Truman & Truman
[2013] FamCA 765
FAMILY COURT OF AUSTRALIA
| TRUMAN & TRUMAN | [2013] FamCA 765 |
| FAMILY LAW – PROPERTY – SETTLEMENT IN RELATION TO MARRIAGE – Where the husband and the wife were married for approximately 20 years – Where there are two children of the marriage – Where the Court determined that it was just and equitable to make orders altering the parties’ interests in property having regard to the decision of Stanford & Stanford (2012) 293 ALR 70 – Determination of the property of the parties or either of them having regard to the comments of the FAMILY LAW – SUPERANNUATION – Where a superannuation splitting order was made. |
Family Law Act 1975 (Cth)
Family Law (Superannuation) Regulations 2001
Bevan & Bevan [2013] FamCAFC 116
| Stanford & Stanford (2012) 293 ALR 70 |
| APPLICANT: | Mr Truman |
| RESPONDENT: | Ms Truman |
| FILE NUMBER: | SYF | 4438 | of | 2006 |
| DATE DELIVERED: | 9 October 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Fowler J |
| HEARING DATE: | 17, 18, 19 and 20 June 2013 and written submissions |
REPRESENTATION:
| COUNSEL FOR THE APPLICANT: | Mr Kasep |
| SOLICITOR FOR THE APPLICANT: | Linden Legal Pty Limited |
| COUNSEL FOR THE RESPONDENT: | Mr Wong |
| SOLICITOR FOR THE RESPONDENT: | ETD Law |
Orders
Ms Truman (“the wife”) wife shall within six weeks from the date of these Orders do all acts and things, including signing all documents, as may be necessary, to transfer to Mr Truman (“the husband) all of her right, title and interest in and to the property situate at and known as I Street, Suburb J in the state of New South Wales (“the J property”).
Simultaneously with the transfer in Order 1 above, the husband shall:
(a)pay to the wife the sum of $983,474.50 and
(b)indemnify and save harmless the wife from and against all claims, actions, suits and demands with respect to the mortgage charged on the Balmoral property and do all acts and things as may be necessary to cause either the mortgage to be discharged or the wife to be released from any obligation thereunder.
In the event that the husband does not pay to the wife the sum referred to in Order 2(a) above and/or comply with the requirement of Order 2(b) above, the parties shall do all such acts and things as may be necessary to procure the sale of the Balmoral property for the best price reasonably obtainable. For the purpose of the sale of the J property, the following orders shall apply:
(a)the parties shall submit the property for sale by auction and the parties shall appoint such agent and such solicitor to act on the sale as is agreed between them and in the absence of such agreement such agent as is appointed by the President of the Property Institute and such solicitor as is nominated by the President for the time being of the Law Society of New South Wales
(b)the parties shall nominate a reserve price and in the event that they are unable to agree on a reserve price the parties shall nominate such reserve price as is determined by a valuer chosen by the wife from three qualified valuers nominated by the husband
(c)the parties shall attend the auction for the purpose of negotiating with the highest bidder and signing any contract for sale
(d)in the event that the property is not sold at auction, it shall be listed for sale by private treaty at the reserve specified for the auction or such other sum as the parties may agree
(e)if within three months of such listing the property remains unsold, it shall again be submitted to auction with a reserve price set at such sum as the parties may agree and in the absence of agreement at a sum which is five per cent lower than that set at the first auction
(f)the property if again not sold at auction will again be submitted for sale by private treaty and subsequent auctions until sold with the provisions of these orders to mutatis mutandis apply to those sales
(g)on sale of the property, the proceeds of sale shall be applied in the following manner and priority:
(i)in payment of the agent’s selling commission and expenses
(ii)in payment of the legal costs of an incidental to the sale
(iii)in repayment to either party of money expended by them with the consent of the other to prepare the property for sale
(iv)in payment to any mortgagee of the property the amount then necessary to discharge the mortgage
(v)in payment to the wife of 50 per cent of the balance then remaining minus the sum of $106,114
(vi)in payment of the balance then remaining to the husband.
The wife shall within six weeks from the date of these Orders transfer to the husband all of her right, title and interest in and to the boat “K”.
The husband is declared as against the wife the legal and beneficial owner of all of his right, title and interest in and to (including any future expectation under) the following entities:
(a) Mr Truman Trust
(b) Mr Q Truman Trust
(c) Estate of E Truman Trust
(d) O Unit Trust
(e) M Unit Trust
(f) O Pty Limited
(g) N Pty Limited
(h) M Pty Limited
(i) K Pty Limited
(j) L Pty Limited.
The husband is to indemnify and save harmless the wife from and against all claims, actions, suits, demands and liabilities associated or arising from the operation of the entities referred to in Order 5 above.
That a base amount of $362,646 of the husband’s entitlement in the Colonial First Choice Super Account (“the Colonial Super entitlement”) is allocated, as required by section 90MT(4) of the Family Law Act 1975 (Cth) (“the Act”), to the wife out of the husband’s interests in Colonial Super (“the Colonial Super Base Amount”).
In accordance with section 90MT(1)(a) of the Act, whenever a splittable payment within the meaning of section 90ME of the Act becomes payable to or on behalf of the husband from his Colonial Super entitlement, the wife is entitled to be paid by the Trustee of the fund (“the Colonial Super Trustee”) the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount of $362,646 and there shall be a corresponding reduction in the entitlement that the husband would have had but for these Orders.
Orders 7 and 8 above have effect from the operative time and the operative time for this Order is four business days from the date of service of a sealed copy of these Orders on the Colonial Super Trustee.
The Colonial Super Trustee is bound by Orders 7 to 9 above.
The husband, as Trustee of the Truman Family Superannuation Fund, shall do the following acts and things in the manner and order of priority set out below:
(a)sell the land owned by the Truman Family Superannuation Fund in Japan for the best price attainable
(b)upon sale of the land pursuant to Order 11(a) above, wind up the Truman Family Superannuation Fund and
(c)upon the Truman Family Superannuation Fund being wound up, distribute the balance of the sale proceeds held in the fund in equal shares to the husband and to the wife.
Except as otherwise provided for in these Orders, the wife shall retain to the exclusion of the husband all of her right, title and interest in and to the property presently in her name, possession or control including superannuation interests.
Except as otherwise provided for in these Orders, the husband shall retain to the exclusion of the wife all of his right, title and interest in and to the property presently in his name, possession or control including superannuation interests.
Order 22 made by this Court on 5 February 2008 be discharged forthwith upon either the wife receiving from the husband the amount referred to in Order 2 above or upon completion of the sale of the J property referred to in Order 3 above, whichever is the later event.
Orders 23 and 24 made by this Court on 5 February 2008 are hereby discharged.
Pursuant to its power under section 78 of the Act, the Court declares that the husband holds on trust on behalf of D Truman and E Truman (“the children”) three life policies (and, noting that the policies will mature in 2014), being policy numbers …75-A, …43-Z and …68-F, and such policies and their proceeds are to be applied by the husband for the maintenance and education of the children and, further, upon the youngest child turning 25 years of age, the husband shall distribute the balance remaining from any of the policies and their proceeds to the children equally.
Upon maturity of the investment made in the forestry investment financed by Investec, the husband shall apply the proceeds of such investment in the manner and order of priority set out below:
(a)in payment of the balance, if any, outstanding under the terms of the loans pursuant to which the investment was financed
(b)in repayment to the husband of the cost to him in terms of repayment of the loans procured for the purpose of the investment from the date of these Orders to the date of maturity and
(c)in payment of the balance then remaining in equal shares to the husband and to the wife.
In the event that there are insufficient funds derived on the realisation of the investment referred to in Order 17 above to meet the requirements for repayment and discharge of the loan, the wife is to reimburse the husband for one half of the expenses referred to in Orders 17(a) and (b) above, to the extent that those expenses are not met from the realisation of the investment.
The parties shall do all such acts and things as may be necessary to give effect to these Orders and in the event that either party refuses or neglects to execute any deed or instrument necessary for that purpose the Registrar of the Court is appointed pursuant to section 106A of the Act to execute such deed or instrument in the name of the said party and to do all acts and things necessary to give validity to the operation of the said deed or instrument and the Registrar is authorised to execute any such necessary instrument upon being satisfied by affidavit that the neglect or default as the case may be has occurred.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Truman & Truman has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYF 4438 of 2006
| Mr Truman |
Applicant
And
| Ms Truman |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceedings before the Court are for orders with respect to the alteration of property interests between the parties to a marriage, namely, Mr Truman (“the husband”) and Ms Truman (“the wife”).
The parties commenced a relationship in 1978 and started living together in 1985. They married in February 1987 and separated in January 2006. The period of cohabitation was therefore around 20 years.
