TRITTON & POYZER
[2010] FamCA 666
•3 August 2010
FAMILY COURT OF AUSTRALIA
| TRITTON & POYZER | [2010] FamCA 666 |
| FAMILY LAW – PROPERTY SETTLEMENT – adjustment of property interests – whether assets acquired post separation should be brought into account in determining the parties’ asset pool – where the parties agree that their contributions were equal up to separation – where a significant time has elapsed since the parties’ separation – consideration of contributions made after separation – where it is alleged that the husband drew upon matrimonial assets to acquire new assets for his own benefit – where the wife alleged that the husband had undisclosed interests in assets – where the husband’s actions in numerous business dealings did not benefit the parties –contributions assessed as 60:40 in favour of the wife – no adjustment upon consideration of s 75(2) factors FAMILY LAW – PROPERTY SETTLEMENT – add backs – where the wife seeks that expenses incorrectly debited as business expenses be brought into account – whether such expenditure by the husband were reasonable expenses – consideration of the time elapsed since separation – where it was appropriate to add back rent, legal fees and unaccounted profits of the husband – where the husband’s expenditure and involvement in other ventures could not be quantified – considered in the context of overall adjustment FAMILY LAW – PROPERTY SETTLEMENT – where it was appropriate for contributions to certain assets be considered separately – contributions in relation to these assets assessed at 65:35 in favour of the husband. |
| Family Law Act 1975 (Cth) ss 79 & 75(2) Family Law Rules 2004 r 13.01 |
| Chorn & Hopkins (2004) FLC 93-204 Essex & Essex (2009) FLC 93-423 Gollings & Scott (2007) FLC 93-319 Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 M and M (1998) FamCA 42 Omacini and Omacini (2005) FLC 93-218 Reichstein & Reichstein [2006] FamCA 1422 R & R [2004] FamCA 388 Wilde & Wilde [2007] FamCA 1044 |
| APPLICANT: | Ms Tritton |
| RESPONDENT: | Mr Poyzer |
| FILE NUMBER: | ADF | 1063 | of | 2001 |
| DATE DELIVERED: | 3 August 2010 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Dawe J |
| HEARING DATE: | 5-6 Nov 2007; 12-16 Nov 2007; 26-28 Mar 2008; 21-24 Apr 2008; 28-31 Oct 2008; 3-7 Nov 2008; 4‑6 Feb 2009; 9-13 Feb 2009; 15-18 June 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Nelson, QC, with Mr Whittle (Until end of September 2009) |
| SOLICITOR FOR THE APPLICANT: | DAVID DAVIDSON (until January 2010) |
| COUNSEL FOR THE RESPONDENT: | Ms Pyke, QC (Nov 2007 - April 2008) Husband In Person from October 2008 |
| SOLICITOR FOR THE RESPONDENT: | RANDLE & TALYLOR (until October 2008) |
Orders
Upon noting that the Poyzer Group includes the following:
(a) AMC Pty Ltd (“AMC”)
(b) Poyzer Family Trust (“PFT”)
(c) M Centre Unit Trust (“MCUT”)
(d) C Pty Ltd (“CPL”)
(e) Poyzer Properties Unit Trust (“PPUT”)
(f) Poyzer Family Trust No 2 (“PFT2”)
(g)Partnership of Poyzer Family Trust No 2 and A&B Z (“PZ Partnership”)
(h) PZ Corporation Pty Ltd (“PZCorp”)
(i) L Corporation Pty Ltd (“LCORP”)
(j) L Unit Trust (“LUT”)
(k) Poyzer Investments Pty Ltd (“PI”)
(l) Poyzer Nominees Pty Ltd (“PN”)
(m)Poyzer Investments Pty Ltd Superannuation Fund (“PISF”)
(n)A Poyzer Pty Ltd (“AP”)
(o)A Poyzer Superannuation Fund (“APSF”)
(p)Tritton Properties Pty Ltd (“TP”)
(q)Tritton Properties Unit Trust (“TPUT”)
(r)Poyzer Properties Pty Ltd (“PP”)
(s)UP Pty Ltd (“UP”)
It is ordered that in full and final settlement of adjustment of property rights and spousal maintenance between the parties:
The wife do retain for her sole use and benefit absolutely all her interest in the property at N in the State of South Australia free from any claim by the husband or any of the entities in the Poyzer Group SAVE AND EXCEPT that the wife shall hereafter pay all monies now due and payable in relation to the First Mortgage Home Loan secured over the said property to the Commonwealth Bank of Australia up to $250,000.
If upon sale of the real estate referred to in paragraph 3 of the order of this Court of 18 June 2010 (Lot 22, M and Lots 51 and 52, M in the State of South Australia) in excess of $250,000 remains owing to the Commonwealth Bank of Australia which is secured over the property at N such sum shall forthwith be paid by the husband to the Commonwealth Bank of Australia to ensure that the only amount owing secured over the property at N is the principal sum of $250,000.
The husband shall on 17 September 2010 (“settlement day”) pay to the wife the sum of NINE HUNDRED AND SIXTY EIGHT THOUSAND DOLLARS [$968,000.00].
If by settlement day any monies are standing to the credit of the joint interest earning account in the names of the parties pursuant to the settlement of sale of the properties referred to in the order of 18 June 2010 (Lot 22, M and Lots 51 and 52, M) then such sum shall be paid from the said account to the wife in reduction of the amount required pursuant to the paragraph (3) ($968,000).
Hereafter all loan accounts payable by the wife to any entity in the Poyzer Group shall be discharged without any payment for or on behalf of the wife provided that at the option of the husband such loan accounts shall be transferred to the husband.
On settlement day the husband shall cause each of the entities in the Poyzer Group to provide to the wife acknowledgement that all loans, debts or other monies due by the wife to any entity in the Poyzer Group are discharged.
If after the husband has paid the sum of $968,000 to the wife further sums are paid to the joint account pursuant to the orders of 18 June 2010 then any amounts thereafter credited to the said joint account are to be released to the husband.
The husband shall have the option to transfer at his cost all his interest and estate in the property situated at P (“P property”) freehold and unencumbered with vacant possession to the wife PROVIDED THAT such option is exercised by notifying the wife in writing of the intention to transfer the P property to the wife by 3 September 2010 and PROVIDED THAT such transfer is completed on settlement day.
If the husband transfers the freehold unencumbered interest in the P property with vacant possession to the wife on settlement day then the sum of FOUR HUNDRED AND FORTY THOUSAND DOLLARS [$440,000.00] shall be credited to the husband against the payment of the sum of NINE HUNDRED AND SIXTY EIGHT THOUSAND DOLLARS [$968,000.00] due to the wife pursuant to these orders.
The P property transferred to the wife pursuant to this order shall include all fixtures, fittings and improvements to the P property.
If the husband exercises the option the husband shall provide vacant possession of the P property on the settlement day to the wife and provide to the wife all keys and instruments necessary to operate all locks and devices and provide all documents currently in his possession relating to the P property and all fixtures and fittings.
The husband shall pay all rates, taxes and charges in relation to the P property until settlement day and thereafter if the property is transferred to the wife free and unencumbered together with vacant possession the wife shall thereafter pay all rates, taxes and other outgoings in relation to the property.
In the event the husband does not pay the sum referred to in paragraph (3) hereof on settlement day interest shall be payable upon such sum as remains unpaid at the rate of interest currently prevailing under the Family Law Rules such interest to be calculated on daily balances on the amount outstanding on settlement day to the date of payment in full.
If by 1 October 2010 the husband has not paid the full sum in accordance with paragraph (3) hereof and has not transferred the P property to the wife then the husband forthwith do all acts and things and execute all documents necessary to effect a sale of the property at P (“the property”) for the best price reasonably obtainable as set out in the following manner:
(a)list the property for sale by public auction within fourteen (14) days with an agent appointed by the wife;
(b)the reserve price for the purpose of such auction shall be such price as may be determined by the agent;
(c)the husband shall co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)making the key available to the agent;
(ii)allowing inspection of the property at all reasonable times requested by the agent;
(iii)doing or saying nothing to hinder or prevent a sale being effected;
(iv)ensuring the property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)signing all documents requested by the agent in relation to the listing for sale of the property;
(d)in the event the bidding at the auction does not reach the reserve price the wife may negotiate with the highest bidders or any other interested person and effect a sale of the property;
(e)the husband shall execute a contract for sale in the form prepared by the agent;
(f)in the event of a sale of the property in accordance with these orders, then on settlement of the sale, the proceeds of sale be paid in the following manner and priority:
(i)all costs and expenses of sale including legal costs and disbursement, agents’ commission and auction expenses;
(ii)the amounts required to pay all municipal and water rates outstanding with respect to the property;
(iii)in payment to the wife of the amount then due pursuant to paragraph (3) hereof and any interest pursuant to paragraph (13) hereof;
(iv)payment of any costs order outstanding and payable to the wife;
(v)the balance (if any) to the husband;
(g)the husband may continue to occupy the property until completion of the sale of the property and shall be responsible for and pay all the outgoings, telephone, gas and electricity accounts, municipal and water rates, insurance and maintenance in relation to the property provided that the husband shall give vacant possession of the property not less than seven (7) days prior to the date fixed for completion of the contract for sale of the property.
