Walls & Keeble (No 2)
[2023] FedCFamC2F 477
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Walls & Keeble (No 2) [2023] FedCFamC2F 477
File number: MLC 1269 of 2020 Judgment of: JUDGE BETTS Date of judgment: 28 April 2023 Catchwords: FAMILY LAW – Property settlement dispute – de facto relationship – where the wife’s assets were substantially greater than the husband’s at the commencement of the relationship – where the case relates to the division of the non-superannuation property which has a net value exceeding $8M – where the wife contends the division should be 85% - 15% in her favour – where the husband contends that following consideration of “future factors” the division should be 65% - 35% in the wife’s favour – just and equitable outcome. Legislation: Family Law Act 1975 (Cth), Pt VIII, Pt VIIIAB Cases cited: Walls & Keeble [2022] FedCFamC2F 1804
Jabour & Jabour [2019] FamCAFC 78
Kennon & Kennon (1997) FLC 92-757
Kowaliw & Kowaliw (1981) FLC 91-092
Robb & Robb (1995) FLC 92-555
Semperton & Semperton (2012) 47 Fam LR 626
Stanford & Stanford (2012) FLC 93-518
Division: Division 2 Family Law Number of paragraphs: 157 Date of last submission/s: 8 March 2023 Date of hearing: 28, 29 & 30 November 2022, 8 March 2023 Place: Town BD & Newcastle Counsel for the First Applicant: Mr Bithrey Solicitor for the First Applicant: Kekeff & Associates Counsel for the First Respondent: Mr Graham Counsel for the First Respondent: Lindeman Lawyers ORDERS
MLC 1269 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MS WALLS
Applicant
AND: MR KEEBLE
Respondent
order made by:
JUDGE BETTS
DATE OF ORDER:
28 April 2023
DEFINITIONS:
A.In these orders:
a.“The Ms Walls Trust” means the Ms Walls Trust which the Applicant brought into the relationship. The Trust holds assets owned by the Applicant prior to the relationship with the Respondent and loaned monies to The C Trust to acquire the Town B Property.
b.“The C Trust” means The C Trust, which is owned and controlled by the Applicant and the Respondent. The C Trust owns assets including the Town B Property and it owes money to the Ms Walls Trust for the acquisition of the Property, and to the Applicant.
c.“The Town B Company” means The Town B Company Pty Ltd (…) owned and controlled by the Applicant and the Respondent as directors and shareholders. The Town B Company is the Corporate Trustee of the C Trust.
d.“The Town B Property” means the property at J Street, Town B in the State of New South Wales, and the Property business operated at that property by the Town B Company trading as the Town B Property.
e.“O Street property” means the property situated at and known as O Street, Town B in the State of New South Wales which is owned by the Applicant, and was purchased with funds provided by the Ms Walls Trust.
f.“P Street, Suburb Q property” means the property situated at and known as P Street, Suburb Q in the State of Victoria which is owned by the Applicant.
g.“R Street, Suburb S property” means the property situated at and known as R Street, Suburb S in the State of Western Australia, which is owned by the Respondent.
h.“Company T” means the Company T Pty Ltd (…), which is an entity owned and controlled by the Respondent.
i.“Company U” means Company U which is a business owned by Company T.
THE COURT ORDERS THAT:
Real Property
1.As between the Applicant and the Respondent and pursuant to section 90SL of the Act the Applicant is hereby declared to be the solely entitled to the following assets:
(a)The P Street, Suburb Q property;
(b)The Ms Walls Family Trust;
(c)The O Street property as Trustee for the Ms Walls Family Trust;
and the Respondent is hereby declared to have no interest therein.
2.As between the Applicant and the Respondent and pursuant to section 90SL of the Act the Respondent is hereby declared to be solely entitled to the property situate at and known as R Street, Suburb S, Western Australia and the Applicant is hereby declared to have no interest therein.
3.Within twenty-eight (28) days from the date of the making of these orders the Respondent shall do all acts and things and sign all documents necessary to cause to transfer his interest in the following:
(a)The C Trust;
(b)The Town B Company Pty Ltd;
to the Applicant and the Respondent thereafter is declared to have no further interest therein.
4.Contemporaneously with Order 3 hereof:
(a)The Respondent do all acts and things and sign all documents as may be required to:
(i)Resign as a director and secretary of the Town B Company;
(ii)Transfer his shareholding in the Town B Company to the Applicant, at the expense of the Applicant;
(iii)Resign as a beneficiary of The C Trust and assign or transfer to the Applicant absolutely all other rights, entitlements, claims, actions or demands which he may have against The C Trust whether by way of shareholder loan accounts, directors loan accounts, beneficiary accounts or otherwise however arising and the Respondent will forgo any right or entitlement to which he may be entitled as an employee or shareholder of The Town B Company as from the date of these Orders, or as beneficiary of The C Trust; and
(iv)Resign as appointer of The C Trust.
5.Within 4 calendar months from the date of these Orders, the Applicant is to pay the Respondent, pursuant to section 90SM(1) of the Family Law Act, the sum of $1,085,042.
6.Contemporaneously with orders 3 and 4 hereof, the Applicant and the Respondent in their capacity as Directors of the Town B Company and as Trustees of the C Trust shall do all acts and things and sign all documents necessary so as to transfer to the Respondent from the Town B Company the Motor Vehicle 1 registered number …, subject to the Respondent doing all acts and things necessary to:-
(a)Cause to refinance and payout the Company’s liability to Company V in respect of that vehicle; and
(b)The Respondent being responsible for any and all tax liability arising as a result of the transfer of that vehicle from the Town B Company to the Respondent.
7.Contemporaneously with the Respondent’s compliance with orders 3 and 4 hereof and except as otherwise provided in the orders the Applicant shall hereby indemnify the Respondent and keep him indemnified in respect of any present or future liability, including but not limited to Capital Gains Tax Liability in relation to the Town B Property.
8.Contemporaneously with the Respondent’s compliance with orders 3 and 4 the Applicant do all acts and things and sign all documents as may be required to indemnify the Respondent and keep him indemnified against:
(a)All or any liability he may have arising from the past and future operation of the Town B Company including but not limited to any taxation liability except for any liability that arises from the transfer pursuant to order 6 hereof;
(b)All or any liability he may have arising from any loan he owes or owed to the Town B Company, including any past or future liability arising from the assignment of the loans pursuant to these orders and including but not limited to any taxation liability.
9.As between the parties each party is hereby declared to be personally liable and responsible for payment of any income tax in relation to any form of income paid to either of them by The Town B Company and/or The C Trust up to 30 June 2023.
10.Forthwith upon the making of these Orders except as otherwise specified in these orders the Applicant do all acts and things and sign all documents necessary to indemnify the Respondent and keep him indemnified against:
(a)Any and all further liability he may have arising from the operation of The C Trust and The Town B Company including but not limited to any future taxation liability; and
(b)Any and all future liability he may have arising from any loan he owes or owed to The C Trust and The Town B Company.