Of the marriage there are two children: D Truman (“D”), who is aged almost 15 years; and E Truman (“E”), who is aged approximately 12 years.
Immediately following the separation, the husband vacated the parties’ home in I Street, Suburb J (“the former matrimonial home”) and took residence in rented premises. The wife continued to live in the former matrimonial home until mid-2006. Thereafter, she rented a small acreage property at Suburb Y (“the first Y property”), where she remained living until 2012. She then commenced renting a townhouse at Suburb Y (“the second Y property”). The husband returned to live in the former matrimonial home after it was vacated by the wife. The husband continues to occupy the property.
The former matrimonial home is the most valuable asset of the parties, with an agreed value of $3.5 million and is subject to a mortgage in the sum of approximately $1.3 million.
Background facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
The husband was born in 1960; he is currently 52 years old. The husband is a financial professional. Over the course of the marriage he worked in various capacities as a company secretary and in financial services.
The wife was born in 1962; she is currently 51 years old. During the marriage, the wife was the primary homemaker and parent. The wife has experience in various retail and office roles, and she also has experience in running livestock business.
The parties commenced cohabitation in around late 1985 or early 1986.
In 1985 the husband established the Truman Family Superannuation Fund
(“the Truman Superfund”) and commenced making contributions into the fund.
In 1987 the parties married. In that same year, they purchased a property in Suburb J for $99,000, which was sold eight years later for $400,000.
In 1996 the parties purchased a second property in Suburb J on which they subsequently built the former matrimonial home. The land was purchased for $437,500 (funded by savings of the husband) and the parties borrowed approximately $470,000 to construct the house.
In 1998, the child D was born; she is currently 15 years old.
In 2001, the child E was born; she is currently 12 years old.
The parties separated in 2006 (the wife asserts in January and the husband asserts in June). A divorce was granted in May 2008.
In December 2006 the husband commenced proceedings in this Court, initially in relation to parenting matters only. The parties subsequently sought orders with respect to financial matters.
On 5 February 2008, parenting orders were made by consent by
Judicial Registrar Loughnan as he then was. It was ordered that the husband and wife have equal shared parental responsibility for the children, and that the children live predominantly with the wife but spend substantial time with the husband. With respect to financial matters, the husband was by consent ordered to:
a)by way of partial property settlement, pay to the solicitors for the wife the sum of $40,000 in four instalments of $10,000, with such monies to be applied only for the purpose of meeting the wife’s legal costs and disbursements incurred in these proceedings
b)
by way of interim spouse maintenance, pay to the wife the sum of
$300 per week, in addition to rent in respect of the property leased by the wife and insurance, registration and maintenance expenses in respect of the motor vehicle in the wife’s possession
c)permit the wife to be registered on the husband’s family medical insurance and
d)by way of interim child support, provide to the wife the sum of $250 per week per child and continue to pay for the existing health insurance in respect of the children, together with all reasonable expenses of the children, as described in his Financial Statement under the headings “Children’s activities” and “Medical, dental, optical, etc”.
The parties were also ordered to appoint a single expert to report on the value of certain assets if the parties could not come to an agreement in relation to those assets. Ms C of X Chartered Accountants (“the expert valuer”) was thereafter appointed to value the husband’s business entities.
In August 2011, the husband received an inheritance of $249,452 from his late mother’s estate.
The orders sought
The wife seeks final orders to the following effect:
a)that the former matrimonial home be sold and the net proceeds divided 30 per cent to the husband and 70 per cent to the wife
b)that the husband be declared to hold to the exclusion of the wife the whole of his right, title and interest in and to certain corporations and trusts (“the [Truman] corporations and trusts”), and that he indemnify the wife with respect to liabilities and claims associated with the Truman corporations and trusts
c)that the parties procure the sale of the husband’s boat (“K”) and divide the net proceeds of sale 30 per cent to the husband and 70 per cent to the wife.
The husband seeks final orders to the following effect:
a)that the husband pay to the wife the sum of $329,026 within 90 days of the making of the orders and that, contemporaneously with that payment, the wife transfer to the husband at her expense her interest in the former matrimonial home
b)that contemporaneously with the transfer of the former matrimonial home, the husband cause the mortgage on the property to be refinanced such that the wife is released from and indemnified against any claim with respect to any mortgage on the property
c)that the former matrimonial home be sold in the event of a default in compliance by the husband with the above order (the husband provides machinery provisions in relation to the sale and the division of proceeds such that the wife would receive $329,026 and the husband the balance)
d)that each party is to retain to the exclusion of the other, in the case of the husband, his property, superannuation, shareholdings and any goods, chattels, furnishings and other property which are at the date of the orders in his possession; and, in the case of the wife, her property, superannuation and any goods, chattels, furnishings and other property which are at the date of the orders in her possession.
e)that the husband be declared to the exclusion of the wife entitled to any present or future expectation under a series of nominated trusts and companies, and that a declaration be made that the wife has no claims, past, present or future, in relation to the income or assets of each trust identified
f)that the wife indemnifies the husband with respect to her loans and liabilities and that the husband indemnifies the wife from liability with respect to all loans and liabilities and credit obtained by him in his name for any purpose and indemnify and keep indemnified the wife with respect to all and any such liability
g)that a superannuation splitting order be made with respect to the husband’s Colonial Superannuation, determined on a base amount of $362,646
h)that the husband, as Trustee of the Truman Superfund, do all acts and things as may be necessary to in effect liquidate the fund, wind it up and distribute the benefits equally to the wife and the husband
i)
that certain life policies (due to mature in 2014) be declared to be held by the husband on trust for the benefit of the children, with such policies to be applied by the husband for and toward the maintenance and education of the children until the youngest child attains the age of
25 years, at which time so much of the fund as remains shall be paid equally to the children
j)that interim consent orders with respect to spouse maintenance and child support paid by the husband to the wife be discharged.
The Orders which the husband seeks to have discharged, made by consent on
5 February 2008, are in the following terms:
22That until further order and without admissions the husband shall pay by way of interim spouse maintenance the following:
22.1the payment of rental (inclusive of outgoings the tenant is obliged to reimburse the landlord for) in respect of the premises occupied by the wife at [Suburb Y] or any substitute premises that the husband and the wife may agree upon in writing, such rents to be paid as and when due directly to the landlord and shall include not more than one months’ arrears of rent;
22.1the sum of $300 per week directly to the wife, the first payment in 7 days and weekly thereafter;
22.3insurance and registration expenses in respect of the Lexus motor vehicle in the possession of the wife as and when due together with payment of all expenses (to be paid directly to the provider) in respect of routine scheduled maintenance of the said vehicle in accordance with the manufacturer’s recommendations.
23.That the husband shall until further order, do all acts and things necessary to permit the wife to become registered for medical benefits on his current family medical insurance but should any of her circumstances change such as to disqualify her from membership under the fund rules then he shall have no obligation to provide insurance.
24.The court notes that there is an existing assessment of child support but that the parties have agreed that pending the determination of applications for property settlement before this court the husband shall, notwithstanding the lesser assessment, provide by way of child support:
24.1the sum of $250 per week per child, the first payment to the wife within 7 days and weekly thereafter;
24.2he will continue the existing health insurance in respect of the children;
24.3he will continue to meet all reasonable expenses of the children as described in Note N60 of his Financial Statement filed 5 February 2008 under the headings “Children’s activities” and “Medical, dental, optical, etc”;
the foregoing amounts being paid as an interim measure without admission by the husband and pending determination of the property settlement the wife shall not make any application for departure from assessment.
The evidence
The parties relied upon the evidence provided in affidavits and financial statements. The husband relied on the following documents:
a)
Initiating Application filed on 8 December 2006 (the Court notes that the husband provided an updated proposed Minute of Order dated
19 July 2013)
b)Financial Statement filed on 29 October 2012
c)Affidavit of the husband filed on 1 May 2013.
The wife relied on the following documents:
a)Amended Response filed on 18 May 2012 (the Court notes that the wife provided an updated proposed Minute of Order dated 19 June 2013)
b)Financial Statement filed on 18 October 2012
c)Affidavit of the wife filed on 31 May 2013
d)Affidavit of Mr B filed on 6 May 2013.
Each of the parties gave oral evidence at the hearing and their Counsel tendered some 24 exhibits.
An affidavit of the expert valuer filed on 1 May 2013 was received into evidence (“the valuation report”). Both parties relied on the valuation report and neither party cross-examined the expert valuer.
Written submissions were filed by each of the parties following the conclusion of the hearing, those documents being:
a)
the Applicant Husband’s Written Outline of Submissions filed on
19 July 2013
b)the Respondent Wife’s Written Submissions filed on 5 September 2013 and
c)the Applicant Husband’s Written Outline of Submissions in Reply filed on 17 September 2013.
