Vesser and Sabean
[2009] FMCAfam 1287
•8 December 2009
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| VESSER & SABEAN | [2009] FMCAfam 1287 |
| FAMILY LAW – Property – valuation of assets – wife’s substantial contribution to husband’s business venture – parties future earning capacity – just and equitable order – no payment of by money to or by either party. |
| Family Law Act1975 Part VII, ss.75(2),(a), (b), (n), 79 (2), 79(4) |
| Black and Kellner (1992) FLC ¶92-287 Brodie v Brodie (2009) 41 Fam LR 18 In the Marriage of Chang & Su (2002) 29 Fam LR 406 In the Marriage of De Angelis (2003) 30 Fam LR 304 Gould & Gould (2007) FLC ¶93-333 Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC ¶93-143 AJO v GRO (2005) 33 Fam LR 134 In the Marriage of Pierce (1998) 24 Fam LR 377 |
| Applicant: | MR VESSER |
| Respondent: | MS SABEAN |
| File Number: | CAC 2165 of 2007 |
| Judgment of: | Neville FM |
| Hearing dates: | 24 & 25 August 2009 |
| Date of Last Submission: | 25 August 2009 |
| Delivered at: | Canberra |
| Delivered on: | 8 December 2009 |
REPRESENTATION
| Counsel for the Applicant: | Mr G. Johnston |
| Solicitors for the Applicant: | Barbara Campbell & Associates |
| Counsel for the Respondent: | Mr M. Kearney |
| Solicitors for the Respondent: | Phelps Reid Lawyers |
ORDERS
That there be no payment to or by either of the parties.
That each party is entitled to the exclusion of the other to all property (including choses-in-action) in the name, possession or control of such party at the date of these Orders;
That liberty is granted to the parties to relist the matter within 21 days in relation to costs. In the event that there is no such application, each party is to pay their own costs.
IT IS NOTED that publication of this judgment under the pseudonym Vesser & Sabean is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAC 2165 of 2007
| MR VESSER |
Applicant
And
| MS SABEAN |
Respondent
REASONS FOR JUDGMENT
A. Introduction
At the outset of the trial I expressed, at some length, my genuine disquiet at the length of time it had taken to bring the matter to a final hearing (this being the second time), as well as my deep concern at the lack of adherence to procedural directions that were designed to ensure the case was ready – for the second time – to proceed. I intimated that my concern was at such a level that I may even be minded to make certain costs orders, including against at least one of the legal representatives.[1] I will leave such matters until the end of these reasons.
[1] See my extended remarks at Transcript (24th August 2009) pp.3-4. I hasten to add that none of my disquiet was, or was intended to be, directed to Mr Johnston, Counsel for the Applicant. To speak somewhat colloquially, Mr Johnston was a `very late starter’ and came into the matter, literally, only a day or so before the trial commenced.
Moving from the procedural (and historical) to the substantive, it is not intended, in any way, to demean or otherwise to criticise either the parties, their Counsel or their respective legal advisers, to describe this case as something of a `smoke and mirrors’ exercise. By this I mean that there were a significant number of exhibits, and correspondingly a significant amount of paper – either generated by or for the trial,[2] or retrieved from various records[3] - referred to and or used in the course of the trial.
[2] As I have already mentioned, at the outset of the trial I noted, for the record, that the original trial, which was scheduled to run in late 2008, did not proceed, essentially because it was not ready to run. This is also to say that there were certain documents prepared for the original trial, and further documents prepared for the trial that was conducted in late August 2009.
[3] For example, rather late on the final day of the trial various company cheque butts were produced. They had been located by an employee of the Applicant’s company (to which reference will be made in due course) in the ceiling of certain premises owned by the Applicant. See Mr Johnston’s comments (Counsel for Mr Vesser) at Transcript (25th August 2009) p.116. Although obviously ensuring the security of these records, it explains why (unfortunately) there was such vehement denial by both parties, and equally vehement accusation against the other party, that these documents were not in their control and must, therefore, be in the possession of the other party.
However, apart from facilitating the accurate recording of assets – always an obviously important exercise[4] – I confess that the production of such significant amounts of records and paper did not particularly help me in the resolution of the relatively small number of issues that required determination, and in ultimately making orders that are `just and equitable’ in all the circumstances of these property proceedings.
[4] See, for example, the Full Court’s recent discussion of the import of the accurate determination of the asset pool in Brodie v Brodie (2009) 41 Fam LR 18.
Indeed, as Mr Kearney (for Ms Sabean) submitted, in my view not unfairly, there were and remain essentially only two primary assets:[5] the former matrimonial home (which was originally owned by Ms Sabean, and which she brought to the relationship),[6] and a business (later incorporated) ([W] – an audio, lighting and IT enterprise) which was started by the Applicant Husband in 1980.
[5] See Transcript (25th August 2009) p.123.
[6] There was a [joint] valuation of this property provided by [E] Valuers. It became Exhibit H. In January 1994, the property, which is in the Canberra suburb of [C], was valued at $240,000; as at August 2004, the property was valued at $600,000; in June 2009, its value was $760,000. The valuation also lists an existing mortgage to Ms Sabean's Father.
Mr Kearney submitted, also in my view not unfairly, that the case turned on my assessment of the contributions in the course of the relationship, “as against the two primary assets.”[7]
[7] See Transcript (25th August 2009) p.123.
