VERDINCK & STEVENS

FAMILY COURT OF AUSTRALIA

VERDINCK & STEVENS

[2017] FamCA 680

FAMILY LAW – PROPERTY – Application for an adjustment of property interests – Where the parties were in a de facto relationship – Where it is just and equitable to make an order – Adjustment made in the applicant’s favour of 10 per cent due to her lower earning capacity and care for the parties’ children – Where the applicant is to retain 40 per cent of the net assets – Where the applicant is to retain the parties’ former home and a cash payment from the respondent.

FAMILY LAW – PROPERTY – CONTRIBUTIONS – Where the de facto relationship between the applicant and respondent had two distinct phases – Where the parties conducted their financial affairs differently in each period – Where it is appropriate to consider the contributions made in each period separately – Where the entirety of the parties’ current assets have their genesis in the respondent’s initial contribution – Overall contributions assessed at 70 per cent to the respondent and 30 per cent to the applicant.

FAMILY LAW – PROPERTY – WASTE – Whether the respondent’s conduct of prolonging the litigation amounted to waste – Consideration of Kowaliw & Kowaliw (1981) FLC 91-092 – Where it is not found that the respondent acted recklessly, negligently or wantonly with matrimonial assets – Where the threshold in Kowaliw is not satisfied.

Family Law Act 1975 (Cth) 117(2A)(c)

Kowaliw & Kowaliw (1981) FLC 91-092

APPLICANT:

Ms Verdinck

RESPONDENT:

Mr Stevens

FILE NUMBER:

CAC

1415

2015

DATE DELIVERED:

4 September 2017

PLACE DELIVERED:

Sydney

PLACE HEARD:

Canberra

JUDGMENT OF:

Rees J

HEARING DATE:

21 and 22 August 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Howard

SOLICITOR FOR THE APPLICANT:

Yeend & Associates

COUNSEL FOR THE RESPONDENT:

Ms Christie

SOLICITOR FOR THE RESPONDENT:

Dobinson Davey Clifford Simpson

Orders

IT IS ORDERED

That the parties forthwith do all acts and things and sign all documents which are necessary to transfer to the applicant the respondent’s right title and interest in the property known as “Property C” situated at Lot 1 and 2 E Street, D Town, in the State of New South Wales more particularly described as Folio Identifiers … and … (“Property C”).
That within 28 days the respondent pay to the applicant the sum of $270,000.
That within 21 days the applicant will make available and the respondent will collect the following items from Property C at a time and date agreed between the applicant and the respondent:
3.1.     Fire pump and hose;
3.2.     Power tools;
3.3.     Welder;
3.4.     Bobcat;
3.5.     Ute and trailer;
3.6.     Compressor and tools;
3.7.     Box trailer;
3.8.     Chain saws and associated equipment;
3.9.     Pole saws;
3.10.   Mill;
3.11.    Respondent’s art collection;
3.12.   The porcelain collection;
3.13.   The coffee machine;
3.14.   The respondent’s musical instruments and all accessories;
3.15.   The title deeds to the Suburb B and F Town properties;
3.16.   Any clothing belonging to the respondent;
3.17.   Dinner service;
3.18.The fences that form the race and pens closest to the top side flat carpark area at Property C and all equipment inside the sheds.
That otherwise than is provided in these orders, the applicant shall be solely entitled to all the property in her name and possession at the date of these orders.
That otherwise than is provided in these orders, the respondent shall be solely entitled to all property in his name and possession at the date of these orders.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Verdinck & Stevens has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: CAC 1415 of 2015

Ms Verdinck

Applicant

And

Mr Stevens

Respondent

REASONS FOR JUDGMENT

Ms Verdinck (“the applicant”) and Mr Stevens (“the respondent”) lived together in Canberra in a de facto relationship between May 1996 and 2006 when they separated (“the first period”).
They resumed co-habitation in February 2007 and remained together until they separated in February 2015 (“the second period”).
There are two children of the relationship, Mr G aged 18 and H aged 16. Both children live with the applicant.

