Waye & Waye
[2023] FedCFamC1F 962
•13 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Waye & Waye [2023] FedCFamC1F 962
File number: SYC 4194 of 2020 Judgment of: HARPER J Date of judgment: 13 November 2023 Catchwords: FAMILY LAW – PROPERTY – Adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) – Where marriage was 20 years in length – Where husband is 60 per cent shareholder and sole director of and wife is 40 per cent shareholder of company – Husband acknowledged “key person” in the business with an average of up to 40 employees – Whether shares should be valued by reference to the core enterprise value alone or by including surplus assets of unknown size and value as at the date trial – Where surplus assets usually in the form of cash have historically been disbursed at the discretion of the husband through the declaration of dividends, Division 7A loans and salary primarily to himself – Cash reserves of the company are more appropriately characterised as a financial resource of the husband – To incorporate surplus assets in the equity value of the company and treat them as a financial resource would result in double counting – Where husband does not wish to sell the business – Where parties agreed contributions were equal – Where both parties have remarried and debate centred on issue of a s 75(2) adjustment in the wife’s favour – Where husband argued that his post separation contributions militated against a s 75(2) adjustment in the wife’s favour – Where he argued there should be no adjustment in favour of the wife – Where wife sought a 15 to 20 per cent adjustment – Where husband has significantly greater earning capacity – Whether wife’s new husband is to be treated as a financial resource to wife notwithstanding a binding financial agreement – Where 18 per cent adjustment made in favour of wife following consideration of s 75(2) factors – Just and equitable division of the parties’ property is found to be 68 per cent in favour of the wife and 32 per cent in favour of the husband – Wife to transfer her shares in the husband’s company to the husband – Husband to transfer to the wife the former matrimonial home unencumbered.
FAMILY LAW – EVIDENCE – Expert Evidence – Where wife objected to the Single Expert’s Valuation of business – Where wife contended the Single Expert applied the incorrect level of renumeration said to be assumed for the purposes of valuation – Where wife contended expert evidence of renumeration expert should be preferred – Where Court held the approach of Single Expert was broadly orthodox – Where Court not bound to embrace values given by an expert – Where Court determined question of value by reference to actual business and its key person expectations – Where Court held value was most accurately reflected in its core enterprise value.
Legislation: Evidence Act 1995 (Cth) s 50
Family Law Act1975 (Cth) Pt VIII, ss 75, 79, 80, 81
Income Tax Assessment Act1936 (Cth) Div 7A
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 7.08, 7.10
Cases cited: Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116
Candle & Falkner (2021) FLC 94-069; [2021] FedCFamC1A 102
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Dovgan & Dovgan [2021] FamCA 306
Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Mallet v Mallet (1984) 156 CLR 605; [1984] HCA 21
Manolis & Manolis (No 2) [2011] FamCAFC 105
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Phillips and Phillips (2002) FLC 93-104; [2002] FamCA 350
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Division: Division 1 First Instance Number of paragraphs: 149 Date of hearing: 8–10 March, 26 May 2023, 16 August 2023 Place: Sydney Counsel for the Applicant: Mr Ahmad with Ms Van Oosterom (8-10 March, 26 May 2023) Solicitor for the Applicant: Behlau Murakami Grant ILP Counsel for the Respondent: Mr Ford Solicitor for the Respondent: Doolan Callaghan Family Lawyers ORDERS
SYC 4194 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS WAYE
Applicant
AND: MR WAYE
Respondent
ORDER MADE BY:
HARPER J
DATE OF ORDER:
13 NOVEMBER 2023
THE COURT ORDERS THAT:
1.Within 28 days of the date of these orders and simultaneously in so far as is practicable:
(a)the Applicant Wife (“wife”) will do all acts and things and sign all documents necessary to transfer to the Respondent Husband (“husband”) her shareholding in B Pty Ltd;
(b)the parties will do all acts and things and sign all necessary documents to transfer to the wife the husband’s right, title and interest in the property situated at and known as C Street, Suburb D in the State of New South Wales being the whole of the land contained in folio identifier … (“C Street property”), furthermore:
(i)the parties will do all acts and things and sign all documents necessary; and
(ii)the husband will pay all monies necessary;
to discharge the mortgage in favour of ANZ with dealing number … registered on the title of the C Street property;
(c)the husband will do all acts and things to pay or cause to be paid to the wife such cash sum as is necessary to effect an adjustment of final property interests between the husband and the wife whereby the wife retains 68 per cent of the net property (taking into account the assets, liabilities, and superannuation she is to receive and retain pursuant to these orders) and the husband retains 32 per cent of the net property (taking into account the assets, liabilities, and superannuation he is to receive or retain pursuant these orders).
2.Within 14 days from the date of these orders, the parties shall do all acts and things and sign all documents necessary to cause the property situated at and known as E Street, Suburb D in the State of New South Wales being Certificate of Title Folio Identifier … (“the E Street property”) to be listed for sale by way of public auction with an agent to be agreed upon between the parties or, in default of such agreement for more than 14 days, with an agent appointed by the President of the Real Estate Institute of NSW or their nominee (“the agent”) whose decision shall be final and binding upon the parties, in the following manner:
(a)Such auction take place within 6 weeks from the date of placing the E Street property for sale by public auction or as soon as possible thereafter;
(b)The reserve price for such auction shall be as agreed between the parties or failing agreement for more than seven days, as determined by the selling agent;
(c)The parties shall equally pay all auction expenses as requested by the selling agent as and when they fall due;
(d)The parties shall do all such acts and things as may be necessary or recommended by the selling agent to properly present the property for sale and make it available for inspection by prospective purchasers;
(e)Either party shall be at liberty to bid for the purchase of the E Street property at auction;
(f)The parties (or the husband alone should the wife elect not to attend) shall attend at the auction sale and in the event that the E Street property is not sold at such auction, then the parties (or the husband alone should the wife not attend) shall if necessary, negotiate with the highest bidder at auction if the reserve price is not reached;
(g)The husband shall instruct the agent that all communication regarding the sale is to be in writing, or if verbal to be confirmed in writing, and to both parties jointly;
(h)The parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
(i)Making keys available to the agent;
(ii)Allowing inspection of the E Street property at all reasonable times requested by the agent;
(iii)Doing or saying nothing to hinder or prevent a sale being effected;
(iv)Ensuring the E Street property, including the grounds, is in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(v)Signing all documents requested by the agent in relation to the listing for sale of the E Street property including but not limited to an agency agreement, except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
(i)The husband shall instruct such solicitor as is agreed between the parties and failing agreement to be selected by the wife from a list of three solicitors proposed by the husband (“the Solicitor”) and the Solicitor shall be instructed to include both parties in all communications. In the absence of the wife making such nomination, the Solicitor shall be nominated by the husband; and
(j)The husband shall each execute a contract for sale in the form prepared by the Solicitor having conduct of the sale.
3.In the event the E Street property fails to be sold by public auction on the first occasion, it shall continue to be auctioned (unless otherwise agreed between the parties in writing) at intervals of six (6) weeks or as otherwise recommended by the agent for the best price reasonably obtainable and for the purposes of any subsequent auction the provisions of Orders 2(a) through to 2(j) shall apply.
4.Upon settlement of the sale of the E Street property the parties shall do all acts and things and sign all documents as shall be necessary to cause the proceeds of sale to be applied in the following manner and order:
(a)In payment of the costs of and incidental to such sale, including legal costs and disbursements, the agent’s commission, valuer’s fees and sale expenses;
(b)In discharge of the borrowings secured by way of mortgage to ANZ Bank, being registered mortgage number … and loan account ending …86 which has a current balance of approximately $533,000;
(c)In payment of council and water rates and adjustments together with any outstanding strata fees and outgoings;
(d)In reimbursement to either party for any expenses (agreed to in writing between the parties) associated with the sale such as advertising expenses or conveyancing fees; and
(e)Payment of the balance to the husband.
5.Except as specifically provided for by any order to the contrary:
(a)The husband is solely entitled at law and in equity, to the exclusion of the wife, to all items of property and financial resources in his possession or control at the date of the making of these orders and in the future;
(b)The wife is solely entitled at law and in equity, to the exclusion of the husband, to all items of property and financial resources in her possession or control at the date of the making of these orders and in the future;
(c)The husband hereby indemnifies the wife from and in respect of all actions, claims, suits and demands as may be made against the wife in relation to all liabilities in the name of the husband; and
(d)The wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife.
6.Except as specifically provided for by any order to the contrary, both the husband and the wife are to release the other from all debts owing from one to the other.
7.Each party do all acts and things and sign all documents, authorities and writings that are necessary to give effect to these orders.
8.In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these orders then the Registrar of the Court be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
9.Any application seeking an award of costs is to be filed and served with an affidavit in support within 28 days of the date of these orders, and in the event no application is filed within the time specified, there shall be no order as to 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 the pseudonym Waye & Waye has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARPER J:
INTRODUCTION
These are proceedings between the applicant wife, Ms Waye (“the wife”) and the respondent husband, Mr Waye (“the husband”) for final property adjustment orders pursuant to s 79 of Pt VIII of the Family Law Act1975 (Cth) (“the Act”).
There was no dispute that it would be just and equitable to make property adjustment orders; in other words, the parties agreed that the Court should accept s 79(2) of the Act was satisfied, subject to the precise form of the final orders.
It was also common ground that there was no basis in the evidence to conclude that the parties’ contributions for the purposes of s 79(4)(a)–(c) of the Act were other than equal, either during the relationship or after separation. On the wife’s case, this position was subject to the qualification that an inheritance received by her should be placed in a separate pool.
The dispute centred around the value of certain assets on the parties’ balance sheet, in particular the value of the parties’ firm, B Pty Ltd, of which the parties are the shareholders, the husband as to sixty per cent and the wife as to forty per cent, and whether any adjustment should be made in the wife’s favour pursuant to s 79(4)(e) upon consideration of the factors set forth in s 75(2) of the Act.