Credit
The husband was cross-examined extensively and overall gave a good and frank accounting of his position.
The wife’s evidence suffered from a number of deficiencies. Much of it was assertion without attendant support or detail. Broad assertions do not have the force of detailed evidence. Her evidence appeared to be on occasions overdramatized. Her claims to penury having regard to the money she had from time to time seem to the Court to be improbable.
The wife’s evidence as to the earlier production and inspection by the husband of documents she produced had difficulties, since at the time of the alleged production the husband was in an offshore location.
It is also a matter of remark that the wife had access to sums totalling in excess of $1.8 million yet seemed, in the years 2011 and 2012, to be spending at a rate which was inconsistent with a lifestyle which would utilise those funds for living expenses.
That is not to say that the husband’s evidence was perfect, however, in matters of conflicting evidence in relation to his financial matters, his evidence is preferred to that of the wife.
The issues
The issues for the Court to consider in this matter are as follows:
a)what are the net assets and liabilities of the parties or either of them, including any notional assets which are no longer the property of the parties or either of them?
b)is it just and equitable in the circumstances of this case to make any order altering the interests of the parties in their property (see Stanford v Stanford (2013) 293 ALR 70)?
c)
if the above question is answered affirmatively, what alteration will justly and equitably reflect the parties’ respective contributions, which are required to be taken into account under the provisions of
section 79(4) of the Family Law Act 1975 (Cth) (“the Act”)?
d)should the division based on contributions be altered by a consideration of relevant matters under the provisions of section 75(2) of the Act?
e)is the overall result that the Court arrives at based on the above inquiries one which is just and equitable?
More specifically, there are issues between the parties as to the nature, extent and value of assets on a balance sheet. There is not a great deal of evidence available to resolve those issues.
One such issue relates to the categorisation of funds procured by the wife from her mother and the utilisation of a portion of those funds by the wife to lend $100,000 to her former partner, Mr U. There is an uncertainty as to whether those loan funds will be recovered.
Another issue is with respect to the present mortgage liability over the former matrimonial home. The extent of the mortgage is the subject of an observation by the wife that it flows primarily from a $1.4 million drawdown made unilaterally by the husband post separation. The husband asserts that the wife’s description of the drawdown is not appropriate and that some of his drawdown was a return of monies he had previously deposited into the account from the sale of life policies that had yet to settle. This issue is discussed and determined later in these reasons.
There are also issues surrounding the proper treatment of monies unilaterally drawn down by the wife from the joint mortgage facility and from a trust account of the husband without reference to him.
The balance sheet
The Court was provided with the following joint balance sheet (dated 19 June 2013) set out hereunder for its consideration.
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| ASSETS | ||||
| 1. | Joint | Former matrimonial home, J property | 3,500,000 | 3,500,000 |
| 2. | Wife | Horse Float 1 | 15,000 | 15,000 |
| 3. | Wife | Horse Float 2 | 4,000 | 4,000 |
| 4. | Wife | 13 Horses | 5,000 | NK |
| 5. | Wife | Jewellery | ||
| 6. | Hus | Jewellery | ||
| 7. | Wife | Household contents | ||
| 8. | Hus | Household contents | ||
| 9. | Hus | Camper trailer | 10,000 | 7,000 |
| 10. | Wife | Horse Tack | 5,000 | 10,000 |
| 11. | Wife | Loan to Mr U (amount admitted but said to be ultimately repayable to Wife’s mother) | 0 | 100,000 |
| 12. | Hus | “K” (boat) | 100,000 | 60,000 |
| 13. | Hus | NAB Offset account | NK | 7,669 |
| 14. | Wife | CBA Account – Smart Access Account 1 | 124 | 124 |
| 15. | Wife | CBA Account – Netsaver Account 1 | 31,204 | 31,204 |
| 16. | Wife | CBA Account– Smart Access Account 2 | 343 | 343 |
| 17. | Hus | 12 ordinary shares in K Pty Ltd | NK | 12 |
| 18. | Joint | 2 ordinary shares in L Pty Ltd | NK | 2 |
| 19. | Hus | 1 ordinary share in M Pty Ltd | NK | 1 |
| 20. | Wife | CBA Account – Netsaver Account 2 | 92 | 92 |
| 21. | Wife | Boat and trailer | 500 | 500 |
| 22. | Wife | Box trailer | 1,000 | 1,000 |
| 23. | Hus | N Pty Ltd | NK | Nil |
| 24. | Hus | O Pty Ltd | NK | Nil |
| 25. | ||||
| Total | $3,672,263 | $3,736,947 | ||
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| ADDBACKS | ||||
| 26. | Wife | Monies withdrawn by the Wife from a joint account in December 2006 without consent | 0 | 200,000 |
| 27. | Wife | Monies advanced to the Wife Feb 2008 Legal fees advance (consent orders) | 40,000 | 40,000 |
| 28. | Wife | Payment to wife from Mr Truman bank account 24/11/08 | 0 | 2,000 |
| 29. | Wife | Partial Property payment 4/09 (consent orders 8/4/09) | 41,000 | 41,000 |
| 30. | Wife | Partial Property payment 8/08 (consent orders 8/4/09) | 25,000 | 25,000 |
| 31. | Wife | Partial Property payment 04/09 (consent orders) | 15,000 | 15,000 |
| 32. | Wife | Partial Property payment 04/09 (consent orders) | 65,000 | 65,000 |
| 33. | Wife | Partial Property payment 07/09 (consent orders) | 15,000 | 15,000 |
| 34. | Wife | Partial Property payment 09/09 (consent orders) | 0 | 15,000 |
| 35. | Wife | Monies withdrawn by the Wife from the Mr Truman Trust bank account in December 2009 without authorisation | 0 | 70,000 |
| 36. | Wife | Improvements to Wife’s residence in 2007 | 21,000 | 21,000 |
| 37. | Wife | Legal Expenses of Wife paid by Truman Family Superfund | 0 | 10,752 |
| 38. | Wife | 50% Share of Valuation Cost of Heather Kind – $25,339.69 and David Nelson – $2750.00 | 14,045 | 14,045 |
| 39. | Hus | Legal Costs paid to date | NK | 212,445 |
| 40. | Wife | Legal costs paid to date (funded by partial property settlements and referred to as add back numbered 27, 29, 30, 31, 32 and 33) (Also funded by loan from mother referred to at 60 below) | 217,496 | NK |
| 41. | Wife | Agreed 50% share of school fees (per 2009 contract) | 48,000 | |
| 42. | Wife | Principal reduction of Loan on House from 2006-2013 | NK | 92,000 |
| 43. | Wife | Wife Super withdrawal 2012 | 0 | 88,000 |
| 44. | Wife | Principal reduction by Husband of Investec Tree Loan 2009-2012 | 0 | 88,000 |
| 45. | Wife | Principal reduction by Husband of Investec Tree Loan 2013 | 0 | 21,480 |
| Total | $236,045 | $1,083,722 | ||
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| LIABILITIES | ||||
| 46. | Joint | Mortgage to NAB account number…844 | 1,320,823 | 1,320,823 |
| 47. | Wife | Westpac Bank MasterCard | Closed | Nil |
| 48. | Hus | Commonwealth Bank MasterCard (business) | 0 | 4,965 |
| 49. | Hus | Westpac Bank Visa (business) | 0 | 74,489 |
| 50. | Hus | NAB American Express (business) | 0 | 17,031 |
| 51. | Hus | Unpaid AMP / AXA premiums on Life policies | NK | 192,217 |
| 52. | Hus | Investec AFM 2005 Tree Project (formerly Arrow Capital Ltd) | NK | 85,920 |
| 53. | Hus | Loan account with O PL (per valuation) | NK | 38,000 |
| 54. | Wife | Adamson Lawyers | 90,404 | 0 |
| 55. | Wife | Carbon Legal | 27,428 | 0 |
| 56. | Wife | ETD Law | 104,380 | 0 |
| 57. | Wife | Fortis Law Group | 75,000 | |
| 58. | Wife | Mr B & Co | 76,760 | 0 |
| 59. | Wife | Ms V | 3,444 | 0 |
| 60. | Wife | Mother (Monies used for legal fees and living expenses post separation) | 643,500 | 0 |
| 61. | Hus | Mr T Truman | 100,714 | 100,714 |
| Total | $2,442,453 | $1,834,159 | ||
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| 62. | Wife | Truman Family Superannuation Fund | Self-managed | 298,708 | 397,460 |
| 63. | Hus | Truman Family Superannuation Fund – Japanese Land | Self-managed | 741,068 | 510,000 |
| 64. | Hus | Truman Superannuation Fund | Self-managed | 1,024,000 | 1,020,000 |
| Total | $2,059,780 | $1,927,460 | |||
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| FINANCIAL RESOURCES | ||||
| 65. | Hus | Frequent flyer points | NK | NK |
The Court now turns to consider discrepancies arising from the above balance sheet.