HISTORY

At the time they met, the applicant was working in Queensland. She had no significant assets. She held a Bachelor degree.
The respondent, who is from the UK, had been married and had a son living in the UK. That son later came to Australia.
The respondent has qualifications and considerable expertise in a field of technology. He practised through a corporate entity, Company J, incorporated in the UK.
The respondent commenced professional work with entities in Australia in 1987. Between 1987 and 1994 he visited Australia 25 times in relation to consultancy. By May 1995, the respondent owned a number of patents in his field of expertise.
In 1994, the respondent was employed in Australia by a telecommunications company. The respondent’s intellectual property was made available to his employer by transferring to the employer 51 per cent of Company J.
On 10 May 1996, the respondent entered into a contract with a successor telecommunications company (“the contractor”). The respondent asserts that, as a result of that contract:
·    His employment ended;
·    The 51 per cent interest in Company J was transferred back to him;
·    The respondent was paid $1,000,000 in compensation for the diminution of the value of his shares in Company J;
·    The contractor no longer had a right to use the intellectual property of Company J;
·    The contractor entered into a contract with Company J to re-supply to it a portion of the intellectual property now owned by Company J in a new and agreed form;
·    The contractor was to pay Company J $250,000 for the services of the respondent;
·    The delivery of services by Company J was urgent and the contract contained a provision for a success fee of a further $1,000,000 if the work was delivered within the specified time-frame.
No copy of the contract of 10 May 1996 is available. There is a dispute about the terms of the contract. The applicant does not admit that there was a provision for a success fee or that a success fee was paid, in whole or in part.
In addition to the property in Paragraph 9, the respondent had an interest in superannuation which has not been valued and which I assume was not significant, namely furniture, a car in the UK and a collection of artworks.
On 11 May 1996 the parties became engaged to marry.
Later in May they commenced co-habitation in Melbourne. On 25 May 1996, they opened a joint bank account.
Between April 1997 and February 1998, the applicant worked in Melbourne.
In April 1997, the respondent received $175,000 from the sale of his former home in the UK.
The respondent asserts that in July 1997, Company J completed the work required pursuant to the contract and received the final payment of a total of $1,000,000 for the success fee. The applicant does not agree with that assertion.
Also in July 1997, the respondent purchased, in his sole name, a rural property in Queensland known as “Property K” for $2,050,000. The applicant contributed no money to the purchase. In August 1997, the parties moved to live at Property K.
In July 1998, the respondent established Stevens Consulting Pty Limited (“Stevens Consulting”) as a vehicle for his professional work.
On 22 December 1998, the respondent sold Property K for $2,400,000 and placed the proceeds of sale in accounts in his sole name.
In 1999, their son Mr G was born.
In October 1999, the respondent purchased an apartment in Melbourne Suburb L in his sole name using funds from the sale of Property K.
In February 2000, the parties jointly purchased a property in Suburb M, ACT for $400,000. The respondent provided $200,000 from his own funds and they borrowed the balance. The respondent paid the stamp duty and legal costs.
In 2001, their daughter H was born.
In 2003 the respondent purchased an apartment in Melbourne Suburb N in his sole name.
In 2003 or 2004, the respondent’s son, then aged about 16 years, came to live with the parties.
In December 2005, the respondent sold the Suburb N apartment and exchanged contracts to purchase a property at F Town for $270,000.
Shortly thereafter, the parties separated.
The parties negotiated a Settlement Agreement. It was prepared by them jointly. Neither sought legal advice. The agreement provided:
·    The applicant was to retain her current assets;
·    The property at Suburb M was to be the property of the applicant and could be sold or retained at her discretion. On sale she was to receive the whole of the proceeds;
·    The applicant received the contents of Suburb M with the exception of the respondent’s personal property. (There is a dispute about whether the collection of artwork which had been introduced by the respondent was personal property or part of the furniture);
·    The respondent was to complete the purchase of F Town for $270,000 in the applicant’s name;
·    The respondent was to pay “a one-off lump sum of $100,000” to cover the costs of private school fees for the children;
·    The respondent was to pay $50,000 lump sum spousal maintenance;
·    The respondent was to pay a lump sum of $270,000 by way of child support.
By April 2006, the Settlement Agreement had been put into effect. The funds required to pay the sums due to the applicant, and to settle on the purchase of F Town, came from the sale of Suburb N.
The applicant moved with the children to Queensland and lived in rented premises in O Town.
On 7 July 2006, the respondent purchased a rural property at D Town known as “Property C” in his own name for $1,060,000. He borrowed $500,000 to complete the purchase.
Later in July 2006, the applicant moved back to Canberra and lived in the property at Suburb M with the children. The respondent was living in rented accommodation with his son.
In August 2006 the applicant sold F Town and received $268,656. The respondent sold Suburb L and received $2,000,000. He then purchased, in the name of Stevens Consulting, a property at Suburb B for $980,000.
In February 2007, the parties resumed co-habitation and lived together at Property C.
On 23 February 2007, the applicant sold Suburb M and received $666,593.
It is an agreed fact that once the applicant had liquidated all of the property she received pursuant to the Settlement Agreement, she had some $1,355,249 which she placed in term deposits. It is also an agreed fact that from the term deposits she received interest, between 2007 and 2015, of $233,389, the total of those amounts being $1,588,638.
At an unspecified time, the applicant gave $200,000 of those funds to the respondent to pay a tax debt. The respondent estimated that the applicant contributed $250,000 to renovations at Property C. Other than those amounts, the respondent disputes that the applicant contributed all her funds to the household after they resumed co-habitation in the second period, as she alleges.
In April 2007, the respondent discharged the mortgage over Property C.
In 2009 the applicant commenced a business called “P Pty Ltd” raising and selling products from Property C. The business made some profit in the early years but not thereafter.
The applicant had paid employment in 2009 and 2010.
Also in 2010 the respondent started a small livestock business.
In May 2010 the respondent purchased the F Town property, which had been sold by the wife for $330,000, in the name of Stevens Consulting.
In May 2012 Property C was burgled and the certificates of title to the real estate were stolen. After this, the applicant became a joint tenant of Property C.
From June to September 2013, the applicant worked in Canberra.
They separated in February 2015.
The applicant remains living at Property C with the children. The respondent is living at Suburb B.
The applicant has started a business from home. She also has a job one afternoon each week.
The respondent has had intermittent contract work. At the time of the hearing, he did not have any contract work.

ISSUES

At the commencement of the hearing, counsel agreed that the issues for determination are:
·    The quantum of the respondent’s initial contribution.
·    Whether the money acquired by the applicant after the first separation was contributed by her, at all or in part, to the welfare of the family after the resumption of the second period of co-habitation.
·    Whether the respondent’s occupation of Suburb B constituted waste.
·    Whether the respondent’s paid legal fees should be added back to the asset pool.
·    Whether the respondent had committed waste by unnecessarily prolonging the litigation.
·    How the money borrowed by the applicant from her father for legal fees should be treated.
·    Who should retain the collection of artworks. The applicant wishes to keep the collection. The respondent wants it returned to him.
·    Who should retain the farm yards. Both parties wish to retain them.
·    The capacity of each of the parties to earn income.
At the commencement of submissions, I raised with counsel the question of whether the contributions made by each of the parties in the first period and in the second period should be treated differently.