Company T and Company U
11.As between the Applicant and the Respondent, the Respondent is hereby declared to be solely entitled to all his interest in Company T Pty Ltd and Company U and the Applicant has no further interest or entitlement therein.
12.The Respondent must do all such acts and things and sign all documents as may be required to indemnify the Applicant and keep her indemnified against all or any liability arising from the past and future operation of Company T Pty Ltd and Company U, including but not limited to any taxation liability.
13.Except as otherwise set out in these orders, each party has no further interest in the items of personal property in the possession of the other including monies held in any accounts, chattels, furniture, furnishings, superannuation entitlements, insurance policies or any other items of personal property, in the name possession or control of that party and the other party has no interest therein.
14.Except as otherwise provided for in these Orders, each party is solely responsible for all liabilities in their own name including their respective credit cards, any future or potential liabilities associated with any property that either of them receives, was sold after separation, taxes including but not limited to stamp duty, land tax, income tax, GST and capital gains tax, tax on interest earned and received or allocated and on dividends and each party shall indemnify and keep the other indemnified in relation to the same.
15.In the event of either party refusing neglecting or otherwise failing to sign any such document as is necessary to put these orders into effect within fourteen (14) days of a written request to do so then a Judicial Registrar of the Federal Circuit and Family Court of Australia (Division 2) is hereby appointed to sign any such document pursuant to the provisions of Section 106A of the Family Law Act on behalf of the defaulting party.
16.The Court will hear the parties on the question of costs.
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 Walls & Keeble (No 2) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE BETTS
INTRODUCTION:
These are bitterly contested property settlement proceedings arising out of the breakdown of the de facto relationship between Ms Walls (“the Wife”) and Mr Keeble (“the Husband”).
The parties commenced an intimate relationship in 2011. The Husband asserts that the relationship morphed into a de facto relationship by June. The Wife disagrees; her case is that the de facto relationship only began in 2012 when the Husband’s work ended and they began living together on a full-time basis.
For reasons which follow, I am satisfied that a de facto relationship had commenced in 2011. It is common ground that the de facto relationship finally broke down in December 2019. [1]
The parties came into the relationship at a mature age, the Wife having been born in 1965 and the Husband in 1966. Each had been married before and had children; each had assets although the Wife’s assets were substantially greater than the Husband’s.
The major source of conflict in this case has been the Property at J Street, Town B, which was purchased by the parties in 2012 and conducted by them throughout the relationship. Following their acrimonious separation, each party wanted to remain living there but this was impractical and the Husband soon agreed to vacate it, signing a consent order to this effect on 31 March 2020 and leaving for good around a week later. The Wife remained in occupation, continuing to manage the Property and to treat the property as her home.
The Town B Property is situated on valuable land on the NSW Region G. Presently zoned “rural”, a re-zoning to “medium density residential” has been on the cards for years. Such a re-zoning would potentially permit the land to be re-developed in a more intensive manner, potentially increasing its value.
Throughout the proceedings, the Husband had been pressing for a sale of the Town B property. The Wife had opposed its sale as she wishes to retain it. In the lead-up to the hearing, a valuer engaged by the Wife, Mr K, valued the property at $4.1M, comprising $3M for the land itself and $1.1M for the improvements. This was the only valuation evidence before the Court.
At trial, the Husband abandoned his application to sell the Town B property; the Husband was content for the Wife to retain it. The Husband’s counsel nonetheless pointed to two (2) matters concerning the Town B property which he said warranted some form of adjustment or allowance in favour of the Husband, namely:
(a)an April 2022 offer from a third party to buy the Town B property for $5.15M which the Wife refused to respond to. The Husband submits that the Wife’s rejection of that offer is akin to “waste”; and
(b)the Husband points to the particular characteristics of the Town B property, namely its location and future development potential, and says that it has further value which is not reflected in the Balance Sheet.
The Wife disagrees. In relation to (a), she says that the property was not for sale at the time, that as a matter of law she was not obliged to sell what was effectively her home and that there is no certainty that the third parties would have proceeded to completion anyway. In relation to (b), the Wife submits that this is speculative and that any adjustment would be inappropriate “double-dipping”.
There were also various other disputes concerning the Balance Sheet; what ought to be done about one particular motor vehicle; the extent of (and weight to be attached to) each party’s contributions; whether there should be any allowance for future needs; and whether the Husband in particular had failed to make full and frank financial disclosure. Though the Wife’s Affidavit asserted that she had been a victim of family violence, she ultimately abandoned her foreshadowed claim for an adjustment in her favour pursuant to the principles of Kennon & Kennon (1997) FLC 92-757. This was an appropriate concession on her part; the evidence does not bring the matter within the “narrow band of cases” warranting such an adjustment.
One thing that the parties did agree on was that their respective superannuation interests should be quarantined and left undisturbed. In the circumstances of this case, I respectfully agree. When the relationship commenced, each party already had substantial superannuation. There is no suggestion that either party made voluntary superannuation contributions during the relationship. The Wife was not in external employment during the relationship and the Husband’s own external employment (and therefore his employer-funded superannuation contributions) ceased very early on in November 2012. In practical terms, the parties’ current superannuation balances are really only a reflection of what each brought in to the relationship.
Ultimately, the debate in this case relates to the division of the non-superannuation property which on anyone’s case has a net value exceeding $8M. The Wife contended that it would be just and equitable to divide the net non-superannuation property as to 85% to her and 15% to the Husband. This is on the basis of contributions alone; she says that no allowance for “future factors” is warranted.
The Husband submits that his contributions-based entitlement is in the range of 20% - 25%, and that when “future factors” are taken into consideration it would be just and equitable that he receive an overall division of 35%.
THE HEARING:
Mr Bithrey of counsel appeared for the Wife and Mr Graham of counsel appeared for the Husband throughout. The first tranche of the final hearing took place over three (3) days on 28, 29 and 30 November 2022. On the last day of the hearing, the Husband sought leave to re-open the evidence so that a further expert valuation of the Town B property could be commissioned. On 9 December 2022 I dismissed that application: Walls & Keeble [2022] FedCFamC2F 1804. Consequent upon that ruling, the matter proceeded straight to closing submissions on 8 March 2023.
For the purposes of the hearing, the Wife relied upon:
·Case Outline Document filed 25/11/22;
·Amended Initiating Application filed 7/11/22;
·Affidavit of the Wife filed 11/11/22 (which referred to, and incorporated, the contents of a separate exhibit bundle);
·Financial Statement of the Wife filed 11/11/22;
·Affidavit of Mr K filed 11/11/22 (being the expert valuer in respect of the Town B property);
·Affidavit of Mr M filed 11/11/22 (being a solicitor who had addressed various legal issues and impediments concerning future re-zoning and development of the Town B property);
·Affidavit of Mr W filed 11/11/22 (who had valued some of the entities in the Balance Sheet).