Summarily stated, the proceedings concern the parties who were in a relationship for approximately 10 years. They began co-habitation in 1994 and married in December 1997. They separated in August 2004. There are no children from the relationship.
Both parties are aged 48 years. Apart from some osteoarthritis from which Mr Vesser suffers, as well as being diabetic, there are no health matters to be considered.[8]
[8] Dr T, a radiologist, provided a medical report on behalf of Mr Vesser, which was attached to his affidavit sworn 19th August 2009. Unfortunately and somewhat surprisingly, no prognosis was provided in the report. In par.91 of his trial affidavit, filed on 20th August 2009, Mr Vesser stated that he has been diagnosed with “acute disc pro-lapse with nerve root damage....” He stated that, as a result, he was unable to work the hours he once did. In para.132 of the same affidavit, he set out his medication regime for pain and for his diabetes. There was no medical evidence in relation to his diabetes. In the absence of relevant medical evidence regarding prognosis and or in relation to its impact on his capacity to work, apart from obviously recognising that Mr Vesser has two medical issues with which to contend but which seem able to be controlled through medication, although it must and is considered later in these reasons, as a s.75(2) “factor” I do not see that it rates very highly. There is just not the medical evidence to do so. The medical evidence, at its highest, is quite open-ended.
Mr Vesser continues to conduct his own business and stated in his Financial Statement that he earned $1066 per week. He expressed considerable concern about the viability of his business ([W] Projects Pty Ltd), which tenders for contracts for “project-based audio-visual installations.”[9] He has some confidential work, through the Department of Foreign Affairs and Trade, with the Defence Department.[10]
[9] Among other places, see his trial affidavit at par.85, and his evidence at Transcript (24th August 2009) p.48. There are two arms of the company: one that operates in NSW, the other in the ACT.
[10] See Transcript (24th August 2009) p.49.
Ms Sabean works as [in the Marketing Industry] and earns $2421 per week. Prior to her employment with [W] Projects Pty Ltd, she had worked [in the Communications Industry].
The scope of the contest was relatively narrow. As already indicated, it might be stated (not untypically) as relating to an assessment of contributions, and similarly of s.75(2) factors – rather limited as they are.
After setting out the respective orders sought, and as brief as possible a consideration of the evidence, I will follow the standard “four steps.”[11]
[11] There is abundant authority in relation to the judicial prescription to use the “four inter-related steps” approach. See, for example, the Full Court decisions in Hickey and Hickey and Attorney-General for the Commonwealth of Australia (Intervener) (2003)FLC ¶93-143 at p.78,386, and In the Marriage of AJO v GRO (2005) 33 Fam LR 134 at p.147 [46].
B. Orders Sought
Applicant Husband - Mr Vesser – sought the following orders:[12]
[12] Application for Final Orders (filed 13th November 2007), confirmed in the Case Outline filed in Court on his behalf, 25th August 2009.
(1)That the husband be declared the sole owner of the business known as [W] Pty Ltd and shall indemnify and keep indemnified the wife in relation to all liabilities associated with the business.
(2)That, within 21 days of the date of these Orders, the wife shall pay to the husband the sum of $230,000.
(3)That upon payment of the sum of money in Order 2 above, the wife shall be declared the sole owner of Property C in the Australian Capital Territory, (“the Property C property”)
(4)That, in the event the wife does not comply with Order 2 herein, the Property C property shall be placed on the market for sale and upon sale and once all costs of the sale have been paid, the husband shall be paid the sum of $230,000 plus interest from the due date of the current Family Court scale.
(5)That, within 21 days of the date of these Orders, the wife shall facilitate the husband’s collection of all items as outlined in the Schedule annexed hereto and marked with the letter “A”.
(6)That, unless otherwise specified in these Orders and except for the purposes of enforcing the payment of any money due under these or any other subsequent Orders:-
(a)Each party be solely entitled to the exclusion of the other to all property including choses-in-action in the possession of such party as at this date.
(b)Monies standing to the credit of the parties in any bank account is to become the property of the party in whose name it is deposited.
(c)Each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other.
(d)All insurance policies to become the sole property of the owner named thereunder.
(e)Each party be solely liable for and shall indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.
(7)That, if either party refuses or neglects to sign (within 14 days of a written request to do so) any documents necessary to effect the Terms of these Orders, the Registrar of the Family Court of Australia, Canberra is hereby appointed to execute all deeds and documents in the name of the husband and or the wife pursuant to section 106A of the Family Law Act 1975 (as amended).
Respondent Wife - Ms Sabean – sought the following orders:[13]
(1) That the Application of the Husband filed 13 November 2007 be dismissed.
(2) That the Husband pay the Wife’s costs of and incidental to these proceedings in [sic] an indemnity basis.
[13] Orders sought by the Respondent Wife (filed 21st August 2009)
C. Evidence of the Parties
Evidence of Mr Vesser: Mr Vesser confirmed that for the duration of his relationship with Ms Sabean he lived in a house that she owned. He also confirmed that he conducted his business from those same premises until the relationship ended.[14]
[14] Transcript (24th August 2009) p.24.