Assets
In relation to item 4, there is no other evidence of the value of the horses, which the wife seeks to retain. They being in her possession, power or control, the Court accepts the wife’s assertion of value as an admission against interest. The husband concurred with that course when it was proposed and the asset will therefore be included with a value of $5,000.
As to items 5 to 8, there being no evidence of the value of the items, the Court will in its deliberations note that they exist but that they are of indeterminate value. They will not be included in the balance sheet but their existence will be taken into account in the Court’s considerations under the provisions of section 75(2)(o).
There is no evidence of the valuation of the camper trailer (item 9), which belongs to the husband. He concedes a value of $7,000 and in the absence of any evidence of valuation the Court will accept his assertion on the basis that it is an admission against interest.
There is no evidence of the value of the horse tack (item 10) which belongs to the wife. In the absence of such a valuation the Court will accept her admission against interest that it has a value of $5,000.
With respect to the loan listed at item 11, there is evidence that the sum of $100,000 is owed by Mr U to the wife but that it might not be recoverable immediately. The evidence available is that which was given by the wife in her affidavit filed on 31 May 2013. At paragraph 162 of that affidavit, the wife gives details of the loan and her belief that it will be repaid in the following terms:
My ex partner Mr [U] owes me about $100,000. This money came from money that my mother lent to me in the sum of $230,000 on
14 March 2011. I expect the $100,000 to be returned to me when his property is sold, which is currently on the market. Sometime in the future, I have to pay my mother back $230,000.Having regard to the Court’s intention to remove the alleged source of the funds (being the funds received from wife’s mother) from the balance sheet as a liability of the wife’s, the Court will accept Counsel for the wife’s assertion that in order to achieve balance, the Court should also remove this asset. The husband agreed with the proposal that, if the funds from the wife’s mother are not included as a liability, the loan to Mr U should not be included as an asset.
There is an issue between the parties as to the value of the “K” boat (item 12) and there is no valuation in relation to it. It is proposed by the wife that the boat be sold; however the husband has at all times sought to retain the boat. At the hearing it was put to the wife that, for the purposes of the balance sheet, a value should be attributed to the boat which aligned with the husband’s admission against interest as to its value being $60,000. That course was agreed by the wife and it will be included at that figure.
The Court does not intend to make an order for sale of the boat. It has a clear value and, given that the wife does not wish to retain it, there is no reason why the husband should not retain it with an appropriate allowance being given to the wife in respect of that asset. If the wife wished to assert another value and seek sale of the asset, she should have procured a valuation and not simply come to Court and agreed to its value.
In relation to the husband’s NAB offset account (item 13), there was discussion with Counsel in relation to this and the amount was agreed to be $7,669, subject to a right in Counsel for the wife to raise the matter again if documents in relation to the account did not prove the assertion correct. No such matter was raised and so that amount is accepted.
It was agreed that the company K Pty Limited, being a Trustee, had no value in its own right and that the husband’s shares in the company (item 17) might be deleted from the balance sheet as an item of any value.
Similarly to the above, the company L Pty Limited, being a Trustee only, was conceded to have no value on its own account. The parties’ joint shares in the company (item 18) will therefore not be included in the balance sheet.
The company M Pty Limited was said by both Counsel to be defunct. Accordingly, the husband’s one share in the company (item 19) will be removed from the balance sheet as it has no value.
Similar to the above, the companies N Pty Ltd and O Pty Ltd (items 23 and 24) will not be included on the balance sheet as their values are entered as nil or not known.
Add backs
Each of the parties asks the Court to “add back” now non-existent assets into the balance sheet.
This Court does not follow the practice of adding back and dividing
non-existent assets. There is no warrant for doing so in the Act. That once fashionable practice was one which assisted in pointing perhaps the way to a just solution; however, there exists plenty of opportunity for the Court to come to a just and equitable assessment as to the source and application of funds in its consideration of contributions under section 79(4) and matters referred to in section 75(2), and also in particular section 75(2)(o).
It is the intention of the Court to follow the suggestion of the Full Court in Bevan v Bevan [2013] FamCAFC 116, which decision supports the view that the Court does not have to take the path of dividing notional assets by way of the “add back” method to arrive at a just and equitable alteration of the property interests of the parties. This Court will, however, consider the source and application of funds in its consideration of matters referred to either as contributions or as matters required to be taken into account under the provisions of section 75(2).
Upon questioning Counsel, it appears that there is no dispute between the parties as to the quantum of the various items under this heading. Rather, the parties disagree as to the way in which the history giving rise to the entries (that is, the source and application of various funds) should impinge on a consideration of a just and equitable result.
As to items 26 to 37, these are either agreed as the quantum on the balance sheet or were the subject of agreement as to quantum at the hearing. Disagreement for each of these items is founded in the parties’ conflicting histories as to the use of the funds, the source of the funds and the degree to which those matters should affect the overall result in this matter.
With respect to item 38, the wife asserts that her share of the fees of valuation costs have already been partly met by her, based on her argument that the funds provided by the borrowing on the former matrimonial home were the source of the husband’s ability to pay those fees. The obligation to pay the fees was the subject of an order made on 5 February 2008. The husband paid the fees at first instance but the obligation arising from the orders will be sustained, notwithstanding the wife’s argument that she has already contributed to them. The payment will therefore be taken into account as a contribution by the husband. The wife’s contribution in terms of providing security for the joint borrowing will also be taken into account.
With respect to the parties’ paid legal costs to date (items 39 and 40), these will not be added back against them. It is noted, however, that the wife received partial property settlement payments totalling $216,000 which were applied to meet her legal costs. The payment of legal costs by the wife from that source will be noted in the Court’s consideration of matters under section 75(2). The wife also asserts that some of her legal costs were paid from funds borrowed from her mother. This will also be noted under section 75(2).
As to item 41, the parties agreed in 2011 that they each would pay half of the child D’s school fees. The agreement is annexed and marked “A3” to the husband’s affidavit filed on 1 May 2013. That impost was fully met by the husband and it did not appear to be in dispute at the hearing that the amount owing by the wife was $48,000. The wife, however, asserts that the husband paid the fees using either the $1.4 million which he drew on the mortgage without her consent or funds derived from the application of those funds to the husband’s business. The wife therefore submits that she has already contributed to the payment of the school fees, either directly or indirectly, and has fulfilled her end of the agreement.
In response to that submission, the Court notes that it will not take into account as a contribution an amount which represents the wife’s assumption of a joint liability for a specific purpose. Rather, it will note that part of the wife’s liability under the mortgage loan account should be seen as a contribution made by her. It is, of course, a contribution made by assuming liability for borrowed funds which, but for the principal reduction hereafter referred to, are still owed.
As to the $48,000 which the husband seeks to have added back against the wife, the Court does not intend to do so but rather will take it into account as a contribution made by the husband. Clause 9 of the 2011 agreement states that pending completion of these property proceedings, the husband would pay all “schooling costs” and that:
Upon final resolution of the Financial Proceedings the mother will reimburse the father her share of “schooling costs” paid by the father by way of cash reimbursement within 7 days or by way of adjustment to the wife’s share of the asset pool.
The Court intends, as was envisaged by the agreement, to take this item into account by way of adjustment in its determination as to the wife’s share of the asset pool.
The amount claimed at item 42 is an amount which Counsel said was in fact claimed as a contribution to the asset. The Court will give it consideration as a contribution made by the husband and will remove it from the balance sheet.
The withdrawal by the wife of $88,000 in 2012 (item 43) is agreed as to quantum but the effect of the withdrawal is not agreed. The Court will take into account the source and application of the funds in its consideration of matters under section 75(2). It will otherwise remove the item from the balance sheet.
Items 44 and 45 are in issue and are said to be included as contributions. As with all add backs contended for, they will be removed from the balance sheet and dealt with aliunde as contributions. It is said by the husband that they should be so included in the balance sheet because they were funds borrowed for the purpose of claiming a taxation benefit which accrued to the benefit of the family during cohabitation. It is the wife’s argument that, since there is no asset representing the borrowing in the balance sheet, they should be excluded. The Court does not propose to ignore the liability but will take the reductions in the Investec Tree Loan account as contributions made by the husband. The unpaid balance of that account will be included as a joint liability and provision will be made in the Orders as to its payment and the realisation of the sum.