INITIAL CONTRIBUTIONS

The respondent contends that his initial contribution was comprised of the money held by Company J in the UK; the proceeds of the sale of his house in the UK; the sum of $1,000,000 which he received pursuant to the contract dated 10 May 1996; a further payment of $250,000 to Company J for the provision of his services; and the amount which was received by Company J by way of success payments pursuant to the contract.
The applicant concedes all but the success payments and contends that the respondent has double counted some amounts.
The documents which establish the respondent’s financial position at the commencement of co-habitation are annexed to his affidavit sworn 9 August 2016.
On 15 May 1996 the respondent had $1,012,851 in a bank account in Australia. In addition, Company J had $225,812 in its bank accounts in the UK.
Company J was owed $71,000 for work which had been invoiced but not yet paid. On behalf of the applicant it was submitted that there was no evidence that those invoices were ever paid. That proposition was not put to the respondent and I accept that the invoices would have been paid.
The total of the amounts available to the respondent at the commencement of co-habitation was $1,309,663.
The respondent received $175,000 from the sale of his house in the UK, bringing the total to $1,484,663.
The respondent provided two invoices from Company J for his services dated 13 May 1996 and 28 June 1996 which total $33,653.84. It is conceded by both parties that, insofar as Company J charged $250,000 for the respondent’s services to the contractor in that period, those amounts were income earned by the respondent and should not be included as part of his initial contribution.
In relation to the payments received by Company J for success fees after 10 May 1996, the respondent has provided invoices from Company J for claims between 25 September 1996 and 25 July 1997 which total $936,919. Those invoices relate solely to success fees. Time spent on the project by employees of Company J was invoiced separately. It is the respondent’s case that the success fees are part of his initial contribution because they represent the payment by the contractor for the delivery of his intellectual property in accordance with the contract dated 10 May 1996.
Those funds were paid to Company J in the UK and remained there until Company J was liquidated, as best I can ascertain, in late 1997.
The respondent gave evidence that Company J had paid its contractors before the contract was concluded on 10 May 1996 and had very little by way of operating expenses after that date.
Counsel for the respondent submitted that the respondent, through Company J, owned an asset being intellectual property, which had been developed over some nine years. The 10 May 1996 contract was a contract which provided for Company J to supply the contractor with that property. There were 78 separate items which were to be supplied, all of which relied on the intellectual property which had been developed by the respondent. If each item was supplied on time, Company J was entitled to a success fee. Thus the respondent, through Company J, was supplying to the contractor something he already had.
I do not accept the submission of counsel for the applicant that the position of the respondent was analogous to the position of a barrister who, having developed an expertise and body of knowledge, can apply that skill and knowledge to a different client each day and thus sell his knowledge and skill over and over.
The respondent had one product which he sold to the contractor. Once he entered into the contract, he could not sell the product to anyone else.
I accept that the success fees paid by the contractor for the delivery of the product on schedule are part of the respondent’s initial contributions.
Thus, the respondent’s initial contribution in money was $1,484,663 plus the success fees of $936,919, a total of $2,421,582.
He also had a car in the UK which he sold, an interest in superannuation which I assume was not significant, furniture and a collection of art. No value has been ascribed to those items.

THE APPLICANT’S USE OF FUNDS RECEIVED PURSUANT TO THE 2006 SETTLEMENT AGREEMENT

As a result of the 2006 Settlement Agreement, the applicant ultimately received in cash a total of $1,355,249. She also received interest in various term deposits totalling $233,389 so that the total benefit to her from the Settlement Agreement was $1,588,638.
It was clear on the evidence of each of the parties that, once they resumed their relationship in the second period, they each considered their funds to be their own and they did not intermingle funds at all.
The respondent gave evidence that, during the second period, if the applicant spent money on an item for his use, he was required to reimburse her. He also paid money regularly into the applicant’s bank account for his share of their living expenses. Between 28 March 2007 and 26 June 2015, the respondent paid a total of $213,368 into the respondent’s bank account for living expenses. He deposed that the sum covered his living expenses and half of the joint household expenses. The respondent also transferred funds to the applicant from Stevens Consulting when she needed funds but did not want to break a term deposit. Those amounts were repaid by her in full.
The extent to which the parties kept their finances separate was demonstrated by the manner in which their livestock venture was conducted. They each paid $10,000 to buy the stock in February 2012. Over the next two years, they made financial adjustments to each other from their separate funds to ensure that they each paid half of the costs of the venture. In 2014, the applicant decided that she did not want to pursue the venture and the stock and associated plant were transferred to Stevens Consulting.
The applicant deposed that she used the whole of those funds for the benefit of the family. The applicant did not attempt to justify that assertion other than by providing the relevant bank statements and other financial records to the respondent.
The respondent conceded that the applicant had paid $200,000 towards a taxation liability incurred by him and that she had paid $250,000 towards renovations at Property C, although he said in oral evidence that her own records did not support that concession but supported a contribution of a lesser sum towards the renovations.

The respondent’s case was that the applicant had not used all of the funds for the benefit of the family. In cross-examination, the respondent said that the applicant’s funds were spent on herself and the children, but not on him.
The respondent had access to all of the applicant’s bank statements, PayPal statements and most of her credit card statements.
The respondent gave evidence that he was unable to account for $600,000 of the applicant’s money by reference to her own records. The applicant adduced no evidence to account for those funds.
The respondent’s evidence about the analysis of the applicant’s spending was not challenged. The applicant, in cross-examination, said that she had not checked his calculations against her own records. Although the applicant’s solicitors had written to the respondent’s solicitors advising that they were preparing an aide memoire showing how the applicant’s funds had been spent, no such document was forthcoming.
On the evidence of the respondent, the applicant spent $200,000 on his tax liability and $250,000 on renovations to Property C, and $600,000 remains unaccounted for. He did not dispute that the remaining amount available to her, $1,050,000, was spent on herself and the children. Nor did he dispute that she was entitled to spend her money however she chose.
I accept that the applicant did not spend her money on the family comprised of herself and the respondent, but, insofar as her spending has been accounted for, she spent the money on herself and the children.
I propose to treat the applicant’s funds as having been spent on the family, albeit that the respondent was not included.