Mr Vesser had been in an earlier relationship (as had Ms Sabean). Following that relationship there had been, to speak broadly, resolution of some property issues, which resulted in him receiving $10,000. He also retained the business which traded under the name “[W].”[15]
[15] See Transcript (24th August 2009) pp.24-27.
Mr Vesser confirmed that, in effect, he brought with him to the relationship with Ms Sabean, a dispute over a lease. He said (and it seemed not disputed) that it was resolved in 1994. He confirmed that he was “exposed” to a claim from two finance companies, which had the consequence that his credit rating was somewhat compromised.[16] This also led to him, to some degree at least, relying upon Ms Sabean assuming financial responsibility for certain purchases (e.g. a spa, and perhaps a car – although the latter was in joint names) because of his compromised credit rating.
[16] Ibid at p.25.
Mr Vesser also confirmed that for a twelve month period (in 1994 and 1995) he used Ms Sabean’s car and that, in so far as its use was for his “business purposes” (as opposed to his personal use), expenditure was reimbursed from Mr Vesser’s company.[17]
[17] This car was available to Mr Vesser because Ms Sabean’s employment at the time provided her with a work vehicle.
At the commencement of the relationship with Ms Sabean in 1994, Mr Vesser was maintaining a residence in Sydney because of a particular project in which he was involved. Those premises, he contended (without much opposition), were paid for by those for whom he was working.
He confirmed that at the time he moved from Brisbane to Canberra he did not have the financial resources to establish business premises in Canberra. Accordingly, with considerable labour to be very specific bordering on diffidence, Mr Vesser confirmed that it was a `benefit’ (he used the term “facility”) to his business and later to his company to have Ms Sabean’s residence as his business premises. Presumably, it was of some personal assistance or benefit also.
Indeed, Mr Vesser maintained that Ms Sabean’s residence was of “benefit” (he resisted Mr Kearney’s description of “considerable benefit”) to his business but which was, in his view, “repaid.” This occurred, he stated, via contribution to expenses and to the property.[18]
[18] See Transcript (24th August 2009) p.29.
In relation to any debt to her Father over Ms Sabean’s property,
Mr Vesser stated that he understood the property was owned by her Father, but also that he was not privy to `the full story’ in this regard.[19]
[19] See further Ms Sabean’s affidavit, sworn 11th November 2008, par.5, where she deposed to a debt owed to her Father of $85,000.
He said that he did not believe there was a debt to Ms Sabean's Father, and that he had not made any contributions to any payment in relation to it.
After some not completely helpful answers to questions about jewellery and artworks, Mr Vesser agreed that Ms Sabean had jewellery and artworks that came from her family. Such was the level of detail, he agreed also that Ms Sabean had not paid for them – thus emphasising that they had come from her family.[20]
[20] Transcript (24th August 2009) pp.30-31.
Part of the gravamen or focus of a significant part of Mr Vesser’s cross-examination concerned improvements to the residence from which he conducted his business. The issue was essentially how many of, or to what degree were, the improvements related – in whole or in part – to the business?
For example, he agreed that the improvements included wiring (including `smart wiring’), the installation of a shed (the shed was stated to be exclusively for the business), lighting (including security lighting), and security alarm (including `back to base’ alarm).
He also confirmed that some business associates – he rejected the term contractors, and pressed that they were his `sub-contractors’ – dined and stayed at the residence. He confirmed that, on those occasions,
Ms Sabean cooked meals for these business associates, as well as doing some cleaning of the house.
Mr Vesser also confirmed that `the business’ paid for a cleaner every fortnight, who cleaned the whole house. He contended that this was part of the “compensation by the business for working out of the house.”[21]
[21] Transcript (24th August 2009) p.35.
Notwithstanding this evidence, Mr Vesser maintained that the business was conducted from only one room of the residence, and that the improvements noted were essentially for the house and certainly not specifically `for the business.’
He did agree, nonetheless, that “to the extent that the business paid for expenses in relation to the property, they were expenses that reflected the use the business had of the property.”[22] Likewise, he agreed with the proposition that to “the extent that the business paid for improvements to the property similarly that is reflected [in] the benefit the business obtained as a result of the property.”[23] He also agreed that living expenses were basically shared.
[22] Transcript (24th August 2009) p.35.
[23] Transcript (24th August 2009) p.35.
I pause briefly here to note the following. I did not take Mr Vesser, in any way, to be anything other than honest in his answers. However, I did find him to be bordering on being unhealthily scrupulous in his earnest attempts to distinguish or to clarify what he said were contributions by each of the parties. To a significant degree I had the strong impression that, in this respect, his answers were almost painfully calculated – and particularly with the benefit of hindsight – to promote and to quarantine the contributions made by the business with an arithmetical calibration that defied reality, especially the reality of a couple who were in a marital relationship for a not insignificant time.
Another example of Mr Vesser’s scrupulous but, in my view, unreal, exactitude related to his evidence concerning `statutory rates and charges.’ While he accepted that the notices for such items (a) were in Ms Sabean’s name, (b) that he did not see them, and (c) that she paid them, he nonetheless maintained that Ms Sabean “... would have paid those bills and had access to the accounts to be able to use those if she had to pay for my share and, in part, we had paid some of the bills.”[24] Precision may be one thing; clarity is another. He was invariably precise, but not always altogether clear. Put another way, he seemed to treat the relationship (at least after the event) more as a business or part of `the business’ rather than a `sharing of life’ with one’s marriage partner.