The Husband relied upon:
·Case Outline Document filed 25/11/22;
·Amended Response filed 04/11/22;
·Affidavit of the Husband filed 14/11/22;
·Financial Statement of the Husband filed 16/11/22.
During the course of the hearing the parties also tendered various exhibits which will be referred to as relevant.
THE LAW:
These proceedings are to be determined in accordance with the provisions of Part VIIIAB of the Family Law Act1975 (“the Act”).
The operative provisions of Part VIIIAB largely mirror those in Part VIII which are applicable to married couples. As a general statement, the established case law in respect of Part VIII has equal application to cases under Part VIIIAB.
In considering what property settlement order (if any) to make in the present case, I intend to:
(a)Firstly, identify and value the property, liabilities and financial resources of the parties (the “Balance Sheet”);
(b)Secondly, consider whether it would be “just and equitable” to make a property settlement order;
(c)If it is, then thirdly I will identify and assess the respective contributions made by each of the parties towards the net assets pursuant to s 90SM(4)(a), s 90SM(4)(b) and s 90SM(4)(c) of the Act;
(d)Fourthly, I will identify and assess any relevant “future factors” being those matters referred to in s 90SF(3) of the Act. I will also identify and assess any relevant matters arising in s 90SM(4)(d), s 90SM(4)(f) and s 90SM(4)(g) of the Act.
Having done so, I will then determine what (if any) adjustment ought to be made to each party’s respective contributions-based entitlement on account of such matters. In carrying out this step I will be mindful not only of percentages (which are often convenient to the Court) but also the underlying dollar figures that are involved (which are the practical consequence to the parties);
(e)Finally, I will consider the effect of my findings and proposed orders so as to satisfy myself that my proposed property settlement order is “just and equitable”.
STEP 1: THE BALANCE SHEET
The parties tendered a draft Balance Sheet as exhibit 1. I reproduce it below. Cents have been ignored. My reasoning in respect of contentious items 7-11, 27, 35 & 36 will follow.
Owner
Description
Wife Value
Husband
Value
Value adopted
1
W
P Street, Suburb Q VIC
$2,650,000
$2,650,000
$2,650,000
2
H
R Street, Suburb S, WA
$630,000
$630,000
$ 630,000
3
Joint
C Trust and the Town B Company, trading as Town B Property (including Motor Vehicle 1)
$2,525,000
$2,525,000
$2,525,000
4
W
Ms Walls Family Trust (incl. 1 O Street Town B at $430,000), share portfolio and debt owed by The C Trust.
$2,680,000
$2,680,000
$2,680,000
5
H
Company T Pty Ltd
$ NIL
$ NIL
$ NIL
6
H
Company U business
$ 7,000
$ 7,000
$ 7,000
7
W
CBA savings account (Suburb X)
$ 1,460
$ 6,962
$ 6,962
8
W
Bank Y saver account
$ 1,822
9
W
Bank Z savings account
$ 1,216
10
W
CBA Netsaver
$ 26
11
W
Bank AB savings
$ 1,210
12
H
CBA account …79
$ NIL
$ NIL
$ NIL
13
H
Various bank accounts
$ 77,602$ 32,894
$ 32,894
14
W
Motor Vehicle 2
$ 14,500
$ 14,500
$ 14,500
15
W
Motor Vehicle 3
$ 40,000
$ 40,000
$ 40,000
16
W
motorcycle 1
$ 3,000
$ 3,000
$ 3,000
17
H
Motor Vehicle 4
$ 14,000
$ 14,000
$ 14,000
18
H
Motorcycle 2
$ 14,000
$ 14,000
$ 14,000
19
H
Household contents
$ 4,000
$ 4,000
$ 4,000
20
H
Boat, outboard motor and trailer
$ 13,500
$ 13,500
$ 13,500
21
H
Inflatable boat, outboard motor and trailer
$ 3,000
$ 3,000
$ 3,000
22
H
Personal tools and equipment
$ 750
$ 750
$ 750
23
H
Motor Vehicle 5
$ 4,300
$ 4,300
$ 750
24
H
Motorcycle 3
$ 8,000
$ 8,000
$ 8,000
25
H
Motorcycle 4
$ 4,000
$ 4,000
$ 4,000
26
H
Motorcycle 5
$ 2,500
$ 2,500
$ 2,500
27
H
Ride-on mower
$ 4,000
$ 4,000
$ 4,000
28
H
Tools and equipment
$ 3,000
$ 3,000
$ 3,000
29
H
security system
$ 1,500
$ 1,500
$ 1,500
30
H
Kayaks
$ NIL
$ NIL
$ NIL
31
H
Surfboards
Items 30-34 total $ 2,000
Items 30-34 total $2,000
$ 2,000
32
H
2 x pushbikes
33
H
Camping gear
34
H
2 x mainsails
35
H
Excavator
$ 18,000
$ NIL
$ NIL
TOTAL ASSETS
$8,729,386
$8,663,906
$8,664,356
ADDBACKS
36
H
Funds drawn down from the WA mortgage post separation
$ 95,000
$ NIL
$ 50,000
Total
$ 95,000
$ NIL
$ 50,000
TOTAL ASSETS including ADDBACK
$ 8,824,386
$ 8,663,906
$ 8,714,356
LIABILITIES
37
H
Commonwealth Bank loan over WA property
$ 480,236
$ 480,236
$ 480,236
TOTAL LIABILITIES
$ 480,236
$ 480,236
$ 480,236
TOTAL NET ASSETS (excluding superannuation)
$ 8,344,150
$ 8,183,670
$ 8,234,120
SUPERANNUATION
38
W
Super Fund 1
$ 691,750
$ 691,750
$ 691,750
39
H
Super Fund 2
$ 468,583
$ 468,583
$ 468,583
TOTAL SUPER
$1,160,333
$1,160,333
$ 1,160,333
TOTAL NET ASSETS (including superannuation)
$9,504,483
$9,344,003
$ 9,394,453
Items 7 – 11: various bank accounts of the Wife
The Husband’s figure is more up-to-date as it is based on the Wife’s latest account balances from her Financial Statement.
Item 27: Ride-on mower ($4,000)
This mower was used at the Town B Property. Each party says the other has it.
I accept the Wife’s evidence that shortly before he left the Property, the Husband had arranged for a lawn mowing service to commence there, and that, when he left, the mower was missing.
