Villiers & Villiers
[2023] FedCFamC2F 47
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Villiers & Villiers [2023] FedCFamC2F 47
File number(s): DGC 2894 of 2020 Judgment of: JUDGE BOYMAL Date of judgment: 30 January 2023 Catchwords: FAMILY LAW – Property – addbacks – inheritance – gambling – money advanced by husband’s family members – initial contributions by wife – agreed value of business Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 75(2), 79(4)
Cases cited: Bonnici & Bonnici [1991] FamCA 86
Bokin & Wild [2022] FedCFamC1A 209
C & C [1998] FamCA 143
NHC & RCH (2004) FLC 93-204
Dickons & Dickons [2012] FamCAFC 154
Kessey & Kessey (1994) FLC 92-495
Kowaliw and Kowaliw [1981] FamCA 70
Gollings & Scott [2007] FamCA 397
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour [2019] FamCAFC 78
M & M [1998] FamCA 42
Mabb & Mabb & Anor [2020] FamCAFC 18
AJO & GRO [2005] FamCA 195
Stanford & Stanford (2012) 247 CLR 108
Trevi & Trevi [2018] FamCAFC 173
Division: Division 2 Family Law Number of paragraphs: 187 Date of hearing: 9 & 10 December 2021, 3 & 4 March 2022 and 6 & 7 April 2022 Place: Dandenong and Melbourne Counsel for the Applicant: Mr Robinson Solicitor for the Applicant: Velocity Legal Counsel for the Respondent: Mr Richardson Solicitor for the Respondent: Mann Lawyers ORDERS
DGC 2894 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR VILLIERS
Applicant
AND: MS VILLIERS
Respondent
ORDER MADE BY:
JUDGE BOYMAL
DATE OF ORDER:
30 JANUARY 2023
THE COURT ORDERS THAT:
1.The husband retain the income and assets of B Pty Ltd and the business known as C Company (Corporate Entity).
2.The husband do all such necessary acts and things and sign all such documents as may be required to release and indemnify, and keep indemnified, or cause the Corporate Entity to release and/or indemnify, and keep indemnified, the wife in relation to all past, current and future debts, liabilities, interests, costs or outgoings of whatsoever nature and kind including but not limited to those in relation to:
(a)any and all creditors of the Corporate Entity;
(b)any and all borrowings of the Corporate Entity of whatsoever kind and nature;
(c)any and all liability to the Australian Taxation Office owing by the husband personally and the Corporate Entity including any interest, costs or penalties applicable thereto;
(d)any liability of whatsoever kind and nature, including taxation liabilities, arising from the operations of the Corporate Entity; and
(e)any and all hire purchase and/or lease liabilities in respect of any assets owned by the Corporate Entity.
3.Within 60 days of the date of these Orders the wife:
(a)pay to the husband or at his direction the sum of $329,197.00; and
(b)discharge and refinance the NAB mortgage accounts ending #...14 and #...69 encumbering the property situate at D Street, Suburb E into her sole name.
4.Contemporaneously with the wife’s compliance with Order 3 herein the husband transfer his interest in Suburb E to the wife, at the wife’s expense.
5.For the purpose of the Suburb E transfer:
(a)each party engage a representative who is a subscriber for the purposes of the PEXA transfer at their sole expense;
(b)each party be responsible for the costs associated with their use of PEXA and for the avoidance of doubt, this includes fees such as verification of identity, workspace fee or such other fee that may be charged by PEXA from time to time; and
(c)the wife shall pay the transfer fee relevant to Suburb E.
6.In the event the wife does not comply with her obligations pursuant to Order 3 herein then:
(a)the parties forthwith do all acts and things and sign all documents necessary to list Suburb E for sale by public auction within 45 days;
(b)in the event the parties cannot agree to appoint a selling agent within seven (7) days, the husband within a further seven (7) days nominate two (2) selling agents and the wife choose one of the selling agents within seven (7) days of the husband’s nomination, failing which the husband nominate the selling agent. In the event the husband does not nominate his proposed selling agents and conveyancers within the specified timeframe the wife nominate the selling agent. Thereafter the parties do all acts and things and sign all documents necessary to appoint the selling agent;
(c)the parties nominate such conveyancer as may be agreed between them and failing agreement a conveyancer nominated by the selling agent;
(d)the parties have the joint conduct of the sale; and
(e)in the event the parties cannot agree on the other terms of sale, then the terms of sale be as determined by the appointed real estate agent.
7.Upon settlement of the sale of Suburb E the proceeds of sale be applied as follows:
(a)first, to pay all costs and expenses of the sale including agent’s fees, commissions and conveyancing costs;
(b)secondly, to discharge the NAB mortgage accounts ending #...14 and #...69 encumbering Suburb E;
(c)thirdly, the balance then remaining divided between the parties in the following proportions:
(i)the sum which provides for a payment to the husband such that he receives 55 per cent of the total net non-superannuation property pool together with interest thereon to accrue from 60 days from the date of these Orders; and
(ii)the balance then remaining to the wife.
8.Pending the settlement date of Suburb E:
(a)the wife pay, or cause to be paid, as and when they fall due, the interest and principal payments associated with the NAB mortgage accounts ending # …14 and #...69 secured over Suburb E and the insurance, utilities, rates and outgoings associated with Suburb E;
(b)neither party be authorised to increase the debit balance of any home loan or further encumber Suburb E without the express consent of the other party; and
(c)the parties hold their respective interest in Suburb E upon trust pursuant to these Orders.
9.Within 28 days of this order the wife make available for collection by the husband at Suburb E all records forming part of the husband’s record collection that still remain at Suburb E or some other location known to the wife.
10.Order 10 to 12 (inclusive) of these Orders are binding on the Trustee of Super Fund 1 (the Fund).
11.The base amount of $33,379.00 be allocated to the wife out of the interest of the husband’s interest (member number …52) in the Fund.
12.Pursuant to s 90XT(1)(a) of the Family Law Act 1975 (the Act) whenever a splittable payment becomes payable in respect of the Husband’s interest in the Fund, the wife shall be entitled to be paid an amount calculated in accordance with part 6 of the Family Law (Superannuation) Regulations 2001 (the Regulations) using the base amount and there be a corresponding reduction in the entitlement of the person to whom the splittable payment would have been made but for these Orders.
13.Order 11 herein has effect from the operative time.
14.The operative time for the purposes of Order 11 herein of these Orders is four (4) business days after the date of service of original certified copies of the final, sealed orders, signed by both parties of these Orders upon the Trustee of the Fund.
15.Until such time as the superannuation split to the wife pursuant to these Orders can be rolled over onto a separate account to the wife:
(a)the husband provide to the wife no less than twenty-eight (28) days’ notice before such time as he elects to retire from and/or take voluntary retirement and/or for any reason accept or become entitled to access in whole or in part his entitlement in the Fund.
(b)the husband direct and authorise the Trustee of the Fund to communicate with the wife and/or any person authorised by him in writing:
(i)to answer any reasonable inquiries as may be made by her or on her behalf from time to time in relation to her entitlement in the Fund, and
(ii)to provide to the wife and/or her authorised representative with a copy of any notice of any application or request by the husband which seeks release of entitlements in the Fund in so far as that release may affect the wife’s entitlement in the Fund pursuant to these Orders: and
(c)the husband by himself, his servants and/or agents be and hereby are restrained from doing any act or thing which would prevent the wife, her heirs, executors, administrators or nominees from receiving the benefits in the Fund to which she is entitled pursuant to these Orders.