SHOULD THE CONTRIBUTIONS MADE IN THE FIRST PERIOD BE ASSESSED DIFFERENTLY FROM THE CONTRIBUTIONS MADE IN THE SECOND PERIOD?

The relationship between the applicant and respondent had two distinct phases. The way in which the parties conducted their financial affairs in the first period was different from the way they conducted their affairs in the second period.
During the first period, the applicant had no cash resources. She was only employed for a short period. After the children were born she was their primary carer and the primary homemaker for the family. The respondent earned the income which supported them and provided the funds which were used to purchase the home in which they lived. He paid all of their expenses including the mortgage payments on the Suburb M property.
The applicant gave evidence that she managed the respondent’s income, allocating various amounts to herself so that she, for example, made sure that any funds which were paid into his superannuation fund were matched by an equal amount paid into her fund.
When they separated in 2006, by virtue of their Settlement Agreement she received Suburb M, F Town and cash of $420,000. In order to finance the settlement, the respondent sold Suburb N. He retained the property at Suburb L, his entity Stevens Consulting which had about $150,000 in the bank and superannuation of $440,000. The respondent estimated that the value of the assets he retained was about $2,200,000. The applicant ultimately received cash of $1,355,249.
The respondent said in oral evidence that he thought the settlement was generous but that he took into account the young age of the children and his wish that they be properly cared for and educated.
The Settlement Agreement contained a warranty to the following effect, “In exchange for this final settlement [the applicant] warrants to [the respondent] that she will not at any time in the future make any other claim against him, his remaining assets, entitlements or future income of whatever form.”
The respondent deposed that he believed that the warranty was effective and that, after the Settlement Agreement was entered into, he made his financial decisions based on that warranty.
Whilst the applicant did not concede that there was any Settlement Agreement, when they entered the second period, to keep their finances separate, I accept the evidence of the respondent that this is what they did. An examination of the manner in which the applicant conducted her financial affairs confirms that, whether or not there was a specific agreement, she too kept her financial affairs separate from those of the respondent.
It is appropriate to consider the contributions made in each period separately.

WASTE IN RELATION TO THE RESPONDENT’S USE OF SUBURB B

Throughout the hearing, it was contended on behalf of the applicant that the respondent’s occupation of Suburb B, which prevented its being tenanted, constituted waste.
That contention was not pressed in submissions but I propose to deal with it.
Stevens Consulting owns a residential property in Suburb B which was rented for $1,250 per week. The tenants gave notice that they intended to vacate.
The respondent advised the applicant that he intended to move into Suburb B and live there with his son and his elderly mother who was coming to Australia following the death of her husband, the respondent’s father. At that time, the respondent did not have accommodation and was living with friends. He gave evidence that because of his age and the uncertain nature of his contract employment, he had not been able to secure rental accommodation.
The applicant brought an application to restrain the respondent from moving into Suburb B.
That application was heard and determined. The applicant was unsuccessful.
No specific order was made permitting the respondent to occupy Suburb B but his occupation was clearly condoned by the Court.
At the time, the applicant was living in Property C, the property which was purchased entirely from the funds of the respondent and was not paying any money to the respondent in consequence of her occupation. Property C is the most valuable real property owned by the parties having an agreed value of $1,300,000.
I do not accept that the respondent’s occupation of Suburb B could constitute waste when it was condoned by the Court.

RESPONDENT’S PAID LEGAL FEES

In June 2015, the respondent withdrew $90,000 from Stevens Consulting. He paid $87,225 to his solicitors on account of legal fees.
On 20 September 2016, judgment was delivered by Gill J in an application by the applicant, inter alia, for an interim property settlement for the purpose of meeting legal costs. The respondent was ordered to pay $25,000 to the applicant. Whilst his Honour does not specifically order that the payment be made by way of interim property settlement, it is clear from the reasons for judgment that was the basis on which the order was made.
The applicant seeks to add back the $87,225. The respondent opposes that course.
On behalf of the applicant it is submitted that the payment of legal fees from cash available to the respondent is a premature distribution by him.
On behalf of the respondent, it was submitted that, because the applicant and the respondent had kept their finances separate during the second period, the respondent was spending his own funds and was entitled to do so.
I consider that the respondent made a premature distribution and that the funds should be added back.
However, the same logic must apply to the amount received by the applicant for interim property settlement which should also be added back. Thus, the net effect will be to add back $62,225.

WHETHER THE RESPONDENT COMMITTED WASTE BY UNNECASSARILY PROLONGING THE LITIGATION

The case which has come to define the scope of “waste” in the family law context and which is viewed as establishing legal “guidelines” for this Court is the frequently cited case of Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”).
In Kowaliw, Baker J made the following comments on the topic of “waste” 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.
At 76,645 of Kowaliw, Baker J reiterated his earlier comments by stating “If a party has acted in a manner to which I have referred earlier … then such conduct in my view and the economic consequences that flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of sec. 75(2)(o).”
On behalf of the applicant it is submitted that the respondent, in initially pursuing a case that the parties had not lived in a de facto relationship, and in opposing the application for sole occupation of Property C, unnecessarily caused legal fees to be incurred by both parties.
This is an argument that would usually be advanced in an application for costs in reliance on s 117(2A)(c) of the Family Law Act 1975 (Cth) but I accept that, in appropriate circumstances, conduct which unnecessarily prolongs litigation and causes costs to be incurred unnecessarily, could be waste.
His actions may have been unsuccessful and they may have been imprudent, but I do not consider, however, that in this instance the respondent acted “recklessly, negligently or wantonly with matrimonial assets”.