I am satisfied that the Husband took the mower, particularly having regard to the Husband’s other conduct around this time. In particular, the Husband:
·gave guests his personal bank account details for Property payments, rather than giving them the business account details (which income has not been accounted for);
·took and retained cash income from guests, rather than depositing it into the business account (which cash income has not been accounted for);
·removed and retained one of the Property EFTPOS machines;
·removed and retained numerous garden hoses and fittings;
·removed and retained a purpose-designed isolating cock for the water system at the Property. This was a custom metal shaft with a handle at one end and a valve fitting on the other, which enabled the water supply to the main building to be isolated from the water supply to the wing of the apartments in the event of leaks or other plumbing works being required. The Wife did not realise that it had been taken until there was a water leak after he had left; [2]
·removed the tools, hardware and plumbing supplies necessary to maintain the Property (though I accept that some of the tools and hardware that he took belonged to him personally);
·removed the vacuum cleaners that were in good order and condition (leaving the Wife with an old broken vacuum to clean the apartments with);
·he removed garage remote controls and keys from the Property;
·removed a complete set of keyless security door locks from the Property including door locks, card readers and programmers – all of which he then advertised for sale on “Region F Buy Sell & Swap”’ while asserting that the new replacement costs were $6,800. [3] I reject the Husband’s evidence that these were simply surplus items which would otherwise have been discarded;
·removed all of the motorcycles, including the motorcycle he had bought the Wife as a gift;
·removed and retained the Property’s work vehicle;
·removed and retained the Wife’s Motor Vehicle 1, meaning that she then had no motor vehicle at all. (The Husband later dishonestly transferred title to the Motor Vehicle 1 into his own name when he was in Victoria. He did so by falsely holding out to the Victorian transport authorities that he was authorised to sign the transfer papers on the Wife’s behalf as transferor).
The Husband also engaged in spiteful behaviour whose sole purpose was to cause the Wife distress and/or frustration:
·he retained the contents of an emergency evacuation bag the Wife had prepared when the Property was threatened by bushfire. Specifically the bag contained the Wife’s Birth Certificate and Passport, and her son Mr AC’s passport, which he then refused to return to the Wife despite her repeated requests;
·he ripped up the Wife’s sentimental photographs (including photos of her children) which the Wife later discovered in a wheelie bin;
·he “keyed” every panel on the Wife’s car down to the metal.
I will therefore include the ride-on mower in the Balance Sheet at the Wife’s estimated value of $4,000.
Item 35: Excavator said to be owned by the Husband ($18,000)
Item 36: Add-back - Post-separation funds drawn down by Husband from WA mortgage ($95,000)
On the Wife’s case, both of these items are instances of the Husband’s “failure to disclose”. It is convenient to address these two items together given the factual background to which I will now turn.
Shortly after separation the Husband re-partnered with one Ms AD. Since August or September 2020, they have cohabited continuously.
Ms AD never having filed an Affidavit in these proceedings, on 17 June 2022 the Wife’s solicitor requested disclosure from the Husband in relation to Ms AD’s financial circumstances. There was no response. Asked whether he had told Ms AD about the request for disclosure, the Husband responded that he had, adding: “You don’t want to hear what she said.”
The Wife’s trial Affidavit complained about this lack of disclosure. Moreover, she said that she believed that Ms AD had purchased a block of land in Town AE, Queensland, that the Husband and Ms AD were planning to build a home there. In support of her contention, she produced an email sent by the Husband from “[email protected]” to Company AF back on 13 February 2022: [4]
Good morning, [Mr AG]
We’re interested to talk about a build in [Town AE] QLD.
We’re looking at our dream block.
But, it appears to be bedrock close to the surface.
Kind Regards,
[Mr Keeble]
A few days after the Wife’s trial material was filed, the Husband filed his trial material. He provided some disclosure concerning the financial circumstances of his cohabitation with Ms AD as he was obliged to do. His Affidavit deposed that he and Ms AD lived together in a rental property (in City AH – some two hours or so drive south of Town AE). His Financial Statement deposed that Ms AD earned an income of $120,000 per annum and that they each paid $500 per week towards their joint rental and household expenses.
The Husband did not volunteer any evidence concerning the block of land in Town AE or any plans to build a home there. However, in cross-examination the Husband agreed that in July 2022 Ms AD had purchased that block for $289,000, and that he and Ms AD were planning to build a home there. He said that, from his perspective, the email he sent to Company AF in February 2022 was no more than “investigating the best use of the land.”
The Wife’s counsel squarely put to the Husband that he had an undisclosed beneficial interest in the block of land, which the Husband adamantly denied.
In relation to the excavator (Item 35), the Wife’s evidence is that in August 2022 she observed that the Husband had been using the company email account to send emails, afterwards deleting them. Starting on 16 August 2022 the Wife observed that the Husband had exchanged various emails with a third party who was advertising the excavator for sale. On 26 August the Husband sent a test email from the company’s email account to “…@gmail.com” – inferentially an email address belonging to the Husband. On 28 August the messages between the Husband and the third party stopped. The third party later posted that he had sold the excavator for $18,000 though without naming the purchaser.
The Wife suspected that the Husband bought the excavator. She was particularly suspicious about his use of the company email account at this time, as his solicitors had advised that the Husband was overseas and uncontactable.
In relation to the add-back (Item 36), the Husband’s Financial Statements reveal that the City AJ mortgage balance was $385,536 on 28 February 2020 and $480,236 by 16 November 2022 – a redraw of approximately $95,000 over that timeframe which was not explained in his trial material.
In cross-examination, the Husband’s evidence was that the redraw was used to meet living expenses. Whenever he was in employment, the Husband received a lucrative salary which was more than enough to cover his living expenses. But he was unemployed for around fifteen (15) months in the period between the two Financial Statements and so the reasonableness of that expenditure needs to be tested by reference to that fifteen (15) month timeframe. In short, can the $95,000 redraw be regarded as “reasonable expenditure” over a fifteen (15) month period?
I accept that over this period the Husband paid around $22,000 in lease repayments for the Motor Vehicle 1. He also had to meet property outgoings for City AJ although these would have been fairly modest given the rental income. He likely spent a few thousand dollars in motor vehicle and motorcycle registration and insurance costs, half (presumably) of the rent payments with Ms AD each week, food, fuel, utilities and general living expenses. Nonetheless, a redraw of $95,000 seems somewhat high.
To be clear, a party is not obliged to account to the other for every dollar of post-separation income and expenditure. Life goes on when parties separate; this includes financial life. It cannot be assumed that a failure to account for all income and expenditure automatically warrants an add-back, an adverse finding or some other adjustment in the other party’s favour.
But the Husband’s problem is that after separation he did engage in the various behaviours set out earlier, including in paragraphs [25] – [26]. I am not inclined as a default position to simply accept the Husband’s evidence that the redraw was used entirely to meet living expenses.
Moreover, I consider that the Husband’s financial circumstances are incongruous and ultimately irreconcilable as I will now explain.