16.The wife otherwise retain for her sole use and benefit to the exclusion of the husband:
(a)bank accounts in her sole name;
(b)her interest in the assets and income of F Company;
(c)save for as provided in these Orders, the household items and personal effects of the Suburb E property;
(d)money and jewellery received by her from the Estate of the Late Ms G;
(e)the Motor Vehicle 1; and
(f)her Super Fund 2 entitlements.
17.The husband otherwise retain for his sole use and benefit to the exclusion of the wife:
(a)bank accounts in his sole name;
(b)the household items and personal effects in his possession;
(c)his share portfolio; and
(d)save as otherwise provided for in these Orders, his Super Fund 1 entitlements.
18.The parties be otherwise solely responsible for and indemnify the other against and in relation to all taxation, credit cards and liabilities of whatsoever kind and nature in their respective sole names.
19.Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:
(a)each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders;
(b)each party forego any claims they may have to superannuation or other work related benefits belonging to or earned by the other;
(c)insurance policies remain the sole property of the policy holder named therein;
(d)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders; and
(e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
20.In the event either party fails, refuses or neglects to sign any documents necessary to give effect to these Orders within 7 days of being requested to do so then pursuant to s106A of the Family Law Act 1975 (Cth) a Registrar or Deputy Registrar of the Federal Circuit and Family Court of Australia is hereby appointed to execute any document necessary to give validity and operation to the Orders upon the production of an Affidavit setting out the requests to comply with these Orders
21.The parties’ applications for costs be adjourned to a date to be advised for interim hearing.
22.Within 14 days the parties forward a joint letter to Chambers advising whether they require an interim hearing date or whether the matter is to be determined in Chambers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BOYMAL
INTRODUCTION
The applicant husband and respondent wife commenced living together in 2002, married in 2006 and finally separated in October 2018 when the husband vacated the family home at D Street, Suburb E. There is one child of the marriage, Mr H, who is now 19 years of age.
The parties seek an adjustment of their property interests. Both parties seek an order that the other party pay their costs in relation to a range of matters.
THE HEARING
The final hearing was listed on 9 and 10 December 2021, 3 and 4 March 2022 and 6 and 7 April 2022.
The parties have a business known as C Company which operates via the entity B Pty Ltd (the business). The value of the business has been a significant issue in dispute since the commencement of these proceedings on 24 August 2020. Much of the Court’s time both during the final hearing and interim hearings has been spent on the value of the business.
At the commencement of the hearing the wife asserted the business had a value of $840,000.00.[1] On the third day of the hearing Counsel for the wife proposed that the business be listed for sale within 90 days with a reserve of $400,000.00 and if it did not sell at that reserve then it be listed again without a reserve. On day four of the hearing Counsel for the wife conceded that “it’s going to take a mighty effort to achieve [$840,000.00] I recognise that”. During the hearing the wife abandoned all of her contemplated claims for spousal maintenance.
[1] Wife’s Affidavit filed 28 September 2021 at [43].
On the first day of the hearing Counsel for the husband opened the husband’s case on the basis that the business be sold in order to avoid the dispute as to its value. He proposed that the business be placed on the market at a reserve of $337,000.00 and if it does not sell within six months then he be at liberty to retain it at the value of $337,000.00. The figure of $337,638.00 being the updated business valuation as at 7 December 2021.[2]
[2] Annexure “1” of Mr K’s affidavit filed 8 December 2021.
On day five of the hearing the Court was told that the parties had agreed on the value of the business at $410,000.00. As a value had been agreed, both parties’ final minute of proposed orders provide for the husband to retain the business.
The husband filed an Outline of Case on 3 December 2021. He relies upon:
(a)his Amended Initiating Application, affidavit and Financial Statement all filed on 13 September 2021 and his affidavit filed on 6 October 2021;
(b)the affidavits of Mr J filed on 22 July 2021 and 6 December 2021 (D Street, Suburb E valuations);
(c)the affidavit of Mr K filed on 8 December 2021 (business valuations); and
(d)Exhibits.
The wife filed an Outline of Case on 8 December 2021. She relies upon:
(a)her Amended Response, affidavit and Financial Statement all filed on 29 September 2021;
(b)the affidavit of Mr L filed 3 December 2021 (plant and equipment valuation); and
(c)Exhibits.
The husband was a patient witness. He was candid, responsive and forthcoming when giving his evidence. I agree with Counsel for the husband that he “gave evidence in a reasonable, balanced way. He answered all questions that were put to him. He answered them reasonably and fully… His answers were fulsome and responsive”.[3]
[3] Transcript dated 7 April 2022 at page 91.
The same cannot be said about the wife. Again I agree with Counsel for the husband with his description of “the wife’s evidence is characterised by her highly argumentative and belligerent responses to questions, her refusal at any stage to concede points, and indeed her insistence at all stages of retelling the version of events that she contended for… she showed a preparedness to change her evidence to suit the questions that she was being asked”.[4]
[4] Transcript dated 7 April 2022 at page 91 & 92.
Counsel for the wife agreed that “a lot” of the wife’s evidence was concerning. Concerning matters included her assisting her former boyfriend, Mr M, to conceal $16,000.00 from his wife while they were going through family law proceedings and the changing nature of the circumstances in which she opened the husband’s letter to Victoria Police.
Taking into account all aspects of the wife’s evidence I generally prefer the evidence of the husband over the wife where it is in conflict.
The Court is not required to refer to every piece of evidence relied upon by the parties, traverse every argument that is advanced or make findings in relation to all of the facts that are put in issue by them. I have read all of the documents relied upon and taken all of the evidence and submissions into account. Pursuant to s 140 of the Evidence Act 1995 (Cth) findings are made on the balance of probabilities. My observations of the demeanour of the parties and the witnesses while giving evidence and observing the proceedings have assisted my assessment of the evidence.
APPROACH TO ALTERATION OF PROPERTY INTERESTS
Prior to making any order the Court must first be satisfied that in all of the circumstances it is just and equitable to make an order altering the parties’ property. When considering whether it is just and equitable to make an order the Court must identify the existing legal and equitable interests of the parties in the property.[5]
[5] Stanford & Stanford (2012) 247 CLR 108.
If the Court is satisfied, the preferred approach when determining what orders should be made is for the Court to:
(a)identify and attribute value to the existing legal and equitable interests of the parties at the time of the hearing (the asset pool);
(b)assess the contributions made by the parties financially and non-financially to the property directly or indirectly to the acquisition, conservation and improvement of the property and to the welfare of the family including in the capacity of homemaker and parent in accordance with s 79(4)(a)-(c);
(c)consider whether there should be any further adjustment having regard to the matters contained in s 79(4)(d)-(g) which includes any relevant factors in s 75(2); and
(d)undertake an assessment whether the proposed adjustment provides justice and equity to the parties.[6]
[6] Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143.
The husband seeks an adjustment of the parties’ property on his asset pool as to 60 per cent to him and 40 per cent to the wife of the non-superannuation assets. The wife seeks an adjustment of the parties’ property on her asset pool as to 60 per cent to her and 40 per cent to the husband. Both parties seek an equalisation of their respective superannuation entitlements and a range of ancillary and consequential orders.