[24] Transcript (24th August 2009) p.36.
To the degree that funds were used by Ms Sabean to pay statutory rates and charges from the business, Mr Vesser stated that such funds would have been treated as drawings towards him and shown in the various accounts, save for those that related to [W] Projects. What accounts paid for what, when and how, was not pursued.
It was not disputed that, apart from the property, each party met their personal expenses from their own resources.[25]
[25] Transcript (24th August 2009) p.37.
In 1998, upon the incorporation of the business, Ms Sabean became an equal share-holder, and director, with Mr Vesser. From that time forward (and as otherwise detailed later) it was a joint business endeavour. Mr Vesser also agreed that he basically ran the business as before and that Ms Sabean provided (in general terms) “backroom support.” He stated strongly that the administration of the new joint enterprise was conducted jointly, at all times. This was so, he said, even on those occasions when he was overseas. He altered this evidence somewhat to confirm that Ms Sabean saw to the business of payment of bills.[26]
[26] Transcript (24th August 2009) pp. 37-39.
Under further cross-examination he admitted that she also brought to the business her marketing and public relations skills – those being her professional background as noted earlier. He conceded quite readily that she brought to the business skills that he did not have in this regard.[27] He also agreed that, to a limited degree, during the period 1998 – 2003 she worked from time to time under the name of
“[Ms Sabean's Company].” Income earned in that respect was accounted for in the accounts of the [W] Projects company.[28]
[27] Transcript (24th August 2009) pp.38-39.
[28] Transcript (24th August 2009) p.40.
There was a small dispute about the amount of income earned by
Ms Sabean during those years. Based on documents checked by one of his staff, Mr Vesser said it was $175,972, whereas Ms Sabean claimed it to be $188,000.
The income allocated to Ms Sabean from the company began to reduce from 2001 which, said Mr Vesser, reflected her declining contribution to the company. She ceased working for the company, and resigned all offices in it, in 2003.
It was not disputed that in 2003 Ms Sabean (working under the banner of [Ms Sabean's Company]) put through the company’s books gross income of $29,734. Of this sum, $3000 was remitted to Ms Sabean and the rest retained by the company.[29]
[29] Transcript (24th August 2009) p.42.
There was only one year in which Mr Vesser contended that
Ms Sabean’s benefit from the company was disproportionate to her contribution. He maintained that in 2000, while he was overseas, the benefits she obtained from the business were disproportionate to her contribution. He noted that during that year, Ms Sabean was quite ill and was thereby unable to work for a period of time.[30]
[30] The discussion of Ms Sabean’s contributions during 2000, particularly while Mr Vesser was in Germany, is set out at Transcript (24th August 2009) pp.42-44.
For my part, I confess to finding the discussion/cross-examination of such matters in this case only further confirmation of the evidence being more of a somewhat revised, post-separation view of the relationship and how it was conducted. It was less than illuminating for the purposes of determining the issues before the Court. I do not suggest that it was in any way a confected re-working of history. Doubtless it was a very precisely defined relationship in a great many respects. However, especially in the light of Ms Sabean’s evidence (noted below), Mr Vesser’s evidence, to a significant degree, assumed such a clinical nature as almost to obliterate or at least attenuate (to a not insignificant degree) the existence and nature of a marital relationship of some ten years. I have some difficulty in accepting, or at least to the degree suggested, that he conducted the marital relationship in such clinical terms and effectively treated it as part of the business. Such was the impression he gave. Whether that was what he wished to convey to the Court is, of course, another issue. For all of his precision, he did not strike me, however, as someone who was so devoid of human warmth and relational capacity as his evidence might otherwise suggest.
Mr Vesser confirmed that there were “retentions” of approximately $105,000 owed to the New South Wales business of [W] Projects, they being amounts owing to the company that have yet to be paid by clients. Other business matters canvassed in his cross-examination included (a) outstanding warranty expenses, (b) a settlement negotiation process involving a person (Mr R) who was formerly involved with the company in NSW (which will likely result in [W] paying out rather than receiving funds), (c) injection of funds of $100,000 into the NSW business of [W] Projects, and the purchase of projectors overseas in the sum of approximately $650,000.[31] The `overseas projectors’ were, he maintained (which was confirmed by his Counsel, Mr Johnston), the subject of a contract with the Department of Foreign Affairs and Trade (“DFAT”), and in turn the Defence Department (“the DFAT job”). Certain delicacies regarding disclosure were involved in such matters. Alas, even the existence of the contract was not previously disclosed by Mr Vesser.
[31] The detail of such matters is traversed at Transcript (24th August 2009) pp.45-48.
He later conceded that no details regarding the company’s foreign currency account [since March 2008] had previously been produced,[32] nor had there been any reference to the `DFAT job’. Details of the `DFAT job’ were not provided to Mr H, who was retained to provide a valuation of the business.[33] This “oversight” was unfortunate, and much more.
[32] In this regard, see Exhibit F being bank statements produced by Mr Vesser in relation to the company’s $US account.
[33]When pursued about this `DFAT job’, Mr Vesser insisted that (a) it was not a contract, (b) nevertheless, he/[W] received income under it nonetheless (including expenses being posted to it), and (c) because
Mr H did not ask him a specific question about it, he provided no disclosure in relation to it.