On settlement day or upon payment of the full amount due to the wife pursuant to these orders:
(a)the wife do resign from any office held by her in any of the entities in the Poyzer Group;
(b)the husband doing all such acts and things and signing all such documents as may be necessary to register and implement the wife’s resignation;
(c)the wife do transfer to the husband all her shareholding and/or other interests (if any) in any of the Poyzer Group;
(d)the wife do execute all such documents as shall be necessary to give effect thereto;
Hereafter the husband do indemnify the wife and procure any trustee of any of the entities of the Poyzer Group to indemnify the wife and keep her forever indemnified with respect to:
(a)all debts and liabilities of the husband past, present and future;
(b)all debts and liabilities of the Poyzer Group past, present and future;
(c)all choses in action against either of the parties or any of the Poyzer Group and in particular but not limited thereto against the wife arising out of her position as a director, secretary, shareholder or beneficiary of any of the Poyzer Group;
(d)any liability of the wife in respect of any guarantee executed by the wife in support of borrowings debts and liabilities of the husband or any of the Poyzer Group;
(e)any debt or debit loan account due by the wife to any of the Poyzer Group;
(f)all income tax, capital gains tax, GST or other taxation liabilities due by the husband and any of the Poyzer Group or due by the wife of or in relation to these orders, the allocation of monies or income to the wife from any of the Poyzer Group, of or incidental to the transfer of any interest of the wife in the Poyzer Group to the husband and the payment pursuant to these orders or the orders of 18 June 2010 SAVE AND EXCEPT that the wife shall pay the income tax, (if any) which is already assessed and outstanding due by her at 30 June 2008 ($69,730) and any other income tax or capital gains tax hereafter payable by her which does not relate to any income, distribution, payment or adjustment from the husband or the Poyzer Group.
On settlement day or as soon thereafter as the husband complies with payment of the sum due under paragraph (3) in accordance with section 90MT (1)(b) of the Family Law Act 1975 (Cth):
(a)the husband shall be entitled to the specified percentage, being 100 per cent of each splittable payment made out of the wife’s interest in the self-managed superannuation fund, Poyzer Investments Pty Ltd Superannuation Fund (the old fund);
(b)the wife’s entitlement is correspondingly reduced;
(c)sub-paragraph (a) has effect from the operative time;
(d)the operative time is the date of transfer of the transferrable benefits;
(e)Poyzer Investments Pty Ltd being the trustee of the old fund shall do all such acts and things and sign all such documents as may be necessary to:
(i)calculate in accordance with the requirements of the Family Law Act 1975 the entitlement created in paragraph (1) of these orders; and
(ii)pay the entitlement whenever a splittable payment becomes payable;
(f)the wife do:
(i)tender her resignation as a director of the trustee of the fund;
(ii)transfer to the husband her shares in the trustee fund and resign as a member of the fund;
(g)as and from the making of these orders the husband shall be responsible for and indemnify the wife in relation to the fund and any liability of the wife personally arising out of her involvement in the fund past, present or future including but not limited to:
(i)any and all liability for payment of tax to the Deputy Commissioner of Taxation past, present or future, howsoever arising, including but not limited to capital gains tax and any fine penalty or other costs in relation to any alleged non-compliance by the fund;
(ii)any and all liability of the wife for individual income tax in respect of the fund past, present or future and howsoever arising including but not limited to capital gains tax, any fine, penalty or other costs;
(iii)any and all creditors of the fund;
(iv)any and all borrowings of the fund;
(v)arising from her resignation as trustee or member.
On or before 10 September 2010 the husband shall provide to the wife all documents required to be signed by the wife in order to carry out the terms of the within orders (including but not limited to resignation of directors, share transfers and notice to superannuation fund trustees).
SAVE AND EXCEPT as provided herein all property whether real or personal now in the possession or control of each of the parties shall vest in that party absolutely.
In the event that either party shall neglect or refuse to execute any document within seven [7] days of the same being forwarded to him/her by ordinary pre-paid post to the last known address for service then in such an event upon proof by affidavit a Registrar of this Honourable Court is hereby appointed and directed to execute the document on behalf of the party so in default and if in his/her opinion it shall be necessary so to do to settle the same and do all such other acts and things as shall be necessary to give full force and effect to these orders on the basis that the party in default shall pay the other party’s costs of and in relation to such neglect or refusal.
The order of 11 November 2002 is discharged from this date.
Any costs application by either party is adjourned to a date to be fixed upon the Court receiving any request in writing from either party provided such written request is forthwith served on the other party and is made to the Court before 3 September 2010.
Each party has liberty to apply for consequential orders in relation to enforcement of the within orders.
IT IS NOTED that publication of this judgment under the pseudonym Tritton & Poyzer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADF 1063 of 2001
| MS TRITTON |
Applicant
And
| MR POYZER |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings for property settlement between the husband and wife commenced in November 2001. For various reasons, including the failure of the parties to prepare the matter, the final hearing was delayed.
The property settlement trial commenced in November 2007. The main issues to be determined at the trial were the assets, liabilities and financial resources of the parties and any adjustment for contributions since separation. The wife asserted that the husband had undisclosed interests in assets, had reduced the available assets by excessive spending and had wasted assets.
The Trial
In October 2007 counsel confirmed that the estimate of the length of the trial was 10 days. As the trial progressed the estimates of Court time required increased from time to time. The first part of the trial lasted 51 days. The wife was represented by Ms Nelson, QC for the trial until judgment was first reserved. The husband was initially represented by Ms Pyke, QC. From October 2008 the husband was unrepresented.
The husband relied on the evidence of himself and the evidence of ten witnesses.The wife relied on her evidence and the evidence of three witnesses.
During the first part of the trial 413 exhibits were received.
Further witnesses were called after permission was given to reopen the evidence and another 8 exhibits were received.
During the trial numerous procedural directions were given and interim orders made.
At the end of the trial the parties both provided lengthy written submissions and oral submissions.
From 29 January 2010 the wife was unrepresented.
After judgment was reserved the husband filed an Application in a Case on 9 March 2010 seeking to re-open the trial for new evidence to be given. This application was listed for 27 April 2010. The husband was not present on this day due to alleged health problems and the application in a case was adjourned to 18 May 2010.
The orders made on 27 April 2010 are as follows:
“1.Within 14 days of service of the order upon the husband being served by pre-paid post to his current address for service the husband provide the wife with copies of the documents referred to in the letter to the husband from the wife dated 26 February 2010.
2I adjourn the question of the husband’s application in a case filed on 9 March 2010 in relation to further evidence to 18 May 2010 at 9.15 am before me.
3I adjourn further consideration of the wife’s application in a case filed on 18 March 2010 to the adjourned date of 18 May 2010 at 9.15 am before me.
4During the period of adjournment I make the order in paragraph 3 of the wife’s application in a case filed on 18 March 2010 and adjourn further consideration of that application to 18 May 2010 at 9.15 am before me.
5I direct that if the husband or wife have any further affidavit or evidence upon which they wish to rely for the purposes of the applications in a case that the same be filed and served by 4.00 pm on 11 May 2010.”
On 18 May 2010 the husband was given leave to reopen the evidence in relation to the compliance status of his superannuation fund, the alleged proposed mortgagee sale of real estate by the Commonwealth Bank and possible capital gains tax implications in relation to the sale of another property. Directions were made for the filing of material and the issue of subpoena and other directions to prepare the matter for further hearing which was listed for 15 and 16 June 2010.
The hearing of oral evidence resumed on 15 June 2010, continued on 16 June, 17 June and 18 June 2010 when judgment was reserved.
Further affidavits of evidence-in-chief were received.
The husband gave further oral evidence.
Mr C, a Bank Officer from the Commonwealth Bank gave evidence. Mr I, Chartered Accountant who earlier had given evidence was recalled and gave further evidence.
The husband called the witness Mr V, who had been recently appointed as auditor of the superannuation fund.
The wife relied on her affidavit and was further cross-examined by the husband.
A further eight exhibits were received.
Final submissions were heard and judgment was again reserved on 18 June 2010.
On 18 June 2010, following receipt of evidence and submissions from the parties the following orders were made for reasons given on that date.
“1.Within ten [10] days from today the husband pay to the [Poyzer] Family Trust sufficient funds and thereafter do all things necessary to ensure that the Family Trust pays all interest due and owing and which thereafter becomes due and owing to the [Poyzer Investments] Pty Ltd Superannuation Fund in relation to the loan between the [Poyzer] Family Trust and the [Poyzer Investments] Pty Ltd Superannuation Fund.
2.The husband to provide within fourteen [14] days written confirmation of the compliance with this order to the wife by forwarding to the wife at her address for service full particulars of the account and date of the payment to the [Poyzer Investments] Pty Ltd Superannuation Fund.
3.The husband and wife do jointly have the conduct of the sale of the properties being the properties at [Lot 22, M] and Lots 51 and 52 [M] in the State of South Australia for and on behalf of the registered owners and that:
(a)failing agreement as to the appointment of a real estate agent within ten [10] days then such agent be appointed as determined by the President of the Real Estate Institute of South Australia;
(b)failing agreement as to the method of sale and sale price then the same shall be determined by the appointed agent.
4.The agent so appointed shall ensure that all instructions are joint instructions in the first instance and that all offers and other information are provided to both parties at the same time.
5.Upon settlement of the sale of the properties that the net proceeds of the sale after payment of the costs of sale and discharge of the Commonwealth Bank secured loans being Bills Matured Accounts formerly Bills Discount Facilities Account No […]6003 and […] 8113 principal amounts THREE HUNDRED AND FIFTY FIVE THOUSAND AND FIVE HUNDRED AND SIXTYY FIVE DOLLARS [$355,565.00] and FOUR HUNDRED AND THIRTY SIX THOUSAND AND FOUR HUNDRED AND TWENTY EIGHT DOLLARS [$436,428.00] are to be placed into a joint interest earning account in the names of the parties and such account shall only be operated with the joint signatures of the parties or further order.”
Main Issues
The main matters in dispute between the parties at the trial were the assets, liabilities and financial resources of the parties which the Court should take into account. The wife maintained that the husband had undisclosed interests in various ventures. The wife also maintained that the husband had taken steps since the separation to reduce the wife’s entitlement to property settlement. The husband strenuously denied these claims and asserted that the wife’s actions had increased the liabilities of the parties and reduced the value of the assets.