In his Financial Statement of 28 February 2020 the Husband deposed that he had only $3,500 or so in the bank and that his expenses exceeded his income by at least $570 per week. [5] Yet by the time of his Financial Statement of 16 November 2022, he had managed to accumulate combined bank balances of $77,602 (Balance Sheet Item 13). It is true that at trial this figure was reduced to $32,894 on account of paid legal expenses but that is beside the point. The key question is: how did he manage to accumulate an additional $74,000 in the bank over the timeframe of the two Financial Statements given his stated income and expenditure positions in those documents? On the face of both Financial Statements, his expenses outweighed or at least equalled his income.
One obvious explanation is that his increased bank account balances came directly from the redraw, but this was not the Husband’s evidence. Was Ms AD the source of the funds or did she otherwise give him financial support? If so, he did not disclose it.
If the true position is that he had understated his income and/or overstated his expenses, he did not say so. Nor did the Husband disclose the sale of any assets that might explain the substantial increase in his bank account balances.
On the evidence, I consider it a real possibility that the Husband applied some of the redraw for an undisclosed purpose – including buying the excavator and/or acquiring an interest in the Town AE land. If the redraw was spent entirely on reasonable living expenses as the Husband says, which is also a possibility, then it seems inescapable that the Husband must have an undisclosed source of income, other undisclosed property that he was able to convert to cash, or access to some other undisclosed financial resource (perhaps in the form of financial assistance from Ms AD).
In light of my other findings concerning the Husband, I conclude that the Husband has deliberately failed to make full and frank financial disclosure to the Court. This lack of disclosure obviously impacts on the Court’s capacity to arrive at the “just and equitable” outcome mandated by the statute. Consistent with authority, I need not be unduly cautious about making findings favourable to the Wife. [6]
In the circumstances, I propose to add-back the sum of $50,000 in respect of Items 35 and 36 of the Balance Sheet.
STEP 2: IS IT “JUST & EQUITABLE” TO MAKE A PROPERTY SETTLEMENT ORDER?
During the relationship the parties jointly incorporated a company and set up a trust structure through which they jointly operated the Town B Property. Following the breakdown of their relationship, they cannot now mutually enjoy the use of those assets.
Each party contends that it would be just and equitable for this Court to make a property settlement order, save that the parties’ respective superannuation balances should be left undisturbed.
In the circumstances I am satisfied that the “just and equitable” requirement identified by the High Court in Stanford (supra) is made out.
STEP 3: ASSESSMENT OF CONTRIBUTIONS
I will assess contributions on a global basis, which is how the parties argued the case at trial.
It is convenient to first explain my finding that the de facto relationship commenced in 2011.
When they started dating the Wife was living at the P Street, Suburb Q property and, although based in Victoria, the Husband was doing off site work interstate. I accept the Husband’s evidence that the parties’ relationship moved quite quickly. Whenever he was home in Victoria, he and the Wife began to regularly stay over at each other’s home.
By July/August of 2011, their relationship had developed to such an extent that they were genuinely looking at buying an investment property together, with a view to redeveloping it. To that end, they began jointly researching and discussing the purchase of various properties located in different parts of Australia.
The Wife downplayed the seriousness of those discussions, but on 27 July 2011 the parties emailed each other in relation to a possible property purchase (and redevelopment) at Town AK. Their email reflects an intimate and close relationship between them and a genuine interest in purchasing the property in question. Later in the day the Wife emailed the Husband to tell him that:
I’m very aware that you’re not a normal 9 – 5 guy and that scenario is just fine with me. Whether that means I fly up 2 weeks on, 2 weeks off or travel for a couple of months, it’s all do-able. If we want to be together, it will just work and where you’re based is only logistics xxx
In September 2011 the parties holidayed together along the Region AL of Australia. During the holiday they continued researching properties and, that same month, they jointly signed a contract to purchase a property at Suburb AM, Victoria, for $550,000. This is a significant matter which satisfies me that by this stage the parties were no longer just “dating.” Their relationship had such a degree of mutuality and commitment that it now met the requirements for a de facto relationship prescribed in s 4AA of the Act.
INITIAL CONTRIBUTIONS:
Following her divorce and property settlement in the 1990s, the Wife received a parcel of valuable real estate which she was able to develop and sell in 2004 for a net figure of $5M after deduction of CGT other expenses. Though not yet 40, she was already financially secure. She had trained and qualified as an allied health worker and her dream was to buy and operate a rural Property. She had the care of twin daughters (born in 1992) and a son, Mr AC, born in 1996.
The best evidence I have about the Wife’s assets at commencement of the relationship is that as at May 2011 she owned:
·the P Street, Suburb Q property which was unencumbered. She had paid $1.24M for it in 2010;
·an unencumbered property in Suburb AN, Victoria;
·an unencumbered 40% interest in a property at Suburb AO;
·the Ms Walls Family Trust which held substantial assets including a hut at Town AP;
·a Motor Vehicle 6 valued at E $40,000;
·savings of E $40,000;
·furniture, chattels and effects of unknown value.
The Husband was earning a lucrative income doing off site work for Employer AQ. He had just finalised a property settlement with his ex-wife as a result of which he had retained the following:
·a mortgaged property at R Street, Suburb S, (City AJ) in WA;
·a mortgaged property at AR Street, Town AS, Victoria;
·(the combined mortgage balances being approximately $1.2M) [7]
·a Motor Vehicle 4;
·a motorcycle;
·a boat;
·furniture, chattels and effects of unknown value.
The Husband and his ex-wife had a son born in 1992. But the Husband also had a much younger child, a daughter AT born in Country AU in 2010 as a result of a brief relationship.
CONTRIBUTIONS DURING THE RELATIONSHIP:
Initially the parties lived in Victoria and the Husband worked off site roles. From November 2012 until final separation they lived together full-time at the Town B Property.
I use the below headings for convenience.
P Street, Suburb Q:
The Husband undertook various unpaid work at P Street, Suburb Q over the course of the relationship. In 2011 he and the Wife returned early from their holiday so that he could urgently fix a water-damaged ceiling. He put up a new ceiling including plastering, cornicing and painting.