THE ASSET POOL
The following assets and liabilities were identified by the husband and wife:
ASSET Ownership Value Husband Value Wife D Street, Suburb E Joint $1,450,000.00 $1,450,000.00 Share Portfolio Husband $16,937.00 $16,937.00 The Business Husband $410,000.00 $410,000.00 Husband’s redraw from mortgage account for machines Husband Not included $28,000.00 Husband’s retention of monies from Ms N Husband Not included $10,000.00 Wife’s retention of monies from Ms N Wife $15,000.00 Not included Husbands dividends Husband Not included $25,548.00 Motor Vehicle 1 Wife $10,000.00 $10,000.00 Jewellery (inheritance) Wife $22,500.00 $22,500.00 Wife’s inheritance Wife $180,789.00 $65,240.00 Assets owned by F Company Wife $20,000.00 Not included Asserted increase on interest and depletion of equity on the mortgages caused by the wife. Wife $34,524.00 Not included TOTAL ASSETS $2,159,750.00 $2,038,225.00 LIABILITIES NAB Mortgages Joint $516,238.00 $516,238.00 NAB Credit Card Husband $3,917.00 Not included NAB Credit Card Husband $5,000.00 Not included Loan owing to Ms O Husband $50,000.00 Not included TOTAL LIABILITIES $575,155.00 $516,238.00 NET NON-SUPER ASSETS $1,584,595.00 $1,521,987.00 SUPERANNUATION Husband $222,050.00 $222,050.00 Wife $155,292.00 $155,292.00 TOTAL SUPERANNUATION $377,342.00 $377,342.00 TOTAL NET ASSETS INCL. SUPER $1,961,937.00 $1,899,329.00
Assets and Liabilities in Dispute
Husband’s NAB Credit Card
The wife is the secondary card holder on the husband’s NAB credit card.
Both parties used the credit card post-separation. The husband used the credit card for outgoings on Suburb E and joint health insurance. The wife used the credit card to pay for utilities on Suburb E and for the purchase of a computer at a cost of approximately $3,000. Repayments on the credit card have been made by both parties.
I am satisfied that the credit card is a joint liability of the parties, it was used by both of them post-separation. The credit card is included in the asset pool.
Husband’s NAB Credit Card
The only evidence the Court has in relation to the sum of $3,917.00 owing on this credit card is a reference to it in the husband’s Financial Statement. The Court does not know to what the debt relates or whether it was incurred pre or post-separation. I consider that it would not be just or equitable to have the wife potentially subsidise post-separation expenditure on this credit card which would occur if it was included in the asset pool. Accordingly it is not included in the asset pool.
Loan owing to Ms O utilised by Husband for living expenses post-separation
The husband has borrowed $187,000.00 from his mother Ms O in order to re-establish himself in a rental property, support himself through the Covid-19 pandemic and pay legal fees. Around $137,000.00 has been utilised toward the husband’s legal fees.
Ms O married Mr P. They were in a relationship for many years. Mr P passed away in 2017.
In late 2018 the husband received $50,000.00 from his mother. He asserts that this money comes by way of loans to him. The husband has used the $50,000.00 to supplement his reasonable and necessary living expenses post-separation including setting himself up in rental accommodation. The husband in those circumstances seeks that $50,000.00 be included in the asset pool.
Counsel for the father did not forcefully press for the inclusion of this debt and indicated that he would not seek to argue with a court finding that the loan will not be required to be repaid.
The husband admits that after he separated from his first wife gifts of money to them from the husband’s mother/Mr P were converted into loans. The wife asserts that the husband is now using a similar argument in these proceedings.
The husband told the Court that he may either have to pay back the loans or they will be viewed as part of his inheritance.
The loan repayments pursuant to a loan made by Mr P in 2012 for the purchase of a Motor Vehicle 2 was forgiven by the husband’s mother by providing for the husband to make the repayments into the parties’ joint bank account after Mr P passed away.
In all of those circumstances I am satisfied that the monies provided by the husband’s mother will be forgiven as a loan or be taken into account as an advance on his inheritance. The sum of $50,000.00 is not included in the asset pool. Furthermore it would not be just for the wife to partially subside the husband’s post-separation living expenses.
Assets owned by F Company
In 2005 the wife registered a company known as Q Pty Ltd of which she was the sole director and shareholder. In 2009 the wife established F Company and in 2017 she established a further business F Company, both of which were run through Q Pty Ltd. In December 2019/February 2020 Q Pty Ltd was deregistered. The wife ran both businesses from the same premises from which the husband ran the business.
On or about June 2019 without prior discussion with the husband the wife removed equipment stock, fixtures and fittings from the premises. The husband contends that these assets have a value of $20,000.00. The wife deposes that the assets have a value of $500.00. No independent valuation has been obtained.
The wife relies on the Notation to the order made on 11 October 2021 as follows:
The parties have agreed that their personal items and chattels do not need to be independently valued as they each recognise that these items are similarly valued.
The wife says that the notation was to obviate the need for a valuation to be obtained of the items the husband took from Suburb E and that the items she took were all part of the set off against what he took. She regarded the items she collected from the business as her personal items. I accept the wife’s evidence.
In those circumstances this item is not included in the asset pool.
Add backs
Both parties seek several sums be added back to the asset pool.
In AJO & GRO [2005] FamCA 195 at [30] the Full Court identified three clear categories where it may be appropriate to notionally add back assets that no longer exist to the pool of assets:
(a)where the parties have expended money on legal fees;
(b)where there has been a premature distribution of matrimonial assets; and
(c)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 has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Reasonably incurred expenditure does not usually fall within a category of acceptable addbacks. Parties are not expected to “go into a state of suspended economic animation” after separation,[7] and are “entitled to reasonably conduct their affairs post-separation in a manner that is consistent with properly getting on with their lives”.[8]
[7] M & M [1998] FamCa 42.
[8] C & C [1998] FamCA 143 at [46].
Notionally adding back into the asset pool is a discretionary exercise. Generally the Court is to take the property of the parties as it is at the final hearing. Adding back is the exception rather than the rule.
Where the discretion is exercised in favour of adding back it reflects a decision that exceptionally, in the particular circumstances of a case, justice and equity requires it. In cases that are not exceptional, justice and equity can be achieved not by adding back but by taking the matter up as a relevant s 75(2) factor. The latter course is perhaps more technically correct than adding back to the list of assets.[9]
[9] Trevi & Trevi [2018] FamCAFC 173 at [28] to [30].
Husband’s dividends
The husband received dividends from the business post-separation. The wife seeks that the sum of $25,548.00 being dividends he received be included in the assets to be adjusted. Counsel for the wife put to the husband that “it may be said that those dividend payments have been to the detriment – detriment of my client because it has reduced the value of the business, potentially”.[10]
[10]Transcript dated 10 December 2022 at page 10.
The Court was not provided with any evidence to support whether the payment of dividends did reduce the value of the business.
The wife also relies on the husband’s payment to himself of dividends as a factor to be taken into account as a future consideration, that is, to support her contention that the husband has a higher income capacity than she does. I will further canvass dividends as a s 75(2) factor.
The husband admits he received dividends post-separation but not the quantum. He says he spent the dividends to enable him to re-establish himself post-separation and that it was expensive to do so.
Exhibit W17 discloses that for the 2018/2019 financial year $20,041.00 was paid in dividends. This covers the period post-separation. I accept the husband’s evidence and find that he spent the dividends he received on reasonably incurred expenses.
In all of those circumstances the husband’s dividends are not included in the asset pool.
Monies from Ms N
In January 2018 the parties withdrew $50,000.00 from their joint mortgage and provided it to Ms N as a loan. Ms N has repaid the total amount. Ms N also paid an additional $5,000.00 representing interest. Thus a total of $55,000.00 was repaid.
The parties agree that $30,000.00 was repaid into the mortgage account.
Of the remaining $25,000.00, the husband asserts that the wife utilised $15,000.00 for her own use and benefit and the wife asserts that the husband used $10,000.00 of for his own use and benefit.
The only evidence that the husband provides in relation to the $10,000.00 he retained is that he is offended by the assertion that he “pocketed $10,000.00” solely for his benefit.[11]
[11] Husband’s Affidavit filed 6 October 2021 at [15].