In the original final submissions the wife’s counsel referred to an amended balance sheet filed on behalf of the wife which provided a list of assets, items to be added-back and showing a “net pool of matrimonial property” $5,680,340. On behalf of the wife it was submitted that she should be allocated 70 per cent of this net pool, being $3,976,238. On behalf of the wife it was proposed that she retain the N property and the P property, together worth $1,070,000, proceeds of Volvo which had been sold ($2,000), furniture and household effects ($14,962) and jewellery and a valuable book ($3,035) in all totalling $1,089,997 leaving the husband to pay the wife $2,886,241. This was on the basis that the husband retain all other assets and indemnify the wife in relation to all the liabilities.
In his original final submissions the husband proposed that the property settlement be approached on an asset by asset basis placing particular emphasis upon assets which existed at the time of separation and those which were acquired after separation. He proposed by way of final orders the wife was to retain the N property in her name ($630,000), the furniture in her possession ($15,000), the superannuation ($90,000), less the mortgage on the N property ($350,000), leaving the wife with a total of net assets of $385,000. On this basis he proposed the husband retain “everything else and discharge all liabilities”. (The husband’s written submissions 16 September 2009).
Following the reopening of the evidence in June 2010 both parties sought to limit their personal responsibility for the increased interest incurred in relation to the Commonwealth Bank loans and the income tax consequences in relation to the superannuation fund.
After the conclusion of the first part of the trial the wife raised issues about the use by the husband of funds withdrawn from the various entities and her concern that funds had been sent overseas in order to defeat possible enforcement of final orders.
Relevant Background and Chronology
The husband is now 59 years old, having been born in 1951. The wife is 54. She was born in 1956. The parties started living together in 1979 and were married in Adelaide in 1988.
The eldest child of the parties, a daughter, was born in 1987. Their son was born in December 1993 and is now aged 16.
The parties separated on 3 December 2000 but continued to live together under the same roof. The wife moved from the matrimonial home to rented premises in February 2001.
The wife filed an application for settlement of property and spouse maintenance in November 2001.
These proceedings are more complex due to the time that has past since the separation of the parties.
Since proceedings commenced there have been numerous interim applications. The matter was prepared for trial both in relation to children’s issues and property settlement. The trial in relation to children’s issues commenced before His Honour Justice Strickland in June 2007. Final orders in relation to children’s issues were made on 21 January 2008. Justice Strickland was unable to hear the property settlement trial. Justice Strickland disqualified himself from hearing the property settlement trial because of his previous role as legal representative for one of the proposed witnesses.
Following the separation the parties shared the care of the children.
The parties’ daughter is now independent. She completed her secondary education and commenced University studies in Adelaide, but moved to live for a short time in Melbourne. The daughter has travelled overseas, with the husband providing money to her, but debiting the cost as a joint expense of the husband and wife in the books of account.
Litigation concerning the parties’ son, his parenting arrangements, education and treatment continued. The child’s ill-health, particularly his diagnosis with Type 1 Diabetes has been a significant factor. There has been ongoing disagreement between the parties about appropriate care for their son.
In the Form 3 application for property settlement and spouse maintenance filed by the wife on 29 November 2001 the wife sought an order for interim spouse maintenance pending disposal of the property settlement proceedings. Seeking that the husband pay or cause to be paid to the wife $1,000 per week. When that application came on before Registrar Kelly on 11 November 2002 a Consent Order was made which provided “That until further order the husband do cause [Poyzer] Nominees Pty Ltd to pay or cause to be paid to the wife against her loan account with [Poyzer] Family Trust the sum of $1,000 per week.” It was noted that either party had liberty to apply to vary or discharge these orders on seven days notice and it was further noted that “there are concerns as to the husband’s ongoing capacity to comply with this order and in such circumstances the question of interim payments to the wife may need to be relisted for argument”.
Subsequently there were further interim hearings, however the order for payment of $1,000 per week continued.
The wife gave evidence at trial that she had not worked since the separation of the parties and had supported herself on the money she received from the Poyzer Group, monies paid by the husband pursuant to spouse maintenance orders and proceeds of sale of assets.
When the evidence was reopened in June 2010 the wife confirmed that she had been employed in part-time work, but had not had any work since 24 May 2010.
The husband has since separation managed the Poyzer Group and has supported himself from monies received from those entities and proceeds of sale of assets.
During the marriage (and after separation) various companies and trusts were established. The intricate complex inter-relationship between the various companies, trusts, businesses, real estate and related expenses increased the cost and length of litigation.
The parties’ main income came from the businesses known as the M Centre and the DS Centre.
The single expert, Mr J, prepared reports for the purposes of these proceedings and gave oral evidence.
He is a well-qualified, experienced Chartered Accountant with qualifications, specifically in the preparation of expert reports and forensic accounting.
The parties agreed that the Court should take into account the parties’ interest in the following entities:
(a) AMC Pty Ltd (“AMC”)
(b) Poyzer Family Trust (“PFT”)
(c) M Centre Unit Trust (“MCUT”)
(d) C Pty Ltd (“CPL”)
(e) Poyzer Properties Unit Trust (“PPUT”)
(f) Poyzer Family Trust No 2 (“PFT2”)
(g)Partnership of Poyzer Family Trust No 2 and A&B Z (“PZ Partnership”)
(h) PZ Corporation Pty Ltd (“PZCORP”)
(i) L Corporation Pty Ltd (“LCORP”)
(j) L Unit Trust (“LUT”)
(k) Poyzer Investments Pty Ltd (“PI”)
(l) Poyzer Nominees Pty Ltd (“PN”)
(m)Poyzer Investments Pty Ltd Superannuation Fund (“PISF”)
(n)A Poyzer Pty Ltd (“AP”)
(o)A Poyzer Superannuation Fund (“APSF”)
(p)Tritton Properties Pty Ltd (“TP”)
(q)Tritton Properties Unit Trust (“TPUT”)
(r)Poyzer Properties Pty Ltd (“PP”)
(s)UP Pty Ltd (“UP”)
(hereinafter referred to as “the Poyzer Group”).
The Poyzer Family Trust (“PFT”) is a discretionary trust in which the beneficiaries include the husband and the wife. The power of appointment rests with the husband. The former trustee was Poyzer Nominees Pty Ltd. The current trustee is AMC Pty Ltd, a company in which the husband is the sole director and shareholder. The wife asserts that the change of trustee occurred by way of unilateral act on the part of the husband.
The PFT owns 100 per cent of the units in the Poyzer Properties Unit Trust and the Tritton Properties Unit Trust. It also holds 75 per cent of the units in the M Centre Unit Trust in which the other 25 per cent is owned by the Z Family Trust. The PFT previously owned 51 per cent of the units in the QG Unit Trust. These units have been sold to the JNUnit Trust, which now owns the DS Centre at M. The husband was given a 10 year option to buy back the units at cost.
The Poyzer Properties Unit Trust is operated by the trustee Poyzer Properties Pty Ltd. The husband and wife are the directors and shareholders of the trustee company. The trust owned 50 per cent of Lot 51, M, 50 per cent of Lot 22, M and 100 per cent of Lot 50, M. The other 50 per cent of Lot 51 and Lot 22 were owned by the husband. The husband’s evidence was that the property known as Lot 50 has been sold to his friend Mr D.
The Tritton Properties Unit Trust was operated by Tritton Properties Pty Ltd as trustee. The husband and wife are the directors and shareholders of the trustee company. The unit trust did not own any real estate or businesses.
The Poyzer Family Trust No 2 is a discretionary trust. The trustee is PZ Corporation Pty Ltd. The husband, wife and Mrs Z are directors and shareholders of the trustee company. This trustee company is also the trustee of the A&B Z Family Trust. Essentially the Poyzer Family Trust No 2 has a 75 per cent interest and the Z Family Trust has a 25 per cent interest in the partnership known as the PZ Partnership.
The M Centre Unit Trust (“MCUT”) is operated by C Pty Ltd as the trustee. The husband, wife and Mrs Z are the directors of the trustee company. The shareholders of the trustee company are the trustees on behalf of the PFT and Z Family Trust.
L Corporation Pty Ltd (“LCORP”) is the trustee of the L Unit Trust (“LUT”). The husband is a director and shareholder of the trustee company and owns half the units in the LUT. The husband asserts that Mr D owned the remaining units and is also director and shareholder of the trustee company. The LUT owned Units 1, 3 and 4 at S. The units have been sold and the proceeds distributed to the husband, wife and Mr D. The involvement of the husband and Mr D in the unit trust and the equitable or true ownership of the units was a matter of dispute.
Poyzer Investments Pty Ltd Superannuation Fund (“PISF”) (the old superannuation fund) was operated by the trustee Poyzer Investments Pty Ltd (“PI”). The husband and wife were directors and shareholders of the trustee company. The husband and wife were the only members of the superannuation fund. Initially, the assets of the fund comprised shares, cash and a loan to the PFT. The treatment of the assets in the fund was an issue in the proceedings. Some of the evidence received when the trial was reopened in June 2010 related to the fund’s non compliant status and steps necessary to reduce possible liabilities.
There is another superannuation fund known as the Poyzer Superannuation Fund (the new superannuation fund) which is operated by A Poyzer Pty Ltd as trustee. This superannuation fund was established in 2004. The husband is the sole director and shareholder of the trustee and the only member of the superannuation fund.
The property at G is owned by this superannuation fund.
VC Pty Ltd is a company incorporated by the husband in which he is the sole shareholder and director. The husband asserted that the company does not trade and does not hold any assets or have any liabilities.
The reports and evidence of the forensic accountant Mr J provide specific, detailed information concerning each entity.
Brief Summary of the Witnesses and their Evidence
The number of witnesses and the evidence relied upon by the parties increased during the trial.
The wife relied upon her affidavits of evidence-in-chief and Statement of Financial Circumstances together with her oral evidence.
The wife also relied upon the reports and oral evidence of Mr S, Licensed Valuer, and Mr J, Forensic Accountant. The husband was given leave to delay his cross-examination of both these experts because he was then unrepresented and wanted to have assistance in Court. He was given leave to have the assistance of Mr H, Valuer, when cross-examining Mr S and Mr E, an accountant, when cross-examining Mr J.