During the course of the relationship, the P Street, Suburb Q property underwent some improvement and renovation work. The parties dispute the extent of the Husband’s involvement. Having considered the evidence (including some photographs that were tendered), I am satisfied that the Husband has overstated, and the Wife has understated, what he did. I am satisfied that:
·the Husband installed decking support structures and proper access to the Area AV;
·he ran a shower pipe up the wall next to the Area AW and installed a shower head. Although his Affidavit described this as “installation of the outdoor shower infrastructure” it was really quite a minor job;
·he assisted with completion of the Area AW interior fitout including ensuite plumbing, door frames, skirting boards, security lock and timber treatment. He also mended and treated the exterior surfaces including the fascia;
·he sanded and treated the Area AY decking and Alfresco area but only in the early years of the relationship and not “regularly” as he deposes. It has been years since either of the parties spent time at the P Street, Suburb Q property;
·he removed and replaced some paling fences that were storm-damaged;
·he organised labour and mulching equipment to remove a large tree that towered over the pool;
·he repaired and treated the damaged northern external walls of the house;
·he cut back foliage from the neighbour’s property which had been obscuring the view of the bay;
·he assisted with drainage works to stop the garage and basement from flooding during weather events. Specifically, he did some excavation work associated with installation of an oversize sink well and installation of a submersible pump. He also engaged and supervised the concreters;
·he installed the cladding materials to seal the outdoor enclosure directly outside the back door of the basement. I accept the Wife’s evidence that this was a fairly quick job;
·he installed the structure and cladding materials to seal the pool equipment. I accept the Wife’s evidence that she thereafter paid a pool man to maintain and service the pool and equipment;
·he sealed the skylight on the roof but did not otherwise undertake “significant roof repairs” as he claims;
·he arranged for a plumber to fix the grey water flooding issues.
There is no doubt that the Husband’s efforts benefitted the Wife and that she appreciated them at the time. They are relevant contributions although there is no evidence as to what impact the work had, if any, on the value of the P Street, Suburb Q property.
Initially the P Street, Suburb Q property was the Wife’s home. When the parties purchased the Town B Property, the Wife moved there. For the first few years afterwards, the Wife’s children lived in the P Street, Suburb Q home; the Wife accepted that her son Mr AC had allowed the home to sustain some damage during his occupation.
Thereafter, the Wife rented out the P Street, Suburb Q property as a holiday let. From time to time, contractors were required to be engaged to do work there and I accept that the Husband managed those contractors. Once the property was rented out, the Wife applied the rental income from P Street, Suburb Q for the parties’ joint benefit.
AR Street, Town AS property:
By around 2011 the Husband was staying so frequently at the P Street, Suburb Q property that he was able to rent out the property at AR Street, Town AS.
Thereafter, and up until July 2012 when the Wife moved to Town B, she used to clean the AR Street, Town AS property after each booking.
The Husband applied the rental income towards the mortgage. In 2013 he must have been under some financial strain because the Wife paid his $38,000 tax bill from her savings and the Husband sold the AR Street, Town AS property for $600,000 to reduce his mortgage debts.
Suburb S property (also described as the City AJ property):
Throughout the relationship, the Husband rented out this property. The rental income was applied towards the mortgage and property expenses and to meet his child support payments for his daughter.
The Town B Property:
In mid-2012 the parties were looking at properties for sale when the Wife discovered Town B Property. It was run-down; it was in an excellent location. She and the Husband discussed purchasing it, agreeing that she would use her capital for the purchase, and that he would use his income from off site work to fund the necessary renovations. This made sense; the Wife had the capital and the Husband had a healthy income of $1,250/day working a roster of 19 days on and 9 days off.
In anticipation of the purchase the Wife engaged solicitors in Melbourne who established a discretionary trust, styled “The C Trust”. Both parties were beneficiaries. They also incorporated Town B Pty Ltd to act as corporate trustee for the trust. The parties were both appointed as company directors and each held an equal shareholding in the company.
In 2012 the parties purchased the Property for $1.5M. According to the contract, the sale price comprised the land value of $1.35M, plant and equipment of $140,000 and goodwill was a mere $10,000. [8]
As agreed, the Wife funded the purchase. She was in a strong financial position at that time; the assets of the Ms Walls Family Trust alone were worth $2.7M. She transferred the deposit moneys of $150,000 to Town B Company and the Ms Walls Family Trust also loaned the company $1,427,475 to cover the balance of the purchase price, stamp duty etc.
The Wife promptly moved to Town B; the Husband stayed there during his days off.
The Property needed a major overhaul which the parties originally intended to undertake over an eighteen (18) month period. But the parties abruptly decided to open much sooner. As agreed, the Husband started advancing the necessary renovation money which was done through his own company “Company T”. The parties budgeted to spend about $250,000.
In 2012 the parties had a windfall; a party booked the Property for a date later that year. As a consequence, the need for renovation became urgent.
Both parties set to it with gusto. There were units at the Property which all needed to be gutted and refitted. Given the budgetary limits and the tight timeframe, the Husband took a month of holiday leave so that he could do as much work as possible himself. During that month, he worked hard to strip the apartments so that the cabinetmakers & painters could renovate them. He undertook demolition work; he removed debris; he gutted and refitted rooms and he and the Wife engaged numerous tradespeople to do work.
The parties also arranged a “weekend working bee” with help from family and friends. Over that weekend, they replaced roof tiles, guttering, fascias, flashing, fixed collapsed paving paths, replaced and mended window frames, replaced damaged doors and flyscreens, repaired staircases and the BBQ area, rebuilt dilapidated fixtures, cleaned, landscaped and fixed brickwork eroded from salt exposure.
The parties also upgraded the pool.
When the Husband returned to work, the Wife had to get the Property operational in time for the function. This required buying curtains, furniture, bedding, crockery, cutlery etc. The whole Property had to be cleaned up, including all the exterior structures. They had to set up all necessary online systems. To this end, the Wife’s daughter flew up from Melbourne to assist the Wife and together they worked together for about fourteen (14) hours per day to ensure the Property was operational just prior to the wedding date.
Both parties, including family members and friends, worked very hard to make all this happen. Even so, the costs blew out and “Company T” ended up advancing $275,000 to Town B Company.
In late 2012, the Husband’s employment was terminated following which he and the Wife lived together full-time at the Property.
The parties conducted the Property business jointly. The Husband undertook maintenance and repair work for the roads and infrastructure, including preventative maintenance work. Where possible he did work himself, but he also engaged contractors as required, eg. he engaged plumbers and electricians and he enlisted an excavating contractor (and an excavator) when major earthworks were necessary. The Husband maintained the pool. He also managed the general security of the property by regularly inspecting fences and buildings and undertaking minor repair and maintenance works as needed.
The Wife did nearly all of the administration work for the Property including managing emails, handling bookings, keeping the internal books of account, preparing BAS statements and collating tax records and undertaking marketing campaigns. The garden was a particular passion of hers; she did just about all of the gardening over the property. (The Husband would sometimes assist in a minor way when asked.) The Wife also managed the cleaners, organising their schedules as well as ordering necessary amenities and supplies for the guests.
There was necessarily some overlap between each party’s role as required.
In the period from 2012 – 2016, the Husband was able to use income from the Town B Company to repay the loans advanced through Company T. Essentially he did so by using Property money to meet his personal and vehicle expenses which were then debited against the loan. During that period, neither party was otherwise able to draw a formal wage from the Town B Company. Put shortly, the Property gave them a lifestyle as distinct from a strong income stream. Indeed it is common ground that from time to time the Wife had to prop up the Property from her own savings. She also used her savings to meet their joint expenses.