As I understood her submissions, in summary the wife argued she should receive a significant adjustment pursuant to s 79(4)(e) of 15 to 20 per cent depending on the treatment of the value of a business and the dividends, to deliver to her about 65 per cent of the assets, according to her composition of the balance sheet. It was the husband’s final position that the parties should each retain 50 per cent of the asset pool and other than making a cash payment to the wife of $73,000 no further adjustment was warranted. He contends this would result in an equal division.
BRIEF BACKGROUND
The wife was born in Country N in 1969 and is 54 years of age. The husband was born in Country N in 1971 and is 51 years of age.
The parties first commenced a relationship in 1995 or 1996. The difference is not material.
In early 1997, the husband relocated to Sydney to commence a role as a professional at F Company. He worked for a number of firms until 2008.
The wife contended that they registered their marriage in City G in 1997. The husband contended that they were married in 1998. Both parties agreed that they held a wedding ceremony in City G in early 1998. Nothing turns on this and I find that the parties were married by no later than early 1998.
In early 1998, the wife relocated to Sydney. The wife was unemployed for approximately six months before she obtained employment in hospitality.
The parties’ only child, Ms H, was born 1999. The wife did not work following Ms H’s birth until she commenced pre-school in 2002.
In 2007, the husband received an early inheritance of $175,000 from his father. These funds were applied to the purchase of a property in Suburb J.
In 2008, the husband opened his own firm, B Pty Ltd. He remains the director of this firm. The wife was never formally employed by B Pty Ltd, however was a director up to September 2017, when she resigned at the husband’s request. The husband currently has a 60 per cent shareholding in the company, whilst the wife holds 40 per cent.
In 2014, the parties purchased a property at C Street, Suburb D (“C Street”) for around $2,200,000. They resided in this property until the husband moved out in March 2017. The wife described this property as her principal place of residence in Australia since the parties’ separation, and she has had exclusive possession of this property pursuant to Court orders made on 11 August 2021.
Also in 2014, a unit at E Street, Suburb D (“E Street”) was purchased for approximately $680,000. The husband’s evidence treated this property as a joint investment asset. He said B Pty Ltd provided a loan to complete the purchase which was then discharged by finance from ANZ bank. According to the wife, this property was registered solely in the husband’s name, but in some unexplained way, both parties became liable for the mortgage debt. Neither party tendered a certificate of title. However, there was valuation evidence which contained the certificate of title recording the husband as sole registered proprietor. This property was tenanted and the evidence showed that the husband received the rent. It continues to be leased at the time of the final hearing, although the husband lived in the property for approximately two years post-separation. The parties included the property on the balance sheet as an asset of the husband but subject to a joint liability.
In 2017 the husband commenced a relationship with his current wife, Ms K. The date of their marriage was in dispute, with the wife arguing it was in 2018, but the husband contending it was not 2020. Again, this difference is not material. The husband and Ms K have two children, L, aged five, and M, aged two.
The parties separated on a final basis in May 2017, with a divorce granted in the Country N Consulate in 2018.
In 2018, the wife’s father passed away. She and her sister were the beneficiaries of his estate, which was worth approximately $1.5 million. Her 50 per cent share was $750,000, comprised of $500,000 in shares which have now been sold, and a 50 per cent share in her late father’s property, worth $250,000.
Around the same period, the wife met her current husband, Mr O. They commenced a relationship in early 2019 and married in 2022. They have resided in Country N since 2022. Prior to their marriage, they executed a binding financial agreement pursuant to s 90C of the Act.
In mid-2019, the husband purchased a property at P Street, Suburb D (“P Street”) in his sole name. He presently resides here with Ms K and their children.
In early 2020, the parties agreed for C Street and E Street to be sold, however the husband subsequently gave instructors to the listing agent to cease this process.
In late 2022, the husband and Ms K exchanged contracts for the purchase of an off-the-plan property at Q Street, Brisbane (“Q Street”). A 10 per cent deposit of $499,500 was paid, financed by way of a loan agreement between the husband and B Pty Ltd to which Div 7A of the Income Tax Assessment Act1936 (Cth) (“the Income Tax Act”) applies (“Division 7A agreement”). He and Ms K intend to sell P Street and relocate to Brisbane upon the completion of construction of the property in late 2023/early 2024.
PROCEDURAL HISTORY
The following aspects of the procedural history are relevant.
The wife commenced proceedings on 26 June 2020 seeking interim and final orders. Her interim application sought spousal maintenance, interim partial property settlement, and disclosure. The husband filed his Response on 29 July 2020.
On 10 August 2020, consent orders were made for disclosure, and a dividend to be declared by B Pty Ltd of $150,000 to the husband and $100,000 to the wife constituting an interim partial property settlement. The $100,000 declared to the wife was to be paid to her solicitor’s trust account. Of the husband’s $150,000, $50,000 was to be paid to an account nominated by the wife with the remaining $100,000 to be paid to the trust account of the husband. Whilst the issue of spousal maintenance was not dealt with on that occasion, the parties agreed for interim payments to be made pending an interim hearing, as well as for the husband to meet payments for other expenses such as the mortgages over C Street and E Street.
On 18 February 2021, consent orders were made for the appointment of a remuneration expert.
Interim consent orders were made on 9 June 2021 withdrawing the wife’s application for spousal maintenance and discharging the husband’s obligations made on 10 August 2020. A further dividend was declared by B Pty Ltd for the husband to receive $174,426, and the wife to receive $116,284.
On 11 June 2021, the wife was ordered to pay any costs relating to C Street.
The matter first came before me on 18 July 2022. I ordered that the parties attend a Conciliation Conference.
On 7 November 2022, I made orders placing the matter in the Sydney Rolling List in March 2023, together with trial directions.
The matter had been listed for a Conciliation Conference on 3 February 2023, however on 12 December 2022, a judicial registrar vacated the listing and ordered the parties to attend external property mediation instead. No mediated resolution was forthcoming.
The matter was initially heard between 10 and 13 March 2023, the matter was unable to conclude and was stood over part heard to 26 May 2023 and then again to 16 August 2023, after which judgment stood reserved.
MATERIAL RELIED UPON BY THE PARTIES
According to her Case Outline filed on 3 March 2023, the wife relied upon:
(1)Affidavit of wife filed 16 February 2023; and
(2)Financial statement of wife filed 8 March 2023.
The wife relied upon a further affidavit sworn and filed by her on 12 May 2023.
According to his Case Outline filed 3 March 2023, the husband relied upon:
(1)Affidavit of husband filed 30 January 2023;
(2)Financial statement of husband filed 30 January 2023;
(3)Exhibit HW-1 to affidavit of husband;
(4)Affidavit of Mr S filed 1 March 2023; and
(5)Affidavit of Ms R filed 31 January 2023.
Both spouse parties were cross-examined.
EVIDENCE
A number of single experts were appointed in this matter.
Ms T was appointed to value B Pty Ltd. She produced a first report dated 29 January 2021 (although it bears the wrong date, 29 January 2020), and an updated valuation on 1 December 2022. Both reports were annexed to her affidavit filed 22 February 2023. Ms T was cross‑examined.
The wife sought leave under r 7.08 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) to rely on an adversarial expert report prepared by Mr U, dated 8 February 2023. Ultimately this was not pressed (Transcript 26 May 2023, p.246 lines 16–17). She also sought leave pursuant to r 7.10 of the Rules, or alternatively s 50 of the Evidence Act 1995 (Cth) (“Evidence Act”) to rely on a draft report prepared by Mr U dated 19 January 2023.
Mr U’s draft report was not attached to an affidavit read in the trial. It was included in the wife’s tender bundle (Exhibit G). Ultimately, the husband did not dispute the figures in paragraphs 10, 13, 14, 15(e), 15(g), 18, 19, 20(e), 21 and 22 of the report, and the wife relied only on the figures in those paragraphs, the balance of the report not being considered as part of the evidentiary record (Transcript 26 May 2023, p.253 lines 16–36).
Mr V was instructed to prepare a Market Remuneration Report concerning the remuneration of the husband in his role as the principal and managing director of B Pty Ltd. Mr V’s affidavit filed 7 March 2023 was read however he was not required for cross-examination.
Mr W was appointed to value P Street, C Street, and E Street. Mr W’s affidavit, filed 28 February 2023, annexed the valuations was read into evidence. These values were ultimately agreed and Mr W was not cross-examined.
During the proceedings, the husband was also granted leave to file and read an affidavit by Mr X, B Pty Ltd’s accountant, affirmed on 9 March 2023. Mr O was cross-examined.
The documents tendered and received into evidence are set out in Schedule 1 to these reasons.
Objections to Ms T’s report
Counsel for the wife objected to paragraphs 19 to 21 of Ms T’s updated report. These paragraphs expressed views about the appropriate level of remuneration to be assumed for the purposes of valuation. I did not accede to the objection. The reasons are explained below at [65] to [80]. As explained, I do not accept Ms T’s value without qualification.
COMPETING PROPOSALS
The wife’s final proposed minute of order is detailed in Annexure “A” set out at the conclusion of this judgment.
The husband’s sought orders as set out in Annexure “B”.
PROPERTY ADJUSTMENT UNDER PT VIII
Part VIII of the Act sets out the legislative provisions relating to orders altering the property interests of parties who are or were married. The central provision is s 79 of the Act, which gives the Court power to make such orders for alteration of property interests as it considers appropriate.
Section 79(2) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act set outs a number of considerations which must be taken into account in considering what order, if any, should be made.
Section 80 grants specific powers to make a range of different orders to adjust property interests. Section 81 is also relevant. It reflects a policy of making orders which finally determine the financial relationship between the parties and avoid further proceedings, as far as practicable.
APPROACH TO BE TAKEN
In property proceedings under the Act, parties generally rely upon the “four step process” set forth in Hickey and Hickey and Attorney General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at [39] in the determination of an application under s 79, as follows:
(1)Identify and value, the parties’ property, liabilities and financial resources at the date of the hearing;
(2)Identify and assess the contributions of the parties as referred to in s 79 of the Act and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
(3)Identify and assess the other factors relevant including, the matters referred to in s 75 of the Act and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
(4)Consider the effect of the above and resolve what order is just and equitable in all the circumstances of the case.
In Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) the High Court made clear at [37] it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property. The four step approach remains appropriate (Bevan & Bevan (2013) FLC 93-545 at [72]–[73] (“Bevan”)).
ASSETS, LIABILITIES AND FINANCIAL RESOURCES AT THE DATE OF THE HEARING
A joint balance sheet was tendered by the parties, which became Exhibit J. A number of items remained in dispute. In relation to these disputed items, I express my conclusions as follows, noting the reference to Item numbers is a reference to the item number on Exhibit J.
Items 5 and 5A: Shares in Country N Listed Companies
The value of Item 5 was agreed by the husband. It became common ground that the value of the wife’s initial investment in Y Pty Ltd was $200,000. This item was connected to Item 5A because the wife’s evidence was that this investment came from the sale of $500,000 worth of shares in Country N companies inherited from her father. The balance of the sale proceeds, about $300,000 was expended on reasonable living expenses. It was never put to her that those expenses were other than reasonable. I do not accept Item 5A should be on the balance sheet as a separate asset.
Item 7: B Pty Ltd
The difference between the values for B Pty Ltd adopted by the parties was substantial. The husband pressed for a lower value of $2,799,000. The wife pressed for a higher value of $4,299,000. Both values were median figures between ranges given by Ms T.
Up until 2014 the wife was a director of B Pty Ltd, but by the time of Ms T’s first report, the husband was the only director, although the shareholdings remained the same. The husband gave evidence that he created B Pty Ltd and continues to be the person who drives its performance. He is the sole director but has an executive team of up to nine further individuals.
He said he does not wish the parties to sell their equity in the company to a third party. He wants the wife to transfer to him her shareholding and to retain the company and its business to generate income for himself and his new family. He gave evidence that in the period leading up to trial, economic conditions had led to a lack of larger design projects. This had resulted in smaller projects which required the same staffing and resources but delivered a more modest financial return because they lacked the economies of scale enjoyed by larger projects. Another problem had been the sudden halting or withdrawal of projects. Although the numbers fluctuated, the husband gave evidence that staff numbers were in the range of 30 to 46 in a given month between 2019 and trial, bringing a staff remuneration cost of between $2,800,000 and $4,414,000 in the financial years 2019 to 2022, and $1,174,152 in the financial year ending 30 June 2023 up to the date of his trial affidavit filed 30 January 2023.
In her first report Ms T described B PTY LTD as follows:
24. [B Pty Ltd] is a firm led by [Mr Waye] […]. Founded in Sydney, Australia in 2008, [B Pty Ltd] delivers a wide range of projects throughout Australia and overseas […]. [B Pty Ltd] projects have won multiple key awards, including […] awards in the United Kingdom and [another] award. The company’s projects have featured in Australian and international magazines […].
25. [B Pty Ltd] generates revenue through fees to clients for the provision of […] services. [Mr Waye] is the sole director of [B Pty Ltd]. Projects are primarily secured through [Mr Waye’s] efforts and personal brand, with business developments, designs and client networking significantly dependent upon him. The main procurement of clients is through face-to-face interactions.
26. Projects [B Pty Ltd] has worked on include [a number of key projects in Sydney]. The company has worked closely […] on multiple occasions and these relationships are expected to continue. [B Pty Ltd] is currently focused on delivering […] projects in Australia and broadening its footprint to include projects [overseas].
(Ms T’s affidavit filed 22 February, Annexure A)
B Pty Ltd holds little by way of plant and equipment. Between 2018 and 2022 it had significant cash holdings. In June 2018 it held about $2,338,722, in June 2019 $2,335,196, in June 2020 $3,461,998, in June 2021 $3,984,077, and in June 2022 $2,540,924.
There was no dispute that between 2008 and 2019 the husband was either paid modestly or received no salary at all. The latter was the position between 2015 and 2019. He then received a salary of $710,937 in 2020, $854,166 in 2021 and $4,800,000 in 2022. I note this range of salaries is broadly consistent with the instruction given to Ms T to assume as salary of $1,000,000 for the husband. It was the evidence admitted from the draft report of Mr U that the salary for each of those years was allocated as follows:
(a)2020 was allocated as to 307,270 for withheld PAYG tax liability, and $403,668 for the husband 2020 Division 7A loan so he received nil in in his hands;
(b)2021 was allocated as to $372,774 for withheld PAYG tax liability, and $248,351 for the husband 2021 Division 7A loan so he received in in his hands $233,042;
(c)2022 was allocated as to $2,906,744 for withheld PAYG tax liability, $657,434 for the husband’s 2019 loan, 383,768 for his 2020 loan and $442,798 for his 2021 loan, with him receiving in his hands $1,089,300.
(Exhibit G, p.663 paragraph 14)
Ms T set out the instruction given to her concerning the role and remuneration of the husband as follows:
46. …
[Mr Waye] is a globally well renowned [leader in his field], and all projects are procured because of his efforts and personal brand. The business development, designs and client networking are significantly dependant on him. In numerous cases, projects have been procured simply as clients wish to work with him as his profile can be used when marketing the development. Other than some assistance from senior personnel all work goes through [Mr Waye]. Therefore, a significant market salary needs to be attributed to [Mr Waye]. We feel as though anything less than $1 m per annum does not reflect the true value of [Mr Waye] to the business.
(Ms T’s affidavit filed 22 February 2023, Annexure A)
She explained why she accepted the posited remuneration of the husband as follows:
47. Given the Husband’s pivotal role in the business, in the absence of him receiving a level of remuneration that he considers to be reflective of his work and contribution to the business, a hypothetical purchaser would be at risk of him leaving the business. Even if some form of restraint was put in place, as the work sourced by the [business] is dependent on [Mr Waye’s] personal brand, the projects offered to the business would likely decline. As such, I have accepted this level of remuneration for the purposes of my valuation assessment.
(Ms T’s affidavit filed 22 February 2023, Annexure A)
There was no dispute, and the husband conceded in cross-examination, that as sole director of B Pty Ltd it was his practice to draw upon B Pty Ltd reserves as he saw fit by way of salary, director’s loan or by declaring dividends. The loans were drawn and repaid to accord with Div 7A of Pt III of the Income Tax Act. He used these sources of funds to pay personal expenses and credit cards.
The wife argued the Court should not apply the value given by Ms T but should reach a value itself according to well known principles, some of which I discussed in Dovgan & Dovgan [2021] FamCA 306 at [215] and adopt here, but specifically in relation to valuation of a business (Mallet v Mallet (1984) 156 CLR 605). I accept I am not bound to embrace the values given by Ms T. In Phillips and Phillip (2002) FLC 93-104 the Full Court said:
44. In The Commonwealth v Milledge (1953) 90 C.L.R. 157 the High Court at pp.161-162 said that the correct approach to be applied to the resolution of a valuation dispute should be a common sense endeavour after consideration of all material to fix a value satisfactory to the mind of the Court as representing the value.
Ms T undertook a valuation of B Pty Ltd as a going concern on a capitalisation of future maintainable earnings basis. This was the type of valuation she was instructed by the parties jointly to undertake. In conducting her valuation process, she accepted that the husband was both an equity holder and a key person in the business to attract clients and generate revenue. She acknowledged the difficulty in cross-examination of delineating “people that are both equity holders and the providers of personal exertion income” but the distinction needed to be made to provide the instructed valuation (Transcript 10 March 2023, p.185 lines 2–5). Therefore, the income of B Pty Ltd’s business was to a significant extent in the nature of personal services income produced by the husband and “key person risk” should affect any valuation. She explained in cross-examination that from the perspective of the hypothetical but not anxious purchaser of the equity:
… if the value of that equity is dependent upon the key person generating the income, managing the contracts, generating a profit, then if they’re not engaged and willing to continue at the level of activity that they were before, there is a real risk that that level of profitability won’t be maintained.
(Transcript 10 March 2023, p.186 lines 10–15)
In her first report she then accepted as part of her instructions assertions by the husband that he would require a market salary of $1 million to remain in the business, if the equity was sold. Taking account of this factor, the nature of the business, and other factors such as disruptions caused by the Covid-19 pandemic she adopted an EBIT of $650,000 to $700,000 (Ms T’s affidavit filed 22 February 2023, Annexure A paragraph 51). To derive an appropriate EBIT multiple Ms T had regard to a number of well recognised factors (Annexure A, paragraph 52) and widely available information on smaller business sale transaction multiples (Annexure A, paragraphs 53–69). She concluded a multiple of 2.5 was appropriate. This gave a core enterprise value range of $1,625,000 to $1,750,000. She also opined that that there was implied goodwill in the enterprise value of 68.4 to 70.7 per cent (Annexure A, paragraph 76). When a loan receivable from the husband of $1,569,000 and net cash of $3,295,000 were added as surplus assets, the full value of the parties’ equity in B Pty Ltd was assessed to be between $6,489,000 and $6,614,000 at the date of valuation 30 June 2020 (Annexure A, p.24–25).
After the first report, Mr V, who was not cross-examined, gave evidence that in his opinion a commercial, arms-length total remuneration level for a Principal and Managing Director in a business of the B Pty Ltd type would be between $320,000 and $365,000, including a premium of 10 to 15 per cent for a person such as the husband (Mr V’s affidavit filed 7 March 2023, p.13). A premium of 10 to 15 per cent would deliver a salary of up to $500,000.
In her second report, Ms T valued B Pty Ltd as at 31 October 2022. She was asked to assume Mr V’s level of remuneration for the husband at $365,000 rather than $1 million. This produced an adjusted EBIT of $900,000 to 1,100,000, based on updated figures (Ms T’s affidavit filed 22 February 2023, Annexure B paragraph 17). Using the same EBIT multiple of 2.5 the core enterprise value would be in the range $2,250,000 to $2,750,000. The figure for loans receivable had changed to $570,000 and net cash to $1,229,000, the value of the B Pty Ltd equity was then $4,049,000 to $4,549,000. I note that the reduction in surplus assets was partly a result of the manner in which the husband’s salary for 2020, 2021 and 2022 were allocated to his loans (above at [61]).