The wife subpoenaed the Bank Manager from Bank SA, Mr G.
He gave his evidence-in-chief and was cross-examined on 4 November 2008. On the application of the husband the Court granted leave for him to be recalled for further evidence on behalf of the husband which was given on 16 April 2009.
Initially, the husband gave notice that he would rely upon his own evidence and that of numerous witnesses.
The wife agreed that the Court receive the affidavit of Mr R, without the need to have him called for cross-examination.
Some of the witnesses the husband said he was proposing to call were not called.
After the trial commenced, and in some cases after some considerable amount of the evidence had been heard, the husband sought to call other witnesses. In some circumstances leave was granted to add these witnesses to the husband’s case. In others leave was not granted to call or recall the witnesses.
The trial commenced on 5 November 2007.
On 6 November 2007 Senior Counsel for the husband produced the affidavit of one of their witnesses, Mr A.
The husband relied on the evidence of the Quantity Surveyor, Mr X. Mr X gave evidence that he relied upon the truth of the information provided to him by the husband about the condition of the properties before work commenced. He confirmed that his costings of the work included both what had been done and the work which remained to be done to the properties when inspected by him.
Mr X prepared two reports which included his opinion of the “indicative construction costs” of work done by the husband (and in certain cases to be done) on P property, G property and W property.
Another witness for the husband was Mr W, a builder. He had been dealing with the husband since meeting him around 2000. He gave evidence in October /November 2008 and was recalled in November 2008.
He carries on business as “W Builders”.
His evidence related to his involvement with the husband in developments at S, Lot 22, M and GG property.
Mrs Z provided an affidavit of evidence-in-chief and was called to give evidence. Ms Z, together with her late husband, were involved in the business of the M Centre.
Mr T was interposed in the cross-examination of the husband. He is an expert who undertook an assessment of the value of the work the husband performs for the M Centre. The updated report dated 6 June 2007 concludes that fair recompense for the work which he was informed the husband undertook would have been $100,000 in March 2004, which would be recalculated at $114,225 in March 2006 and $162,166 in March 2007. His evidence was based upon the information provided to him by the husband and the husband’s employee, Ms O.
Mr D was called as a witness for the husband. He is a builder who resides in NSW and a close friend of the husband for many years. He gave evidence concerning his involvement with the husband in the property at S and GG.
Dr N gave evidence for the husband. He was first consulted by the husband in July 2008. He did not have available to him any of the husband’s previous doctor’s records. The doctor gave evidence concerning his diagnosis that the husband was suffering from alcoholic neuropathy (being damage caused by excessive alcohol consumption over a period of time). The husband’s symptoms included memory lapse and poor concentration, gastritis and anxiety. Dr N considered the anxiety was possibly due to several causes, including the parties’ son’s diabetes diagnosis and ongoing Family Court litigation. He referred to the husband not taking the medication which had been prescribed for him and not undertaking the blood tests which had been recommended.
Dr N was recalled by the husband in May 2009.
Dr N gave evidence that following further tests the husband had been diagnosed with an auto-immune disorder in relation to connective tissues which resulted in aches in multiple joints, pain in his right shoulder and arm and that there was a high likelihood of Type 2 Diabetes condition. It was also his evidence that the husband had been referred for surgical treatment on his sinus.
He recommended the husband participate in weight-bearing exercise, have a sensible diet and reduce his alcohol intake.
Dr N’s evidence was also interposed in the cross-examination by the wife’s counsel of the father’s witness Mr D.
After the cross-examination of Mr D permission was given to the husband to ask further questions by way of examination-in-chief. (By then the husband was unrepresented). Counsel for the wife then completed cross-examination of Mr D.
Prior to the trial and later when the trial was part-heard, the Court emphasised the benefit to the parties of conferring and, where possible reaching agreement about disputed items in the accounts of the trusts and companies and in particular the amounts attributed to each of the parties as drawings or as business expenses. Notwithstanding, the emphasis placed upon the possible constructive work to be done out of Court time the parties were unable to agree about most of the disputed entries. The wife was therefore recalled and gave her evidence and was cross-examined about the disputed items which had been debited as expenses or drawings.
Mr A was called by the husband. He gave brief evidence-in-chief and was cross-examined by Senior Counsel for the wife. His evidence related mainly to the dealings between himself and the husband including an option deed which he had signed providing the husband with a proposed interest in certain South Australian ventures (which were investments of Mr A) and the husband’s assistance given to him in these ventures.
The husband was then re-sworn and gave evidence briefly before being further cross-examined by Ms Nelson, QC. He gave brief evidence by way of re-examination and then gave further evidence and was further cross-examined.
Ms O, who worked at the M Centre gave evidence. Her role included maintaining and preparing various company and trust records and financial statements. Her evidence was that she had prepared various accounts and statements primarily on the husband’s instructions and relying upon his direction.
By consent the evidence of Mr L, Insurance Broker, was interposed. His evidence related to the explanation for various insurance records which suggested that properties in which the husband claimed to have no interest were included in records relating to the husband’s companies or businesses. The records suggested on the face of it that the husband provided information and obtained invoices in relation to the GG property, ET Pty Ltd and Units at G.
The husband called Mr I, Accountant. He gave evidence that the accounts were based upon information and instructions he had received from the husband and from the MYOB accounts which had been prepared by Ms O. He confirmed that all drawings in the accounts had been attributed to the husband and wife equally, regardless of which party had actually received any benefit.
Mr I gave further evidence in June 2010 in relation to the superannuation funds.
The evidence of Mr S commenced in May 2009. He confirmed that he had received his information (which formed the basis of the report) from the husband. He said that the lack of refurbishment of the M Centre premises since 2005 and the lack of general and regular maintenance had reduced the value of the property.
In early September 2009 when the trial again resumed the husband gave evidence about the tenants who had left the M Centre.
Mr S completed his evidence and Mr J concluded his evidence. Again, the husband was given permission to give further evidence concerning matters raised during the oral evidence.
In September 2009 the affidavit of John Taylor, solicitor, was filed setting out particulars of trust monies invested.
When the matter resumed after permission was given to reopen the evidence, the husband and wife both gave evidence and were cross-examined about the new issues. The husband also called the evidence of Mr C from the Commonwealth Bank, Mr I, his accountant and Mr V, the auditor who had been appointed in relation to the old superannuation fund.
During the evidence of the husband he disclosed that on 29 January 2010 he had moved $50,000 from his Australian accounts to a Barclays Bank Account in the name of his brother in the United Kingdom. He also confirmed that there was a further 120,000 UK pounds in his brother’s name in the United Kingdom. This money had been sent to his brother’s account since the conclusion of the first part of the trial in September 2009.
Mr C, the Bank Officer from the Commonwealth Bank confirmed that the bank had secured loans of approximately $780,000 secured by mortgage over Lots 51 and 52 and Lot 22, M. The bank did not agree to renew the loans. There was limited evidence about steps taken by the husband on behalf of the companies and trusts involved to secure other finance to prevent the action taken by the Commonwealth Bank. Mr C confirmed that the bank has issued default notices but that the bank had not taken any active steps to place the properties on the market, at the time Mr C gave his evidence. A much higher interest rate was being applied to the loans which had matured.
The evidence of Mr I, the Chartered Accountant for the Poyzer Group confirmed his calculations for capital gains tax, which was likely to be payable on the sale of various properties. His evidence was clearly based upon information provided to him by the husband.
Mr V was appointed auditor for the old superannuation fund (Poyzer Investments Pty Ltd Superannuation Fund). It appears that he was instructed in about January 2010. He assumed he had authority to act for both parties (the husband and wife). He confirmed the letter of 20 May 2010 should have been dated 10 May 2010, being a letter he wrote to the taxation authorities. His evidence confirmed that if the outstanding interest was paid by one of the Poyzer Group trusts to the old superannuation fund then there was a discretion which might be exercised by the taxation authorities to restore the superannuation fund as a compliant fund and reduce any penalties payable.
On 18 June 2010 the Court ordered the husband to ensure that the Trust which owed the money to the old superannuation fund made payment to the fund of the interest due.
The Law
The Family Law Act 1975 sets out specific provisions in relation to property settlement proceedings. The most relevant in this matter are:
Section 79
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them--altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage--altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
…
(2)The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
(4)In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and
(c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and
(d)the effect of any proposed order upon the earning capacity of either party to the marriage; and
(e)the matters referred to in subsection 75(2) so far as they are relevant; and
(f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and
(g)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.
Section 75(2)
The matters to be taken into account are:
(a) the age and state of health of each of the parties; and
(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; and
(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; and
(f)subject to subsection (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; and
(g)where the parties have separated or divorced, 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 to 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:
(i) the property of the parties; or
(ii) vested bankruptcy property in relation to a bankrupt party; and
(naa)the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:
(i)a party to the marriage; or
(ii)a person who is a party to a de facto relationship with a party to the marriage; or
(iii)the property of the person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv)vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); 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 to the marriage; and
(q)the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage.
The Family Law Rules 2004 Chapter 13 deal with the obligation of each party to provide the Court and each other party with “full and frank disclosure of all information relevant to the case, in a timely manner” (rule 13.01 sub-paragraph (1)).
Paragraphs 39 and 40 of the Full Court decision of Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 state:
“39. The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of s.79. That approach involves four inter-related steps. Firstly, the Court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss.79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss.79(4)(d), (e), (f) and (g), (“the other factors”) including, because of s.79(4)(e), the matters referred to in s.75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case: Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Davut and Raif (1994) FLC 92-503; Prpic and Prpic (1995) FLC 92-574; Clauson and Clauson (1995) FLC 92-595; Townsend and Townsend (1995) FLC 92-569; Biltoft and Biltoft (1995) FLC 92-614; McLay and McLay (1996) FLC 92-667; JEJ and DDF (2001) FLC 93-075 and Phillips and Phillips (2002) FLC 93-104.