The wife deposes that the husband transferred $5,000.00 on 18 March 2019 and 27 September 2019, a total of $10,000.00, to his account from the joint account of the $20,000.00 repaid by Ms N. The balance of $10,000.00 went toward joint expenses. To equalise the husband’s transfers to himself the wife directed Ms N to make the remaining $10,000.00 payment directly to her. Ms N did so together with the $5,000.00 of interest in late 2019.
The wife deposes that she paid the following expenses from the money she received directly from Ms N:
(a)$1,690.13 to the NAB Credit Card;
(b)$4,390.00 in relation to her counselling course fees;
(c)$2,2334.25 for Mr H’s school fees; and
(d)further school expenses for Mr H including school text books and for the school play in which Mr H had the lead.
By mid-2019 the wife was no longer working within the business. She commenced casual employment at R Company. In late 2019 she enrolled in a course in order to retrain herself. The wife acknowledges that the counselling course was for her benefit. She, however, contends that the cost of same is less than the $10,000.00 the husband retained. Accordingly there should be no addback.
I am satisfied consider that the wife spent the money she received directly from Ms N on reasonable living expenses.
In all of those circumstances I am satisfied that there are no exceptional circumstances that require the money retained by either of the parties to be added back.
Husband’s redraw from mortgage account to purchase a business machine
In November 2018, post-separation, the husband withdrew $28,000.00 from the mortgage account with the agreement of the wife and paid it to the business to fund the purchase of a business machine. This created a director’s loan in the business accounts. The business has over time repaid the loan directly to the husband. As at the final hearing the husband had received the sum of $27,553.00.
The wife seeks that $28,000.00 be added back. The wife contends that as the funds came out of the mortgage account she now has to deal with increased interest because of his withdrawal.
The husband says that he has used the money derived from the director’s loan toward his living expenses.[12] The husband was not challenged in relation to that evidence. I accept his evidence.
[12] Husband’s Affidavit filed 13 September 2021 at [46].
I do not consider that the withdrawal from the mortgage account was reckless, wanton, wasteful, negligent, or that it was a premature distribution of matrimonial funds. It was an investment in the business.
There are no exceptional circumstances warranting the sum of $28,000.00 being added back. It is not added back.
However, the withdrawal by the husband did cause an increase in the interest on the mortgage. The husband was ultimately able to use money derived from the mortgage account for his sole use and benefit. This is considered further at paragraph 77 of these reasons.
Increased interest on the mortgages and depletion of equity caused by the wife
After separation the two mortgages secured over Suburb E were initially paid from joint savings. In October 2019 the parties sought a stay of repayments until March 2020. Thereafter the wife unilaterally applied for and obtained further mortgage stays for a further period of 14 months between March 2020 and May 2021.
The husband relies on Annexure 8 of his September 2021 affidavit to support that during the 14 month period he received an income of approximately $45,000.00 net ($3,214.00 per month) Jobseeker, government benefits and child support income and made cash withdrawals of $32,552.50.
The husband says that the wife’s non-payment of the mortgage for that 14 month period has resulted in unpaid interest on the mortgage of $11,151.00 and the redraw facility being reduced by $23,273.00, a total of $34,424.00. He therefore contends that the sum of $34,424.00 should be added back as during that period she did not make any contributions towards the mortgages, notwithstanding she was in receipt of income.
Annexure 9 to the husband’s September 2021 affidavit discloses:
(a)the redraw facility on account #...69 decreased from $44,958.95 as at 31 December 2019 to $21,684.80 on or around 9 October 2021, a reduction of $23,274.15 which approximates the husband’s figure. The wife used the credit available to be withdrawn on this mortgage to pay the repayments on account #...14 between August 2020 and May 2021;
(b)the balance outstanding on account #...69 increased from $260,077.54 as at 11 November 2019 to $277,029.66 on or around 9 October 2021; and
(c)the balance outstanding on account #...14 increased from $239,103.67 as at 31 March 2020 to $247,669.27 as at April 2021.
The wife commenced making mortgage repayments in May 2021 after she obtained employment and received her mother’s inheritance.
The wife says that:
(a)at the time of separation both mortgages were in credit therefore there was no requirement to make mortgage payments. The husband had already used the credit available on one of the mortgages to purchase the business machine; and
(b)she did not have the capacity to pay. She was not employed until mid-2021, she had the primary care of Mr H and she paid for his school uniforms, text books, school shoes, sports uniforms, school blazer and extracurricular activities.
Having regard to the wife’s income I am of the view that it would have been difficult for her to pay for her and Mr H’s living expenses and also meet the mortgage repayments for that 14 month period. Monthly payments on #...69 were $1,551.81 and on #...14 were $1352.89, a total of $2904.70.
From an income which the husband asserts was $3,214.00 per month, if the wife had paid the mortgage she would have had $310.00 per month left to pay for all other expenses. The wife deposes that from October 2020 until April 2021 her average weekly expenses, excluding the mortgage repayments were $833.00. This equates to approximately $3,332.00 per month. Again there was insufficient income from which she could meet the mortgage payments.
It should not be expected that Mr M, who occasionally stayed at Suburb E, should have contributed to the mortgage or Mr H’s living expenses. Mr M did otherwise assist the wife financially including subsidising her purchase of a printer, washing machine and dryer, and overseas holiday (the holidays predating March 2020).
Into the mix is the husband’s allegation of the wife’s gambling.
In late 2019 the wife and Mr M shared equally in a $32,000.00 gaming win. The total amount was deposited into the wife’s account. The wife asserts that by 12 December 2019 she had repaid Mr M his half share and repaid loans provided by him. She used the balance on living expenses.[13]
[13] Exhibit “H8” of the Wife’s Affidavit filed 28 September 2021 at [145].
I note that these transactions occurred prior to March 2020 when the agreed mortgage stay ceased. The wife was not receiving an income from the business. Between July 2019 and August 2019 the wife earnt $2433.46 from casual employment. Q Pty Ltd provided her with several thousand dollars from which she then had to pay expenses. The wife asserts that prior to December 2019 her financial circumstances were difficult. She therefore borrowed money from others and incurred credit card debt.[14]
[14] Ibid [33] – [37].
Annexure 7 of the husband’s September affidavit is a table prepared by the husband setting out venues, time of day and quantum of cash withdrawn by the wife between December 2014 and September 2020. I am not satisfied that the information contained in that table supports that the cash withdrawals made by the wife between March 2020 and September 2020 were all at gaming venues or that all or even most of her cash withdrawals between March 2020 and May 2021 subsidised her gambling. Most of the locations do not inferentially support they were gaming venues. There is no evidence as to the venues, time of day and amounts for the period between 11 September 2020 and May 2021.
Lest it be forgotten, and I consider it common knowledge, that between March 2020 and May 2021 Victoria’s population and venues were shut down several times and for lengthy periods as a consequence of the Covid-19 pandemic. I also consider that because of the Covid-19 pandemic it would have been extremely difficult for the wife to find employment during that period of time.
The wife told the Court she used cash to pay for expenses. There is no allegation that the wife had an undisclosed account for that period of time. She was required to use her income to pay for living expenses.
Dealing first with the reduction in the redraw facility by the wife. The husband in November 2018 withdrew $28,000.00 from a mortgage account to purchase the business machine. His use of the redraw account caused an increase in interest. Ultimately the husband was able to use the money withdrawn for his own personal use and benefit by way of repayment to him of the director’s loan. He also obtained an unencumbered asset in the business machine. I acknowledge that the business machine is included in the business valuation.
The wife used the redraw facility for mortgage repayments in the sum of $23,274.15 between March 2020 and May 2021 in circumstances where I am satisfied that in order to meet her and Mr H’s reasonable living expenses she could not afford to pay the mortgage independently. I am not satisfied that this course taken by the wife was reckless, wasteful, wanton or negligent. There are no exceptional circumstances warranting the sum of $23,274.15 being added back, and thus it is not.
