 and her health is not good. There is no reason to not accept the expert evidence in the affidavits and reports that were relied upon by her and which were not the subject of cross-examination. This evidence indicates that she is presently unable to work. Her future earning capacity from employment is uncertain.
[82] The respondent is aged 52. He has experienced mental health problems for most of his adult life. There is no expert medical evidence before the Court concerning the current state of his mental health. He was diagnosed with an aggressive throat cancer and underwent therapy for it until September 2009. Currently he appears to be in remission. There is no reliable evidence concerning his prognosis. This places the Court in a difficult, if not impossible, situation to determine his life expectancy. The respondent having recently experienced life-threatening cancer, one cannot simply assume that his life-expectancy is normal. However, the evidence does not permit me to conclude with any degree of certainty that his life-expectancy has been reduced substantially by his recent encounter with cancer. He survived that cancer and presently is not undergoing treatment for it. The contingency of premature death usually cannot be predicted with any degree of certainty in a particular case.[10] In the absence of medical evidence from either party concerning the respondent’s prognosis in respect of a recurrence of cancer, I simply am not in a position to reach a well-informed conclusion concerning his life expectancy. The absence of evidence is predominantly attributable to the respondent’s failure to call evidence that would be expected to come from him, and which should have been provided in compliance with an order of the Family Court. In the absence of evidence from the respondent, I infer that any evidence that he might have called would not have assisted the conclusion that he has a normal life expectancy for a man of his age. However, the absence of evidence does not permit me to conclude that he has a substantially reduced life expectancy. If it be the case that his life expectancy has been reduced to some uncertain extent, then I should take into account that any recurrence of cancer may preclude him from employment during future periods when he receives treatment.
[10]De Sales v Ingrilli (2003) 212 CLR 338 at 354 [32].
Resources and employment capacity
[83] I have previously addressed the property and financial resources of each of the parties at the date of the hearing.
[84] The applicant presently derives income from income protection insurance. This presently is in the order of $19,000 per month. Its continuation depends upon her health and ability to return to work. Even if her health suddenly took a turn for the better, she would not be able to be self-employed as a tax agent. She would need to regain her qualifications. In the meantime, however, she might undertake paid employment and be remunerated at a reasonable level for a person with her aptitude and experience.
[85] The continuation of her income via income protection insurance may be jeopardised by the respondent’s malicious conduct. In the past and out of spite he provided information to an insurer which contributed to a cessation of benefits which were only restored after expensive legal proceedings. The respondent did this, notwithstanding that the financial consequence was to effectively shoot himself in the foot, not to mention to deprive his children of a source of financial support. I cannot rule out the possibility that the respondent will engage in similar erratic and destructive behaviour towards the applicant in the future. However, I proceed upon the assumption that any insurer will be guided by more reliable sources of information in the future, including objectively-verifiable evidence concerning the applicant’s health and capacity to undertake work. On that assumption, I assume that the applicant will continue to derive income support. The benefits derived from those income protection policies, and any future benefit that the applicant may derive from insurance, are largely a result of her own contributions. It was the income produced by the applicant’s work that predominantly, if not exclusively, funded these policies.
[86] The respondent has few financial resources. He is presently a welfare recipient. He hopes to return to acting. If he does not do so then he has a capacity to earn a modest income doing the kind of work that he undertook after separation, including labouring, upholstering and driving. The respondent boasted that he could obtain acting work without much difficulty. Had he not given this evidence, I would have thought that the prospect of obtaining remunerative acting work on a sustained basis was not high. The respondent’s confidence in his own ability and in the preparedness of persons to employ him as an actor is admirable. I operate on the assumption that the applicant has the physical and mental capacity to undertake gainful employment, including work as an actor. Whether he gains such employment is dependant upon a number of matters including his continuing to be in reasonable physical health, and obtaining treatment and therapy for his mental health problems.