40.Section 79, unlike s.78, requires the Court to consider the whole of the property of the parties, however and whenever acquired, notwithstanding that the parties may only seek an alteration of interest in some of that property. As a consequence of the first step in the preferred approach to the determination of the s.79 proceedings, each party to the proceedings has an obligation to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto: Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Tate v Tate (2000) FLC 93-047.”
In M and M (1998) FamCA 42, the Full Court said:
“2.11There seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses. Neither the Family Law Act nor the case law require that parties go into a state of suspended economic animation once their marriage breaks down pending the resolution of their financial arrangements. Parties are entitled to continue to provide for their own support. Whether any expenditure so incurred is reasonable or extravagant is a matter that can be determined by the trial Judge.”
In the decision of R & R [2004] FamCA 388 the Full Court (Nicholson CJ, Kay and Chisholm JJ) considered a matter in which the husband had failed to take the opportunity open to him of acquiring control of a Trust or its assets. They decided that this should be treated:
“… as having wasted or voluntarily relinquished the financial resource he had in the Trust: Kowaliw and Kowaliw (1981) FLC 91-092 applied.”
See Headnote of R and R (Supra).
The Headnote continues:
“The resource that was available to the husband in the Trust, and which he failed to acquire when he could have done, was a matter of great weight to be taken into account under s 75(2), either as a (notional) financial resource or as a matter that the justice of the case required to be considered.”
This latter comment appears to be a reference to section 75(2)(o).
In the matter of Omacini and Omacini (2005) FLC 93-218 the Court referred to the circumstances in which it was appropriate to notionally “add back” assets to the pool. At 79,617:
“To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees.
…
(b)Where there has been a premature distribution of matrimonial assets (Townsend & Townsend (1995) FLC 92-569).
….
(c)In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a)where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b)where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.””
In the context of this case it is also appropriate to note the Full Court decision of Reichstein & Reichstein [2006] FamCA 1422 in which the Full Court said:
“80.This was a case where the husband failed to comply with his clear obligation under the Family Law Rules 2004 to make a full, frank and complete disclosure of his financial circumstances in a timely manner. The need for parties in financial matters to make such disclosure is not in doubt. In the seminal passage in Briese and Briese (1986) FLC 91-713 Smithers J said at 75,180 – 75,181:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
…
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.
(See also Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Kannis and Kannis (2003) FLC 93-135).”
The Full Court decision of Gollings & Scott (2007) FLC 93-319 deals with the question of adding back legal fees as discussed in Chorn & Hopkins (2004) FLC 93-204 (see paragraphs 46-49 of Gollings & Scott (Supra)). Gollings & Scott (Supra) also discusses the principles in relation to adding back assets. Paragraphs 65 and 68 of Gollings & Scott (Supra) say:
“65.In Omacini and Omacini (2005) FLC 93-218; (2005) 33 Fam LR 134 the Full Court identified three clear categories of cases where it was appropriate to notionally add back to the pool assets which were said by the Full Court to “no longer exist”. Those three categories were:
(a) monies spent on legal fees;
(b)monies disbursed by way of premature distribution of matrimonial assets; and,
(c)monies lost by one party either during or after the marriage as a result of a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets or as a result of reckless negligent or wanton behaviours which had the effect of reducing or minimising the value of assets.
…
68.As a general rule once the parties have separated, subject to obligations of maintenance and support, and subject to the type of considerations described in Kowaliw (1981) FLC 91-092 relating to waste, each party is entitled to get on with his or her life independent of the other. The husband would be free to go about spending the money he earned post-separation in the furtherance of his relationship with Ms Y if he chose to do so providing that at the same time he properly met his obligations towards his wife and children for their due support. It would not normally be appropriate some years after separation to require each of the parties to account for any monies they had spent post-separation so as to determine whether or not that expenditure was reasonably necessary for their own self-support, and to the extent that it was not, to determine whether it would be proper to add it back into the pool of assets available for division between the parties. As we have said, the matter is clouded in this case because of the nature of the concession made as to the equality of contribution both prior to and post-separation. The pool of assets to which the husband was prepared to make that concession did not include in it any monies spent by him on the F property. It is doubtful that one can properly bind the husband to a concession that would have the effect of entitling the wife to claim an equal share of all monies earned by the husband post-separation.
In C&C (1998) FamCA 143 the Full Court (coram: Nicholson CJ, Ellis and Kay JJ) when examining some small add-backs into a pool of $3 million said:
45.Although it is not one of the Grounds of Appeal, we would also like to make the observation that we were troubled by her Honour adding back into the pool of assets the sum of $15,000 provided by the wife to [A] to enable her to place a deposit on a unit. The provision of modest amounts of capital by parents to their adult children to enable the children to get a start in life is a normal experience in our society. In a case involving the magnitude of the assets of this case, in our view it is unreasonable to conduct a microscopic examination of each of the parties’ items of post-separation expenditure with a view to determining whether or not it is appropriate that they be brought into account in dividing up the asset pool between them. The cases which deal with notional add-backs are generally examples of circumstances in which it would be clearly unjust and inequitable not to take those matters into account. (See Kowaliw (1981) 7 Fam LR 13; [1981] FLC 91-092, esp at FLC 76,645; Townsend (1994) 18 Fam LR 505; [1995] FLC 92-569; Farnell, (1995) 20 Fam LR 513 (expenditure on legal costs notionally added back because of s117).
46.Whilst not seeking to place a fetter upon the exercise of discretion of a trial judge in individual cases, it seems to us that the concept of adding monies reasonably disposed of back into the pool ought to be the exception rather than the rule. The parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives. Providing modest support for their adult children or taking not inappropriate holidays for themselves seems to fit comfortably within that description.”
The Full Court (Bryant CJ, Finn and Boland JJ) in Wilde & Wilde [2007] FamCA 1044 set out a helpful summary as follows:
Relevant legal principles – full and frank disclosure
51.The need for parties in financial matters to make such disclosure is not in doubt. In the seminal passage in Briese and Briese (1986) FLC 91-713 Smithers J said at 75,180 to 75,181:
I believe that a person in the position of the husband in this case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure. The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance. Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding.
…
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which have referred. Livesey v. Jenkins makes it clear that mere compliance with rules of court or practice directions does not alter the basic principle of the need for full and frank disclosure by the parties.
(See also Oriolo and Oriolo (1985) FLC 91-653; Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Kannis and Kannis (2003) FLC 93-135).
52.We think it important prior to our discussions of individual items to emphasise that the adjustment process under s 79 involves a broad exercise of discretion. The wide discretion conferred upon the Court was discussed by the High Court in Mallet v Mallet (1983) 156 CLR 605, where Gibbs CJ held at 608:
[The Parliament] has conferred on the Court a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made (see subsec. (1) and (2) of sec. 79) although there are some broad principles to which the Court is required to give effect, and some circumstances which it is required to take into account. A principle which the Court is expressly required to apply, so far as practicable, is that it will make such orders as will finally determine the financial relationships between the parties to marriage and avoid further proceedings between them: sec. 81.
53.In Norbis v Norbis (1986) 161 CLR 513; (1986) FLC 91-712, Mason and Deane JJ in discussing the approach to be taken towards the ascertainment of contributions said at 523 to 524:
As a matter of construction of s 79 Nygh J is right in saying that the section imposes no obligation on the Family Court to pursue in relation to this issue either the global approach or the asset-by-asset approach to the exclusion of the other. We do not understand the Full Court in the present case to suggest otherwise. What the Full Court asserts is that the global approach is the only “realistic”, that is, convenient, means of arriving at the entitlements of the parties. Again, it seems to us that it will depend on the circumstances of the particular case, though in the majority of cases the global approach will be more convenient and for this reason the Full Court is entitled to prescribe its adoption as a guideline in the majority of cases. The Family Court has rightly criticized the practice of giving over-zealous attention to the ascertainment of the parties’ contributions, and we take this opportunity of expressing our unqualified agreement with that criticism, noting at the same time that the ascertainment of the parties’ financial contributions necessarily entails reference to particular assets in the manner already indicated, (emphasis added).”
In Essex & Essex (2009) FLC 93-423 the Full Court said:
“Discussion
29.The grounds which go to the trial Judge’s findings about the quantification of the parties’ net assets involve two issues – “add backs” – and identification of either joint or sole liability for debts.
30.Questions of how a trial Judge should deal with so called “add backs”, and/or premature distribution of assets, regularly arise in cases under s 79 and are often the subject of grounds of appeal. Often the amounts are minor when compared to the overall property in issue and the time taken and costs involved to agitate the claims both at first instance and on appeal, lack proportionality. Trial Judges are correct to deal with such claims robustly in the broad exercise of their discretion under s 79.
31.The principles about when an expense should be “added back” have been comprehensively discussed in Full Court decisions particularly Chorn & Hopkins (2004) FLC 93-204, Omacini & Omacini (2005) FLC 93-218 and Gollings & Scott (2007) FLC 93-319.
32.The principle that where one party has unilaterally assumed control of, and has improperly disposed of, or diminished the value of, an asset to the detriment of the other party, that the disposal should be regarded as a premature distribution to the party at fault is not in doubt (see Townsend & Townsend (1995) FLC 92-569). What is often controversial is when the principle is applicable.
…”
Discussion and Findings on Main Issues in Dispute
At the commencement of the trial the parties agreed that the contributions of the parties to the date of separation were equal. There was no agreement about the value to be placed upon the contributions of each of the parties since separation, nor was there an agreement about any further adjustment to be made for the parties’ needs, financial circumstances or other factors.
Y and YY property
The parties originally purchased the property at Y in the 1980s. The husband became the sole registered proprietor. Monies were borrowed from Westpac to put towards the purchase price. Later monies were borrowed using an account which became known as the “Homeside Lending account”. This Homeside Lending account was later used to purchase other assets, including land and shares. Subsequently, the property was improved with a small dwelling being placed at the front which became known as YY property.