However, Ms T doubted a hypothetical purchaser would be prepared to agree a purchase price using a multiple of 2.5. In her second report she expressed the view:
19. Whilst acknowledging that I am not a remuneration expert, in my opinion, given [Mr Waye’s] reputation […] and his pivotal key person role in the business, a potential purchaser of the [B Pty Ltd] business would have reservations that the level of total remuneration assessed by [Mr V] would be sufficient, relative (inter alia) to [the husband’s] public profile and revenue origination activity, to retain and incentivise him as an employee of the business. As such, the resultant high level of adjusted EBIT (after allowance for [Mr Waye’s] assessed remuneration and profit share), could not be considered to be available to the purchaser (i.e. a provider of capital) in the long term.
20. The value of a business represents the present value (on a risk adjusted basis) of the future cash flows expected to be generated by that business and available to the provider of capital. Given that large disparity between:
(a) the remuneration expert’s assessment of total remuneration and profit share; and
(b) [Mr Waye’s] recent salary payments from the business and his comments as to an expected salary of some $1.0 million;
in my opinion, a potential purchaser of the [B Pty Ltd] business would have reservations with respect to paying a multiple of 2.5 times (as assessed in the First [Ms T] Report) for the adjusted earnings as the risk associated with the continuity of the adjusted EBIT of $0.9 million to $1.1 million is significant.
(Ms T’s affidavit filed 22 February 2023, Annexure B)
This led Ms T to the view that a multiple of 1 was more realistic than 2.5 giving a core enterprise value of $900,000 to $1,100,000 and on overall value of $2,699,000 to $2,899,000, adding loans receivable of $570,000 and net cash of $1,229,000. In her second report she said:
21. As a result of the factors outlined above, in my opinion, a potential purchaser would be willing to pay a multiple of no more that 1.0 times the adjusted EBIT (after allowance for the market based salary and profit share percentage assessed by [Mr V]) to purchase the business. Such a multiple would reflect:
(a) an assessment of the likely continuity of management incorporating the significant risk that [Mr Waye], the key person in the business, could not be retained in the short-medium term at the level of remuneration included in the determination of the adjusted earnings
(b) the run-off of existing contracts adjusted for the risk that clients may elect to stop work in the event that [Mr Waye] left the business
(c) the very low net tangible asset backing of the underlying business.
(Ms T’s affidavit filed 22 February 2023, Annexure B)
Ms T further explained:
55. However, in my opinion, the adoption of the level of remuneration assessed by [Mr V] and the increased business earnings that flow therefrom does not necessarily result in an increase in the market value of the [B Pty Ltd] business or the market value of the equity of [B Pty Ltd], i.e. the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm’s length within a reasonable timeframe.
56. I say this because the adjusted earnings after allowance for [the husband’s] assessed remuneration would, in my opinion, be considered excessive by both [the husband] (as vendor and relative to his stated remuneration expectations) and a knowledgeable purchaser (either after allowance for paying to retain [the husband] or in the absence of [the husband]) and therefore not considered to be maintainable. In the context of the overall business earnings, and [the husband’s] reward for his personal contribution thereto, in my opinion, the assessed level of remuneration would not be sufficient, in relative terms, to remunerate [the husband] for his skill, talent and […] reputation and to retain his services absent him holding equity in the company. Given this risk, in my opinion, a hypothetical purchaser would not be willing to pay a multiple of 2.5 times the adjusted earnings on this basis.
(Ms T’s affidavit filed 22 February 2023, Annexure B)
(Footnotes omitted)
The wife put forward four reasons why the Court should adopt the higher value of about $4,299,000, or otherwise the best guess the Court could arrive at. First, she argued that Ms T’s adoption of a 1 multiple for EBIT in her second report was based upon a subjective figure for the husband’s remuneration which “cut across” the arms-length model provided by Mr V. The wife’s point was that in effect the husband’s assertions about what he would require by way of salary artificially distorted the presumed mind of the hypothetical purchaser. Secondly, Ms T failed to expose her reasoning for reducing the multiple from 2.5 to 1. Thirdly Ms T uncritically accepted assertions about impact of the Covid-19 pandemic, the war in Ukraine and disruptions to global supply chins. Fourthly she took no account of dissipation of cash assets between her first and second reports.
I do not accept the wife’s arguments. The passages from Ms T’s second report extracted above at [70] to [72] demonstrate she considered a range of factors in reaching her conclusions about the appropriate multiple, not only the remuneration figure proposed by the husband for himself. She did not “uncritically” accept the remuneration figure. She accepted it based upon her experience which informed her expertise, as the wife accepted, and as pointed out, the husband’s salary between 2020 and 2023 was consistent with a salary of $1,000,000. In cross‑examination Ms T explained that when considering the salary of a key person it is necessary to have regard to the salary they themselves expect (Transcript 10 March 2023, p.185 lines 21–40). This seems to me to be correct. Any hypothetical purchaser, who seeks to purchase a business while retaining the services of a key person must take account of what that person expects to be paid, even if they either ultimately do not want to pay such remuneration or try to negotiate it down. I do not see how a hypothetical purchaser could ignore the remuneration expectations of a key person, especially where, as here, the key person is an equity holder and would be involved in the negotiations for sale. A key person equity holder may reasonably seek a substantial remuneration because, once they have sold their equity, the salary is the only expression of the value to themselves which they bring to the business through their personal exertions. In other words, the value to them is no longer expressed in the value of the equity because they no longer own the equity. This observation would apply to the husband if he was proposing to sell his shares. A failure to meet that expectation risks disaffecting the key person and losing them as a component of the business, which would diminish the value of the equity to be held by the hypothetical purchaser.
It is in the nature of a key person factor in the value of the business that such a person may expect a salary outside any normalised salary parameters in the relevant industry. Ms T was engaged to value an actual business by considering its actual components. The wife cannot escape the reality that the value of the parties’ equity in B Pty Ltd, when the valuation is done on a capitalised future earnings basis, is and would be reliant to a significant degree upon the personal exertions of the husband and his ability to attract business, even taking account of the numerous other employees of B Pty Ltd. His views of what remuneration he expects are unavoidably relevant. As Ms T said in cross-examination:
… a third party who is making a decision to acquire that equity, and if the value of that equity is dependent upon the key person generating the income, managing the contracts, generating a profit, then if they’re not engaged and willing to continue at the level of activity that they were before, there is a real risk that that level of profitability won’t be maintained.
(Transcript 10 March 2023, p.186 lines 10–15)
The shortcoming in the wife’s first argument is that she ignores the point made by Ms T that the evidence of a “normalised” or average market salary will also inevitably affect the choice of multiple. The higher multiple of 2.5 was predicated on the husband receiving remuneration at a level which a hypothetical purchaser would accept was sufficient to incentivise him to remain in the business and support its profitability. The lower multiple of 1 was arrived at in the absence of the same predication. Rather the lower multiple reflects the lower value attributed by the “normalised” remuneration to the personal exertions of either the husband who no longer held equity, or a new Principal or senior executive if the husband left the business, and the impact which this would have on the hypothetical purchaser’s perception of earnings and growth in profitability. It also stands to reason that a hypothetical purchaser would only be prepared to pay less in the face of a greater risk that such a key person would leave because their expectations of remuneration were not being met. When cross-examined, Ms T specifically denied factoring in “key person” risk both at the entity level and for selecting the appropriate EBIT multiple (Transcript 10 March 2023, p.187 lines 5–7).
As Ms T said, if the CEO remuneration was kept at $350,000 to $500,000, being about half or less than half what the husband expected:
[Ms T]: That has caused a depression in the multiple to what I think is one times, because
[COUNSEL]: Yes?
[Ms T]: it’s a totally different outlook for the business, and there’s a real risk, not only that – you know, there’s a pervasive key man risk; there’s a real risk, in my opinion, that if there’s a disparity between the remuneration that’s offered and the remuneration that’s expected, that that key person would exit the business and the assessed level of earnings would not be maintainable in the long term.
(Transcript 10 March 2023, p.188 lines 2–9)
In my view Ms T adopted an orthodox methodology which justified her value using a reduced multiple based upon the expert remuneration evidence which the wife herself adduced. In my view her reasoning was adequately exposed as explained above.
As to the remaining criticisms, information about the disruptive impacts of the pandemic and the war in Ukraine upon supply chains is widely available in the public domain and was properly taken into account by Ms T. As to the fourth point, Ms T made clear in her cross‑examination that she had to take the cash reserves of the business as at the date of valuation. The cash reserves of any business constantly fluctuate.
However, I am not inclined simply to adopt the value given by Ms T in her second report. Although her approach was broadly orthodox, ultimately, I consider the contest about the value of the B Pty Ltd shareholdings is resolved not by focussing on some normalised salary for a Principal but by reference to the evidence about the actual business and its key person which are most accurately reflected in its core enterprise value. The husband was clear that he did not want to sell the business. He wants to keep it and remain as the key person. The EBIT of the business fluctuated over the period between the first and second reports of Ms T. The appropriate multiple remained at 2.5 while the husband will remain in the business as key person and equity holder. The core enterprise value given by Ms T as at January 2021 was in the range $1,625,000 to $1,750,000 and as at 31 October 2022 it was $2,250,000 to $2,750,000, using an adjusted EBIT in both reports. The wife herself recognised that using a remuneration level of $1,000,000, an average EBIT between 2019 and 2022 of $784.9 and a multiple of 2.5 yielded a core enterprise value of about $1,962,250 (Wife’s Written Submission filed 15 May 2023, paragraph 28). It can be seen that the core enterprise value exhibits a more stable range of values.