Secondly, I do not propose to add back the sum of $11,151.00 asserted by the husband as unpaid interest:
(a)it is indiscernible from Exhibit 9 how the husband arrived at the figure of $11,151.00 as unpaid interest. Interest was at least being repaid on #...14 from the redraw account. There is no evidence before the Court in relation to interest during the 14 months in relation to #...69 save for a period prior to March 2020;
(b)both parties accessed the redraw account(s). The withdrawals by each of them enabled them to meet their living expenses. The interest payable on the mortgage(s) takes into account both parties withdrawals from the redraw facility and that the parties obtained a five month mortgage stay. Thus, they are both responsible for the increase in interest; and
(c)Exhibit 9 discloses, and I note the time frames in the statements :
(i)the increase in the mortgage balance of account #...69 includes a 4 month period prior to March 2020, when there was a mortgage stay by agreement, and a 5 month period post May 2021; and
(ii)The mortgage balance of account #...14 was $239, 920.51 as at 31 March 2020, and as at April 2021 was $247,669.27. The increase in the mortgage balance was $7,748.76. It increased notwithstanding that repayments were being met from the redraw facility. Since 13 May 2021 the wife has directly met the mortgage repayments. She also made a lump sum payment on 8 June 2021 of $4,969.00. As at 30 June 2021 the balance outstanding was $240,657.30. Between 31 March 2020 and 30 June 2021 the mortgage balance increased by $736.79.00.
Wife’s inheritance
In 2019 the wife’s grandmother passed away. The wife received jewellery and approximately $195,000 in mid-2021 from her grandmother’s estate.
I am satisfied that the husband learned of the quantum the wife received only after inspecting the documents that were produced under subpoenas issued on his behalf. Whilst the Terms of Settlement and the correspondence from the wife’s solicitor disclose that she has an interest in the inheritance, they do not disclose the quantum she would be receiving.[15]
[15] Exhibit W2.
The husband seeks that the wife’s inheritance be included in one non-superannuation asset pool. The wife contends for a two non-superannuation asset pool approach.
Notwithstanding that the sum of $65,240.00 is included in the balance sheet provided by Counsel for the wife prior to closing submissions, the wife told the Court that she has only some $10,000.00 left of the inheritance monies. From the inheritance she has paid $125,872.20[16] on legal fees and of the balance she repaid some $20,000.00 of debt, paid the mortgage, some $6,000.00 for arrears of rates, service on her car including new tyres, and general living expenses. The husband disputes the quantum of legal fees paid by the wife on the basis that the wife’s cost notice is non-compliant with the Rules.
[16] Wife’s Costs Notice filed 7 April 2022.
Whilst the payment of legal fees is a category which may be appropriate to notionally add back to the asset pool, the Full Court said in NHC & RCH (2004) FLC 93-204:
56. In summary, we consider that the above mentioned decisions of the Full Court establish that, while the treatment of funds used to pay legal costs remains ultimately a matter for the discretion of the trial Judge, in determining how to exercise that discretion, regard should be had to the source of the funds.
57. If the funds used existed at separation, and are such that both parties can be seen as having an interest in them (on account, for example, of contributions), then such funds should be added back as a notional asset of the party, who has had the benefit of them.
58. If funds used to pay legal fees have been generated by a party post-separation from his or her own endeavours or received in his or her own right (for example, by way of gift or inheritance), they would generally not be added back as a notional asset; nor would any borrowing undertaken by a party post-separation to pay legal fees be taken into account as a liability in the calculation of the net property of the parties. Funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement may need to be looked at differently from other post-separation income or acquisitions.
The inheritance did not exist at separation. The funds the wife received post-separation which she used to pay her legal fees were received by her in her own right by way of an inheritance. The husband has made no significant contributions to the wife’s inheritance. The payment of her legal fees has not reduced the value of the asset pool to which both parties made a myriad of significant contributions. Accordingly, no part of the inheritance used by the wife for the payment of her legal fees, whatever that quantum may be, is added back to the pool.
As to the balance, I consider that the money was spent on reasonably incurred expenses in a manner that was consistent with the wife properly getting on with her life. Furthermore, a party may ordinarily spend funds acquired after separation as they please.[17] Accordingly the balance of the inheritance after the payment of legal fees, whatever the quantum may be, is not added back.
[17] Gollings & Scott [2005] FamCA 397 at [72].
As no part of the inheritance is added back it is moot to discuss whether a global or two asset pool approach of the non-superannuation assets be adopted.
The wife has kept the jewellery. The jewellery is also a post-separation acquired asset, inherited and unconnected to the husband. There are sufficient other assets available to satisfy the husband’s property entitlement without the jewellery being included in the asset pool. In this matter there are no “very unusual circumstances”[18] to suggest that the husband has contributed significantly to the wife inheriting the jewellery. The jewellery was inherited by the wife solely because of the relationship between her and her grandmother. The jewellery will not be included in the asset pool.
[18] Bonnici & Bonnici [1991] FamCA 86.
For the above reasons I find that the assets and their values to be adjusted between the parties are as follows:
ASSET Ownership Value D Street, Suburb E Joint $1,450,000.00 Share Portfolio Husband $16,937.00 B Pty Ltd / the Business Husband $410,000.00 Motor Vehicle 1 Wife $10,000.00 TOTAL ASSETS 1,886,937.00 LIABILITIES NAB Mortgages Joint $516,238.00 NAB Credit Card Husband $5,000.00 TOTAL LIABILITIES $521,238.00 NET NON-SUPER ASSETS $1,365,699.00 SUPERANNUATION Husband $222,050.00 Wife $155,292.00 TOTAL SUPERANNUTAION $377,342.00 TOTAL NET ASSETS INCL. SUPER $1,743,041.00 SHOULD PROPERTY ORDERS BE MADE
Both parties seek an adjustment of their property interests. They seek different orders. The parties are separated after a 16 year relationship during which they made a myriad of contributions and had one child. They no longer have the common use of property. The express and implied assumptions that underpinned the existing arrangements of their property during their relationship has been brought to an end by the end of their relationship.
I consider that this is one of the many cases referred to in Stanford v Stanford [2012] 247 CLR 108 at [42] in which the requirements of s 79(2) of the Act are readily satisfied. I am satisfied that it is just and equitable to make an order altering the parties’ property.
CONTRIBUTIONS
The authorities establish that an assessment of contributions does not require “over-zealous” attention.[19] It is a not a mathematical or accounting exercise but rather the exercise of a wide discretion. The assessment involves the identification and assessment of all of the parties’ respective contributions of all kinds and from all sources in a holistic way across the course of the relationship and in the post-separation period up to the point of assessment.
[19] Horrigan & Horrigan [2020] FamCAFC 25.
The weight to be attached to initial contributions must be assessed against all of the financial and non-financial contributions that are made.[20] Regard must also be had to the use made by the parties and the length of the relationship when assessing the weight to be attached to initial contributions.
[20] Jabour & Jabour [2019] FamCAFC 78.
Contributions are not required to be attached or directly referable to any arbitrary time frames or any specific item of property.[21] However the use of timeframes assists in identifying the myriad of contributions made by the parties.
[21] Dickons & Dickons [2012] FamCAFC 154 at [24] – [26].
Initial Contributions
The business manufactures and sells products in particular to corporate clients. It was established by the husband in 1999, prior to the parties commencing cohabitation. The husband told the Court that in 1999 the business was in its infancy, he was not able to draw a living from the business, he was working out of a shed in the back of his mother’s home, the business only had a few pieces of equipment, had a negative asset position, and no substantial sales.