In my view, Mr Vesser’s answers in relation to the `DFAT job’ were exercises [again] in hair-splitting. To the degree that he presented an argument that said – Mr H did not ask questions about the DFAT job (a) because he did not know about it, and (b) if he did, because there was no “contract” it did not meet any of Mr H’s requirements and therefore did not have to be disclosed – was a significant exercise in obfuscation. It all sounded quite disingenuous. It reads in the Transcript no better.[34]
[34] See, for example, Transcript (24th August 2009) pp.54-57.
Later, Mr Vesser stated that he did mention to Mr H over the telephone that there was a day-to-day “piece of business” that the company was doing for the [Commonwealth] Government but specifics could not be given. Given his earlier quite vehement evidence about not giving any information to Mr H (and others) about the `DFAT job’ I confess that I found this later assertion somewhat problematic.
Later still, Mr Vesser claimed that he had given information to his solicitor in the week prior to the trial about “the arrangement” with DFAT. He confirmed – rightly so – that no such disclosure ever appeared in his affidavit material. Nor had he disclosed it to his accountants, Deloittes, when they had been commissioned to prepare a valuation of the business on behalf of Mr Vesser.[35] That valuation, without reference to the “DFAT arrangement” valued the business at $950,000.
[35] See Transcript (24th August 2009) pp.62-63.
For all of the confidentiality requirements attached to “the job” with DFAT, its existence, at least, not to mention all the benefits under it (in an appropriate way) should have been disclosed to Ms Sabean and to Mr H – as well as to the Court. To state the obvious, not to have done so placed everyone at a significant disadvantage. He was not prepared to disclose – saying that he was not at liberty to do so – anything except that he was on a project with DFAT on a free-lance basis, when required, and that he was paid on an hourly, daily, weekly or monthly fee, no details of which were disclosed.[36] The risks in relation to non-disclosure are well known.[37]
[36] For the sake of completeness, some detail was ultimately provided only to Mr Kearney (and of course to Mr Johnston) regarding what I understand to be a somewhat unusual contractual arrangement in that, among other things, one of the contracting parties is not [W] Projects but Mr Vesser personally on behalf of [W]. The company, nevertheless, bills DFAT for services provided by Mr Vesser.
[37] See, for example, Gould & Gould (2007) FLC ¶93-333 & In the Marriage of Chang & Su (2002) 29 Fam LR 406.
Mr Vesser contended that there were specific issues regarding the viability of his company that took it somewhat outside the parameters of difficulty that beset all business ventures in difficult economic times. In part, these difficulties resulted in the Court not having before it the financial statements for the company for the financial year ended June 2009.
He accepted Mr Kearney’s contentions that it would have been helpful for the Court (and obviously others) if those accounts had been available. I did not take Mr Vesser as deliberately not disclosing relevant matters. That said, given how long these proceedings have been on foot, and the particularity and accountability he required of
Ms Sabean, Mr Vesser’s lack of attention to some significant matters of detail did not assist his case.
He also maintained, initially at least, that he had no expectation of further work from the contract with DFAT. Later, he conceded that there might be further purchase orders. At the time of the trial, there were, he said, three existing contracts on the books of the NSW business of [W], worth $28,000. Notwithstanding his not unreasonable concerns about the business, Mr Vesser agreed that his wages had increased slightly since October 2008. It also appeared that the business was now covering the running costs of his motor vehicle.[38]
[38] These matters are detailed at Transcript (24th August 2009) pp.48-53.
A final matter to note is that, somewhat reluctantly, Mr Vesser acknowledged that Ms Sabean introduced him (and therefore [W] Projects) to a number of business and other contacts within Canberra. He denied that it was to the degree claimed by Ms Sabean.[39]
[39] For detail regarding the specific contentions, see Ms Sabean’s affidavit, sworn 21st August 2009, par.16, and Mr Vesser’s “Notes on Affidavit by Ms Sabean received 14.36, 23rd August 2009”; the latter became Exhibit “G.” I simply note Mr Vesser’s particularity even as to the time of receipt of this affidavit. That particularity is relevant, among other things, to Ms Sabean’s evidence.
He also acknowledged that, even following their separation, Ms Sabean assisted him in some matters relating to [W] Projects, as well as in the acquisition of some units in [F]. He maintained that she received some [unspecified] remuneration for this assistance.[40] Whatever the remuneration involved, it might reasonably be taken to exhibit a significant level of generosity on her part.
[40] See Transcript (24th August 2009) p.64.
Evidence of Ms Sabean: A significant part of Ms Sabean’s cross-examination related to her alleged failure to have the contents of her home professionally valued. For example, she was shown photographs of furniture and jewellery. Some of the furniture was purchased in 1997, the lounge in 1982 (and re-covered), and still other things (shelving) in 1992. The photographs also showed some crystal and glass ware, as well as a Persian rug. Some of the jewellery, a rosewood chest, and the crystal, she insisted, belonged to her Father. It was not disputed that her Father is aged 85, or that, in all likelihood, when he died, she would inherit the items mentioned.
