WEIMAN & PAIGE
[2013] FamCA 788
•19 September 2013
FAMILY COURT OF AUSTRALIA
WEIMAN & PAIGE [2013] FamCA 788
| FAMILY LAW – PROPERTY SETTLEMENT IN RELATION TO MARRIAGE – Where the husband and wife were married for 13 years – Where there are three children of the relationship – Where the Court determined that it was “just and equitable” in the circumstances of the case to make orders altering the parties’ interests in property – Where the court was asked to add back a number of notional items of property into the asset pool – Consideration of the Full Court’s comments in Bevan & Bevan [2013] FamCAFC 116 in relation to add backs – Determination of the parties’ respective contributions having regard to the provisions of section 79 of the Family Law Act 1975 (Cth) (“the Act”) – Consideration of whether the contribution-based entitlement should be adjusted having regard to relevant matters under section 75(2) – Consideration of whether the overall result achieved is “just and equitable”. |
| Family Law Act 1975 (Cth) |
| AB v ZB (In Marriage of Brew) (2003) FLC 93-140 Bevan & Bevan [2013] FamCAFC 116 Garcia v National Australia Bank Ltd (1998) 155 ALR 614 In the Marriage of Kowaliw (1981) FLC 91-092 Johnson and Johnson (No 1) (1999) 26 Fam LR 475 Jones v Dunkel (1959) 101 CLR 298 |
Lemnos & Lemnos (2009) FLC 93-394
Stanford v Stanford (2012) 293 ALR 70
Townsend and Townsend (1995) FLC 92-569
| APPLICANT: | Ms Weiman |
| RESPONDENT: | Mr Paige |
| FILE NUMBER: | SYC | 5643 | of | 2010 |
| DATE DELIVERED: | 19 September 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Le Poer Trench J |
| HEARING DATE: | 11–14 March 2013; 1 May 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Pender |
| SOLICITOR FOR THE APPLICANT: | J S Pinto & Co Solicitors |
| COUNSEL FOR THE RESPONDENT: | Ms McIntosh |
| SOLICITOR FOR THE RESPONDENT: | JNT Legal |
Orders
The parties are to do all things necessary to cause the funds standing to their credit in the controlled monies account held by JNT Legal to be distributed in the following manner and order of priority:
(a) an initial sum of $131,329 is to be paid to the wife;
(b) a second sum of $51,644 is to be paid to the husband; and
(c)any balance thereafter is to be divided in the ratio of 65 per cent to the wife and 35 per cent to the husband.
Other than as provided for in these Orders and as between the parties, the husband and the wife are each declared to be the legal and beneficial owners of all other property and financial entitlements in their names, possession or control, or to which they are each presently legally or beneficially entitled, including furniture and furnishings, monies in bank accounts, real estate, motor vehicles, shares, superannuation entitlements and insurance policies.
Other than as provided for in these Orders and as between the parties, the husband and wife are each responsible for the payment of all debts and liabilities standing in their name and each party is to indemnify the other in respect thereof.
Other than as provided for in these Orders, all outstanding applications, save as to costs, are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Weiman & Paige has been approved by the Chief Justice pursuant to s 121(9)(g) of the Act.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5643 of 2010
| Ms Weiman |
Applicant
And
| Mr Paige |
Respondent
REASONS FOR JUDGMENT
Introduction
The proceeding before the court is the hearing of a property application brought by Ms Weiman (“the wife”) in relation to a marriage of 13 years (and possibly cohabitation of a little longer) between her and the respondent, Mr Paige (“the husband”). There had also been a parenting application before the court, however, the parties resolved that aspect of the proceedings and entered into consent orders on the third day of the hearing. Consequently, only the property aspect of the proceedings requires determination.
In many respects this is a tragic case for all concerned. The parties had a highly conflicted parenting dispute which clearly beared heavily on the children as well as the parents. They settled that after three days of trial and, thereafter, spent two further days contesting the property proceeding.