Liabilities
The parties’ joint mortgage with NAB (item 46) is a liability which was the subject of evidence from the husband. He conceded that the loan had its origins in an advance procured by him to purchase a bundle of policies through his business. In due course, those policies were either sold or matured or remained as stock in the business.
The husband was unable to produce to the Court any inventory of his current stock of policies and gave non-specific answers in relation to the application or expenditure of the funds derived from the borrowings. When asked by Counsel for the wife why, on the realisation of the assets purchased with the borrowed funds the amount was not repaid, the husband responded as follows:
Mr Wong:Why didn’t you reduce the mortgage down when you realised these assets? Realised the capital and got the profit back. Why didn’t you reduce the mortgage over the formal matrimonial home?
Mr Truman: Well, I think if you look at my affidavit in the years of
‘07 and ‘08, there’s an extraordinary outflow of cash and moneys in child support, spouse maintenance, legal fees, you know, there’s a need for working capital in the business. There wasn’t, you know – all those payments of money by way of child support, spouse maintenance, mortgage, running two homes, you know, that accounts for cash flow leaving that set of entities, and there wouldn’t have been any surplus left on the sidelines. As I described yesterday, in my weekly cash flows, I would sweep between [N] via the [Mr Truman] Trust to Homeside to reduce the interest burden on that account.Mr Wong:To put it simply it was spent – the $1.4 million on a mixture of living expenses and business expenses. Is that right? Put simply?
Mr Truman:When you say “spent”, as I said yesterday it’s blended into the purposes that I described yesterday. It’s impossible to match against one thing or another.
It seems from the evidence that the capital which was borrowed ($1.4 million) perhaps found its way in some part into, inter alia, the amounts for which the husband claims credit in payments to the wife post separation. The husband says it is impossible for him to discern the precise application of the funds, they having been utilised for a number of purposes.
It seems to the Court that to the extent that the borrowed funds will be taken into account as a joint liability, their application to either the business or to the support of the family must represent an equal contribution by the wife and the husband, to the extent that that was achieved by income derived from the business using the working capital borrowed. To the extent that the wife provided security for the loan, therefore, the payments made by the husband post separation from the sum borrowed represent, in part, contributions by the wife.
Equally, contributions made by the husband post separation not funded by that capital borrowing are from income derived, in part, at least from the utilisation of capital provided by the wife. This will be taken into account as a matter of contribution.
It was agreed that the wife’s Westpac MasterCard (item 47) could be deleted from the balance sheet as the account had been closed.
Items 48 to 50 represent debit balances on the husband’s credit card accounts and other business liabilities. The quantum of those items is not in dispute. The husband asserts that the expenses incurred were for a mixture of private and business purposes. A similar assertion is made with respect to item 51, said to be the husband’s “Unpaid AMP / ASA premiums on Life policies”.
These liabilities include, it seems, payments for financial products which were part of the husband’s stock and also include the purchase of wine, payment for dinners and costs of overseas travel. Apart from exhibit 17 (which relates to payments to AMP totalling $34,207.17 as annual premiums paid for policies bought), there is no sufficient evidence to delineate the purpose of the expenses. The husband provided only a limited breakdown of which portion of the expenses were business related and which portion were personal expenses. Presumably, to the extent that they were expenses properly incurred for business purposes, they would be subject to a right of reimbursement.
The difficulty the Court is faced with is that there is no corroborative evidence as to whether this is or is not so and, if it is so, whether there is any possibility of such reimbursement. Apart from alleging the obligation as a personal one, the husband also asserts that the liability in part was for monies due in the future on sales of financial products and that the wife, having enjoyed the benefit, should also participate in the burden. The husband says that they were incurred expenses for O Pty Ltd.
The husband is unable to provide to the Court some estimate of the current stock of his companies. Whilst he gives reasons why this might be so, that does not provide the answer. It is submitted on his part that the failure of the wife to cross-examine the expert valuer meant that she accepted the disclosure made. The Court accepts that the expert valuer could only have given what is now historical evidence in relation to the affairs of the various entities and the lacuna of knowledge complained of is in relation to their current position. In the absence of disclosure, the ability for reimbursement is assumed against the husband’s claim. In the absence of a capacity in the Court to discern with accuracy the distinction between business and personal expenditure on credit cards, those liabilities will be removed from the balance sheet.
It argued that, as the wife received the benefit of the borrowings, she should also in part be required to bear the burden. The Court has no difficulty with that submission; the difficulty is that it is not possible to clearly identify on the evidence which part of the liabilities are personal and which part are business related. It is also not possible to say whether a right of reimbursement to the extent it exists is real, given there is no evidence of O Pty Ltd’s current financial position. The Court will, however, take into account under section 75(2) that the husband has these liabilities (items 48, 49, 50 and 51), subject to a right of indeterminate value for reimbursement of so much of them as constitute business expenses related to one or other of his business entities.
Item 52, the “Investec AFM2005 Tree Project loan”, also presents the Court with some difficulty. The loan relates to an investment in trees which does not come to maturity until 2023. The wife complains of an absence of a valuation in relation to the asset. The husband argues with some force that, as there is no secondary market in the investment, it is difficult to determine its value. He proposes that the asset should be divided between the parties on its ultimate sale in the proportions that the parties’ assets are otherwise divided, and the liability should in the meantime be included in the balance sheet.
The Court agrees with the submission with respect to the liability, however, it will not adopt the suggestion of the husband as to the division of the asset, as there may be ongoing expenditure by him in relation to the loan referred to. The Court will make an order that provides as follows:
a)upon realisation of the asset, the gross return will be subject to repayment of any part of the loan which remains unpaid
b)the husband shall be reimbursed any sum paid by him by way of principal and/or interest from the date of the order to the date of the realisation of the asset and shall be reimbursed any other expenses reasonably incurred in the maintenance and realisation of the asset and
c)the remaining net value of the asset will then be divided between the parties in appropriate proportions.
In the event that the resulting figure is a loss, the wife will at that time be obliged to pay to the husband her proportion of that loss.
With respect to item 53, the husband’s loan account with “[O] PL”, the husband submits that, since there is no corresponding asset included in the asset pool, the item should be excluded. The Court agrees with that course.
Items 54 to 59 represent legal and accounting fees said by the wife to be outstanding. Item 59 are fees said by the wife to be owing to Ms V but no submission was made in respect of this item and the Court is not certain if it represents legal or other professional fees. The Court notes that the amounts said to be owed by the wife to her solicitors and other professionals was initially not agreed. The husband asserted that the wife produced no documentation which substantiated her claims.
The parties were requested to confer and see if agreement could be reached as to the amounts owing. The Court was not subsequently informed that there had been agreement but it will assume that the values asserted by the wife are accurate. At any rate, these items will not be included in the balance sheet but they will be taken into account as part of the Court’s consideration of the wife’s financial position under the provisions of section 75(2)(o).
Item 60 is an amount procured by the wife from her mother (through her brother, who appears to be administering her mother’s affairs). The wife’s mother is a resident at the present time in a nursing home. There has been no demand for the repayment of the sum. The wife says that the sum has been expended on legal fees and living expenses but she did not provide, until the hearing, any details of such expenditure and not then in a manner which was timely and would have enabled the husband to properly investigate her claims. In the circumstances and having regard to the money made available otherwise to the wife at the time of the procurement of the funds from her mother, the Court will not include that amount as a liability in the balance sheet. Also, since a portion of the funds borrowed from the wife’s mother were used to provide a loan to Mr U, there will be a measure of balance provided by removing both sums from the balance sheet; a secondary course agreed to by both parties.
Superannuation
The parties agreed at the hearing that wife’s interest in the Truman Superfund (item 62) could be noted as agreed at $298,708.
As to item 63, the husband’s interest in the “[Truman] Family Superannuation Fund – Japanese land at …”, the parties could not come to agreement as to the value of the Japanese properties held in the Truman Superfund. The wife relied on what was said at 13.1 of the valuation report (on page 30 of 37), where the expert valuer said:
·The Japan Property is currently listed for sale at 67,760,000 Japanese Yen. At current exchange rates this equates to $903,466. If the property were to achieve its listing price then after allowance for realization costs the net value would be $871,845. This compares to the book value as at 30 June 2010 of $788,818.
·I note that the husband in an email to the Super Group dated
24 November 2011 suggest (sic) that the property should be included in the 2011 accounts at 15% less than the listing price to achieve a sale. This equates to a net price after allowance for realization costs of 3.5% of $741,068.Counsel for the husband made the submission at the hearing that, at this stage, no-one could be sure what the property was going to sell for. The Court agrees and notes that the figure put forth in the valuation report is not based on any real estate valuation; rather, it is based on a sale price listing.