Caring for children
[87] The applicant has the sole parental responsibility for two children who are presently aged 11 and 8. She will have that responsibility for the foreseeable future. Depending upon the judgment of the Family Court of Australia, the respondent may have some future responsibility for the care of his children. However, as presently advised, I doubt whether it will be of any significance, compared to the long-term responsibility that the applicant will have for the care of the two children who are under 18 years of age. This factor justifies an adjustment in the applicant’s favour.
[88] Neither party contends that s 300 (necessary commitments) or s 301 (responsibility to support others) is presently relevant.
Government assistance
[89] The respondent is presently on a disability pension. This is not a significant factor. The applicant receives what is, in effect, a private pension. Whilst it is significantly larger than the respondent’s disability pension, she has more significant financial commitments.
Length of the relationship
[90] The relationship was a long one. However, this does not call for an adjustment. This is not a case in which, during the course of a long relationship, one partner put their career “on hold” and is at a relative disadvantage as a result.
[91] The respondent submits that the length of the relationship weighs heavily in favour of equality of distribution and submits that this is particularly so when there has largely been a “team effort” in respect of all aspects of the relationship. I reject the proposition that there has been any kind of “team effort” in the relationship. If any sporting analogy is called for, it was the applicant who had to carry a player who was not prepared to contribute to a team effort, and whose erratic behaviour resulted in the team failing to reach its potential. I take sympathetic account of the fact that the respondent’s failure to engage in a “team effort” was due, in part, to a long-standing psychological illness. However, many of the problems in the relationship were due to his “self-medication” with drugs and alcohol. The fact remains that he effectively abandoned his career as an actor in 1999 and did not take up alternative forms of employment. The time that he had on his hands was not devoted to supporting the applicant in her career and income-generation or in making any significant contribution to the welfare of his family. I do not take these matters into account by way of some negative contribution or in punishing the respondent by way of an adjustment in favour of the applicant. I mention these matters in the present context in response to a submission that the length of the relationship weighs heavily in favour of equality of distribution. The relationship was a long and difficult one. It is not a case in which the length of the relationship justifies an adjustment in the respondent’s favour.
Other factors – s 309
[92] The applicant gave evidence of an abusive relationship, principally in the form of the emotional abuse that she and her children suffered because of the respondent’s mental health problems, drug and alcohol abuse and erratic behaviour. The parties addressed whether this history of abuse was analogous to the course of domestic violence discussed in Kennon v Kennon.[11] I have previously addressed these issues by concluding that the respondent’s erratic behaviour during substantial parts of the relationship made the applicant’s contributions, both financial and non-financial, more arduous than they otherwise would have been. The Full Court of the Family Court in Kennon did not indicate that the application of the relevant principle was limited to cases of domestic violence. I do not consider that I need to revisit the issue of emotional abuse or domestic violence in the present context. I have taken it into account in assessing both the quantity and the quality of the parties’ contributions to their net assets. It was my assessment of the quality and quantity of their respective contributions, not some notion of “negative contribution”, that led me to conclude that a contribution-based apportionment of 75%:25% was appropriate.
[11](1997) FLC 92-757.
[93] I find it unnecessary to resolve factual matters concerning the episode of violence that occurred on 29 March 2005. On any view of the evidence, the relationship came to a violent end. I find it unnecessary to conclude whether the respondent had a handgun on that occasion. The applicant’s evidence in this regard was apparently plausible. The evidence did not clearly establish whether she mentioned this matter to the police. The respondent owned a gun, but said that it was at their property in New South Wales at the time. I found his evidence somewhat unconvincing on this aspect as on other aspects. However, I find it unnecessary to reach a conclusion as to whether a gun was present that evening.
Conclusion – stage 3 adjustment to the contribution-based entitlement
[94] Some of the factors that I have mentioned above favour the applicant. Others favour the respondent. Taking all matters into account, I conclude that the contribution-based entitlement should be adjusted to arrive at a division of 80%:20% in the applicant’s favour.