During their marriage the parties worked very hard to build up their equity in property and to parent their children. At the end of this litigation, after they pay their legal fees, they will have very little capital left.
This is a property case which, in my opinion, should have been capable of being resolved with the assistance of skilled and reasonable lawyers. That has not occurred. In my opinion there were positions taken in this case which made it impossible to resolve the case.
Background facts
Where in this judgment I make statements of fact they are, unless otherwise specified, my findings of fact.
The wife was born in 1973 and is currently 40 years old. The husband was born in 1974 and is currently 39 years old.
The parties met in 1994 and were married in January 1997.
The wife in her submissions said the parties had cohabited in the husband’s parents’ home prior to their marriage, however, no reference to the evidence was made in support of that submission. The husband at paragraph 168 of his affidavit stated that he and the wife had lived together at Suburb A but he did not say when that cohabitation commenced. Neither of the parties’ chronologies specified a date for the commencement of cohabitation prior to the date of marriage. The husband’s mother, Ms Paige, said in her affidavit that the parties lived with her for 18 months before they were married. In any event, and given the other facts relating to the parties’ cohabitation, whether it endured for 13 years or as many as 16 years is of little importance.
There are three children of the relationship: B, born in 2000 and aged 12; M, born in 2001 and aged 12; and C, born in 2004 and aged 8 (together, “the children”).
Final consent orders with respect to parenting were entered into by the parties during the hearing in March 2013 with the effect that the children live with the wife and spend time with the husband at other times.
From April 2001, the parties bought and renovated a series of properties. Those properties were:
·I Street, Suburb D: purchased for $356,500 in April 2001 and sold for about $581,000 in October 2002;
·F Street, Suburb E: purchased for $455,000 in about August 2003 and sold for $697,500 in about December 2004;
·G Street, Suburb E: purchased for $475,000 in about September 2004 and sold for $621,000 in about May 2007; and
·H Street, Suburb J: purchased for $475,000 in about September 2007 and sold for $775,000 in about September 2010.
The parties separated in April 2010. They remained living under one roof until September 2010.
In September 2010, the husband left the former matrimonial home. The wife moved into rental accommodation with the children in the same month. There is a dispute as to whether the husband removed the majority of the household goods at that time, as is claimed by the wife. The husband asserts that the furniture was divided equally.
The former matrimonial home was sold in September 2010 and the net proceeds of sale were placed in controlled monies account under the control of JNT Legal. The net proceeds were realised after the mortgage, a credit card debt of $27,000 and a loan from the wife’s parents of $35,000 were paid out.
In October 2010, Mr K began living in the wife’s residence. The wife said she did not commence to live with him in a de-facto relationship until a year later.
On 20 June 2011, correspondence was sent between the parties’ solicitors in relation to the release of funds from the parties’ controlled monies account in order to pay a tax debt to the Australian Taxation Office (“the ATO”) which the husband had incurred prior to separation. No agreement was reached in relation to the payment of that tax debt from the sale proceeds of the house, as the husband had requested.
On 1 November 2011, the ATO removed $18,110.65 from the parties’ controlled monies account. A further $9131.66 was removed from the account by the ATO on 14 November 2011.
On 19 March 2012, counsel for husband told the court that monies were taken by the ATO without notice to the husband. Orders were made at that time for the production of documents by the husband relating to the removal of monies, including copies of all bank account statements and copies of correspondence with the ATO.
The wife alleges that the husband is in arrears of child support payments and currently has a child support assessment of nil. The husband asserts that he has continuously paid child support since the first assessment was issued.
On 8 May 2012, the wife made an application in court in which she sought that I disqualify myself from these proceedings on the basis of something said by me on 19 March 2012. A further hearing in relation to her application took place on 31 May 2012. The husband requested that costs of court transcript, which he obtained in order to answer the application, be paid from the controlled monies account. The wife agreed to that request. The application was ultimately dismissed with costs awarded against the wife.