The wife asserts that she introduced some $160,000.00 into the relationship, comprising $60,000.00 she received as a result from the breakdown of her first marriage, $30,000.00 in 2003 from the proceeds of sale of her half share in a business, $20,000.00 which included a redundancy payment and settlement money from an unfair dismissal claim, and other cash she had in the bank. She was also in receipt of income of $50,000.00 per annum.
The husband told the Court that he could not recall what assets the wife brought in and “I couldn’t tell you whether the funds ended up in our matrimonial pool or not”.
The wife was unable to provide any documents supporting her asserted amounts save for a letter from Mr P dated July 2014,[22] which she says supports that she gave Mr P the sum of $60,000.00 to hold and earn interest and would be transferred back to her as required. At this time the husband was going through his divorce from his first wife (it appears to have been an acrimonious breakdown).
[22] Wife’s Affidavit filed 28 September 2021 at Annexure Ms V-20.
Counsel for the husband says that a letter sent two years after the commencement of the relationship is not a document that supports her initial contributions and as a consequence of her lack of credit the Court should not give weight to the evidence she gives on initial contributions.
However, I am satisfied that the wife did bring assets into the marriage. The wife was steadfast in her evidence on this issue, unlike at other times. I am satisfied that the wife did give Mr P $60,000.00 to invest on her behalf. To recover documents from some 20 years ago is not an easy task. I cannot be satisfied on the available evidence what was the exact quantum of her contribution but I am satisfied that it was in excess of $100,000.00. That is a substantial sum in the context of the early 2000’s.
There is no evidence to support that the contributions asserted by her went anywhere other than for the benefit of the parties. It is disingenuous in my view to suggest otherwise. The husband and the business were not in a good financial position at the beginning of the relationship, he could not afford to pay rent. He was living at his mother’s home until the wife obtained rental accommodation for them. The wife asserts that she alone paid the rent for about 18 months. I am satisfied that they relied on the wife’s assets and income including toward the purchase of their first home being the property at S Street, Suburb T and that it was her $60,000.00 that was provided by her to Mr P.
Contributions during the relationship
The wife ceased her employment in which she earned $50,000.00 per annum and thereafter worked within C Company and B Pty Ltd. The parties worked in and derived income from C Company and the businesses established by the wife including U Company.
The wife contends that as she was “incredibly influential” in the establishment of the U Company part of the business and that those aspects of the business were very important for the overall success of the business and its profitability.
Counsel for the wife said:
“we accept, over time, as good couples tend to do working together as a team, they combined their talents and [C Company] flourished. The business went from renting a smaller premises in 2004, making equipment purchases, employing greater number of staff to bigger premises in 2009 and getting to a point where it is today”.[23]
[23] Transcript dated 4 March 2022 at page 322.
The husband also acknowledges that he and the wife “were a team and we both contributed to our marriage and businesses”, and that the wife played a role in the development of the business.
The evidence supports that U Company had a decline in sales from $112,000.00 in the 2015/2016 financial year to $59,000.00 in the 2018/2019 financial year. In the 2017/2018 financial year sales were $70,075.00.[24]
[24] Annexure “Ms V-12” of the wife’s affidavit filed 28 September 2021.
In 2016 the parties began attending venues to sell products between late November and Christmas each year.
In early 2004 the parties purchased Suburb T. I do not accept the husband’s assertion that the parties contributed relatively equally from their pre-relationship assets contained in separate bank accounts.[25] Lest it be forgotten, the state of the husband’s financial circumstances at the commencement of the relationship. His property settlement with his first wife did not conclude until around 2005. I accept the wife’s assertion that the deposit and all costs were her contributions alone, or almost entirely so. The wife at the time of the purchase was receiving her $50,000.00 income. In 2002 the husband earned $13,554.00 and in 2003 he earned $6,500.00.[26]
[25] Husband’s affidavit filed 13 September 2021 at [56].
[26] Wife’s Affidavit filed 28 September 2021 at [125].
The wife agrees that the husband undertook renovations on Suburb T. She says that his description of the work done as “essentially rebuilding the home” is overstating the case. In any event, whilst the husband was working on Suburb T the wife was caring for Mr H who was a very young baby at the time, together with the husband’s three children from his first marriage who spent time with the father each alternate weekend. She also managed the household. The husband also acknowledges that the wife assisted with painting and other minor improvements.
In 2011 Suburb T sold for approximately $550,000. There is no evidence before the Court in relation to any increase in value to Suburb T occasioned by the works the husband undertook. The parties purchased vacant land at Suburb E for $435,000.00 upon which they constructed the family home.
The wife agrees that the husband undertook works on Suburb E but disputes that he did significant works. In any event, whilst the husband was working on Suburb E the wife was caring for Mr H and the husband’s other three children and maintained the businesses to free up the husband’s time to undertake the works.
The husband asserts that between $50,000.00 and $100,000.00 was gifted to him by his mother/Mr P to apply toward the renovation costs of Suburb T. The wife disputes this gift.
The wife concedes that the family received the sum of $254,780.00 from the husband’s mother/Mr P between 2011 and 2018.
The evidence supports that the husband’s mother/Mr P contributed to Mr H’s school fees in the sum of $120,000.00 by way of gifts of $60,000.00 in April 2016 and July 2016 respectively.[27]
[27] Annexure “5” of the Husband’s Affidavit filed 6 October 2021.
The husband’s mother provided a further sum of $38,379.16 toward Mr H’s school fees post-separation.[28] The husband deposes this sum is by way of a loan. For the same reasons set out in paragraphs 27 – 30 (inclusive) of these reasons I am not satisfied that this sum comes by way of a loan, but rather by way of a gift.
[28] Husband’s Affidavit filed 13 September 2021 at [31].
Further, on or around 2005 the husband’s mother/Mr P invested approximately $350,000.00, although the wife says $285,000.00, into a business called V Company, a business which the wife attempted to establish. Unfortunately the business failed and went into voluntary liquidation.
I am satisfied that the gifts made by the husband’s mother/Mr P during the relationship and post-separation totalled $413,159.16 (being the total of $254,780.00, $120,000.00 and $38,379.16). If the asserted Suburb T renovation gift is included, the range of the total of the gifts is between approximately $460,000 and $520,000.
Whether the Suburb T renovation gifts are or are not included, the parties received a very substantial amount by way of gifts from the husband’s mother/Mr P.
Counsel for the wife contends that the gifts should not be taken into account as contributions but rather “as an investment” and that they were given in order to benefit both of the parties and not just the husband, thus do not come within the kind referred to in Kessey & Kessey (1994) FLC 92-495.
In Kessey the Full Court said:
A contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who was the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.
There is no evidence from the husband’s mother of what her or Mr P’s intentions were when the monies were gifted. However, I am of the view that the gifts by them are the classic category of gifts intended to be covered by the statement, that is, that a contribution by a parent of a party to a marriage is to be taken as a contribution made by or on behalf of the party who is the child of the marriage. The reality is that the gifts were only made by virtue of the relationship between the husband and his mother, and his relationship with Mr P as a consequence of Mr P’s relationship with his mother. The presumed intention of the mother and Mr P was to advantage the husband.[29] There is no evidence that suggests otherwise.
[29] Mabb & Mabb & Anor [2020] FamCAFC 18 at [37].
The wife agrees that the shares not included in the asset pool but held in the husband’s name are held on trust by the husband for Mr H. The shares were passed to the father to hold on trust after the passing of Mr P.
Post-separation contributions
I have canvassed the parties’ contributions to the mortgages on Suburb E.
The husband solely maintained the business post July 2019.