Stage 4 - Consideration of whether provisional result is just and equitable
[95] Finally, I must determine whether this result is just and equitable in accordance with s 286 of the Act.
[96] Considered in isolation, the division of 80%:20% is just and equitable having regard to the parties’ contributions and to other relevant matters provided for in ss 297-299, including their responsibility to care for their children.
[97] The respondent has already effectively received substantial amounts out of the pool being:
(a) the $17,000 value of the Euroboat that was spent on legal fees;
(b) the $22,000 that was diverted from the proceeds of sale of the Sanctuary Cove house;
(c) the $125,000 paid out of Court to Veduta;
(d) $50,000 worth of chattels or the proceeds of the sale of chattels.
These amounts total $214,000.
[98] A 20% share of the net assets of the parties equals $255,223. The difference between this amount and the amount he has received would suggest that an order be made that the respondent be paid $41,223 from the amount paid into Court, with the balance of funds in Court to be paid out to the applicant.
[99] The parties are agreed that each party should retain in their possession the chattels, household effects, equipment and the like that is presently in their possession. The applicant proposes orders for the respondent to transfer his interest in the Thora property and that the respondent relinquish any interest in certain accounts. The applicant would assume responsibility under mortgages over the property at Thora.
[100] The consequence of these orders would be that the applicant would retain far less than the 80% of the asset pool, including add-backs. The applicant submits that this is less than just and equitable but is all that can be achieved in the circumstances. The applicant submits that it would not be just and equitable for the respondent to receive any further payment out of the moneys paid into Court in addition to the $125,000 paid to Veduta’s solicitors in settlement of the debt that he incurred. The applicant submits that if the respondent receives nothing further out of the moneys paid into Court and is simply left with the chattels that he presently possesses, then such a result will have been of the respondent’s own making, given the substantial add-backs in respect of trustee’s costs and the like which are not reflected in actual assets that remain available for division. There is much to commend this submission. There is something artificial in arriving at a conclusion that the applicant should receive 80% of the net assets of the parties, but to then make orders that result in her receiving far less than 80% of the parties’ actual assets.
[101] I adhere to the view earlier expressed that the discretionary power to make an order under s 286 that the Court considers “just and equitable” about the property of either or both of the de facto partners does not permit an order that is unrelated to the purpose of Part 19. I am disinclined to make an order that results in the payment of moneys held in Court to the respondent on the basis that such a distribution will allow him to “start again” and rejuvenate his acting career. The respondent should bear the consequences of the depletion of the asset pool by the conduct that has given rise to substantial add-backs. These should not simply be visited upon the applicant under orders which result in her receiving less than her fair share of the remaining assets. That said, the purpose of Part 19 is not simply the adjustment of property interests on the basis of contributions, taking into account the additional relevant matters provided for in ss 297 to 309. Under s 293 the Court must consider the effect of any proposed order on the earning capacity of the de facto partners. Orders that have the effect of leaving the respondent without a modest amount by which he can plan for his future and attempt to secure employment will have an adverse effect on his future earning capacity. Subject to his health remaining satisfactory, the plaintiff has an earning capacity in the kind of employment that he has pursued in recent years and in his former career as an actor. Although he is in receipt of social security benefits and presently has the benefit of accommodation, orders providing for payment to him of a moderate amount to secure rental accommodation, in turn, may provide a secure environment for him to seek employment.
[102] I also take into account at this stage the anticipated receipt by the applicant of the inheritance from her uncle. This receipt owes nothing to the respondent’s contribution. However, it is a financial resource that will benefit her and her children and ameliorate, to some extent, the prejudice occasioned by the negligent, reckless or wanton conduct of the respondent that reduced the net assets available for distribution, and which resulted in her incurring substantial legal costs.
[103] I accept the applicant’s submission that any order to be made for a sum of money to be paid to the respondent should be subject to provisos requiring him to first discharge outstanding liabilities in the form of arrears for child support, and also an order for costs made by Byrne SJA on 11 December 2007.