The issues
During a pre-trial attendance on 14 February 2013, the parties identified the issues of fact at the commencement of the hearing to be as follows:
·The payment of the husband’s tax debt in November 2011. This was paid from the parties’ controlled monies account holding the net proceeds of sale of the former matrimonial home.
·The value of the husband’s business.
·The contribution made by the husband as a homemaker and parent.
·The contribution of the wife to the renovation of four homes owned by the parties during the cohabitation.
·The husband’s contributions by way of child support post separation.
·The parties’ respective earning capacities.
·The resources each party has in their current partners.
·Items proposed to be added back to the balance sheet.
Credit
The wife
In relation to the wife’s credit, the husband made a number of submissions which are set out below.
The husband submits that the wife still carries a great deal of resentment towards the husband. He says that she was not truthful in her evidence and was cautious of the information that she disclosed about her partner, Mr K.
It is submitted that the wife initially portrayed herself as a person with little knowledge of renovations and business and appeared coached, it is submitted, in the style of Garcia v National Australia Bank Ltd (1998) 155 ALR 614. She later conceded that she had worked in real estate and understood the real estate process. It is absurd, the husband submits, that the wife did not understand the business affairs of the parties.
The husband points to the fact that the wife agreed in evidence that she had no objection to the payment of the ATO taxation debt, yet unreasonably maintained her objection to the liability being paid from the sale proceeds of the former matrimonial home.
The husband further submits that the wife gave her evidence in a selective manner; she conceded evidence that she thought would assist her case and resiled from evidence that she thought detrimental to her case. An example, according to the husband, is her accusation that the husband would not pay for a computer for B. It is said that the wife only accepted that the husband paid half of the rental when she was shown an itemised account listing that the husband was paying for half. An accusation that a further computer not paid for by the husband was not particularised in her evidence and it is submitted that the wife wished the court to be critical of the husband on her allegation alone.
The husband says that the wife was selective about the husband’s contribution as a homemaker and parent and struggled with her evidence as to the husband’s care of the children.
The wife’s failure to call Mr K as a witness is, it is submitted, another example of the wife being selective in her evidence. She covered his involvement at length in her affidavit evidence and it is submitted that this was an important factor to the credit of the wife and the selective manner in which she has run her case.
Further, it is submitted that the wife’s evidence as to when her relationship with Mr K commenced should not be accepted. It must have been clear to the wife that to allege she lived with Mr K for more than a year before they formed an amorous relationship strains credulity. She did not provide any details of the income of Mr K, as she was required to do in her Financial Statement. She acknowledged that she had been asked for details of Mr K’s income and that could only have come from her solicitor as a necessary part of completing the Financial Statement. The husband submits that, in the circumstance of this case, the wife should have called Mr K as a witness. Based on the fact that she did not, the court should draw an adverse inference that she knew his evidence would not assist her case.
For the above reasons, the husband submits that the court should have difficulty accepting the wife’s evidence. It is submitted that the wife gave her evidence to achieve a result and that, where there is conflict in the evidence of the husband and wife, the court should prefer the husband’s evidence.
In relation to the wife’s failure to call Mr K as a witness, the husband submits that the wife was put on notice that he would ask the court to draw an inference pursuant to Jones v Dunkel (1959) 101 CLR 298 (“Jones v Dunkel”). That notice was made in open court by the husband’s counsel. The husband requests that the court draw that inference.
The wife submitted she gave her evidence credibly and was not shaken in cross-examination. She submitted there was a notable difference in the manner in which she gave her evidence as compared to the husband.
Determination as to the wife’s credit
The wife gave her oral evidence for the most part in a straight forward and apparently honest manner. She largely addressed the questions asked of her and there were only a few occasions when she appeared to be avoiding questions or arguing with the cross-examiner or, alternatively, providing evidence in purported answer to a question where that evidence was more in the nature of advocacy.