At the time of separation the Homeside Lending account was not in debit. Negotiations had begun with the local council for the subdivision of the property. The wife placed a caveat on the title to Y property in January 2001. Thereafter, the subdivision proceeded dividing the land into three sections, with a portion being sold to the local council. The property continued to be security for monies borrowed for various reasons after separation. The main home was also sold in March 2006 with settlement taking place in September 2006. After the discharge of the Homeside Lending account, the net proceeds of sale were $270,305.97.
The net proceeds were divided by:
(1)one payment of $14,698.48 to the ATO for the husband’s outstanding tax;
(2)$38,652.36 for the ATO to the wife’s outstanding tax;
(3)$40,000 to the Commonwealth Bank in reduction of borrowings;
(4)$50,000 to the wife’s solicitors David Davidson Trust Account;
(5)$50,000 to the husband.
The sum of $77,559.29 remained in the Conveyancing Business Matters trust account. Shortly thereafter the sum of $77,000 was paid by the conveyancer to Tritton Properties Pty Ltd (being received in the bank account on 14 September 2006). The bank account statements show that the husband withdrew $77,000 from Tritton Properties Pty Ltd on 20 September 2006. The husband said this was to reduce his personal overdraft.
The husband received a further payment of $7,700 as a contribution by the council to the sub-division costs.
The husband retained his interest in YY property.
In May 2007 the wife received from the husband $62,500 representing one half of the value of YY property (based on Mr S’s valuation of this property ($125,000)). The wife claims to have paid the amount to her solicitors in relation to legal fees.
The husband says that this property and monies the wife received should not be brought into account because of the agreement made at that time.
The transcript of 13 April 2007 includes the following portion:
“HIS HONOUR: What is intended with C at the trial of this matter? Does that mean that I exclude entirely the property at [YY] from the pool of assets?
MR RICHARDS: Yes.
MR JORDAN: Yes.
HIS HONOUR: And I don’t take into account, when considering section 75(2)(b), that the husband has that property.
MR RICHARDS: Correct
HIS HONOUR: It’s that’s what ---
MR RICHARDS: Correct.
HIS HONOUR: I would have expected that. I just wanted to confirm that.
MR RICHARDS: As a matter of arithmetic your Honour can understand, and for the purposes of the transcript, the sum of $62,500 is precisely half ---
HIS HONOUR: 50 per cent.
MR RICHARDS: --- of the valuation.
HIS HONOUR: But I mean that’s not a concession that I assume that the appropriate in this matter is 50 per cent; fifty-fifty?
MR RICHARDS: No, it’s just ---
MR JORDAN: No, it’s not.
MR RICHARDS: It’s just taken out.
HIS HONOUR: All right. I just make a note of that then. At trail not include – well, not include – sorry, not include the property but do I include the 62 and a half that the wife receives? I don’t.
MR JORDAN: No.
HIS HONOUR: Logically I don’t.
MR RICHARDS: Or the husband’s interest.
HIS HONOUR: The husband’s interest or what the wife has received, ie the 62 and a half.
MR JORDAN: They’re both out.
HIS HONOUR: They’re both out; not including. Okay. Thank you. …”
(Exhibit 44)
In the joint balance sheet filed on behalf of both parties on 2 December 2007 the property YY (registered in the name of the husband) was described as being “excluded” by both parties, whilst the wife was seeking to bring into account the $77,000 and $8,000 received by the husband. Subsequently, however it appears from the amended balance sheet filed on behalf of the wife and submissions to the Court in September 2009, the wife seeks to bring into account YY property at an estimate of $200,000 (as well as $77,000 being the proceeds of sale of portion of YY property and $7,700 being the contribution of the council to the subdivision costs).
The husband maintains that he carried out significant work improving the property at Y and arranging for the subdivision of the property. For a period of time he lived on the property with the children and at other times the property was vacant.
The wife has maintained that the husband’s control of this asset has benefitted him and she has been disadvantaged by her need to use her share of the funds for payment of legal fees (she says occasioned by the husband’s behaviour). She also maintains that he has failed to rent out the home when it was vacant and has at other times retained cash which was rental income.
The husband has had the benefit of that property until it was sold. His work on the property should be acknowledged. The $77,000 and the $7,700 received by him should be brought into account.
In accordance with the agreement reached (as indicated in the transcript) the property at YY should not be included as an asset for division purposes nor brought into account under section 75(2).
H, United Kingdom and D, United Kingdom
The H, UK, property was purchased in the husband’s sole name in April 1998. The parties resided in H for some months in 1998 to 1999 when renovations to the property were carried out. Until May 2000 the property was freehold. The husband then took a mortgage over the property at H to purchase the D, UK property. At the time of separation both properties were registered in the husband’s name.
The parties travelled to the United Kingdom from time to time or the husband travelled on his own, staying at either the H property or the D property.
After the separation of the parties the husband has travelled to the United Kingdom. The husband claims that it has been appropriate to claim the travel expenses by way of reduction of the capital gains tax and as his contribution to the costs of improvement of the properties.
On occasions the husband’s travel costs to the United Kingdom have been paid by Tritton Properties Pty Ltd.
In September 2004 orders were made by Justice Strickland for the sale of the H, UK property. The property was sold in April 2005. The home loan to UCB Home Loans was repaid and the remaining proceeds of $625,873 paid into Randle & Taylor trust account (then solicitors for the husband).
The husband’s debts were paid and each of the parties received $195,000 ($50,000 and $145,000).
The D, UK property was purchased in May 2000 using the borrowing secured over the H, UK property. A tenant resided in the property until May 2003. The husband has claimed the cost of travel to the United Kingdom as an expense in relation to this property.
The wife complains about the lack of independent proof of necessary expenditure on this property.
During visits to the United Kingdom the husband on occasions and the children or one of the children have stayed at the property.
In September 2004 an order was made by Justice Strickland for the sale of the property, but on the application of the husband (who was seeking to retain the property) this order was suspended in August 2005. The wife submitted that the husband did not take appropriate steps to ensure that the property was made fit for and subsequently rented.
Following a further order made in March 2008, the property was sold and in February 2009 the sum of A$380,798.78 was received by the wife’s solicitors and one-half thereof ($190,399.39) paid to the husband’s solicitors.
The wife maintains that the husband has not provided reliable evidence concerning the claimed expenditure on the properties in the United Kingdom and in particular the claims he has made for travel expenses. The wife also maintains that the husband has not managed the property appropriately to secure the best returns by way of rental income or profit.
The wife maintains that the husband’s dealings with the property and his failure to provide proof of alleged expenditures has resulted in the wife spending significant time and funds investigating these claims. She maintains that his failure to provide substantial independent proof of the alleged renovations makes it probable that the husband has “personal unaccounted for cash reserves” (page 68 of the final submissions of the wife).
The husband’s evidence (and in particular his failure to provide any documents to support the substantial improvement costs he claimed) was unsatisfactory. He has failed to establish the costs of, or value of, work done by or arranged by him on these properties. He failed to establish an appropriate basis to support his travel costs being attributed to any significant improvements to these properties.
N property
This property was purchased by the wife after separation. Settlement took place in April 2005. The wife wishes to retain this property. The purchase price was $590,000, being a deposit of $25,000 drawn by the wife from the Tritton Properties bank account, a housing loan of $250,000 secured by first mortgage to the Commonwealth Bank of Australia (“CBA”) and CBA bank loan of $360,000 secured against Lot 22 and Lots 51 and 52, M. The wife has used the payments from Tritton Properties to meet the monthly repayments. Occasionally she has been in arrears of repayments and has used payments made after sale of assets to meet the accumulated arrears.
The husband also seeks to bring into account the unpaid liability for capital gains tax on the sale of D property in the United Kingdom. Again, he relies on the evidence of Mr I in assessing the sum at $47,602.62.
The wife maintains the husband failed to reduce his liabilities by making arrangements (consistent with the laws of the United Kingdom) to claim the property as his principal place of residence, thus avoiding capital gains tax.
Because of the unsatisfactory nature of the evidence concerning the records maintained by the husband, the Court is unable to be satisfied that these capital gains tax figures are accurate.
The Court will bring into account the fact the husband will be responsible for any capital gains tax attributable and payable by either the husband or wife in relation to the sales of assets of the parties and the Poyzer Group which have taken place. An exact calculation of the amount is not possible but the Court considers that it will be a significant amount.
(f)Debt from the husband and the wife to PZ Corporation Pty Ltd re Commonwealth Bank loan to pay income tax $350,000”.
Mr J’s calculations as to the valuation of the Poyzer Group ignore the amounts in the accounts payable by the husband and wife to the Trusts for the purposes of ascertaining the value of the Group. The other liabilities of the Poyzer Group have been considered by Mr J (based on the material provided by primarily the husband and Ms O).
The Court has taken into account the monies due to the CBA. It is acknowledged that further sums may be due by way of penalty, interest and costs incurred by the CBA. The CBA loan was taken into account as one of the liabilities of the Poyzer Group in Mr J’s valuations.
(g) Loans from Trusts to the husband and the wife
The husband seeks to bring into account as liabilities the debts of the husband and wife to the Poyzer Group; ($398,646 owed by the husband and $722,277, owed by the wife, being a total of $1,120,923) based upon the figures in Mr J’s report of 10 February 2009 on page 6.
Originally the wife was seeking to add as an asset the parties’ debit loan accounts in the Poyzer Group at $1,246,477. Mr J’s fifth report (Exhibit 397) page 58 shows the loans and beneficiaries entitlements as $1,120,923. This amount has been taken off the sub-total and therefore not included as an asset when he valued the parties’ interests in the Poyzer Group.
The fifth report of the expert Mr J (Exhibit 397) updates the valuation of the Poyzer Group to May 2009. The wife includes the figure of $1,728,536 as the valuation of the Poyzer Group as at 30 June 2008 (being the figure which is arrived at assuming the husband has control of the M Centre Unit Trust and PZ partnership). The wife seeks to add to this figure the debit loan accounts of the parties at $1,246,477. The husband seeks to use the February 2009 figure for the valuation of the Poyzer Group ($1,376,935) and seeks to have deducted as a liability of the parties the loans from the Poyzer Group to the husband and wife which as at the 10 February 2009 report totalled $1,120,923.