The equity value of B Pty Ltd which the wife promotes, $4,299,000, includes a value for surplus assets. It seems to me that the core enterprise value is the appropriate basis upon which to reach a share value for the purposes of the balance sheet. There is great difficulty in adding any figure for surplus assets because the evidence showed surplus assets varied considerably between 2017 and June 2023. Although it was clear substantial levels of cash were generated in the business from time to time, apart from selecting some entirely arbitrary amount there is no way for the Court know what those surplus assets may presently be as at the date of trial. More importantly, as pointed out, the husband has had access to the cash reserves as he has seen fit, through loans and dividends, even if the use of those reserves has partially benefitted the wife. I infer he will continue to use the surplus assets of B Pty Ltd in the same manner. The reality of B Pty Ltd as a financial resource of the husband in particular is a matter to which the wife gave considerable emphasis and I will return to it below. I am persuaded that it is more appropriate to take account of surplus assets in the form of director’s loans or cash reserves as a financial resource of the husband among the s 75(2) factors for the purpose of percentage adjustment rather than to include an arbitrary figure for them to be reflected in the balance sheet value of the parties’ share equity.
To include surplus assets in the value of B Pty Ltd equity and to treat those surplus assets also as a financial resource of the husband would be a form of double counting. Using the core enterprise value avoids this risk. Excluding surplus assets in the value of B Pty Ltd equity does not prejudice either party because it has the same impact for the purpose of giving a value to their respective percentage shareholdings. I do not conclude this approach prejudices the wife because taking account of the cash reserves in B Pty Ltd used by the husband through Division 7A loans and dividends will result, as explained later, in a higher percentage adjustment to the wife under s 79(4)(e).
I find the appropriate value for Item 7 is between $1,650,000 and $2,750,000. In my view the more recent core enterprise value is the most persuasive guide. Therefore, I will adopt a value of $2,500,000 for Item 7, being a value towards the upper end of the range. This justified by the historical EBIT of B Pty Ltd which has remained reasonably robust for a business of its size and nature, in the face of the operating difficulties described by Ms T, and the recent salaries paid to the husband. It should be pointed out that this is the value to be given to the total shareholding of the parties in B Pty Ltd.
Item 12 is excluded as immaterial.
Item 14 on Exhibit J is the amount of the deposit paid by the husband to purchase Q Street, Brisbane (“Brisbane property”). This property was purchased in the names of the husband and his new wife. However, the payment was funded entirely by a Division 7A loan from B Pty Ltd to the husband in the amount of $499,500. The wife primarily argued that this amount should be included on the balance sheet as an asset of the husband, by which she appeared to mean, this was the value of the husband’s interest as purchaser in the property under the contract of sale. However, she also conceded that application of the presumption of advancement would likely result in the husband’s new wife being understood as enjoying co‑ownership. The wife conceded also that the contract of purchase of the Brisbane property could be taken into account under s 75(2)(o) as a prospective resource with significant potential. For the reasons given in this paragraph, I consider this to be the appropriate way to treat it, rather than to include it on the balance sheet. I will exclude Item 14. The consequence is that Item 36 also is removed from the balance sheet. This appeared to be included by the husband as a liability of $533,624 corresponding to the Division 7A loan. The disparity between $499,500 and $533,624 was not explained by the evidence, nor was there any documentation of the loan. I do not consider this is a liability in which the wife should share.
The wife disputed Item 15 as a loan said to be owing by B Pty Ltd to the husband in the amount of $10,050. The husband made no submissions about this amount. The evidence did not support it. I will exclude it.
Otherwise Items 1 to 18 were agreed.
Addbacks
The parties accepted the amounts received by them during the proceedings as partial property settlement should be included on the balance sheet as added back notional property (Items 19 and 20). Consent orders were made on 10 August 2020 requiring the declaration by B Pty Ltd of dividends of $150,000 to the husband and $100,000 to the wife. From the husband’s dividend, $50,000 was to be paid to the wife as partial property settlement. The balance of the husband’s dividend and the whole of the wife’s dividend of $100,000 was to be paid into the trust accounts of each party’s solicitors to be used on account of legal costs and disbursements, but was also characterised as partial property settlement. The wife sought to differentiate the amount of $50,000 from the two amounts of $100,000 on the basis the $50,000 was purely a property distribution, while the amounts of $100,000 were for legal costs. This distinction is not persuasive. Both dividends were ordered to be paid as partial property settlement. Paid legal fees are a well known category of addback. I will include both $150,000 for the wife and $100,000 for the husband as added back property. This means Item 24 should be removed.
Item 21 was contentious. There was no dispute that between 2017 and 2022 B Pty Ltd declared dividends for its shareholders in this total amount of $2,457,378. Prima facie this total amount was owned as to 60 per cent by the husband and 40 per cent by the wife, the wife’s share being $982,951. But there was also no dispute these dividends had been utilised and spent in the hands of the husband. The wife never received this amount herself and argued it should be included on the balance sheet as added back property of the husband. Since the dividends have been spent by the husband, the wife claimed they fell into the recognised addback category of waste or premature dissipation of marital assets. However, there was also no dispute that although B Pty Ltd would have paid tax on the dividends at the company tax rate, the parties would be liable for top up tax on the dividends as income, being the difference between the company tax rate and their marginal tax rate, assumed to be about 47 per cent.
The Court must take the property of a party to the marriage as it finds it at trial and the parties do not go into a state of suspended economic animation (Trevi & Trevi (2018) FLC 93-858 at [28]–[30]). But adding back property no longer in existence has long been recognised as justified in certain circumstances. In Candle & Falkner (2021) FLC 94-069 at [52] (“Candle”) the Full Court accepted there are three well recognised categories of add back “where the parties have expended money on legal fees, where there has been a premature distribution of matrimonial assets, and ‘waste’ or wanton, negligent, or reckless dissipation of assets”, noting the latter category “indicates that the nature of the expenditure of post-separation or premature distributions can be relevant to the exercise of discretion to add back”.
In Candle the Full Court further explained:
58. In our view, [the] authorities establish four relevant propositions. First, adding back property which has been distributed and spent is discretionary, and reflects an exceptional exercise of the discretion as an “accounting” or “balance sheet” exercise for the purposes of ss 79(2) and (4) to achieve justice and equity between the parties. Secondly, the nature of the expenditure reflected in “add backs” is relevant, and reasonably incurred expenditure does not usually come within accepted categories of addback. Thirdly, the decision in Stanford, followed by Bevan, does not necessarily require the conclusion that adding back notional property is per se an error, but proper consideration must be given to existing interests in property. Fourthly, in cases which are not exceptional, expended interim distributions can be taken up under s 75(2) rather than as part of the balance sheet exercise.
(Emphasis in the original)
The wife argued that the dividends depleted the cash reserves of B Pty Ltd which had the effect of suppressing the valuation of the parties’ equity.
The husband argued that although he controlled how the dividends were disbursed, the evidence showed both parties received benefits from the funds paid out of B Pty Ltd including dividends. For example, there was evidence that between 1 May 2017 and 10 August 2020 the wife received $962,374.32 through loan accounts and the husband caused a total of $319,173.21 in financial assistance to be paid to the parties’ adult daughter Ms H. The husband also argued the Court should find the wife’s tax liability arising from the dividends has also been paid from the cash reserves of B Pty Ltd. He argued the dividends were applied in a variety of ways for the benefit of the family in the same manner in which company reserves had been used historically in the parties’ family.
There seemed to be no dispute that some at least of the money derived as dividends was used by the husband to pay a range of ordinary expenses, including to service the mortgage secured against C Street.
The wife conceded in her written submissions that since separation she had received about $607,133, excluding strata fees and levies (Wife’s Written Submissions filed 15 May 2023, paragraph 46).
I am satisfied that it was an established pattern during the relationship up to 2017 for B Pty Ltd retained profits to be applied occasionally by way of salary, usually by way of director’s loans or dividends for the use or benefit of the parties and their family. After 2017 director’s loans and dividends were clearly used partly as contributions to the parties and their assets but substantially for the husband and his new wife. This was done by the husband exercising his powers as sole director of B Pty Ltd to take salary, receive director’s loans or declare dividends. I do not accept the husband has wantonly dissipated marital assets or has spent in an unjustifiably extravagant manner. It is true that he caused the disbursement of 40 per cent of the B Pty Ltd dividends which percentage was clearly due to the wife as her shareholder entitlement. In that way he spent the wife’s money. But there is no separate claim by her for an amount referrable to this entitlement based upon her shareholding. I am satisfied that to the extent the husband caused the disbursement of the wife’s percentage of the dividends, she and Ms H members received some of the benefit. However, the evidence does not allow a clear picture of the ascription of any particular amounts to any particular benefit.
For these reasons, I decline to addback the total amount for dividends as notional property of the husband. A further reason is that the evidence does not permit a clear calculation of the “top up” tax payable by either party, which it would be necessary to take into account if the figure was on the balance sheet. I conclude that the more appropriate way to take account of the dividends is under s 79(4)(e), as part of the considering B Pty Ltd as a resource of the husband. This treatment is consistent with excluding surplus assets from the valuation of the B Pty Ltd shareholdings.
No submissions were made about Item 22. It will be excluded.
As to Items 23 and 25, the wife argued that since the husband had disclosed expenditure on legal fees in excess of $500,000 from salary, dividends and director’s loans, to the extent they had been ultimately derived from B Pty Ltd reserves, they should be added back. I do not accept this argument. As explained, whether salary, his share of dividends or director’s loans, the funds in the hands of the husband must be taken to be his money. The fact that B Pty Ltd cash may have been used, which diminished its equity value, does not change that reality. The only question here is whether the expenditure by the husband falls into a recognised or other arguable category of addback. I have found that this is not demonstrated in the evidence. It my view, neither party was clear about their actual legal fees paid.
In relation to Item 25, this was an amount of a dividend ordered to be declared by the husband to meet a costs order in the wife’s favour. Items 23 and 25 should simply be excluded.
Liabilities
Items 26 to 28 and 37 were agreed and have been included.