Ms Sabean maintained that her general estimate of the value of the contents of the house was approximately $5000. Allowing that this might be a bit on the `light side’, in the light of the way the case was conducted by both sides, I have some difficulty in making any adverse finding against her in this regard. This is especially so where there was no alternative evidence to the contrary provided by Mr Vesser. He had more than ample opportunity to secure such evidence if he wished to do so.
Another significant part of Ms Sabean’s cross-examination related to a line of questioning arising out of income from the company she received in 2000/2001 financial year. To use a more general term, the “drawings” for that year totalled $85,000.[41]
[41] This figure was later revised down somewhat because, as Mr Johnston properly noted and immediately apologised to Ms Sabean, there had been some incorrect accounting of funds from a later year. See Transcript (24th August 2009) p.89.
Mr Johnston suggested that there could have been only three sources of income for her: her pension from Comserve, interest payments, and income from the company ([W] Projects). He suggested further that she was mis-appropriating funds from the business. He suggested this notwithstanding that Mr Vesser confirmed in his evidence that he had no such concern in relation to Ms Sabean.
Ms Sabean maintained that she withdrew funds only in consultation with Mr Vesser and with the business accountant.
Mr Johnston’s pointed – but always fair – questioning was directed to seeking to establish that (a) Ms Sabean received more from the business/company than she contributed, and (b) Ms Sabean received undisclosed and unaccounted for funds.[42]
[42] Cf. Black and Kellner (1992) FLC ¶92-287 and Transcript (25th August 2009) p.103.
For her part, Ms Sabean was unable to explain or otherwise comment on the range of entries to which she was taken in various bank statements. Her unwavering response was twofold: first, she said that nothing was paid without either or both it being discussed with and approved by Mr Vesser and or the business accountant; secondly, she also stated that, in the absence of source documents (e.g. cheque butts or Netbank transfer documents) she was unable to speculate or otherwise give any reasonable answer to the individual amounts about which Mr Johnston questioned her.
In addition to this twofold response, in my view, given how careful
Mr Vesser was (and no doubt still is) in relation to all aspects of the company’s affairs, including its accounts (together with the oversight of the accountant), I have quite some difficulty in accepting that it would have been possible for Ms Sabean doing anything in relation to company funds that could have escaped the attention of Mr Vesser and or the accountant.
There remained a dispute about the degree of Mr Vesser’s contribution to the household and other running costs. Ms Sabean acknowledged that the business always paid for newspapers, and that she would divide gas and other statutory charges between herself and the business (and later the company). She agreed that from 1996, the company paid $510 per month to Ford Credit, and for fuel, running and service costs of her car and that of Mr Vesser. She maintained that both parties paid for a spa service and for house cleaning.[43]
[43] See Transcript (25th August 2009) pp. 109-110.
Ms Sabean acknowledged that Mr Vesser contributed periodically to some of the statutory charges but otherwise, she maintained, his contributions in this regard were “very minimal.” This was challenged by Mr Johnston on behalf of Mr Vesser.[44]
[44]Ms Sabean was also challenged by Mr Johnston about a relatively recent payment of some $31,000 to her Father. She said that it was part of her repayment (which occurred on a semi-regular basis) of an unregistered mortgage to her Father, to which debt I have previously referred. He also challenged her about the extent of funds in her NAB account. It had “peaked”, post separation, at approximately $55,000. The funds currently available were substantially less than this amount. In submissions, Mr Johnston contended that the $55,000 should be added back into the pool.
By way of general comment, I accept Ms Sabean’s regular twofold qualification/response to much of her cross-examination, that is, that all accounts/payments and or drawings on the business/company were canvassed with either or both her husband and or the accountant, in addition to which, in the absence of source documents of the kind to which I have referred earlier, she should not be criticised for having no specific recollection about payments of quite some years ago about which she was asked various questions.
Ms Sabean struck me as a very straight-forward witness who gave her evidence in a very credible manner. She was resolute in her evidence. She did not engage in the hair-splitting exercises of Mr Vesser. Indeed, she expressed genuine surprise at quite a number of the propositions put to her by Mr Johnston regarding Mr Vesser’s contributions, such as that he paid “rent” from the beginning of the relationship. I accept, of course, that the business contributed to certain outgoings in relation to the residence.
More generally, I accept Ms Sabean’s evidence where there is any conflict between it and that given by Mr Vesser. Accepting (but not repeating) what I have already stated above in relation to his non-disclosure regarding the `DFAT job’, in preferring Ms Sabean’s evidence I should not be taken as suggesting that Mr Vesser was anything other than truthful in his evidence.
D. The Asset Pool
There was significant agreement in relation to “the pool.” The principal dispute, and fortunately it was not a large one, concerned “add-backs.”
The touchstone here is, of course, the Full Court decision in AJO v GRO.[45] The Court (Holden, Warnick & Le Poer Trench JJ) stated that there were three categories of cases where the court will add back items to the pool of assets. Summarily stated, those categories are (a) expenditure on legal fees, (b) a premature distribution of matrimonial assets, and (c) where one party has embarked on a course of conduct designed to reduce the value of matrimonial assets, or has reduced the value of assets by acting recklessly, negligently or wantonly.
[45] AJO v GRO (2005) 33 Fam LR 134, especially at [30].