MONEY LENT BY THE APPLICANT’S FATHER

The applicant has borrowed $135,000 from her father and used those funds to pay legal fees. Counsel for the applicant submitted that it would not be just and equitable for the applicant’s loan to be excluded when she has paid her legal fees from borrowed money and the respondent had paid his from income.
Counsel for the respondent submits that it would not be just and equitable to include the loan because that has the effect of making the respondent liable for a portion of the applicant’s legal fees.
On behalf of the respondent, counsel submitted that her father, who gave evidence, would not press her for payment if she did not have cash with which to repay him, and, on that basis, the loan should not be included. I do not accept that argument. The applicant’s father clearly expects that he will be repaid when the applicant is able to do so.
However, those are not the only matters to be considered.
The respondent also has a loan of $135,000 from his mother. He gave evidence that he borrowed the funds during a period when he was not working so that he could maintain his payment of the children’s private school fees and continue to pay child support which was then in excess of $2,000 per month.
The only funds available to the respondent when he was not earning income as a contractor were those held by Stevens Consulting or the funds he might have been able to access from his superannuation. However, the applicant had successfully brought an application for the respondent to be restrained from using those funds. He had no other income or source of funds.
The respondent did not seek to have his loan taken into account in the Balance Sheet, but to include the applicant’s loan and exclude the respondent’s loan would be unjust.
I therefore propose to exclude both liabilities from the Balance Sheet.

THE COLLECTION OF ABORIGINAL ART

The respondent had the art collection at the commencement of co-habitation. It was a term of the 2006 Settlement Agreement that the applicant would receive the contents of Suburb M, excluding the personal possessions of the respondent.
The applicant retained the art collection. Whether she was entitled to do so pursuant to the Settlement Agreement does not need to be decided but clearly the respondent acquiesced.
The art collection was brought to Property C when the parties resumed their relationship and remained there.
In cross-examination the applicant said that she liked the art and had decorated Property C around its colours. No other reasons were advanced by her to retain the collection.
The respondent collected the works. They were his property before he met the applicant. The respondent should retain them.

THE FARM YARDS

The yards were used by the respondent in connection with his livestock venture. He wants to move the yards to the property at F Town where the livestock are held.
The applicant wants to retain the yards although she does not currently have any stock. In cross-examination she said that a friend of their son has livestock agisted at Property C and therefore she needs the yards.
The yards were purchased for use in the livestock enterprise. They should be retained by the respondent.

THE EARNING CAPACITY OF THE PARTIES

The applicant has started a business which she operates from home. The business is operated on a part-time basis and runs at a loss. She also receives a Newstart allowance.
The applicant, in her Financial Statement sworn 9 August 2017, deposed that she receives no income from her business. She did not disclose her income from her employment as a receptionist. In cross-examination the applicant stated that the business cost about $3,000 per month but made no profit. She conceded that much of the expenses from the previous year were “start up” costs and would not be recurring expenses. The applicant was shown the PayPal records for the past three months which showed payments from that source alone to the business exceeded $3,000 per month. She conceded that she was also paid in cash by clients. She also conceded that she was able to deduct some of her expenses, such as motor vehicle expenses, electricity and the like because she runs the business from home.
It is not possible to know what the applicant’s income is, but I accept that it is modest.
The applicant has a Bachelor’s degree and has worked in the past at various institutions, most recently in Canberra.
In 2016 she swore an affidavit in which she deposed that she did not intend to apply for full time work because it did not suit her plans.
The applicant relies on her asserted need to be at home to care for their 16 year old daughter. While their daughter has had health problems in the past, the applicant agreed in cross-examination that, since November 2015, she has not provided any medical reports to the respondent about their daughter’s health because there had been no such reports.
Their daughter has a part-time job.
Further, the parties have agreed that their daughter will travel to Europe with a school group in early 2018 and the applicant conceded in cross-examination that she would not have permitted the travel if she had concerns about their daughter’s health and her ability to cope with overseas travel.
At the least, the applicant must have a capacity for part-time work, as she has done in the past. If she undertook paid employment, she would not incur the expenses of running a business and her overall financial position would be improved.
There is no evidence that the applicant cannot work full-time or of what she might earn if she did.
The applicant is entitled to make a lifestyle choice to run a business from home that makes a loss but she cannot expect that choice to be taken into account as being reflective of her earning capacity.
The respondent deposed that he was out of work between 1 July 2015 and November 2015. He had a contract from November 2015 until June 2016. He was out of work until August 2016 when he secured a contract until January 2017. He has had no work since then.
The respondent has no contract at present. It is not possible to know whether he will be successful in obtaining further contract work. He is 60 years old. Pursuant to his last contract, he earned $2,511 per week.
The respondent’s earning capacity, if he obtains employment, is superior to that of the applicant. However, whether he will obtain further employment is not known.

IS IT JUST AND EQUITABLE TO MAKE ANY ORDER?

Property C is owned by the parties as joint tenants. They can no longer both use and enjoy that property and therefore it is necessary to make an order which either transfers the title of Property C to one of them or makes provision for its sale.
Both parties ask the Court to make orders adjusting their property interests.
It is just and equitable, and necessary, to do so.