Item 30 appeared initially to be in dispute but the wife agreed that if E Street was sold, there would be realisation costs of $21,000 including a tax impost.
Items 32 – 34: Tax on dividends
The wife argued that these items were not liabilities in which she should share. In short these items were the projected tax impost payable on dividends declared to repay Division 7A loans. The wife pointed out that such dividends had not been declared so no tax is presently payable. The husband made no submissions supporting these possible liabilities. They will be excluded from the balance sheet but I will take account of them under s 79(4)(e).
Item 36
Item 36 has already been dealt with in connection with Item 14. It will be excluded.
Item 38: Personal loan owed by the wife to Mr O
Item 38 was claimed by the wife to be the portion of money loaned to her by her husband, Mr O, which she has used for reasonable living expenses, which she will have to repay. Mr O gave evidence, which I accept, that he expects to be repaid money he has lent the wife. I will include Item 38 on the balance sheet.
Conclusions and asset pool
Based on these conclusions, the asset pool is as follows:
Ownership
Description
Agreed value
1.
Joint
C Street
$2,750,000
7.
Joint
B Pty Ltd (H 60 per cent $1,500,000/W 40 per cent $1,000,000)
$2,500,000
4.
Wife
Interest in …
$280,000
5.
Wife
Shares held in Y Pty Ltd
$200,000
6.
Wife
Motor Vehicle 1
$35,000
10.
Wife
CBA …28
$23,178
17.
Wife
Household contents
$5,000
19.
Wife
Motor Vehicle 2 motor vehicle
$41,299
2.
Husband
P Street
$2,200,000
3.
Husband
E Street
$730,000
8.
Husband
NAB …28
$20,231
9.
Husband
ANZ …36
$6,381
13.
Husband
ANZ Credit Card …81 (prepaid) (presently card …54)
$7,446
16.
Husband
Household contents
$5,000
Total
$8,803,535
ADD BACKS
19.
Wife
Partial property settlement
$150,000
20.
Husband
Partial property settlement
$100,000
Total
$250,000
LIABILITIES
26.
Joint
C Street Mortgage $1,705,567 (equal liability)
$1,705,567
27.
Joint
E Street Mortgage (equal liability)
$532,603
37.
Wife
Unpaid income tax
$25,871
38.
Wife
Personal loan owed to Mr O
$88,500
24.
Husband
P Street
$1,759,406
30.
Husband
Realisation costs of sale of E Street
$21,000
Total
$4,132,947
SUPERANNUATION
Member
Name of Fund
Type of Interest
Agreed value
39.
Wife
Superannuation Fund 1 fund
$103,455
40.
Husband
Superannuation Fund 1 fund
$264,636
Total
$368,091
NET POOL (INCLUDING SUPERANNUATION):
$5,288,679
Consequently, if there was no property adjustment, with the percentages rounded, the husband would hold 62.6 per cent and wife hold 37.4 per cent of the net assets per cent. As noted, both parties agreed there should be a just and equitable property adjustment, and it was therefore not appropriate to leave the assets and liabilities undisturbed.
I turn now to consider the application of Pt VIII of the Act and the factors set forth in s 79 and s 75(2).
CONTRIBUTIONS
As outlined above, the parties were in agreement that the assessment of contributions pursuant to ss 79(4)(a)–(c) were equal. I accept this is correct because the ultimate assessment of contributions should be made without “giving over-zealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524). I should also note here that s 79(4)(f) and (g) are irrelevant, as the parties’ only child has reached majority. The wife made no submissions with respect to s 79(4)(d), and the husband submitted that there should be no adjustment on this basis. I agree. The central focus, therefore, was on s 79(4)(e) and the matters arising under s 75(2) as to any adjustment for future needs.
SECTION 75(2) ADJUSTMENT
The husband submitted there should be no adjustment by reference to the factors in s 75(2). The wife argued she should receive an adjustment of 15 to 20 per cent.
(a) the age and state of health of each of the parties
The wife is currently aged 53. She gave evidence that she was diagnosed with a medical condition in August 2017, but did not indicate the type of treatment that would be required, nor how this would impact her future abilities to gain employment.
She has seen a psychologist since 2019 and was diagnosed with depression. She described physical lethargy, low mood, and feeling emotional.
The husband is currently aged 51. He pointed to no health issues.
(b) the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The wife did not engage in paid employment between 2000 and mid-2022, however holds a tertiary degree. Between 2008 and 2017, she engaged in unpaid work with B Pty Ltd, such as paying accounts, banking, and dealing with external accountants.
In 2017, the wife set up an internet business, Z Pty Ltd, which sold products. This was unsuccessful, with revenues not exceeding $30,000 per year. This company was deregistered in or around mid-2021.
In July 2022, the wife obtained part-time employment as a retail assistant earning $12 per hour in Country N, however resigned in late 2022 due to depression associated with these proceedings. She gave evidence, however, that she hopes to seek further employment in the retail industry upon the conclusion of these proceedings.
The wife has invested $200,000 in Y Pty Ltd, a company owned by Mr O. During cross‑examination, she indicated that this money was derived from her inheritance from her late father. Exhibit 5, which set out the wife’s share of profit transactions from Y Pty Ltd (the trustee for Y Pty Ltd), indicated that between August 2021 and June 2022, she received $24,400. The ASIC search of Y Pty Ltd indicated that the wife holds six ordinary shares out of 120. As noted, these shares are included on the balance sheet as an asset of the wife. However, they have some relevance also to determining the extent to which Mr O can be considered a financial resource of the wife.
She also included in her financial statement an estimate of Mr O’s income, being $9,000 per week. However, she gave evidence that she and Mr O entered into a loan agreement in September 2022 for the sum of $315,000, which covered payments made up to that date, as well as monies moving forward. She also accepted that she had expended an additional $300,000 since June 2021, which was derived from the proceeds of sales of the shares she inherited from her late father.
As noted, I have included a loan repayable by the wife to Mr O of $88,500 on the balance sheet. The wife accepted in cross-examination that she had been loaned approximately a total of $540,000 by Mr O, although she did not seek to include this amount on the balance sheet. The wife contended that she will be required to repay these sums with interest. The wife and Mr O also signed a binding financial agreement which provides that she has no interest in Mr O’s assets and liabilities, and requires that both parties equally contribute to household expenses. This agreement disclosed that Mr O possesses assets in the range of $39 million.
The wife argued that the existence of this binding financial agreement was a complete answer to any suggestion Mr O was a financial resource of the wife. I accept that, on the assumption the financial agreement is not set aside at some point in the future, it would govern how the property of the wife and Mr O would be divided if either made an application for property adjustment under Pt VIII of the Act and would preclude any claim upon his deceased estate.
The question of whether a new partner is a financial resource is answered by a factual enquiry as to whether they constitute a source of support which could reasonably be expected to be forthcoming when called upon. The wife has invested in Mr O’s company. There was no dispute Mr O has in the past provided support to the wife when called upon, even if this took the form of loans to be repaid at some unspecified future time. Financial support is not limited to unconditional gifts of money or property. A loan can be a form of financial support. These matters show a material if modest degree of union in the financial affairs of the wife and Mr O. I conclude that Mr O is a financial resource of the wife.
Although I earlier settled on a value for the parties’ shares in B Pty Ltd, as at trial, as discussed above, this did not capture fully the value to the parties of B Pty Ltd as a financial resource of the husband. There was no dispute that the husband controlled B Pty Ltd and had access to its resources through salary, director’s loans and dividends for a range of purposes including the acquisition of property and the payment of living and leisure expenses. Although I have accepted that the wife received some benefit from the declaration of dividends and loans after separation, this was plainly by reason of the way in which the husband chose to use the funds in his hands. I am satisfied that B Pty Ltd is a substantial financial resource of the husband through his full control of its withheld profits and cash reserves as sole director and majority shareholder. I also accept that the adjusted EBIT of B Pty Ltd as assessed by Ms T is, to a large but otherwise unquantifiable degree, the result of the husband’s personal exertions, his stature as a professional, his key person role in the business, and the cumulative fruits of more than 15 years of business operation. I emphasise that this is not a matter of some type of special contribution by the husband, rather it is a recognition of his relationship to the financial resource. However, the part played by B Pty Ltd’s numerous other employees, also unquantifiable, cannot be ignored either.
Nonetheless, the husband’s position has given him access to millions of dollars in shareholder and director’s loans, and dividends for a number of years, and permitted the payment of a salary of $4,800,000 in the financial year to June 2022. Forty per cent of dividends were plainly the property of the wife which she has not directly received since 2017 and these were deployed as the husband determined. The husband seeks an order that the wife transfer to him her shares in B Pty Ltd. I propose to make such an order. Thereafter the wife will lose the benefit of any claim on the cash reserves of B Pty Ltd.
I should add here that putting to one side the husband’s salary, if director’s loans owing to B Pty Ltd, and its retained profits or cash reserves had been factored into the value of the parties’ shareholdings, it would not be permissible to take them into account again, thereby reducing any percentage adjustment in favour of the wife. However as explained above, I decided it is more appropriate to take them into account under s 79(4)(e).
I also take account here of the husband’s contract of purchase of the Brisbane property as a prospective resource with some potential capital improvement.
I also take account of the clear disparity in the earning capacity of the parties.
(d) commitments of each of the parties that are necessary to enable the party to support
(i) himself or herself; and
(ii) a child or another person that the party has a duty to maintain;
(e) the responsibilities of either party to support any other person; and
(j) the extent to which a party has contributed to the income, earning capacity, property and financial resources of the other party; and
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation
I accept that the during the relationship the homemaker role taken on by the wife freed to husband to develop B Pty Ltd.
Both parties have remarried. The wife has no further children, whilst the husband has two children aged five and two.
The husband’s wife, Ms K, is presently employed by B Pty Ltd as a Business Development Manager on a salary of $150,000 per year.