There was no argument about legal fees. Nor was there any specific contention regarding `reckless, negligent or wanton’ diminution of matrimonial assets. At its highest, there were a number of items about which there was no explanation (e.g. certain funds either received or paid), or there was a contested explanation (e.g. the repayment to Ms Sabean's Father).
For my part, given the limited categories of “add-backs” specified by the Full Court in AJO v GRO, and importantly given that the parties separated more than five years ago, and that there has been basic settlement on the distribution of other non-realty items, in my view, it is stretching the scope of the add-back categories to include the kinds of things submitted by Mr Vesser. Both parties should be entitled to conduct their own financial affairs, post separation, without undue interference by the Court unless it is clear that one or more of the AJO v GRO add-back categories is activated on the evidence before the Court. In my view, that is not the case here.
Certain credit card debts claimed by Ms Sabean (American Express [$5000] and Visa [$6000]) cannot be included in the pool for the same reasons indicated above: they are post separation debts and should be borne by her.
Mr Johnston also submitted that I accept the purchase price, indicated by Ms Sabean in her affidavit material, of $16,820 in relation to certain jewellery. Ms Sabean claimed that its current value was approximately $6000. In other circumstances I might be minded to assess a value of such an item at some mid-point. However, given that there was no independent (or even alternative) evidence before the Court regarding value and simply a challenge to its asserted value, I am reluctant to go down that course. In such circumstances, the asserted value of $6000 will stand.
In the light of what I have said, and in the light of what was conceded in the course of submissions,[46] the asset pool looks as follows:
[46] See, for example, Transcript (25th August 2009) pp.118-119.
| ASSETS | TITLE | HUSBAND | WIFE |
| Property C | W | $760,000 | $760,000 |
| Interest in [W] Projects Pty Limited | H | $811,440 | $811,440 |
| Loan owing to Husband by [W] Projects | H | $56,117 | |
| Interest in Vesser Trust (including two (2) commercial units at [F] | H | 84,695 | 84,695 |
| Interest in [Ms Sabean's Company] | W | Nil | Nil |
| NAB Account | W | $3,623 | $3,623 |
| CPS Community Credit Union Account | W | $6,699 | $6,699 |
| CBA Account | H | $31,759 | $31,759 |
| Suncorp Metway Account | H | $10,328 | $10,328 |
| Macquarie Investment | H | $13,270 | $13,270 |
| AMP Shares- 1,171 @ $5.92 | W | $6,932 | $6,932 |
| IAG Shares- 1,281 @$354 | W | $4,535 | $4,535 |
| Suncorp Metway Shares- 4,694 @ $7.90 | H | $37,082 | $37,082 |
| Zurich Term Life Insurance policy | H | $12,757 | $12,757 |
| 2004 Mercedes | W | $21,500 | $21,500 |
| 2000 Toyota | H | $8,050 | $8,050 |
| Household contents | W | $5,000 | $5,000 |
| Household contents | H | $24,000 | $24,000 |
| Jewellery | W | $6,000 | $6,000 |
| "Add-backs" | W | $83,000 | $52,000 |
| TOTAL | $1,930,670 | $1,955,787 | |
| LIABILITIES | Husband | Wife | |
| Debt to Wife's father | W | 0 | $54,000 |
| TOTAL | $54,000 | ||
| SUPERANNUATION | Husband | Wife | |
| PSS | W | $99,021 | $99,021 |
| CBFC | W | $71,806 | $71,806 |
| Colonial First State | W | $20,030 | $20,030 |
| Zurich | H | $141,541 | $141,541 |
| TOTAL | $332,398 | $332,398 | |
| NET ASSETS | Husband | Wife | |
| ASSETS | $1,930,670 | $1,955,787 | |
| LESS LIABILITIES | Nil | $54,000 | |
| NET ASSETS | $1,930,670 | $1,901,787 | |
| SUPERANNUATION | $332,398 | $332,398 | |
| NET ASSETS AND SUPERANNUATION | $2,263,068 | $2,234,185 |
E. Contributions
From what has been traversed in the course of dealing with the evidence, earlier in these reasons, I can and will be brief here.
I accept, of course, the authority of Pierce,[47] and more recently the Full Court decision in Brodie v Brodie,[48] regarding the appropriate manner in which the Court should approach the consideration of contributions, and in particular, that in relation to a marriage (such as here) of a decade or more it is not a “purely mathematical exercise.”[49]
[47] In the Marriage of Pierce (1998) 24 Fam LR 377.
[48] (2009) 41 Fam LR 18.
[49] See, for example, (2009) 41 Fam LR 18 at [82] - [86].
Secondly, the same authorities to which I have just referred are also relevant to matters such as the appropriate “weight” that should be given to the initial contributions.[50]
[50] Ibid.
In my view, Ms Sabean’s initial “contribution” of her residence was most significant. It was used throughout the relationship with
Mr Vesser as both the matrimonial home and also as the base and operational centre of his business. Even if I accepted his contention that it operated only out of one room – which, on his evidence, I do not because other rooms of the house were used [at least] for entertaining and likely much more – it nonetheless provided a secure base for his business (a) at the outset of the relationship when he had some not insignificant financial “issues”, and (b) throughout the relationship.
I accept that Mr Vesser’s business paid for some services, to which I have earlier referred, used at the residence either by Mr Vesser or also, at times, by Ms Sabean.