[104] Since the purpose of any payment to the respondent is to secure his personal position and enhance his earning capacity, it would be unfortunate, to say the least, if any sum that he received was squandered. Any money which the respondent may receive should remain available for his welfare and the welfare of his children to whom he owes child support obligations. Accordingly, I shall require the parties to submit a form of order that addresses this aspect.
Draft orders
[105] I have already made orders by consent for the sum of $125,000 to be paid out of Court to the trust account of the solicitors for Veduta. Subject to further submissions as to the form of orders, I propose the following orders:
1. The First Respondent forthwith do all things necessary including signing all documents necessary to transfer to the Applicant or her nominee all of his right, title and interest in the real property situated at 1462 Darkwood Road, Thora in the State of New South Wales more fully described as Lot 2 in Deposited Plan 583073 Parish of Never Never and County of Raleigh folio identifier 2/583073 (“the Thora, New South Wales property”).
2. Within sixty days of the date hereof the applicant do all things necessary to cause the mortgages in favour of the Commonwealth Bank of Australia registered over the title of the Thora, New South Wales property that are in the joint names of the applicant and the first respondent to be discharged and the debts secured thereby to be refinanced and the applicant indemnify and keep indemnified the first respondent against any and all liability in respect of those mortgage debts to the Commonwealth Bank of Australia.
3. The applicant shall retain as her sole property and the first respondent shall relinquish all right, title and interest he has in the following property:
(a) The balance of funds in the CBA MISA account in their joint names;
(b) The parcel of IAG shares;
(c) The Mazda 121 motor vehicle in the applicant’s possession or control;
(d) The furniture, chattels and personal effects in the applicant’s possession;
(e) Shares in Z Pty Ltd and C Pty Ltd.
4. The first respondent shall retain as his sole property and the applicant shall relinquish all right, title and interest she has in the following property:
(a) The furniture, chattels and personal effects in the first respondent’s possession or control;
(b) Shares in B and Co Pty Ltd;
(c) Any money owed to the parties jointly or severally by the company, B and Co Pty Ltd.
5. The applicant indemnify and keep indemnified the first respondent against any and all liability in respect of the credit cards she has in her name and any other personal liability she may have, including any liability arising out of the operation of Z Pty Ltd and C Pty Ltd.
6. The first respondent indemnify and keep indemnified the applicant against any and all liability in respect of any personal liability he may have, including any liability arising out of the operation of B and Co Pty Ltd.
7. From the balance of moneys currently held in Court after payment out of the sum of $125,000 to the solicitors for the third respondent there be paid:
(a) such sum as shall discharge as at the date of payment all and any liability of the first respondent for arrears of child support owing in respect of the children, ESB, LSB born 22 January 1999 and ZCB;
(b) to the trust account of the solicitors for the applicant, Hartley Healy Family Law Solicitors such sum as will discharge the first respondent’s liability to the applicant pursuant to paragraph 2 of the orders of Justice Byrne of this Court of 11 December 2007 to pay her costs of and incidental to the application filed 23 November 2007 to be assessed on the indemnity basis;
(c) to the solicitors for the first respondent such sum as will, when added to the amounts paid out of Court pursuant to sub-paragraph (a) and (b) hereof total $41,223 inclusive of those amounts already paid out pursuant to sub‑paragraphs (a) and (b) hereof, upon condition that such sum will be paid [provision to be made for payment into a trust account or the like for defined purposes];
(d) the remainder of the moneys held in Court, together with accretions, if any, be paid out to the trust account of the solicitors for the applicant, Hartley Healy Family Law Solicitors.
8. There be liberty to apply.
[106] I will hear the parties as to the current extent of arrears of child support and attempt to fix the quantum of costs ordered by Byrne SJA on 11 December 2007. Precision in relation to these matters will enable me to fix an amount to be included in paragraph 7 of the final orders.
[107] The only order that I presently propose to make is to direct the parties to confer and for the applicant to submit within 14 days draft minutes of order.
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