The Executive Summary, page 6 of the fifth report of Mr J concludes that the net assets of the group (assuming control) have a sub-total of $1,972,910. These figures are then reduced by $1,246,477 representing the “loans or beneficiary entitlements” for the husband ($461,423) and the wife ($785,054). The final figure is reached by adding to that net amount the superannuation of $1,001,103.
Mr J’s valuations are therefore based upon the assumption that neither the husband nor the wife will be required to, or will, pay the amounts described as payable by them or attributed to them. If these loans were brought into account as amounts owing by the parties to the Poyzer Group then the valuation of the Poyzer Group would be correspondingly much higher.
The evidence of Mr I, Ms O and the husband indicates that the division between the husband and the wife of the amounts in each loan account was based merely upon an assumption and direction that they be split equally. The division of the drawings equally between the husband and wife does not in any way represent an actual equal benefit by the parties. It was simply a notional division carried out at the direction of the husband.
Some of the drawings attributed to the wife relate to the payment of $1,000 per week following the order made in November 2002 in the interim spouse maintenance proceedings.
Page 22 of Mr J’s fifth report (Exhibit 397) summarises the loans and beneficiaries entitlements as follows:
Loans and Beneficiary Entitlements $
[The husband]
LUT owes [the husband[ at 30 June 2007 14,463
[The husband] owes [PFT] at 30 June 2008 (483,944)
[PFT2] owes [the husband[ at 30 June 2008 8,057
Sub-Total $(461,423)
[The wife]
[The wife] owes [PFT] at 30 June 2008 (601,110)
[The wife] owes [PFT2] at 30 June 2008 (183,945)
Sub-Total $(785,054)
Total Owing $(1.246,477)
Paragraphs 9.11 and 9.12 on page 23 of Mr J’s fifth report set out the drawings by the husband and wife for the five years ended 30 June 2008. The evidence of Mr I and the accounts indicate the drawings of the husband and wife were allocated by splitting them equally between the husband and wife regardless of the actual use or categorisation of the monies. Since 2004 to 30 June 2008 there has been a total of drawings from the group by the husband and wife of $2,032,294.
It is not appropriate to add the book entry indebtedness as liabilities of the parties.
Summary and conclusion in relation to assets, liabilities and financial resources
At the time of the parties’ separation there were the following assets:
(1)Y property - this became three allotments including Y, YY and the portion sold to the council;
(2)Interest in the Poyzer Group of companies and trusts which included the M Centre and DS Centre and the real estate connected with the Poyzer Group;
(3)H property in the United Kingdom and D property, in the United Kingdom;
(4)Interest in the proposed LE development with Mr W;
(5)Shares in registered public companies;
(6)Four motor vehicles being the Volvo, BMW (UK), Holden Commodore and Honda Prelude;
(7)Furniture and household effects at Y, (the former matrimonial home) and H, United Kingdom;
(8)Jewellery and personal effects of each of the parties;
(9)Frequent Flyer points;
(10)Bank accounts, including bank accounts held by various entities in the Poyzer Group and separate bank accounts in the name of the husband, in particular in the United Kingdom;
(11)Bank accounts and investments of the Poyzer Investments Pty Ltd Super Fund. (Included in Poyzer Group valuation).
At the time of the separation the parties also had liabilities related to the Poyzer Group, the mortgage on H, United Kingdom, monies owing to the owner of D property in the United Kingdom and possible income tax and future capital gains tax liabilities.
The wife has acquired the property at N using funds by way of mortgage and secured loans. She wishes to retain that property. The husband has purchased and sold W property. The husband has purchased P property.
The Poyzer Group has continued to trade and there has been trading in the Super Fund shares and private shares. The husband has sold the Honda and Commodore motor vehicles and claims the BMW has been disposed of for no value.
The wife has sold the Volvo.
The husband has rolled over monies from the joint superannuation fund to a separate superannuation fund and purchased in the name of the new superannuation fund the property at G.
The husband has continued to travel claiming a substantial part of the expenses from the Poyzer Group and increasing the frequent flyer points (a share of which the wife seeks to claim).
As part of the final submissions of the wife a cost schedule was produced. This shows that the wife has incurred solicitor’s costs, counsel fees and expert fees up to 21 September 2009 of $1,212,096.
The husband says he has paid or incurred approximately $900,000 in legal fees.
These monies have been paid using drawings from the Poyzer Group or distribution of assets.
Notwithstanding that most of the add-backs sought by the wife have not been brought into account as assets, the Court will consider the husband’s expenditure and involvement in other ventures in the context of the overall adjustments to achieve a result which is just and equitable in all the circumstances.
Assets and liabilities to be brought into account
In accordance with these findings the assets and liabilities to be brought into account are:
$
Proceeds of Y property 14,698.00 (H)
50,000.00 (H)
77,000.00 (H)
7,700.00 (H)
38,652.00 (W)
50,000.00 (W)
Proceeds of H, United Kingdom 195,000.00 (H)
195,000.00 (W)
Proceeds of D, United Kingdom 190,399.00 (H)
190,399.00 (W)
N property 630,000.00 (W)
Poyzer Group (including real estate and superannuation funds)
as per Mr J’s valuation 1,728,536.00 (H)
(i) not adjusting superannuation fund values Nil
(ii) increase value of Lot 50 28,000.00 (H)
(iii) add adjustment Lot 52 53,747.00 (H)
Total Poyzer Group, real estate and superannuation funds $1,810,283.00
QG Option 165,750.00 (H)
Husband’s sale of shares unaccounted proceeds (see para 278) 20,078.00 (H)
Proceeds of sale of Mercedes motor vehicle 10,500.00 (H)
Proceeds of sale of Honda and Holden Commodore motor vehicle 5,000.00 (H)
Proceeds of sale of Volvo motor vehicle 2,000.00 (W)
Wife’s furniture and personal effects 14,962.00 (W)
(including jewellery & rare book) 3,035.00 (W)
Husband’s furniture and personal effects 21,335.00 (H)
Husband’s interest in Queensland Time Share 1,300.00 (H)
Add Backs
Rent for Adelaide property 16,900.00 (H)
Husband’s Family Law fees paid by Poyzer Group 38,264.00 (H)
UCB borrowings and unaccounted for proceeds for
D, UK property 50,183.00 (H)
Total assets: $3,798,438.00
Liabilities to be brought into account
N property mortgage approximately 250,000.00
CBA Loan re N property approximately 340,000.00
Wife’s income tax 69,730.00
Husband’s income tax 106,939.00
Capital gains tax (unable to quantify)
Total liabilities: $766,669.00
Total assets and add backs $3,798,439.00
Less liabilities $766,669.00
Net: $3,031,770.00
Assets treated separately
P property 440,000.00
Less mortgage (134,000.00) Net equals: 306,000.00 (H)
Proceeds of sale of W property 302,337.00
Less CBA Loan (90,000.00) Net equals: 212,337.00 (H)
List of ventures and dealings by husband which require consideration even though no actual asset or “add-back” can be identified and valued.
(i)Husband’s claims for money spent on D and H properties, UK, not sufficiently proven;
(ii)L Trust dealings in relation to S property;
(iii)Reduced value of shares due to husband’s sale without agreement from wife;
(iv)Husband’s failure to benefit from E Street and O Street ventures;
(v)Husband’s failure to benefit from GG project;
(vi)Husband’s failure to benefit from Lot 22/W venture;
(vii)Husband charging C Pty Ltd rent for P property;
(viii)Husband’s benefit of travel expenses and motor vehicle expenses claimed against company outgoings;
(ix) Husband’s inability to account for BMW in England, UK;
(ix)Use of UCB Home Loan funds being more than $50,183.
Contributions
The parties agreed that at the time the parties commenced living together in 1979 neither had any assets of significance.
The parties are also agreed that the contributions during the marriage until the time of separation should be considered equal.
This period of cohabitation and equal contributions for 21 years is significant.
Since the separation of the parties the husband has had the significant control of, and use of, the assets in the Poyzer Group. He has continued to run the M Centre business with the assistance of paid staff.
The husband maintains that the contributions he has made since the separation of the parties should be dealt with on an asset by asset basis. He also asked the Court to take into account his contributions by way of renovations to the properties in particular, the P property, the W property and the G property.
The husband has also made substantial contributions to other ventures in which he has (according to his evidence) no interest. He asserts he has no ability to claim compensation for the work and effort put in by him.
In his final written submissions the husband sets out a list of properties under the heading “Husband’s submissions re contribution to trusts properties and liabilities”. He seeks different contribution adjustments for each particular asset and liability which he brings into account.
The husband includes in his final submissions the loans from the trusts to the husband and wife which he says are liabilities totalling $1,120,923. He suggests that he bear 80 per cent of the debt with the wife 20 per cent.
The method by which the contributions are calculated for each property is not clearly explained in the final submissions, but it would appear that the husband places considerable emphasis upon the acquisition of some of the properties after separation and his ongoing contribution in running the businesses and acquiring the properties.
The wife maintains that the husband’s employee, Ms O, has been paid by the Poyzer Group to do most of the work to maintain the assets of the Poyzer Group since separation. She maintains that the contribution of Ms O is recognised by her wages which have been paid from the Poyzer Group and should therefore be considered an expense which the parties have borne equally.
The wife concedes that the husband has made contributions since the separation particularly in relation to acquisitions of properties and some work in relation to renovations or work done on the properties.
The husband seeks to bring into account his contribution, both financially and the value of his work by way of improvements as detailed in the evidence of Mr X. He also claims to have put in “capital” into the L Corporation, the P property and the superannuation funds.
The wife seeks to offset against these contributions what she assesses are the husband’s deliberate wasting of assets and his “dishonest stealings”.