THE BALANCE SHEET

At the commencement of submissions, the parties tendered a joint Balance Sheet. That document is reproduced substantially below. Some items of no value have been omitted. Where an item is disputed, it is marked with an asterix. Those disputes will be dealt with using the item numbers from the Balance Sheet.
ASSETS

Owner-ship Description value

PROPERTY

1         J “Property C” E Street, D Town, NSW 1,300,000

2         A Household Contents in Property C 27,625

3         A External Furniture and gym equipment at Property C 5,450

FARM EQUIPMENT

4         A Small Quad Childrens Bike 1,750

5         A Large Quad Bike 3,000

6         A Bobcat original bucket 500

7         A Air Compressor and Tools 450

8         A Quad Bike Attachment -Spray tank 1,500

9         A Quad Bike Attachment -Slasher 1,200

10       A Quad Bike Attachment -trailer 200

11       R Fire pump and hose 250

12       R Power Tools 1,100

13       R Welder 250

14       J Bobcat 15,000

15       J Portable livestock yards 850

16       R Ute and Trailer 13,000

17       R Box Trailer 1,000

18       R Chainsaws and associated equip 700

19       R Pole saws 250

20       R Mill 8,000

BUSINESS ENTITY

21       A Enterprise: Q Pty Ltd

22       A Equipment & Stock 20,000

23       A Enterprise: P Pty Ltd

24       A Silo 750

25       A Business equipment 1 300

26       A Business equipment 2 1,900

27       A Breeding Stock: 675

28       A Bank Account: see part 55*

29       R Property: U Street, Suburb B, ACT (3 bed townhouse in small complex) 1,150,000

30       R Furnishings of Suburb B Property 20,000

31       R U Street, F Town (Rural Block - no buildings, approved for primary production) 340,000

32       R CBA Account …38 – Jan 2017 11,944

33       R Enterprise: Property C

34       R Yards and handling equipment 10,500

35       R Stock 7,428

OTHER PERSONAL ITEMS

36       J Art Collection 5,400

37       J Porcelain Collection 6,950

38       J Dinner Service 150

MOTOR VECHICLES

39       R Motor Vehicle 1 1,000

40       A Motor Vehicle 2 15,500*

Total 2,974,572

Owner-ship	Description	value
PROPERTY
1	J	“Property C” E Street, D Town, NSW	1,300,000
2	A	Household Contents in Property C	27,625
3	A	External Furniture and gym equipment at Property C	5,450
FARM EQUIPMENT
4	A	Small Quad Childrens Bike	1,750
5	A	Large Quad Bike	3,000
6	A	Bobcat original bucket	500
7	A	Air Compressor and Tools	450
8	A	Quad Bike Attachment -Spray tank	1,500
9	A	Quad Bike Attachment -Slasher	1,200
10	A	Quad Bike Attachment -trailer	200
11	R	Fire pump and hose	250
12	R	Power Tools	1,100
13	R	Welder	250
14	J	Bobcat	15,000
15	J	Portable livestock yards	850
16	R	Ute and Trailer	13,000
17	R	Box Trailer	1,000
18	R	Chainsaws and associated equip	700
19	R	Pole saws	250
20	R	Mill	8,000
BUSINESS ENTITY
21	A	Enterprise: Q Pty Ltd
22	A	Equipment & Stock	20,000
23	A	Enterprise: P Pty Ltd
24	A	Silo	750
25	A	Business equipment 1	300
26	A	Business equipment 2	1,900
27	A	Breeding Stock:	675
28	A	Bank Account:	see part 55*
29	R	Property: U Street, Suburb B, ACT (3 bed townhouse in small complex)	1,150,000
30	R	Furnishings of Suburb B Property	20,000
31	R	U Street, F Town (Rural Block - no buildings, approved for primary production)	340,000
32	R	CBA Account …38 – Jan 2017	11,944
33	R	Enterprise: Property C
34	R	Yards and handling equipment	10,500
35	R	Stock	7,428
OTHER PERSONAL ITEMS
36	J	Art Collection	5,400
37	J	Porcelain Collection	6,950
38	J	Dinner Service	150
MOTOR VECHICLES
39	R	Motor Vehicle 1	1,000
40	A	Motor Vehicle 2	15,500*
Total	2,974,572

ADDBACKS

41       J Monies held on behalf of the respondent as at 16 June 2016 87,225*

42       A Monies paid for legal 25,000*
LIABILITIES

43       A Loan – Mr V Verdinck (unsecured) 135,000*

44       A ANZ VISA …53 (27 March 2017) 1,735*

45       R CGT and income tax Tax liability if Stevens Consulting Pty Ltd is liquidated as per evidence to pay cash to H 198,762*

46       R Loan – Ms W Stevens 135,000* but post sep borrowing not deducted

SUPERANNUATION

Member Name of Fund Type of Interest Value

47       H Y Group Accumulation 588,363

48       H
CFS
Accumulation 155,299

49       H CBA Accumulation 170,208

50       H Telstra Accumulation 176,784

51       W CBA Accumulation 2,401

52       W CBA Accumulation 12,756

53       W Z Group Accumulation
311

Total 1,106,122

Item 28 – applicant’s bank account

No submissions were directed to this item. In her Financial Statement, the applicant deposed to having $1,300 in the bank. That figure will be included.

Item 40 – the applicant’s vehicle

It was agreed that, if the payment of $25,000 made by the respondent to the applicant pursuant to orders was added-back to the asset pool, then the vehicle should be excluded as part of that sum was used to repay the loan for the purchase of the vehicle. This item will be excluded.

Items 41 and 42 – add backs

For the reasons set out earlier, the sum of $62,225 will be added back.