I accept also that Mr Vesser, either personally or through the business, contributed to some of the outgoings of the residence. I accept, however, for reasons canvassed in my consideration of the evidence, that Ms Sabean paid most of the outgoings on the residence.
I accept that the business paid for a range of matters for or on behalf of Ms Sabean, such as car expenses, noted earlier. I do not accept that
Ms Sabean received benefits from the business to which she was not entitled or which exceeded her contributions.
For all of the time and effort expended in presenting material concerning contributions, I formed the view that, essentially and over time, the contributions (financial and non) went very closely to cancelling each other out. If pressed, because of its significance, I would be minded to make a small adjustment in favour of Ms Sabean because of the substantial, initial contribution of the residence, even taking account of the decade-long relationship.
F. Section 75(2) Factors
Because of the detail earlier in these reasons, I can also be quite short in comment here.
The issues here, summarily stated, are: the parties are both of the same age (48) with significant working years ahead of them.[51] There are no children of the relationship. Both parties have significant professional expertise and therefore quite similar earning capacity.[52]
[51] Section 75(2)(a).
[52] Section 75(2)(b).
Both parties have a significant asset available to them: Mr Vesser’s business; Ms Sabean has the Property C residence.[53]
[53] Section 75(2)(b).
The only health issue relates to Mr Vesser.[54] It involves his back and his diabetes. There was limited medical evidence before the Court, and certainly nothing to suggest that he was incapacitated for his chosen work in conducting the business.
[54] Section 75(2)(a).
I was asked to consider Ms Sabean's Father’s age and his South Coast residence as a “financial resource” under s.75(2)(n).
Although the Court was told that Mr S is 85 years old, and that Ms Sabean is an only child, in the absence of any relevant evidence, I do not take age, of itself, as a sufficient basis upon which the Court, in proceedings of this kind, should undertake the exercise of assigning when his estate will ultimately vest. In any event, to state the obvious, given the vicissitudes and vagaries of life, and in the absence of any relevant evidence other than a person’s senior age (but who is otherwise, it would seem in reasonable health), Ms Sabean may pre-decease her Father who may well live for a good many years yet.
For the reasons just articulated, I am not prepared to engage in an exercise of `entrail reading’ (with no apology for the ghoulish metaphor) as to Ms Sabean's Father’s life expectancy, I do not accede to the request or the submission in relation to s.75(2)(n).[55]
[55] Cf. In the Marriage of De Angelis (2003) 30 Fam LR 304.
I will not repeat my earlier comments about Mr Vesser’s failure to disclose anything to do with the `DFAT job’, even allowing for the confidentiality requirements that are attached to it. At the very least, he should have disclosed the arrangement to Ms Sabean, Mr H and to the Court, and that it included certain confidentiality provisions and the limitations which that placed on him. Not to have done so placed him, Ms Sabean, Mr H, and the Court at a considerable disadvantage.
By way of summary, in my view, at its highest in this case, an extremely small adjustment might be able to be made in favour of
Mr Vesser, essentially on the grounds of possible health issues. This might be reduced on the basis of the extremely limited and very late-breaking evidence about the DFAT enterprise.
G. Conclusion: `Just & Equitable’ Order
It remains to consider and to determine what, in all the circumstances of the case, is the just and equitable order that should be made.[56]
[56] Section 79(2).
Mr Johnston submitted that the original orders sought by his client, of payment to him of $230,000, were clearly at the “high end” of the range. Respectfully, I agree. He suggested that something in the order of between $150,000 – 200,000 would be more appropriate.[57]
[57] See Transcript (25th August 2009) p.121.
For the reasons set out above, in my view, the just and equitable order should be that there is no payment to or by either party. The vagaries of life will unfold, and each should be able to get on with their life without further regard (at least in a financial sense) to what transpired in the course of their relationship.
Although I noted at the outset of these reasons my disquiet in relation to the preparation of the case, among other things, and the risk that I apprehended as to costs, I do not wish to penalise parties where some circumstances might not have been able to be adequately explained to the court. I will not say more on that subject.
Although Ms Sabean sought an order for indemnity costs, in my view, the more appropriate and just order is that unless a separate application is made within 21 days, each party should pay their own costs.
I certify that the preceding ninety-five (95) paragraphs are a true copy of the reasons for judgment of FM Neville.
Associate: D-R Gale.
Date: 8 December 2009.
A valuation, jointly funded, was prepared by Mr H, of [H] Chartered Accountants, dated 5th August 2009, and provided to the Court. At para.12.1.3 of that Report, Mr H stated: “Taking into account the value of the assets and liabilities listed above, in my opinion the net value of the company’s assets at
30 June 2008 is $811,440, including the value of the business on a value to owner basis.” As at the date of separation in 2004, Mr H valued the company, on the same basis, at $132,761.
See Transcript (25th August 2009) pp.108-109. Other areas of some quite modest contention concerned a small amount of funds in Ms Sabean’s Community CPS Australia account. She said that there were two deposits from [O], which related to her redundancy from that company. She did not know how or why they had been deposited and was seeking to have them clarified with that company. Mr Johnston submitted that because the funds (which totalled approximately $5600) were in
Ms Sabean’s account, they should be included in the pool. Given my findings and the conclusion reached, the resolution of this denouement, as with some others, is unnecessary.
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