After separation Mr H lived in an equal shared care arrangement for a period of 12 months. In October 2019 the husband suffered a severe broken bone and was unable to care for Mr H. Since then Mr H lived with the wife and spent minimal time with the husband. Mr H completed Year 12 in 2021. The wife was thereafter the primary carer including when he was studying during the last two years of his secondary education under the difficult circumstances occasioned by the Covid-19 pandemic. Mr H has since moved out of Suburb E and is living independently.
The husband paid child support for Mr H commencing in November 2019 in the sum of $14,570.26. I have canvassed the expenses the wife paid for Mr H post-separation and the gift of school fees from the husband’s mother.
Evaluation of contributions
The parties agree that their superannuation should be equalised. My evaluation of contributions which follows is in relation to the parties’ non-superannuation assets.
Counsel for the wife contends for a two to three per cent uplift from 50 per cent in favour of the wife on the basis of the wife’s initial contributions and that in all other respects the contributions made by the parties were equal. I consider this contention does not give weight to the gifts the husband received from his mother/Mr P or the myriad of other contributions he made.
Counsel for the husband contends for an uplift of 10 per cent from 50 per cent in favour of the husband based on the level of contributions made by him. I consider this contention does not give weight to the initial contribution made by the wife or the myriad of other contributions she made.
The Full Court in Bokin & Wild [2022] FedCFamC1A 209 at [16] observed:
The Court does not adopt a precise, mathematical approach to the exercise of discretion as the various matters taken into account under s 79 are not all capable of precise calculations. Some considerations involve value judgments or are matters of impression. (citations omitted)
Taking into account the myriad of contributions made by the parties during some 20 years between the time they commenced living together until the date of the hearing, and in holistically and collectively considering the wife’s initial contribution, the gifts received by the husband together with all of the other contributions made by each of the parties, I assess that on a contributions basis the non-superannuation assets be adjusted by way of 57.5 per cent to the husband and 42.5 per cent to the wife.
In money terms the husband receives $785,276.00 (rounded) and the wife receives $580,423.00 (rounded). The differential between what they each receive is $204,853.00 in the husband’s favour, being 15 per cent (rounded).
RELEVANT FACTORS PURSUANT TO SECTIONS 79(4)(D)–(G) AND 75(2)
The age and state of health of each of the parties
The husband is 55 years of age and is self-employed in the business.
He has a number of health issues. He attends upon many medical professionals throughout the year and takes extensive medication. He has commenced taking prescribed drugs. He has significant medical related expenses. Currently, his health is not affecting his ability to conduct the business and earn an income. However, his ability to generate income in the future may be impacted as his medical conditions are progressive.
Any impact on his earnings is mitigated because he has staff. However the husband asserts that if he is unable to work, the business would stop as there are a number of tasks in the business that only he can perform.
The wife is aged 49 years. She has been diagnosed with depression for which she takes medication. She is otherwise in good health. She deposes requiring approximately $28,000.00 in dental work. The husband also deposes that he requires dental work estimated to be at a cost of approximately $35,000.
There is an age difference of seven years between the parties. Counsel for the husband says that he has fewer working years than the wife to accrue assets. The husband’s health ailments will likely have an impact on his capacity to work as his medical condition progresses.
The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The wife at the time of trial was employed with W Company working full time as a client services representative and earning around $70,000.00 inclusive of superannuation, of which her salary was $62,972.00. When she started at W Company in early 2021 she was in receipt of $63,000.00 inclusive of superannuation.
The wife told the Court that as the duties in her role have expanded she has approached her employer seeking an increase of double her salary. The Court is not aware of the outcome of her request. Notably, the wife was reluctant to disclose how her financial circumstances would “be changing shortly”.
The disclosure was occasioned by Counsel for the husband’s cross-examination of the wife in relation to her borrowing capacity required for her to retain Suburb E. The wife told the Court that on her present income she could borrow around $340,000.00 in total. That sum is insufficient to refinance the existing mortgages on Suburb E.
The balance of the wife’s inheritance is insufficient to assist her with her purchase of the husband’s interest in Suburb E. The wife did not know what her potential borrowing capacity would be after the change in her income. Her request for a raise was recent.
The wife said that she was also considering increasing her income by renting out Suburb E or at least its three spare bedrooms. She was not able to say how much rental she could receive.
The wife has her inherited jewellery which she is not likely to dispose of given its sentimental value.
The wife asserts that the husband has access to large sums of cash in addition to his disclosed income. Counsel for the wife submitted “the great benefits that Mr Villiers derives from the C Company, his almost unlimited resources – it’s a bank for him, the C Company business…”.
The husband is the sole director and shareholder of B Pty Ltd, from which he derives all of his income. His taxable income for the 2021 financial year was $62,692.00. He says that his income has been relatively stable and that the increase in the 2018/2019 financial year was due to the separation and the cost of re-establishing himself. The dividends he has received post-separation is included in his taxable income. Thus, income received by the husband by way of dividends is not in addition to his taxable income as asserted by the wife.
The husband estimated his income for the 2021/2022 financial year at around $90,000.00 inclusive of salary and dividends.[30]
[30] Transcript dated 4 March 2022 at page 310; Exhibit H1.
The business meets the costs of his telephone bill which includes his mobile phone, Mr H’s mobile phone and the NBN costs of the business. The business also pays for all of his motor vehicle expenses. I accept that he uses the vehicle in the main for the purpose of the business. I am satisfied that the other expenses the husband was cross-examined on including travel and costs of his association with the Sports Club were all business related and not for his personal benefit.
The husband agrees that the parties received cash from sales at venues. The parties disagree on the number of venues attended each year and the quantum of cash received. However, sales at these venues are no longer a source of any income to the husband. The husband has decided not to attend them any longer and by the hearing had already ceased doing so. He says that the income derived from such a source does not justify the time and effort required over weekends to attend these venues.
The wife relies on Exhibit W26 which is a letter dated 29 April 2018 from the husband’s brother to X Company who was commissioned by the parties to place a value on the business for sale purposes. The letter attaches a project plan which includes “The owners estimate that an additional $45k -$50k of cash has been removed from the business”.
I consider that no definitive conclusion can be reached as to the quantum of cash the parties received over the three year period specified in the plan. The valuation included all four businesses at that time operated by the parties and it is unclear whether the sum refers to one financial year or all three financial years or any period in between. It was clearly a marketing document for the sale of the business at that time. I also accept the husband’s evidence that there may have been some embellishing to try and get the best price they could.
The wife relied on Order Confirmation records of U Company. The highest that can be found on the evidence of the wife is that over a 16 month period, between January 2018 and May 2022, there may have been cash receipts averaging approximately $900 per month.[31]
[31] Wife’s Tender Bundle at Item no. 39; Transcript 6 April 2022 at page 377.
The wife asserts that the husband is able to determine what income he receives from the business as he can draw on the cash that is held in the business account. As at January 2022 the business account held $186,000.00.[32]
[32] Transcript dated 3 March 2022 at page 32.
I accept the following evidence of the husband. The husband agreed that there was no-one stopping him paying himself a level of income, save for his own “conscience”. He said that he paid himself a responsible wage based on funds available in the business and his needs. He considers himself a responsible business owner. He pays the business expenses and then pays himself. Sometimes the business account might go down to $50,000.00. He told the Court:
Just because there is money in the business account doesn’t mean it’s mine to take….That is not how I run my business…I’ve also got eight staff to pay. I’ve got tax to pay. I’ve got payables to pay. I’m not in the mode of raping and pillaging my business for my own personal benefit.[33]
[33] Ibid.
I consider that the evidence does not establish on the balance of probabilities that the husband has unlimited resources, access to “rivers of cash”, or the ability to derive a significantly higher income in any of the ways the wife asserts.