With no further submissions as to the value of the Japanese land held by the
Truman Superfund, the Court will not include the asset in the balance sheet as it cannot be sure of its value. The Court will, however, take this item into account when it comes to consider how the parties’ superannuation interests are to be divided. The Court proposes to make an order which will make clear what is to be done with the sale proceeds of the properties when they are sold and their value comes known.
The value of the husband’s interest in the Truman Superfund listed at item 64 will be included with a value of $1,024,000, following an update given by Counsel for the wife at the hearing, to which Counsel for the husband did not object.
Conclusion on the balance sheet
I find that the assets (including superannuation) and liabilities of the parties are as follows:
Assets ($) Former matrimonial home (joint) 3,500,000 Horse Float 1 (w) 15,000 Horse Float 2 (w) 4,000 13 Horses (w) 5,000 Camper trailer (h) 7,000 Horse Tack (w) 5,000 “K” (boat) (h) 60,000 NAB Offset account (h) 7,669 CBA Account – Smart Access Account 1 (w) 124 CBA Account – Netsaver Account 1 (w) 31,204 CBA Account– Smart Access Account 2 (w) 343 CBA Account – Netsaver Account 2 (w) 92 Savage boat and trailer (w) 500 Box trailer (w) 1,000 Total assets
$3,636,932
Liabilities ($) Mortgage to NAB account number …844 (joint) 1,320,823 Investec AFM 2005 Tree Project (formerly Arrow Capital Ltd) (h) 85,920 Loan account with O PL (per valuation) (h) 38,000 Mr T Truman (h) 100,714 Total liabilities
$1,545,457
Total net assets
$2,091,475
Superannuation Name of Fund Type of Interest Truman Family Superannuation Fund (w) Self-managed
298,708 Truman Superannuation Fund (h) Self-managed 1,024,000 Total superannuation
$1,322,708
Total net assets (incl. superannuation)
$3,414,183
Whether the parties’ property interests should be altered
The wife and the husband were in a relationship of cohabitation and marriage for approximately 20 years but are now separated. The consortium vitae is at an end.
The mutuality that was attendant on the parties during their relationship, including fiscal unity and co-operation no longer exists and there will be no common use of property.
The parties have no agreement as to how their assets should be held having regard to these events and, as such, the present arrangements for the ownership of property are not sufficient for their purposes upon the breakdown of their marriage. Each of the parties seeks orders altering their interests in property.
In the circumstances, the Court finds that it is just and equitable to make an order adjusting the property interests of the parties, including their interests in superannuation.
Section 79(4) contributions
Initial contributions
The wife submits that the parties commenced the cohabitation with no significant assets. The Court notes, however, and accepts the evidence of the husband with respect to the assets which he brought to the relationship.
At the commencement of cohabitation, there was $25,000 in the Truman Superannuation Fund owing to the husband’s contributions. He also had savings of around $75,000.
Contributions to the date of separation
The husband provided funds for the renovations to the first property that the parties purchased in Suburb J. He asserts that he provided $90,000 for those renovations and says that the source of the funds was the savings he had at the commencement of cohabitation, together with his income.
The husband asserts that he arranged for the purchase of the block of land in Suburb J on which the former matrimonial home was built. He submits that he met the mortgage costs in relation to the former matrimonial home, both during the marriage and post separation. In addition, the husband says that he liaised with architects and others in relation to the construction of the former matrimonial home.
It is further asserted by the husband that the costs of the renovations to the former matrimonial home, above that which could be met by the mortgage, were paid for through loans from his business and family. He asserts that his parents lent him $70,000 for this purpose at in interest rate of 5 per cent (which, he asserts, was substantially lower than commercial lending rates at that time). That loan was on the husband’s evidence repaid in 2003 from proceeds of his business.
The husband asserts that he applied his inheritance in his later father’s estate (being in the sum of $266,370) to his business. In a like manner, he says that the funds which he inherited via the Mr Truman Trust in the late
Ms NN(being in the sum of $59,000) were used in his business. The husband also submits that his skill and devotion to managing assets created, for example, a valuable superannuation entitlement exceeding
$1 million.
The husband further submits that during the marriage he made the following other contributions:
a)provided funds to purchase the wife’s livestock and associated equipment
b)paid the salaries of family helpers
c)maintained the family boat and
d)paid expenses for the children.
With respect to non-financial contributions, the husband submits that, subject to his working requirements, he provided care and support for the family. In particular, he points to his contributions of this nature when the wife was suffering from chronic fatigue.
Overall, whilst accepting that the nature of the wife’s contributions might, in a marriage of this length, lead one to a position of equality, the husband submits that this should not be the Court’s conclusion in this case. Rather, he submits that the Court should give weight to the fact that the two inheritances he received (as set out above) were applied to his business, which enabled the parties to pursue the lifestyle that they did. The appropriate division based on contributions to the date of separation should, in the husband’s view, be 55 per cent in his favour and 45 per cent in the wife’s favour.
During the cohabitation the wife says she was the primary homemaker and carer for the children. The Court accepts this but also accepts that the husband’s contribution was not inconsiderable when he was available to fulfil that role.
In terms of financial contributions, the wife submits that soon after the parties married she received a bequest from her father in the sum of $25,000.
As to her income, in the early part of the marriage the wife worked as a sports instructor and in sales roles, applying the income she earned to family costs. During this period, the wife says that the husband attained his qualifications as a financial professional and worked in the financial services industry. The wife also asserts that she worked in administrative capacities to assist the husband with the operation of his business entities during their marriage.
Overall, the wife’s position as to contributions to the date of separation is that they should be regarded as equal, notwithstanding that the husband inherited more than she did during that period. On that topic, the wife submits that, in the context of such a long marriage, the parties’ inheritances need to be seen in the context of all other contributions.
Contributions post separation
Since separation, the wife has continued in the role of the primary carer for the children. The husband asserts that he has paid the wife’s rent and utilities, together with her car and medical insurance. He also paid for some improvements to the wife’s rental accommodation.
In particular, the husband asserts that the wife since separation has received:
a)$539,951 in spousal support from the husband
b)$280,407 in child support payments from the husband and
c)$261,000 by way of partial property settlement payments, under the terms of consent orders dated 5 February 2008 and 8 April 2009.
In addition, the Court notes that the wife has received from her mother and otherwise an amount of around $650,000.
The wife asserts that the amounts she has received since separation were spent over a period of six years. She was questioned on her expenditure in
cross-examination. Whilst she gave an explanation for some of the expenditure, it was not and has not been fully explained by the wife.
In addition, the wife asserts that she largely funded the husband’s post separation contributions to her support as such contributions were, she says, funded by the husband’s $1.4 million drawdown on the joint NAB/Homeside facility and his utilisation of those funds in his business.
The wife’s submission that the husband’s post separation financial contributions were “mere ‘smoke and mirrors’” is, in the Court’s view, an overdramatisation of the wife’s claim that, by assuming a liability which will be taken into account as a joint liability in the balance sheet, she has made a contribution to the general pool. This is so and will be recognised.
In this case, however, the husband’s application of the funds to his business appears to have created the profit from which the husband was, at least in part, able to make the post separation contributions. With respect to his drawdown on the NAB/Homeside facility, the husband submits, inter alia, that:
a)the facility was used as “working capital” whereas family costs were met using cashflow from the husband’s businesses
b)he has expended over $500,000 on interest repayments and $92,109 in reduction of the principal
c)much of the drawdown found its way directly or otherwise into the credit now held by the parties in their superannuation entitlements and
d)
the funds were used to repay the “section 65” loans from the
Truman Superfund.
The $92,000 principal reduction in the NAB home loan account made by the husband between 2006 and 2013 (item 42 on the balance sheet), referred to above, was not included as an add back on the balance sheet and will therefore be taken into account as a post separation contribution of the husband.
The Court also notes here that the husband has made significant reductions in the Investec Tree Loan account since separation (items 44 and 45 on the balance sheet) and they will be taken into account in the ultimate result as contributions made by him. The asset which the loans represent exists, although it is not presently possible to value it. It will be the subject of orders which will require ultimately that it be divided on its maturity or other earlier realisation.
The husband further asserts that in the post separation period he applied an inheritance he received in 2011 from his late mother’s estate (being in the sum of $249,452) to purchase three policies that will meet the children’s educational needs, and to a loan to the O Trust.
The Court also notes that the sum of $48,000 representing the wife’s share of school fees under the 2011 agreement will not be repaid to the husband by the wife, but his payment of the totality of the fees will be taken into account as a contribution made by him post separation. His payment of the fees relating to valuation costs (and the wife’s failure to meet 50 per cent of those costs) will be treated in a like manner.