Items 43 and 46 – money borrowed by the applicant from her father and by the respondent from his mother

For the reasons set out earlier, these liabilities will be removed from the Balance Sheet.

Item 44 – applicant’s credit card debt

The applicant seeks to have this liability included. The respondent opposes it.
There is no evidence that the debt is referable to the period of co-habitation and to include it would be to visit some portion of the liability on the respondent.
The liability will be excluded.

Item 45 – tax liability on removal of assets from Stevens Consulting

It is an agreed fact that, if Stevens Consulting is liquidated, and its assets realised, a tax liability of $198,762 will arise.
However, if any cash adjustment made in favour of the applicant can be satisfied from the respondent’s present superannuation entitlements, it will not be necessary for the assets of Stevens Consulting to be utilised.
At the present time, because the respondent has reached 60 years of age and is not in employment, he is entitled to have access to the money in his superannuation funds. He can use that money to satisfy any order for payment to the applicant.
At the conclusion of the hearing, a direction was made that if, prior to the delivery of reasons for judgment and orders, the respondent obtains a consultancy, he is to immediately notify the applicant and the Court. No such notification has been received and the matter will proceed on the basis that the respondent is not employed and can have access to his superannuation funds.
There is no evidence that the respondent intends at any time to liquidate Stevens Consulting unless he is obliged to do so by virtue of these orders.
Therefore, the tax liability will not be included.

Items 47 to 50 – the respondent’s superannuation

Although the characterisation of the superannuation was not specifically addressed in the course of the hearing, the matter proceeded, as has been set out above, on the basis that he is currently able to have access to those funds.
The respondent’s superannuation will be treated as an asset in his hands.
There has been substantial agreement about the items of personal property, (excepting the art collection and the stock yards which I have determined above), to be retained by each party.
I therefore find the assets of the parties to be:
ASSETS

Owner-ship Description Value

PROPERTY

A “Property C” E Street, D Town, NSW 1,300,000

A Household Contents in Property C 27,625

A External Furniture and gym equipment at Property C 5,450

FARM EQUIPMENT

A Small Quad Childrens Bike 1,750

A Large Quad Bike 3,000

A Bobcat original bucket 500

A Quad Bike Attachment -Spray tank 1,500

A Quad Bike Attachment -Slasher 1,200

A Quad Bike Attachment -trailer 200

R Air compressor and tools 450

R Fire pump and hose 250

R Power Tools 1,100

R Welder 250

R Bobcat 15,000

R Portable livestock yards 850

R Ute and Trailer 13,000

R Box Trailer 1,000

R Chainsaws and associated equip 700

R Pole saws 250

R Mill 8,000

BUSINESS ENTITY

A Enterprise: D Town Wax and Relax

A Equipment & Stock 20,000

A Enterprise: P Pty Ltd

A Silo 750

A Business equipment 1 300

A Business equipment 2 1,900

A Breeding Stock 675

A Bank Account 1,300

R Property: U Street, Suburb B, ACT (3 bed townhouse in small complex) 1,150,000

R Furnishings of Suburb B Property 20,000

R U Street, F Town (Rural Block - no buildings, approved for primary production) 340,000

R CBA Account …38 – Jan 2017 11,944

R Enterprise: Property C

R Stock Yards and handling equipment 10,500

R Stock 7,428

OTHER PERSONAL ITEMS

R Art Collection 5,400

R Porcelain Collection 6,950

R Dinner Service 150

MOTOR VECHICLES

R Motor vehicle 1 1,000

TOTAL 2,960,372

Owner-ship	Description	Value
PROPERTY
A	“Property C” E Street, D Town, NSW	1,300,000
A	Household Contents in Property C	27,625
A	External Furniture and gym equipment at Property C	5,450
FARM EQUIPMENT
A	Small Quad Childrens Bike	1,750
A	Large Quad Bike	3,000
A	Bobcat original bucket	500
A	Quad Bike Attachment -Spray tank	1,500
A	Quad Bike Attachment -Slasher	1,200
A	Quad Bike Attachment -trailer	200
R	Air compressor and tools	450
R	Fire pump and hose	250
R	Power Tools	1,100
R	Welder	250
R	Bobcat	15,000
R	Portable livestock yards	850
R	Ute and Trailer	13,000
R	Box Trailer	1,000
R	Chainsaws and associated equip	700
R	Pole saws	250
R	Mill	8,000
BUSINESS ENTITY
A	Enterprise: D Town Wax and Relax
A	Equipment & Stock	20,000
A	Enterprise: P Pty Ltd
A	Silo	750
A	Business equipment 1	300
A	Business equipment 2	1,900
A	Breeding Stock	675
A	Bank Account	1,300
R	Property: U Street, Suburb B, ACT (3 bed townhouse in small complex)	1,150,000
R	Furnishings of Suburb B Property	20,000
R	U Street, F Town (Rural Block - no buildings, approved for primary production)	340,000
R	CBA Account …38 – Jan 2017	11,944
R	Enterprise: Property C
R	Stock Yards and handling equipment	10,500
R	Stock	7,428
OTHER PERSONAL ITEMS
R	Art Collection	5,400
R	Porcelain Collection	6,950
R	Dinner Service	150
MOTOR VECHICLES
R	Motor vehicle 1	1,000
TOTAL	2,960,372

ADDBACKS

R Monies held on behalf of the respondent as at 16 June 2016 less $25,000 paid to the applicant 62,225

TOTAL 62,225

SUPERANNUATION

R Y Group superannuation 588,363

R CFS Superannuation 155,299

R CBA Superannuation 170,208

R Telstra Superannuation 176,784

A CBA Accumulation 2,401

A CBA Accumulation 12,756

A Z Group Accumulation
311

TOTAL 1,106,122

I find that the parties have no liabilities to be included in the Balance Sheet.
The parties have total assets of $4,128,719. The applicant has superannuation entitlements of $15,468 which she cannot access.
Of the total assets, the applicant has or will keep assets to the value of $1,381,618, including her superannuation entitlements.