Their son, L, has been diagnosed with developmental issues and features of Autism Spectrum Disorder. He currently sees a range of specialists, including a paediatrician, speech pathologist, and occupational therapist. L has also commenced sessions, and there were discussions as to whether L’s commencement in primary school should be delayed for one year. He is also an NDIS participant.
The husband gave evidence that L requires additional supports such as therapy and respite care, which totals $850 per week, together with ongoing medical and specialist fees. I accept the husband’s evidence that either his or Ms K’s capacity to work full-time in the future may be impacted L’s special needs.
The husband continues to financially support Ms H, who is aged 23. He gave evidence that he would continue to do so until she is financially independent.
(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken in to account
I have nothing to add here.
Conclusion
I am satisfied, taking account of these factors, that there should be an adjustment in the wife’s favour of 18 per cent. I have considered the husband’s submissions that a large percentage adjustment for s 75(2) factors in the context of a long marriage is unusual. But I have come to the view that it is the appropriate way to take account of the all the s 75(2) factors including the substantial value of B Pty Ltd as a financial resource, as explained at length earlier in these reasons.
PROPOSED OUTCOME
Consequently, there should be a division of the parties’ property 68 per cent to the wife and 32 per cent to the husband.
The process required of the Court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise, justifying a “broad brush” approach (eg Dickons v Dickons (2012) 50 Fam LR 244 at [25]; Candle at [101]). However, the husband emphasised that it comes to s 75(2) adjustments in particular, it is well established that the real impact or value of the adjustment in money terms is ultimately the critical issue, not its expression as a fraction or percentage of the overall assets (Candle at [102]). I approach the ultimate outcome on this basis.
Both parties proposed the wife should retain C Street exclusively. The difference between them was that the wife sought discharge of the mortgage by the husband while he proposed the wife should take sole responsibility for it. Both proposed that the wife transfer to the husband her shares in B Pty Ltd. The wife made no specific proposal about E Street, which is held in the husband’s sole name, though both parties are equally liable for the mortgage. The husband proposed E Street be sold, with the net proceeds being paid 50 per cent to him and the balance to the wife subject to a number of deductions.
The proposed deductions were for the wife to contribute to the cost of experts in the amount of $19,224 and make a payment in respect of her “conduct” of $100,000. The reference to “conduct” was opaque and not clarified in submissions. I have ignored it. I have taken account of the wife’s obligations in respect of experts’ fees in the proposed percentage division, as the husband accepted was appropriate.
Otherwise both parties proposed each should retain their assets and liabilities.
The percentage division can best be achieved by the husband discharging the mortgage on C Street and then transferring his interest to the wife. I do not consider it appropriate for the wife to remain liable for the mortgage debt of $1,705,567, secured against C Street. The evidence satisfies me that the husband will have access to sufficient cash reserves through B Pty Ltd to make such a substantial payment to discharge this mortgage. The wife in turn is to transfer to the husband her shares in B Pty Ltd which have a value on my analysis of no less than $1,000,000 (40 per cent of $2,500,000). The unexplained position regarding the joint liability of the parties in respect of E Street could be resolved by either its sale of the husband clearly assuming sole responsibility for its mortgage. A sale is preferrable, and is proposed by the husband, so that the net proceeds of sale, after discharge of liabilities should be received by the husband. The sale is entirely practicable and s 81 of the Act compels a finalisation of the parties’ financial relationship. That way the husband gives up his interest in C Street and becomes liable to discharge its mortgage, but receives the net proceeds of E Street and the value of the wife’s shareholding in B Pty Ltd, giving him the full equity in the business which is a very substantial financial resource into the future. If the other assets and liabilities remain undisturbed, this would result in an approximate division of 66 per cent to the wife and 34 per cent to the husband. Accordingly, the husband will need to make a lump sum payment to the wife so as to affect the division of 68 per cent to the wife and 32 per cent to the husband. On the basis of the values provided to the Court this amount would likely be $122,741. I have taken account of the fact that the husband will need to declare a dividend to make such a payment, which will attract top up tax. Otherwise, the parties should retain their assets and liabilities, including the husband retaining P Street.
Although the husband sought a superannuation split in his proposed orders, this was not pressed by the conclusion of the trial. In any event, in light of the other assets available and his retention of B Pty Ltd, I am not persuaded any such split is just and equitable.
WHETHER THE PROPOSED ORDERS ARE JUST AND EQUITABLE
Section 79(2) of the Act provides that:
The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Although the parties agree that it would be just and equitable to make an order adjusting their property interests, s 79(2) requires the Court to be satisfied the proposed order itself is just and equitable after “stepping back” and considering the impact (Manolis & Manolis (No 2) [2011] FamCAFC 105 at [65]).
The High Court in Stanford commented on the meaning of “just and equitable” as follows:
36. The expression "just and equitable" is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.
(footnotes omitted)
I also take account of the caution expressed in Stanford at [40] that to conclude that making an order is “just and equitable” only “because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act”.
I find separately that the proposed orders and their effect is just and equitable.
On a 68/32 percentage division, the husband and wife will have the assets and liabilities as set out in the below table (figures rounded).
Assets and liabilities to be retained by the wife
Value ($)
C Street
$2,750,000
Interest in FF Property
$280,000
Shares held in Y Pty Ltd
$200,000
Motor Vehicle 1
$35,000
CBA …28
$23,178
Household contents
$5,000
Motor Vehicle 2
$41,299
Partial property settlement to wife
$150,000
Adjustment payment from husband to wife
$122,741
Unpaid income tax
-$25,871
Personal loan owed to Mr O
-$88,500
Superannuation Fund 1
$103,455
Total:
$3,596,302
Assets and liabilities to be retained by the husband
Value ($)
E Street
$730,000
P Street
$2,200,000
B Pty Ltd
$2,500,000
NAB …28
$20,231
ANZ …36
$6,381
ANZ Credit Card …81 (prepaid) (presently card …54)
$7,446
Household contents
$5,000
Partial property settlement to husband
$100,000
C Street Mortgage
-$1,705,567
E Street Mortgage
-$532,603
P Street
-$1,759,406
Realisation costs of sale of E Street
-$21,000
Adjustment payment by husband to wife
-$122,741
Superannuation Fund 1 fund
$264,636
Total:
$1,692,377
COSTS
In such circumstances, I will order that any party who seeks costs to file the relevant application within 28 days of these orders.
CONCLUSION
For all the foregoing reasons I am satisfied the orders set out at the commencement of these reasons should be made.
I certify that the preceding one hundred and forty-nine (149) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Harper. Associate:
Dated: 13 November 2023
SCHEDULE 1 – MATERIAL TENDERED INTO EVIDENCE
Exhibit Label Document Tendered by 1 Case Outline of Mr DD dated 7 August 2020 Husband 2 Case Outline of Mr EE dated 7 August 2020 Husband 3 Costs notice filed by wife on 2 February 2023 Husband 4 ASIC search Y Pty Ltd Husband 5 Share of Profit Transactions for Y Pty Ltd Trust ending 2021 and 2022 Husband 6 Wife’s tax return for Financial Year ending 2021 and 2022 Husband 7 Two Country N bank statements Husband A B Pty Ltd Balance Sheet as at 28 February 2023 Wife B B Pty Ltd Profit and Loss Statement for month ended 28 February 2023 Wife C Constitution of B Pty Ltd Wife D Husband’s payslips Wife E ASIC search of B Pty Ltd Wife F Contract for sale –Q Street Brisbane Wife G Wife’s Tender Bundle Wife H Additional Schedule of Monies Wife I Cover page and first page of document headed “Financial Assistance Provided to Ms H and Ms Waye 1 May 2017 to 10 August 2020” Husband J Balance Sheet dated 1 April 2023 Wife K Affidavit of Mr O sworn 10 October 2022 paragraph 29 and affidavit of Mr O sworn 19 October 2022 paragraph 42 Husband L Husband’s Tender Bundle Husband M Letter from the husband’s instructing solicitor dated 2 November 2022 Wife ANNEXURE A – PROPOSED MINUTE OF ORDERS SOUGHT BY THE WIFE
1.That the Applicant retain, free from claim by the Respondent, all of any of her right, title and interest in and to the estate of her late father [Mr BB].
2.That within 28 days of the date of these Orders and simultaneously in so far as is practicable:
2.1 the Applicant will do all acts and things and sign all documents necessary to transfer to the Respondent her shareholding in [B Pty Ltd];
2.2 the parties will do all acts and things and sign all necessary documents to transfer to the Applicant the Respondent’s right, title and interest in the property situated at and known as:
2.2.1 [C Street], [Suburb D] in the State of New South Wales being the whole of the land contained in folio identifier […] (“[C Street] property”).
2.3 the parties will do all acts and things and sign all documents necessary and the Respondent will pay all monies necessary to discharge:
2.3.1the mortgage in favour of ANZ with dealing number […] secured on the title to the [C Street] property.
2.4 the Respondent will do all acts and things to pay or cause to be paid to the Applicant such cash sum as is necessary to effect an adjustment of final property interests between the Respondent and the Applicant whereby the Applicant retains 68.5% of the net property (taking into account the assets, liabilities, and superannuation she is to receive and retain pursuant to these Orders) and the Respondent retains 31.5% of the net property (taking into account the assets, liabilities, and superannuation he is to receive or retain pursuant these Orders).
3. That except as specifically provided for by any Order to the contrary:
3.1 the Respondent is solely entitled at law and in equity, to the exclusion of the Applicant, to all items of property and financial resources in his possession or control at the date of the making of these Orders and in the future;
3.2 the Applicant is solely entitled at law and in equity, to the exclusion of the Respondent, to all items of property and financial resources in her possession or control at the date of the making of these Orders and in the future;
3.3 the Respondent hereby indemnifies the Applicant from and in respect of all actions, claims, suits and demands as may be made against the Applicant in relation to all liabilities in the name of the Respondent;
3.4 the Applicant hereby indemnifies the Respondent from and in respect of all actions, claims, suits and demands as may be made against the Respondent in relation to all liabilities in the name of the Applicant.