I agree with Counsel for the husband’s submission that:
To suggest there have been rivers of cash is not borne out by the asset pool the parties have. Conversely, the fact that the business has always offered a surviving income that my client and the wife were able to survive on, and lead a modest lifestyle and meet their costs of living. I think the wife attends to the fact also they took holidays – that’s the reality of the situation.[34]
Commitments of each of the parties that are necessary to enable the parties to support himself or herself or a child or another person that the party has a duty to maintain and the responsibilities of either party to support any other person
[34] Transcript dated 9 December 2021 at page 45.
Neither party has a duty to maintain or support another person or has a responsibility to support any other person.
Where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
No submissions were made accordingly I will not consider it.
The duration of the marriage and the extent to which it has affected the earning capacity of the parties
The duration of the marriage has not affected the earning capacity of the husband. He still derives his income from the business. The wife now has employment notwithstanding that for the duration of the marriage her earnings were derived from the business.
If either party is cohabiting with another person and the financial circumstances relating to the cohabitation
The husband has re-partnered with Ms Z. They have been living together since around late 2019 in rental premises. Ms Z was unemployed at that time and became the husband’s carer during the husband’s six month recovery from his injury. Ms Z commenced working in late 2020 and now earns $108,000.00 per annum. She owns a property in Suburb AA which is encumbered by a mortgage. The husband and Ms Z do not propose to live in it. It is small and impractical for their needs. In or about late 2019 the Suburb AA property suffered water damage and until repairs were only recently completed the property was unable to be tenanted. The husband says that he and Ms Z maintain separate finances, he pays the rent and utilities, and they jointly share other household costs.
In 2020 the husband provided Ms Z with $9,000.00 to further their IVF procedure.
Any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account
The husband raises the wife’s gambling. I consider that I have sufficiently canvassed the post-separation periods between June 2019 and March 2020, and between March 2020 and May 2021. The wife was cross-examined on the period prior to March 2020 essentially on the basis that her application for backdated spousal maintenance from July 2019 had not yet been abandoned.
The husband did not pursue a Kowaliw and Kowaliw [1981] FamCA 70 contention in final submissions, namely that the wife’s gambling during the marriage had a negative impact on the value of the matrimonial assets. I also consider that Annexure 8 and the cross-examination of both parties on this issue is such that I cannot find that all of the gambling was done in the absence of the husband and that he did not also partake. There are many withdrawals with the description that the cash emanated from a joint account and from interstate venues where the parties holidayed.
Sections 75(2)(f), (h), (ha), (j), (l), (naa), (na) and (q) are not relevant in this matter.
Evaluation of s 75(2)
The submissions in relation to adjustments on a future considerations assessment largely focussed on the differences in the parties’ future income earning capacities.
Counsel for the husband contends that no adjustment be made for s 75(2) factors on the basis that the future considerations of the parties are equal. He submits that if the wife obtains the increase in salary she sought then there is not a significant difference between the parties in relation to their earning capacity. As noted already the Court is not aware of the outcome of her request.
Counsel for the wife contended for an uplift in favour of the wife of seven per cent for s 75(2) factors. He bases the uplift on the disparity of income available to the parties and that the husband is living with a committed partner who herself has property and is in receipt of a good income.
The Court can only speculate whether the wife received an increase in her salary. Whatever the quantum may be the evidence before the Court is that the wife receives a salary of $62,972.00. Irrespective of the potential quantum increase, I consider that the husband is in a better position than the wife in relation to future considerations. He can adjust his income to meet his needs, pay himself dividends as required, he is in a relationship with Ms Z, and they are already intermingling the payment of their joint expenses.
Pursuant to my assessment on a contributions basis[35] the husband will receive $785,276.00 (rounded) and the wife will receive $580,423.00 (rounded). As noted previously, the differential between what they each receive is $204,853.00 in the husband’s favour, being 15 per cent (rounded).
[35] Family Law Act 1975 (Cth) s 75(2)(n).
When assessing any adjustment pursuant to s 75(2) it is important to consider the real impact or value in monetary terms.
Having taken into account all of the evidence available to the Court and balancing the relevant considerations I am satisfied that a 2.5 per cent ($34,142.00 - rounded) adjustment in favour of the wife is just.
Accordingly the overall adjustment pursuant to the s 79 factors is 55 per cent to the husband ($751,135.00 – rounded) and 45 per cent to the wife ($614,566.00- rounded). This reduces the differential of assets between the parties to 10 per cent, being $136,569.00.
JUSTICE AND EQUITY TO THE PARTIES
The overarching responsibility of the Court in matters requiring an adjustment of property is to ensure a just and equitable result between the parties.
The wife retained her jewellery heirloom.
The total of the non-superannuation assets is $1,365,699.00.
An adjustment of 55 per cent to the husband provides him with assets to the value of $751,135.00. He seeks to retain assets totalling $421,937.00 being the business plus the share portfolio less the NAB credit card.
An adjustment of 45 per cent to the wife provides her with assets to the value of $614,565.00. She seeks to retain assets totalling $943,762.00, being Suburb E plus the car less the mortgage.
A payment to the husband of $329,197.00 from the wife is therefore required to make up the husband’s 55 per cent share.
An equalization of the superannuation provides each party with $188,671.00 by way of superannuation. To equalise the superannuation these orders will provide that the amount of $33,379.00 be allocated to the wife out of the husband’s superannuation, as agreed between the parties.
Taking into account the different percentages on the superannuation and non-superannuation assets the husband will retain assets overall of $939,805.00 being 54 per cent (rounded) of the total asset pool. The wife will retain assets overall of $803,235.00 being 46 per cent (rounded) of the total asset pool.
For the above reasons I am satisfied that a percentage adjustment of the non-superannuation assets as to 55 per cent to the husband and 45 per cent to the wife, and that an equalisation of their superannuation is just and equitable in all the circumstances.
Until the wife disclosed that she may receive an increase in salary the husband was of the view that the wife had little likelihood of retaining Suburb E and sought that Suburb E be sold at first instance. The husband now agrees to give the wife the opportunity to retain Suburb E on the terms that interest accrue after 60 days from the date of these orders on the basis that the wife make payment within 120 days.
The wife seeks that she be given 90 days within which to pay and interest accrue thereafter if she has not made the payment.
The wife has had ample time since the last day of the hearing to make enquiries in relation to her borrowing capacity. There is also no longer a need to wait for a decision from her employer in relation to the potential increase in her salary. Accordingly the payment date will be 60 days from the date of the orders and interest shall accrue thereafter.
The husband asserts that he still does not have his record collection. The wife asserts that he has the collection. I consider that there is no mischief caused by the making of an order that the wife provide all records to the husband which are part of his collection that still remain at Suburb E or some other location known to the wife.
COSTS
Both parties seek costs. They filed written submissions after the conclusion of the hearing.
I propose to deal with the costs applications after the parties have had the opportunity to read these reasons. The wife does not quantify on any basis the quantum of costs she seeks. She seeks an order that they be taxed. The husband in my view should be afforded the opportunity of knowing what his potential liability for costs may be and make submissions in relation to quantum if required.
My orders will provide for an interim hearing on a date to be advised. I leave the option open to the parties to either do further written submissions if they desire to do so or to attend an interim hearing. A joint consent letter should be forwarded to my Chambers within 14 days to advise whether an interim hearing is required, or only further written submissions will be relied upon or whether no further submissions are required to be made. I will make necessary directions after Chambers receives the joint letter which will include that the wife file and serve an itemised schedule of the quantum of costs that she seeks.
I certify that the preceding one hundred and eighty-seven (187) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Boymal. Associate:
Dated: 30 January 2023
8
0