The parties acknowledge that they have both received significant sums from the Poyzer Group since separation however there is a substantial dispute as to the way the drawings have been attributed to each of the parties in the respective books of account prepared for the taxation returns or for the MYOB accounts and summary accounts provided by Ms O.
The particulars of the income, drawings and loan accounts of each of the parties in the long period since separation were before the Court in various forms, with much of the material in relation to the drawings attributed to the wife challenged by the wife.
Taking into account the evidence of the husband, the wife, Ms O and Mr I, I am satisfied that the wife has established a significant basis to reject the accounts kept by or on behalf of the husband in relation to the drawings attributed to the wife. The husband has failed to establish that the figures which are provided in the accounts are sufficiently reliable for the Court to accept that they represent benefits received by the wife.
What is clear from the evidence is that the wife has received lump sum payments and benefits (including weekly sums in accordance with Court orders) from the Poyzer Group, which she has used to support herself and the children and pay legal fees.
The wife has not worked since separation save and except recent part time employment.
The husband has continued to supervise the operation of the Poyzer Group with the significant assistance of the employee Ms O. The husband has had the benefit of significant drawings and income from the Poyzer Group which he has used to maintain himself and the children. He has also used drawings to fund other significant items, such as his acquisition of other properties, overseas travel, maintaining more than one residence at a time and maintaining his lifestyle. His time, effort and on occasions, financial commitment has been used for other projects which did not result in any profit or the acquisition of any assets (such as his involvements with Mr D, Mr W and Mr A).
Some of the expenditure by the husband (as evidenced by the records of a large number of credit card accounts) also establishes that the husband’s lifestyle and use of the income and assets of the Poyzer Group does not fall within the category of reasonable living expenses in the ordinary sense.
When taking into account the contributions of each of the parties since separation (both positive and negative) it is necessary to consider in particular that the husband has used the assets which existed at the time of separation as security for other ventures some of which have not been successful and some which have resulted in the acquisition of assets, such as P property and W property.
The time, money and expertise spent by the husband on ventures which were not successful and ventures for which he did not receive any recompense need to be brought into account.
The parties’ daughter was born in 1987 and is therefore now aged 22. The parties’ son was born in December 1993 and is therefore aged 16. Whilst there have been significant proceedings between the parties concerning children’s orders (in particular recently in relation to the son) neither party makes significant submissions in relation to the contributions that each of them made in relation to the shared care of the children since separation.
The drawings attributable to the parties jointly in the books of account of the Poyzer Group primarily indicate that any monies spent by the husband for the benefit of the children have usually been attributed as drawings by both the husband and wife equally.
Taking into account in an overall sense the complex transactions and the evidence about the husband’s involvement in other ventures, the Court is satisfied that an adjustment for contributions on the basis of 60 per cent to the wife and 40 per cent to the husband is appropriate.
The interest of the husband in P property (at a net value of $306,000) has been considered separately in relation to contributions with an allocation to the husband of 65 per cent and to the wife 35 per cent.
Similarly, in relation to the W property that asset is considered separately bringing into account the net proceeds of $212,337 on the basis of contributions of the husband 65 per cent and the wife 35 per cent.
The Court is required to take into account the effect of any proposed order upon the earning capacity of either party to the marriage. It is unlikely that any proposed order would affect the wife’s earning capacity.
The husband has, and will continue to have, an earning capacity in running a business centre and in real estate development. The factors concerning section 79(4)(d) are therefore not significant in this matter.
Section 79(4)(g) brings into account “any child support which the party has provided or is to provide or might be liable to provide in the future for a child of the marriage”. Child Support in relation to the parties’ son is therefore one factor to consider if the husband maintains control of the M Centre and therefore is capable of receiving a significant income.
Any final order will bring an end to the wife’s receipt of income from the Poyzer Group (pursuant to the order made in the interim spouse maintenance proceedings). This is a factor which needs to be taken into account, but is not a significant issue in the overall adjustment of the property of the parties.
In summary therefore in relation to contributions:
(i)an allocation of 60 per cent of the jointly considered net assets and liabilities (being $3,031,770) is $1,819,062 to the wife and 40 per cent is $1,212,708 to the husband;
(ii)an allocation of 35 per cent of the net value of P property (35 per cent of $306,000) to the wife is $107,100 and 65 per cent to the husband is $198,900;
(iii)an allocation of 35 per cent of the net value of W property to the wife (35 per cent of $212,337) is $74,318 and 65 per cent to the husband is $138,019.
This would bring about a total adjustment to the wife of $2,000,479 and to the husband of $1,548,727.
Section 79(4)(e) requires the Court to give consideration to the matters referred to in subsection 75(2) so far as they are relevant. The matters required to be taken into account are as follows:
(a) The age and state of health of each of the parties; and
(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 husband was born in 1951 and is therefore aged 59. The evidence of Dr N was that a significant contributor to the husband’s poor health was his excessive consumption of alcohol.
The conclusion of the proceedings is likely to have a positive effect on the mental, psychological and emotional health of both of the parties relieving them from the stress of ongoing litigation and allowing them to spend time on activities other than Family Court litigation.
The husband has a capacity to continue his role in relation to the management of the M Centre or other similar ventures with the assistance of appropriate staff such as Ms O. He can continue to gain from his past experience as a property developer.
The wife was born in 1956 and is aged 54. She has no formal qualifications nor any significant work experience which would support her in obtaining employment. The wife does however have experience relating to the significant effort she has put into supporting the investigations and research for the litigation in this Court. In her submissions the wife refers to having good health and “a mindset to work”.
When the evidence was reopened in June 2010 particulars of the wages paid to the wife for her part time work became an exhibit. The evidence indicates the wife has the capacity to obtain employment, if it is available, as a paralegal.
The income of the husband is likely to continue to be that from the M Centre whilst the wife’s income will be dependent upon her capacity to find employment in the future.
The property and financial resources of the parties are referred to in the previous part of the judgment. The husband seeks to retain the Poyzer Group assets and remaining real estate. The wife seeks to retain her N home and have a substantial capital sum.
(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;
Both parties have similar needs to make appropriate provision for their son. The parties have also made commitments to support their daughter, although she is now independent and is not in need of regular financial assistance.
(e) The responsibilities of either party to support any other person;
The evidence does not disclose that either party has a responsibility to support any other person.
(f)Subject to subsection (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;
Factors referred to in subsection (f) are not significant in this matter, save that the husband has taken steps to now draw down from the superannuation fund and has the capacity to continue to do so.
(g)Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
The standard of living of the parties prior to separation and each of them individually since separation has been greater than average. The husband has spent substantial sums using credit cards. The wife has also had the benefit of the income and some of the acknowledged expenses paid by the business.
(o)Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
This factor is similar to the provisions of section 79(2) which require that the Court shall not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Considering all of these factors including the age, health, earning capacity, resources, needs and lifestyle of the parties no further adjustment is appropriate.
Thus an appropriate adjustment allocates $2,000,479 to the wife and $1,548,727 to the husband (total of $3,549,206).
The wife seeks to retain:
Wife to retain N property ($630,000)
(subject to mortgage of $250,000) Net $380,000
Proceeds of sale of Volvo retained by the wife $2,000
Furniture and household effects retained by the wife $14,962
Jewellery and rare book retained by the wife $3,035
$399,997
Less liabilities outstanding tax to 30 June 2008 -$69,730
(A) Net assets retained by the wife: $330,267
The wife has already received from the proceeds of sale of properties the following amounts:
(i)Sale of Lot 50 M (being part of the Poyzer Group $119,000
(ii)Sale of Unit 3, S $34,493
(iii)Sale of Unit 4, S $29,184
(iv)Sale of Unit 1, S $45,016
(All forming part of the real estate considered by Mr J
in the valuation of the Poyzer Group).
(v)Proceeds of sale of Y property $38,652
(vi)Proceeds of sale of Y property $50,000
(vii)Proceeds of sale of H, UK property $195,000
(viii)Proceeds of sale of 27 D, UK property $190,399
(B)$701,744.00
The net assets to be retained by the wife $330,267 (A) and the proceeds already received (A + B) total $1,032,011.
In order therefore to receive net assets worth $2,000,479 a further payment of $968,468 rounded to $968,000 is to be paid to the wife.
The husband would retain the proceeds of sale that he has received from various properties, the substantial interest in the Poyzer Group, including the superannuation interests in both the old and the new fund, the QG option, the proceeds of sale of shares and the remaining shares and the proceeds of sale of the motor vehicles disposed by him together with his furniture and household effects and Queensland time share. The husband would remain responsible for the remaining debts to the CBA, his income tax and any capital gains tax.
As previously indicated the husband would also remain responsible for and be required to indemnify the wife for any other liabilities including any capital gains tax assessed or attributed to her. The husband is retaining the substantial interest in the Poyzer Group on the basis that he will pay and indemnify the wife against any claim by any of the Poyzer Group entities for any monies owing by the wife to any of those entities.
The husband would retain net assets (after taking into account the “add-backs”) totalling $1,548,272.
In the further evidence that was heard at the resumption of the trial in June 2010 the husband indicated that his financial circumstances were such that he was able to send in excess of $300,000 from monies held in Australia to an account in his brother’s name in the United Kingdom to be held by his brother for him.
The net proceeds from the sale of the real estate sold pursuant to the orders of 18 June 2010 are likely to be in the region of $200,000.
The husband has the capacity to raise funds to meet the payments required pursuant to the orders.
As an option, or if he defaults in payment, the husband could transfer the P property to the wife unencumbered at a value of $440,000.
It is appropriate to allow the husband time to raise funds and to bring the proceeds of sale of properties (as ordered on 18 June 2010) into account.
Summary and conclusions
Taking into account the complex history and financial circumstances of the parties the Court is satisfied that the proposed adjustment is just and equitable.
I certify that the preceding five hundred and fifty eight (558) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe
Associate:
Date: 3 August 2010
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