CONTRIBUTIONS

Initial contributions

The applicant made no significant initial contribution.
The respondent made an initial contribution of $2,421,582 plus his art collection, some superannuation and money from the sale of a car in the UK.

The first period of co-habitation

During the first period of co-habitation, commencing in May 1996, the respondent worked and contributed his income to the household. The applicant did not work for almost a year after co-habitation. For that year, the respondent made the greater contribution.
The parties moved to Property K in August 1997 with the intention of conducting a rural business. Mr G was born in 1999. Thereafter, until they separated in 2006, the applicant was the primary carer for Mr G and, after H was born in 2001, for both of the children.
Between 2002 and 2006 the applicant operated a market stall. There is no evidence of any income earned by her in this endeavour. Presumably the respondent cared for the children while she was engaged with the stall.
Either from 2003 (according to the applicant), or late 2004 (according to the respondent), the respondent’s son lived with the parties and the applicant’s homemaking was extended to include him. There is no evidence about how Mr V was parented during this period but he was aged at least 16.
They separated in February 2006.
For this first period of co-habitation, the respondent’s contributions were slightly greater than those of the applicant by virtue of her not being employed for the first year.

The second period of co-habitation

For the whole of this period, the applicant was the primary carer for the children and the primary homemaker. She was also employed on a part-time basis for a short period.
The respondent worked and earned an income. The applicant gave evidence in cross-examination that, when the respondent was working during the second period he paid all of his income into her account. She said that he was not obliged to do so but he chose to do so. There is little evidence about the amount the respondent earned during the second period. In the case outline filed on behalf of the applicant, counsel stated “The respondent has always managed to obtain high-paying contract work throughout the relationship”. A payslip annexed to the applicant’s affidavit shows that in December 2014 and February 2016, the respondent was earning $237,443 per annum. If that amount is indicative of his earnings over the eight years of the second period, then his contribution of income exceeded the applicant’s contribution of capital.
In addition to the income contributed by the respondent towards their living expenses, the applicant contributed her capital.
The respondent’s capital was preserved by him and invested.
After separation, the applicant was the sole carer for the children but the respondent provided for them financially, paying their private school fees, paying child support, contributing to the purchase of a car for Mr G and to the cost of H’s overseas trip.
The contributions during the second period are assessed as equal.

Overall contributions

The respondent’s initial contribution represents 60 per cent of the present asset pool. The entirety of the present assets had their genesis in those funds. The contribution must be given substantial recognition.
Taking into account the greater contribution by the respondent in the first period, contributions are assessed as 30 per cent to the applicant and 70 per cent to the respondent.

ADJUSTMENTS

The applicant has historically had a lesser earning capacity than the respondent. Whether this will be so in the future is not known.
The respondent at the present time has no contract.
He hopes to secure work and, if he is successful, will earn more than the applicant could earn, even if she exercised her capacity to its fullest extent.
The respondent’s superannuation has been brought into account in full. The applicant has a small superannuation which she will retain.
The applicant is 47 years old. The respondent is 60 years old. The applicant could conceivably work for another 18 years when she will be aged 65. The respondent, if he works until he is 65 years old, has another five years of work.
The applicant has the care of their two children but Mr G is now an adult. The circumstances of the applicant’s care for H, who is now 16 years of age, have already been discussed.
The respondent is presently estranged from his children. Whether that situation will continue into the future is not known.
It is appropriate to make an adjustment in favour of the applicant but, because of the uncertainty surrounding the respondent’s future employment, that adjustment will be modest. An adjustment of 10 per cent is appropriate.

OUTCOME

The applicant will receive 40 per cent of the assets, or $1,651,488.
The applicant has in her possession assets valued at $1,381,618. The respondent must pay her $269,870 which I will round up to $270,000.
It is appropriate that the applicant receive that sum in cash, rather than in superannuation. The respondent can pay that sum from his superannuation entitlements.

I certify that the preceding one hundred and ninety-two (192) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 4 September 2017.

Associate:

Date: 04/09/2017

[2017] FamCA 680

4 September 2017

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

41	J	Monies held on behalf of the respondent as at 16 June 2016	87,225*
42	A	Monies paid for legal	25,000*

43	A	Loan – Mr V Verdinck (unsecured)	135,000*
44	A	ANZ VISA …53 (27 March 2017)	1,735*
45	R	CGT and income tax Tax liability if Stevens Consulting Pty Ltd is liquidated as per evidence to pay cash to H	198,762*
46	R	Loan – Ms W Stevens	135,000* but post sep borrowing not deducted

Member		Name of Fund	Type of Interest	Value
47	H	Y Group	Accumulation	588,363
48	H	CFS	Accumulation	155,299
49	H	CBA	Accumulation	170,208
50	H	Telstra	Accumulation	176,784
51	W	CBA	Accumulation	2,401
52	W	CBA	Accumulation	12,756
53	W	Z Group	Accumulation	311
Total		1,106,122

R	Monies held on behalf of the respondent as at 16 June 2016 less $25,000 paid to the applicant	62,225
TOTAL	62,225

R	Y Group superannuation		588,363
R	CFS Superannuation		155,299
R	CBA Superannuation		170,208
R	Telstra Superannuation		176,784
A	CBA	Accumulation	2,401
A	CBA	Accumulation	12,756
A	Z Group	Accumulation	311
TOTAL	1,106,122