The wife submits that contributions to the date of hearing should result in a division in the proportion of 55 per cent to her and 45 per cent to the husband. The husband submits that his post separation contributions should be recognised in an adjustment in his favour, such that the division of assets based on an overall consideration of contributions is 60 per cent to him and 40 per cent to the wife.
The matters referred to by the husband above will be taken into account as financial contributions on his part, but it should be remembered that this is not a mathematical or accounting exercise. Rather, it is a search for a just and equitable redistribution of the wealth of these parties having regard to the matters required to be considered by the Court under the Act.
Conclusion based on contribution
All in all I assess the contributions of the parties to the acquisition, conservation and improvement of the property of the parties or either of them (including such property which is no longer the property of the parties or either of them), together with their contributions to the welfare of the family aliunde, to be in the proportion of 55 per cent to the husband and 45 per cent to the wife.
Section 75(2) considerations
In determining whether an adjustment should be made to the contribution-based finding, the Court takes into account the following matters under the provisions of section 75(2).
(a) the age and state of health of each of the parties
The wife is aged 50 years and the husband is aged 52 years.
There is no current medical evidence that they are not in good health, although the wife in the past has suffered from chronic fatigue syndrome.
(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 property and financial resources of the parties are as set out above.
The husband has a number of qualifications but is currently a dealer in specified financial products. His skills referred to above would enable him to cope with a variety of occupations, subject to his being enabled to procure employment. He has thus far been self-employed and on his own evidence has generated, in a number of ways, significant wealth.
Whilst the husband’s business is presently suffering some difficulties, he has not indicated that he does not intend to continue in it and the Court assumes that he would not have made that decision if he did not think that it would lead to a continuously adequate income stream. That income stream, having regard to the borrowings that he might have to make to refinance the former matrimonial home on transfer to him (as is proposed by him), will be significant and the husband appears confident that this is possible.
The wife has had a number of occupations. She has sought to make money in the management of livestock. She does not appear to have had any financial success in pursuing that sort of occupation. She has worked as a sports instructor but that was some time ago and she has worked in retail and sales roles. It is the Court’s finding that, on the evidence, the wife’s income-earning capacity would be limited by reason of her qualifications and experience.
Having said that, the wife has in the past had the benefit of monies provided by her mother. That source of funds has been a significant financial resource for her. She also continues to be owed a sum of $100,000 in respect of a loan made by her, which sum she believes is recoverable.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The wife has the primary care of the children of the marriage, namely D (aged 15) and E (aged 12).
The children it is hoped will in due course, when the dust of this litigation settles and the parties get on with the rest of their lives, spend more time with their father than they do presently.
(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
The evidence of the commitments of each party necessary to pay for their own support was a matter upon which the Court, having regard to the evidence and the way it was presented, had some difficulty in determining.
The wife presently has significant expenses in the maintenance and stabling of a number of unproductive horses. Whilst the Court understands that the wife has an emotional attachment to them, the fact is that they are a drain on resources without gain at present and could not in the Court’s view be considered as a reasonable expense for the wife, given the overall financial position of the parties and their duties to support themselves and the children.
(e) the responsibilities of either party to support any other person
The wife has no responsibility to support any other person. So far as the Court is aware, neither does the husband at this time.
(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
So far as the Court is aware, neither party is eligible for a pension, allowance or benefit under any law of the Commonwealth or a State or Territory or another country.
The parties have superannuation entitlements as set forth above.
(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
There is no doubt that these parties and the children enjoyed a relatively high standard of living during the marriage. The Court is not required to propose orders which will preserve that standard of living and, indeed, in most cases that would not be possible.
In Part N of her Financial Statement filed on 18 October 2012, the wife asserted that her average weekly expenditure on herself is $1,567 and on the children is $1,871. Her reported expenditure is also set out in exhibit 10, which comprises income and expenditure in the total period of July 2011 to June 2012 in documents related to the following two periods:
a)30 July 2010 to 1 June 2011
b)1 July 2011 to 31 March 2012.
The Court considers that the expenses set out in those documents are excessive to the wife’s needs. It agrees with the submission of the husband that the wife’s expenditure, especially in relation to acquiring and agisting a number of horses in pursuit of a recreational hobby, is unreasonable.
The Court finds that the orders which it will make in all the circumstances of this case will provide to the parties a standard of living that is in all the circumstances reasonable.
(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
There is no evidence as to the undertaking of a particular course.
(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
There is no evidence on which the Court could come to the conclusion that the orders it proposes to make will affect the ability of a creditor to recover the creditor’s debt.
(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
The wife has contributed as set out above.
(l) the need to protect a party who wishes to continue that party’s role as a parent
Each of the parties wishes to continue their role as a parent and the wife wishes to continue in her role as primary carer for the children.
The Court does not find that the orders which it proposes to make will impinge on the parties’ abilities to do so.
(m) if either party is cohabiting with another person – the financial circumstances relating to the cohabitation
There is no evidence of any such circumstance.
(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
The Court takes into account the prior orders made in particular for interim property settlements and the benefit that has flowed to each of the parties thereby.
The Court notes that, as to the portion of the sum so provided, it was made available to the parties on an equal basis.
The Court will take the provision of those settlements and the benefit that each of the parties has received in the way in which the pool ultimately is to be divided.
(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
The husband presently pays child support to the wife in the sum of $500 per week under order of the Court. The Court notes that this is not an assessed rate.
The husband has, in addition, met other expenses of the children pursuant to the orders of the Court made on 5 February 2008.
Those additional payments are subject to an agreement entered into by the parties, under which the wife was to reimburse the husband for half the school fees paid by him for the children on completion of these proceedings. That agreement imposes an obligation upon the wife to reimburse the husband the sum of $48,000 or to have it taken into account by way of adjustment to her share of the asset pool. That has been taken into account.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
Under section 75(2)(o), the Court takes the following matters into account:
a)Each of the parties is possessed of jewellery and household contents of indeterminate value.
b)The wife withdrew the sum of $200,000 from an account (item 26 on the balance sheet) and applied it to legal fees and living expenses. Given that the wife cannot identify the quantum of expenditure made with respect to those two categories of expenses, the Court will take into account in its determination of the wife’s entitlement that she has had the benefit of that amount, which was the product of contributions made financially and otherwise by each of the parties but which was applied solely to the benefit of the wife.
c)The Court notes and takes into account the sum paid to the wife in 2008 (item 27 of the balance sheet) and its application for the purpose of the payment of legal fees. The wife argued that this sum was paid to her from funds which the husband drew down on the NAB/Homeside facility. As otherwise indicated in this judgment, that drawdown, to the extent that the wife assumed liability for it, will be regarded as a contribution made by her to the property pool. The Court will, however, also take into account the wife’s use of a portion of the property pool to meet her requirement for her representation in these proceedings.
d)The Court notes and takes into account that the partial property payments made to the wife in 2009 (items 29 to 34 of the balance sheet) and the effect of those settlements on the property presently available for division.
The Court notes the assertion of the wife that significant monies were expended on legal fees and its earlier comments in this regard.
It also notes its findings in relation to the categorisation of portion of the partial property settlement payments to the wife as maintenance.
The Court accepts that, to the extent that the property settlements are taken into account to the detriment of the wife’s claim, the Court will not additionally to the wife’s detriment make an adjustment in the husband’s favour for the legal fees said to have been paid with the sums. The husband agrees that the sums which were paid to the wife (totalling $216,000, if including item 27) were applied to the payment of such fees.
e)The wife withdrew funds totalling $70,000 from the Mr Truman Trust account without authorisation in December 2009 (item 35 on the balance sheet). The Court will take this into account in its consideration of the ultimate result in this case The wife in her evidence says that she spent part of the funds on expenses for the children and herself, however, she provides no particulars. The sum was not an amount to which she could claim sole entitlement and it was taken at a time when the wife had use of significant funds provided to her by the husband by way of maintenance and child support and lump sums paid to her by her mother. The Court is obliged to and will take into account here the circumstances of the withdrawal of funds and their application by the wife to the exclusion of the husband.
f)In 2007 the husband paid for improvements to be made to the first Y property, a rental property where the wife was then residing. The total cost of these improvements was $21,000 (item 36 on the balance sheet) and this does not appear to be in dispute. The Court notes that these costs were met entirely by the husband for the wife’s benefit in the post separation period and takes this into account here.
g)The wife withdrew an amount of $10,752 from the Truman Family Superannuation Fund (item 37 on the balance sheet). It is asserted by the wife that the sum so drawn was applied to the procurement of legal advice given to her as to whether or not she had remedy against the husband for potential maladministration of the fund. The Court accepts the husband’s assertion that this advice was not a legitimate expenditure of the funds but rather advice as to her personal benefit. The Court will take into account the reduction in the pool of assets by reason of this application of those funds by the wife for that purpose.
h)Save as set out above, the Court will take into account the liabilities incurred by each of the parties for legal costs (items 39 and 40 on the balance sheet). The Court notes the assertion of the wife that the monies derived from her mother were applied, in part, to the payment of her legal costs. Given that the sum is excluded as a liability, to the extent that it is possible to glean what portion of that sum was used for legal fees, so also should that part of the costs paid by the wife from such monies not be taken into account to the detriment of her claim. The problem the Court faces is that there is no clear evidence of the source and application of funds, and the submissions provided following the hearing do not help.
i)The Court will take into account the fact that the wife in 2012 withdrew the sum of $88,000 from the capital contained in a superannuation fund and that she has thereby had an early distribution of property in her favour. This will be reflected in the ultimate division of property.
j)The Court notes and will also take into account that, as part of his financial obligations following this hearing, the husband will be liable for the amounts due on his credit cards and for unpaid premiums on life policies (items 48 to 51 on the balance sheet). Together, those debts total close to $300,000.
k)
The Court also notes and takes into account here the monies said by the wife to be owing to her various solicitors, her accountant and
Ms V, which together total over $350,000.