4. That except as specifically provided for by any Order to the contrary, each of the Respondent and the Applicant release the other from all debts owing from one to the other.
5. That each party do all acts and things and sign all documents, authorities and writings that are necessary to give effect to these Orders.
6. That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the court be appointed pursuant to Section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
7. That the Respondent pay the Applicant’s costs of and incidental to these proceedings.
8. Such further or other Order as this Honourable Court deems meet.
ANNEXURE B – PROPOSED MINUTE OF ORDERS SOUGHT BY THE HUSBAND
1.These adjustive property orders are made pursuant to section 79 of the Family Law Act 1975 (Cth).
2. That within 14 days from the date of these Orders the parties shall do all acts and things and sign all documents necessary to cause the property situate at and known as [E Street], Suburb D in the State of New South Wales being Certificate of Title Folio Identifier […] ("the [E Street] property") to be listed for sale by way of public auction with an agent to be agreed upon between the parties or, in default of such agreement for more than 14 days, with an agent appointed by the President of the Real Estate Institute of NSW or their nominee (“the agent”) whose decision shall be final and binding upon the parties, in the following manner:
2.1 That such auction take place within 6 weeks from the date of placing the [E Street] property for sale by public auction or as soon as possible thereafter;
2.2 That the reserve price for such auction shall be as agreed between the parties or failing agreement for more than seven days, as determined by the selling agent;
2.3 That the parties shall equally pay all auction expenses as requested by the selling agent as and when they fall due;
2.4 That the parties shall do all such acts and things as may be necessary or recommended by the selling agent to properly present the property for sale and make it available for inspection by prospective purchasers;
2.5 That either party shall be at liberty to bid for the purchase of the [E Street] property at auction;
2.6 That the parties (or the Husband alone should the Wife elect not to attend) shall attend at the auction sale and in the event that the [E Street] property is not sold at such auction, then the parties (or the Husband alone should the Wife not attend) shall if necessary, negotiate with the highest bidder at auction if the reserve price is not reached;
2.7 That the Husband shall instruct the agent that all communication regarding the sale is to be in writing, or if verbal to be confirmed in writing, and to both parties jointly;
2.8 That the parties shall each co-operate in every way with the agent including (without limiting the generality of the foregoing):
2.8.1 Making keys available to the agent;
2.8.2 Allowing inspection of the [E Street] property at all reasonable times requested by the agent;
2.8.3 Doing or saying nothing to hinder or prevent a sale being effected;
2.8.4 Ensuring the [E Street] property, including the grounds, is in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
2.8.5 Signing all documents requested by the agent in relation to the listing for sale of the [E Street] property including but not limited to an agency agreement, except a contract or agreement for sale which has not been authorised by the parties’ solicitors.
2.9 That the Husband shall instruct such solicitor as is agreed between the parties and failing agreement to be selected by the Wife from a list of three solicitors proposed by the Husband (“the Solicitor”) and the solicitor shall be instructed to include both parties in all communications. In the absence of the Wife making such nomination, the Solicitor shall be nominated by the Husband.
2.10 That the Husband shall each execute a contract for sale in the form prepared by the solicitor having conduct of the sale.
3. That in the event the [E Street] property fails to be sold by public auction on the first occasion, it shall continue to be auctioned (unless otherwise agreed between the parties in writing) at intervals of six (6) weeks or as otherwise recommended by the agent for the best price reasonably obtainable and for the purposes of any subsequent auction the provisions of Orders 2.2 through to 2.8 shall apply.
4. Upon settlement of the sale of the [E Street] property the parties shall do all acts and things and sign all documents as shall be necessary to cause the proceeds of sale to be applied in the following manner and order:
4.1.in payment of the costs of and incidental to such sale, including legal costs and disbursements, the agent’s commission, valuer’s fees and sale expenses;
4.2. in discharge of the borrowings secured by way of mortgage to ANZ Bank, being registered mortgage number […] and loan account ending […86] which has a current balance of approximately $533,000;
4.3. in payment of council and water rates and adjustments together with any outstanding strata fees and outgoings;
4.4. in reimbursement to either party for any expenses (agreed to in writing between the parties) associated with the sale such as advertising expenses or conveyancing fees;
4.5. payment of the balance then remaining as follows:
4.5.1. to the Husband 50%;
4.5.2. to the Wife the balance, less the following which shall be paid to the Husband:
4.5.2.1. her 50% share of the valuers’ expenses paid on her behalf by the Husband during these proceedings;
4.5.2.2. the fees of [Mr CC], BDO and NPV; and
4.5.2.3. a sum being the amount claimed by the Husband by reason of the wife’s conduct, but not less than $100,000.
5. That simultaneously with settlement of the sale of the [E Street] property as provided in Order 2 of these Orders, the following shall occur:
5.1. the Wife will do all acts and things and sign all documents necessary to transfer to the Husband her shareholding in [B Pty Ltd];
5.2. the parties will do all acts and things and sign all necessary documents to transfer to the Wife the Husband’s right, title and interest in the property situated and known as [C Street], [Suburb D] in the State of New South Wales being the whole of the land contained in Folio Identifier […] (“the C Street property”) and the Wife shall, at her expense, discharge the mortgage in favour of ANZ with dealing number […] securing borrowings for the [C Street property] (with a balance of approximately $1,708,103); and
5.3. that the Husband shall retain, to the exclusion of the Wife, all of his right, title and interest in the property known as [P Street], [Suburb D] and shall indemnify the Wife with respect to all borrowings secured by way of NAB mortgage over the property (which has a balance of approximately $1,762,000).
6. That within 7 days of the settlement of the sale of the [E Street] property and subject to the Wife’s compliance with Order 5.1, the Husband will do all acts and things to pay or cause to be paid to the Wife such cash sum as is necessary to effect an adjustment of final property interests between the Husband and Wife whereby the Husband retains 50% of the net property, taking into account the assets, liabilities, and superannuation he is to receive and retain pursuant to these Orders and the Wife retains 50% of the net property, taking into account assets, liabilities, and superannuation she is to receive or retain pursuant to these Orders and for the avoidance of doubt this includes her vested entitlement in assets overseas including the wife’s inheritance from her late father.
7. For the purposes of the implementation of Order 6, the Husband shall be permitted to make such payment to the Wife by way of a Division 7A Loan from [B Pty Ltd] and the parties shall be equally responsible for the payment of tax associated with such loan in accordance with the Income Tax Assessment Act 1936 (Cth).
8. The parties have liberty to apply on seven (7) days’ notice to the Associate to the Honourable Justice Campton with respect to the implementation of or the quantum of any tax payable arising from the payment to the wife pursuant to order 6 herein.
9. That the Court allocates, as required by Section 90XT(4) of the Family Law Act 1975, a base amount of $80,590 to the Wife out of the Husband's interest in the Superannuation Fund 1 (“the Fund”).
10. That, in accordance with Section 90XT(1)(a) of the Family Law Act 1975:
10.1.the wife (or the Wife's administrators, executors, beneficiaries, heirs or assigns) is entitled to be paid, using the base amount allocated in the immediately preceding order, the amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001; and
10.2. the entitlement of the Husband in the Fund (or the entitlement of such other person who becomes entitled to receive a payment out of the Husband's superannuation interest) is correspondingly reduced by force of this Order.
11. That the Husband and Wife in their capacity as directors of Superannuation Fund 1 , the corporate trustee of the Fund (“the trustee”), shall do all such acts and things and sign all such documents as may be necessary to:
11.1. calculate, in accordance with the requirements of the Family Law Act 1975 the entitlement awarded to the Wife in the immediately preceding clause of this Order; and
11.2. pay the entitlement whenever the trustee makes a splittable payment from the Husband's interest in the Fund.
12. That Order 10 has effect from the operative time and the operative time is 42 days from the date of service of this sealed Order on the trustee.
13. That immediately following the parties’ compliance with Orders 5 and 6 the parties will do all acts and things and sign all documents necessary including taking all steps as may be reasonably requested of them by the Fund’s accountant so as to prepare and lodge the Fund’s 2023 and 2024 if required income tax return and financial statement at the joint expense of the parties.
14. That immediately following the parties’ compliance with Orders 10 and 11, the parties will do all such things and sign all such documents as may be necessary for the rollover or transfer of the Wife’s member entitlements in the Fund to a complying superannuation fund of the Wife’s choosing in accordance with the Superannuation Industry (Supervision) Regulations 1994.
15. That the parties will equally meet all and any costs associated with their compliance with Orders 10 - 14 inclusive including but not limited to accounting fees as and when those costs are incurred.
16. That following compliance with Orders 10 – 14 inclusive, the Wife will do all acts and things and sign all documents necessary to forthwith transfer all and any interest she has in Superannuation Fund 1, and resign as director of, Superannuation Fund 1.
17. That except as specifically provided for by any Order to the contrary:
17.1. the Husband is solely entitled at law and in equity, to the exclusion of the Wife, to all items of property and financial resources in his possession or control at the date of the making of these Orders and in the future;
17.2. the Wife is solely entitled at law and in equity, to the exclusion of the Husband, to all items of property and financial resources in her possession or control at the date of the making of these Orders and in the future;
17.3. the Husband hereby indemnifies the Wife from and in respect of all actions, claims, suits and demands as may be made against the Wife in relation to all liabilities in the name of the Husband; and
17.4. the Wife hereby indemnifies the Husband from and in respect of all actions, claims, suits and demands as may be made against the Husband in relation to all liabilities in the name of the Wife.
18. That except as specifically provided for by any Order to the contrary, each of the Husband and the Wife release the other from all debts owing from one to the other.
19. That each party do all acts and things and sign all documents, authorities and writings that are necessary to give effect to these Orders.
20. That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court be appointed pursuant to Section 106A of the Family Law Act, 1975 to execute such deed or instrument in the name of the defaulting party and to do all acts and things necessary to give validity and operation to the deed or instrument.
21. That the Wife pay the Husband’s costs of and incidental to these proceedings.
6
4