In 2016 the Wife sold her 40% interest in the Suburb AO property for $160,000 net. The moneys were spent for joint purposes. It was also the Wife who paid for the bulk of their overseas holiday expenses in 2014, 2016 & 2018 when they visited the Husband’s daughter in Country AU. The holidays were expensive; on each occasion the parties were overseas for several weeks.
From around October 2016 to July 2017 the parties separated, although both remained living at the Property. During this time, the Wife moved out of the manager’s apartment and into a smaller room. The parties seem to have otherwise continued running the Property in the same manner.
In 2017 the Wife’s father passed away. He and the Wife’s mother had been living rent-free in the Suburb AN property and later that year the Wife used the Ms Walls Family Trust to purchase her mother a home at O Street, Town B for $315,000. The Wife’s mother moved to that home and has lived there rent-free ever since.
In 2018, the parties were able to draw a modest wage from the Property. They briefly separated again between January and April of that year during which time the Wife returned to Melbourne. From there she managed the administrative work remotely but the Husband no doubt had to undertake much more of the day-to-day administrative and other work at the Property than he normally did. After the Wife’s return, the parties resumed their usual roles. [9]
In 2018 the Wife sold the Suburb AN property, netting $850,000. She applied the sale proceeds as follows:
·E $20,000 on renovations to the P Street, Suburb Q property;
·E $50,000 for overseas holiday expenses for the parties (Country AZ & Country BA);
·the Wife used money for joint living expenses and to financially “prop up” the Property as needed;
·at the Husband’s request, in July 2019 the Wife loaned him $200,000 to offset the mortgage over the Suburb S (City AJ) property.
From time to time the Husband pocketed cash income from guests which he kept for himself, particularly in the later stages of the relationship. The Wife objected to him doing so, particularly given that she was the one whose savings were being used to prop up the Property.
As the relationship spiralled in 2019, the Husband became less and less interested in working at the Property. The Wife picked up the slack. In 2019 when serious bushfires were threatening the Property, the Husband drove out to catch a flight to Melbourne. I accept the Wife’s evidence that:
75.…I was very frightened; visibility was extremely poor and sirens were blaring. At 9.00am, I sent [Mr Keeble] a photo of the fire which was burning on our foreshore and told him that the [Property] next door had been evacuated. He replied with a “thumbs up” symbol. At 9.27am, I texted [Mr Keeble] advising him that the RFS had advised me to hose down the buildings and prepare to evacuate. He replied with the text “Doh”. I continued to update [Mr Keeble] by text and sent photos of the fire. He responded by texting me a photo of his family dinner and pictures of a boat he wanted to buy. I sent him a message explaining how I was scared, disappointed and disillusioned that I was being left to manage the worst bushfire crisis NSW had ever experienced, on my own. Upon his return several weeks later, he looked me up and down before saying “Well, you look perfectly fine to me.” He then scanned the property and said “It looks like everything here is fine too so what the fuck were you crapping on about?”
By the busy Christmas/New Year period, the relationship was effectively over; the Husband was largely absenting himself. On one occasion there was a sewerage leak and the Wife was left to manage the problem (including making arrangements with the guests) while the Husband was out enjoying social activities. Her repeated requests that he return and fix it were persistently rebuffed; ultimately he ended up telling her to call her handyman.
In December 2019, the Wife transferred $60,000 from the Husband’s Suburb S (City AJ) offset account back into her own personal account, thereby reducing her loan to the Husband from $200,000 to $140,000. By this stage the Wife had contributed approximately $200,000 from her own funds to prop up the Property.
Motor Vehicle 1:
At separation, the Wife owned the Motor Vehicle 1. She had previously traded in her Motor Vehicle 6 to acquire the Motor Vehicle 1.
Company U business:
Towards the end of the relationship, the Husband bought this business for $7,000. Essentially it consisted of a quantity of stock. He established an ABN for the business but it has no separate bank account and is simply conducted by the Husband in his own name. He says it has had a very modest turnover which on balance I am willing to accept notwithstanding my reservations about the Husband’s evidence. The business is included in the Balance Sheet as an asset at its original purchase price.
CONTRIBUTIONS POST-SEPARATION:
At separation the Wife vacated the manager’s apartment and moved into the apartment next door. She asked the Husband for her $140,000 back and he refused.
The Husband engaged in various post-separation behaviours as set out in paragraphs [25] and [26] herein. On 8 January 2020, he unilaterally withdrew $10,000 from the business account, calling it “wages”.
In January 2020 the Husband left for Melbourne for around a month. (This is when he took the Wife’s Motor Vehicle 1.) While the Husband was away, the Wife sought an Undertaking from him that he not return except to collect his own property. He did not respond.
The Wife took over management of the Property and had the locks changed. On 5 February 2020 the Husband returned, gaining access to the main building through a window. He called a locksmith to the property who then found himself in the middle of the parties’ argument. The Wife went to Police and brought a private AVO application against the Husband; seemingly to avoid further conflict Police gave the Husband a key.
The Husband brought Ms AD to the Property to stay with him. Ultimately, she then stayed there for several (rather tense) weeks and I accept the Wife’s evidence that the Husband was effectively trying to pressure her into leaving the Property.
In January 2020, the Wife used $69,000 of Suburb AN moneys to buy herself a Motor Vehicle 3. (This is the vehicle the Husband “keyed”).
In February 2020 the Wife commenced these proceedings in the Melbourne Registry; the first return date was 4 March. On 1 March, the Husband attended the P Street, Suburb Q property without the Wife’s knowledge or permission and he accessed the downstairs area. The Wife only found out he had done so when her tenants contacted her later. The Wife does not know what he took from the property that day; in the witness box the Husband said he only retrieved a “rare car part” he had been storing there. I have real doubts about the reliability of what the Husband told me but equally anything he took would not seem to have been overly valuable or the Wife would have made inquiries and given specific evidence on point.
On the Husband’s application these proceedings were subsequently transferred to the Newcastle registry. On 31 March 2020, the parties entered into a consent order whereby, amongst other things, the Husband was to vacate Town B by 14 April, conditional upon him being permitted to leave 2 shipping containers, filled with his personal belongings and the contents of the Manager’s apartment, at the premises, if necessary, such containers not to be interfered with by the Wife. [10] The practical effect is that the Husband took the furniture and the fittings from the apartment.
After the Husband left on 9 April 2020, the Wife moved back into the manager’s apartment. She replaced what the Husband had taken. Shen then took over the full-time management and operation of the Property consistent with the orders of 31 March 2020.
By this stage the Property had again fallen into some disrepair. The Husband had done many “patch-up” jobs over the years, in order to save costs, and over time this work needed to re-done. Moreover, towards the end of the relationship the Husband had not been keeping up the maintenance. There were various items that required repair such as broken window frames, missing tiles and loose and damaged fly screens. The Wife engaged a handyman for this purpose.