(p) the terms of any financial agreement that is binding on the parties to the marriage
There is no evidence of any such agreement save as set out.
Conclusion based on section 75(2)
Balancing all the matters referred to above, including the differential earning capacity of the parties, the Court finds that it is just and equitable in this case to make an adjustment of 5 per cent in the wife’s favour. That adjustment represents a dollar figure of $170,709.
Overall division of assets
The above determination will see the wife and the husband each receive 50 per cent of the parties’ net assets.
Just and equitable
The division of assets would see the wife receive $1,707,091.50 worth of net assets and the husband receive $1,707,091.50 worth of net assets.
In the circumstances of this case the Court determines that result to be just and equitable.
Orders which should be made
It is proposed by the wife and agreed to by the husband that the husband will indemnify the wife from and against all claims which might be made against her by any of his related entities with respect to monies due to the entities or any of them on loan account by the wife.
Each of the parties seeks superannuation splitting orders. The Court proposes to leave each with their existing entitlements in the Truman Superfund, save for the splitting order it proposes to make with respect to the husband’s superannuation entitlement at item 64 on the balance sheet (and referred to in the splitting order as the “Colonial First Choice Super Account”). On that subject, Counsel for the husband submitted as follows:
Mr Kasep:What is proposed – and this will be reflect (sic) in the minute – is that one is, at this stage, very difficult to value because it involves the land in Japan and, at this stage, no one can really say what that is going to sell for. So it would be proposed that that the two funds in respect of which we know what their value is - those figures be aggregated, be split in half. The wife already has one fund, and the difference would be simply a transfer from – a split from the fund that the applicant husband has into the wife’s fund, and then when the land in Japan is sold, the proceeds from that sale simply be split once again
fifty-fifty.The Court proposes to adopt this course to increase the wife’s share of the superannuation portion of the assets and to increase the husband’s share of the non-superannuation assets, which will afford a greater measure of balance in terms of the property that the parties will retain.
The Court will also make an order that the proceeds from the sale of the Japanese properties be split such that the wife receives 50 per cent of those proceeds and the husband receives 50 per cent, as suggested in the husband’s proposed Orders.
The Court in addition to the above will grant the declaratory relief sought by the husband in relation to the three short-dated insurance policies which, on his evidence, he bought to be held on trust for the children. The husband confirmed in his oral evidence that he purchased the policies for the benefit of the children utilising funds bequeathed to him by his mother. For abundant caution, the husband seeks the declaration which is set out above. The Court accepts his evidence and finds that the policies were never property of his.
The Court proposes orders which will give effect to the following division.
The wife will receive:
| Assets | ($) |
| Horse Float 1 | 15,000.00 |
| Horse Float 2 | 4,000.00 |
| 13 Horses | 5,000.00 |
| Horse Tack | 5,000.00 |
| CBA Account – Smart Access Account 1 | 124.00 |
| CBA Account – Netsaver Account 1 | 31,204.00 |
| CBA Account – Smart Access Account 2 | 343.00 |
| CBA Account – Netsaver Account 2 | 92.00 |
| Savage boat and trailer | 500.00 |
| Box trailer | 1,000.00 |
| Wife’s existing interest in Truman Superfund | 298,708.00 |
| Wife’s interest in Truman Superfund following splitting order | 362,646.00 |
| Cash adjustment payment from husband | 983,474.50 |
| Total assets (incl. superannuation) | $1,707,091.50 |
| Net assets (incl. superannuation) | $1,707,091.50 |
The husband will receive:
| Assets | ($) |
| Former matrimonial home | 3,500,000.00 |
| Camper trailer | 7,000.00 |
| “K” (boat) | 60,000.00 |
| NAB Offset account | 7,669.00 |
| Husband’s interest in Truman Superfund after splitting order | 661,354.00 |
| Total assets (incl. superannuation) | $4,236,023.00 |
| Liabilities | $ |
| Mortgage to NAB | 1,320,823.00 |
| Investec AFM 2005 Tree Project | 85,920.00 |
| Loan account with O PL (per valuation) | 38,000.00 |
| Mr T Truman | 100,714.00 |
| Cash adjustment payment to wife | 983,474.50 |
| Total liabilities | $2,528,931.50 |
| Net assets (incl. superannuation) | $1,707,091.50 |
Should the husband not be able to refinance the mortgage over the former matrimonial home and/or fail make the payment to the wife referred to in
Order 2(a) above within the given timeframe, orders requiring the parties to sell the former matrimonial home shall become operative, namely the provisions set out in Order 3 above.
In that event, in order to ensure that the distribution of the parties’ net assets is achieved in the ratio of 50 per cent each to the wife and husband, the Court proposes orders which will give effect to the distribution set out in the tables below. This alternative division would require the wife to pay to the husband a cash adjustment sum of $106,114.
The wife will receive by way of distribution in the event and only in the event that the husband does not retain the former matrimonial home:
| Assets | ($) |
| 50% share of former matrimonial home | E 1,750,000.00 |
| Horse Float 1 | 15,000.00 |
| Horse Float 2 | 4,000.00 |
| 13 Horses | 5,000.00 |
| Horse Tack | 5,000.00 |
| CBA Account – Smart Access Account 1 | 124.00 |
| CBA Account – Netsaver Account 1 | 31,204.00 |
| CBA Account – Smart Access Account 2 | 343.00 |
| CBA Account – Netsaver Account 2 | 92.00 |
| Savage boat and trailer | 500.00 |
| Box trailer | 1,000.00 |
| Wife’s existing interest in Truman Superfund | 298,708.00 |
| Wife’s interest in Truman Superfund after splitting order | 362,646.00 |
| Total assets (incl. superannuation) | $2,473,617.00 |
| Liabilities | ($) |
| 50% share of the mortgage to NAB | E 660,411.50 |
| Cash adjustment (to be deducted from wife’s share of sale proceeds) | 106,114.00 |
| Total liabilities | $766,525.50 |
| Net assets (incl. superannuation) | $1,707,091.50 |
The husband will receive by way of distribution in the event and only in the event that he does not retain the former matrimonial home:
| Assets | ($) |
| 50% share of former matrimonial home | E 1,750,000.00 |
| Camper trailer | 7,000.00 |
| “K” (boat) | 60,000.00 |
| NAB Offset account | 7,669.00 |
| Husband’s interest in Truman Superfund after splitting order | 661,354.00 |
| Cash adjustment (to be deducted from wife’s share of sale proceeds) | 106,114.00 |
| Total assets (incl. superannuation) | $2,592,137.00 |
| Liabilities | |
| 50% share of the mortgage to NAB | E 660,411.50 |
| Investec AFM 2005 Tree Project | 85,920.00 |
| Loan account with O PL (per valuation) | 38,000.00 |
| Mr T Truman | 100,714.00 |
| Total liabilities | $885,045.50 |
| Net assets (incl. superannuation) | $1,707,091.50 |
Other orders
The Court proposes to discharge Orders 22, 23 and 24 of the Orders of
5 February 2008 with respect to the payment of funds for spousal maintenance as set out above.
Having considered that proposal by the husband in the course of arriving at its findings in the property settlement proceedings, together with its duty under section 81 of the Act to end financial relations between the parties, the Court has determined subject to the payment herein ordered to be made being made that such support is no longer required to be provided by the husband to the wife.
I certify that the preceding one-hundred and seventy-one (171) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 9 October 2013.
Associate:
Date: 9 October 2013
Key Legal Topics
Areas of Law
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Family Law
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Property Law
Legal Concepts
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Remedies
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Costs
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Injunction
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Statutory Construction
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