When the Husband left, there was also general rubbish and building materials scattered around the Property which needed to be removed. Pursuant to the orders of 31 March 2020 the Husband had been required to do all acts and things to remove rubbish currently scattered around the property including old building materials, old toilets, old/dilapidated lawnmowers, old whitegoods and scrap metal. The Husband did not undertake the requisite clean-up. Consequently, the Wife had to get it done when he left. [11]
The Husband’s removal of tools from the Property (paragraph [25] herein) meant that the Wife had to replace them. She used the Suburb AN moneys to do so. The removal of tools also resulted in inconvenience and business disruptions that may otherwise have been lessened or even avoided. For example, the Husband’s removal of the water isolating cock meant that when there was a water leak in May 2021 the Wife could not isolate the affected water supply but instead had to turn off the mains water to the Property for a whole day until the plumber could attend.
In the first few months after leaving the Property, the Husband made various withdrawals from the Property bank account totalling around $200. While these are minor amounts in the grand scheme of this case, the orders of 31 March 2020 had positively restrained him from making such withdrawals. The Husband said that this was a mere “oversight” on his part as he had confused his different bank cards. He also said that at the time of the withdrawals the orders of 31 March were not at the forefront of his mind. His answers were both unconvincing and unimpressive.
In Semperton & Semperton (2012) 47 Fam LR 626, one of the spouses held a non-commutable DFRDB pension interest which the trial Judge took into consideration both in the Balance Sheet (where it was included as an asset at a high capitalised value) and then taking it into consideration again later as a relevant future factor given that it was an income stream. The Full Court (May, Thackray & Ryan JJ) held this to be an error. Thackray & Ryan JJ observed in their joint judgment that, in the context of assessing future factors, it is not improper for the Court to refer to property that has already been included in the Balance Sheet. Indeed, s 75(2)(b) of the Act – or s 90SF(3)(b) in this case – expressly authorises the Court to take such assets into account. But as their Honours warned:
146 This would, however, usually be relevant only in the following circumstances:
•to highlight a significant discrepancy between the value of assets to be retained by each of the parties which calls for some further adjustment…; or
•to show that the extent of assets to be retained by each party following assessment of contributions is such that there is no warrant for further adjustment…or that a further adjustment is required…; or
•where the nature of the property to be retained by one of the parties has a quality about it which is not accurately reflected in the value ascribed…[14]
(my emphasis)
The Husband’s argument was based upon the third bullet point above. Mr Graham also referred me to the Full Court’s decision in Jabour & Jabour [2019] FamCAFC 78 wherein Alstergren CJ, Ryan & Aldridge JJ agreed with earlier jurisprudence that where one of the initial contributions of a party is a property which suddenly increases in value during the relationship as a result of a rezoning, the party who introduced the property should not necessarily receive the whole contributions credit for that increase. Such an increase is in the nature of a “windfall” to which both parties (or perhaps neither party) may have contributed.
But here the rezoning has not happened; there may never be a “windfall”. Mr K is aware of the rezoning issues; the property has been valued against that backdrop; and future rezoning/redevelopment of the site is simply too speculative and/or remote to warrant a further adjustment. In the end, having regard to the state of the evidence as set out in paragraph [147] above, I adhere to my preliminary view expressed during the trial - namely that to make some further adjustment or allowance in the Husband’s favour on account of this future potential would be to impermissibly “double dip” in relation to the same asset.
STEP 5: ENSURING A “JUST & EQUITABLE” OUTCOME
On the basis of the above analysis, I have determined that it would be “just and equitable” to divide the non-superannuation property on an 83% - 17% basis in the Wife’s favour. In my view such an outcome properly reflects the parties’ respective contributions over the modest length of the relationship and adequately takes account of the future factors. It also takes into account the Husband’s non-disclosure.
The form of order the parties ask me to make is set out in exhibit 2A. Essentially, the Wife will take over the Town B Property and associated entities and each party will otherwise retain their own assets and liabilities.
The only dispute as to the form of the order relates to the Motor Vehicle 1 motor vehicle. The Wife contends that it should be transferred to the Husband, and that he should refinance the existing lease debt and indemnify the Town B Company in respect of any tax liabilities which arise. The Husband contends that the vehicle should be sold, the lease debt extinguished, and the balance divided between the parties in the proportion determined by the Court.
The current value of the Motor Vehicle 1 is unclear; so too is the current lease debt.
Given the Husband’s conduct in relation to the Motor Vehicle 1, I consider that the Wife’s proposed orders are the very manifestation of justice and equity. The Husband will be receiving a substantial cash payment and, in combination with his income, I see no difficulty in him being able to refinance the lease debt. He can always sell the vehicle if necessary. He should pay the Fringe Benefits Tax (and any other tax) arising from his actions.
To the extent that the Motor Vehicle 1 order might somewhat “skew” in the Wife’s favour the 83% - 17% division that I have otherwise found to be just and equitable, such skewing would be relatively minor in the overall scheme of this case.
CONCLUSION & ORDERS:
For these Reasons, I make the orders set out at the commencement herein which I consider to be just and equitable. I will hear the parties as to costs.
I certify that the preceding one hundred and fifty-seven (157) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Betts. Associate:
Dated: 28 April 2023
[1] On 9/12/22, I delivered Reasons and orders dismissing the Husband’s application to re-open the evidence. In those Reasons I incorrectly stated that separation occurred in early 2020.
[2] See paragraph [117] of these Reasons
[3] Exhibit TBA-17; p 88 of the Tender Bundle
[4] Exhibit TBA-18; p 89 of the Tender Bundle
[5] I say at least because he did not claim all of his expenses in his Financial Statement. In particular, he omitted to complete Item 32 and Part N, which provide for “usual” day-to-day living expenses such as food and fuel etc
[6] See the Full Court’s decision in Weir & Weir (1993) FLC 92-338 and the line of authority which follows it
[7] The Husband made this concession in the course of cross-examination
[8] Exhibit TBA-1A; p3 of the Tender Bundle
[9] The Wife’s Affidavit annexed various negative reviews from guests. A common theme of the reviews was that the Husband had behaved aggressively or rudely to them But although the reviews make for entertaining reading, they cannot be given any weight in the absence of evidence that the Husband’s actions diminished the value of the business in any real way
[10] Order 1.1.1
[11] Order 2.3
[12] The Wife’s responsibility falls within s 90SF(3)(e) or s 90SF(3)(r)
[13] At p 76,644
[14] See also Preston & Preston [2022] FedCFamC 1A 157 where the Full Court (Alstergren CJ, McClelland DCJ & Austin J) applied Semperton - again in the context of non-commutable superannuation interests
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