There was some evidence of exaggeration in her evidence. At one point she said in cross-examination that the husband had provided no assistance at any time in the care of the children. Shortly thereafter, she acknowledged that there were a few occasions where he cared for the children.
I understand from her evidence that she had little knowledge of financial transactions which took place during the marriage (that is, outside of understanding the day-to-day cost of supporting the family).
I have difficulty accepting all of the wife’s evidence about when she commenced a romantic and then a de-facto relationship with her partner, Mr K. I also have difficulty accepting her evidence about the financial aspects of her relationship with Mr K. I observed her carefully at the time she was being cross-examined about her relationship with Mr K, when it commenced, and what the financial circumstances of the relationship were. I observed her to look most uncomfortable in the witness box. She moved in the chair, she broke eye contact with both the cross-examiner and with me. I was not confident she was being completely candid about that relationship. I considered that she was not truthful in all of the evidence she gave in relation to Mr K. She appeared to hold the attitude that Mr K’s income and financial circumstances were none of the husband’s or the court’s business.
I have set out in these reasons the areas where I have not accepted her evidence or, alternatively, where I have preferred the evidence of the husband.
The husband
The wife made extensive submissions in relation to the husband’s credit.
She set out examples of where the husbands’ evidence was contradictory. She described what she said was the most striking example, that being his evidence about the funds taken from the parties’ joint account which contained the proceeds of the sale of the former matrimonial home. The wife’s submission on that issue is as follows.
The evidence of the husband was that he had not directed the ATO to take the funds from the account; he conveyed the impression that the funds had effectively been garnisheed from the account. The husband’s legal representative informed the court that the funds had been removed from the account by the ATO as if by garnishee. That information was consistent with a letter dated 12 December 2011 (annexed to the wife’s affidavit and marked “J”) which was sent to the wife’s solicitor by the husband’s solicitor.
The wife also annexed and marked “P” a copy of a letter dated 7 November 2011 from the ATO to the husband. That letter referred to a recent phone conversation between the husband and an officer from the ATO confirming that the husband had requested a direct debit payment of taxation. Another document is attached and provides precise details of the joint account. The consequence of the direct debit request was that the ATO obtained from the account two sums in November 2011, those sums being $18,110.65 and $9,131.66. In his oral evidence, the husband said that he did not tell the ATO to deduct the money owed in tax from the account. That evidence was directly contrary to what he had sworn to be true in paragraph 222 of his affidavit.
I accept that the husband was untruthful in his oral evidence to the court when he denied having authorised the ATO to deduct the tax owed by him from the joint account.
The wife further submitted that the husband had been dishonest in what he said to the Child Support Agency (“the CSA”) as set out in exhibit W5. That exhibit consists of a letter written by the husband to the CSA. In it he claimed that he had no money in any bank accounts. The wife says that this was untrue because it was shown at the hearing that he had $441 in his Sutherland Credit Union account on 12 December 2011 and, in a separate account with the same credit union, he had $6,863 on 9 November 2011 and $10,952 on 28 December 2011.
When confronted with the above evidence, the husband said that the funds in the account with the larger balance included payment for materials which he was required to pass on to suppliers; the funds which were his, he claimed, amounted to a small proportion of that fund. It was put to him that he could afford to holiday with the children in January 2012. He said that was true, however, that the holiday was a camping holiday and the fees were $1,000. He later agreed that he had paid $2,127 to Business L for camping. He had also spent other funds whilst on that holiday with the children.
Whilst I accept that there may have been funds in the accounts referred to above which were to be paid to suppliers, I cannot accept that the husband’s funds in those accounts were minimal. I do accept that the husband was not being completely candid with the court or the CSA in relation to his true financial position at the end of 2011. The husband did say in oral evidence that December was his busiest month and that the first three months of the year were slow in providing work and income. I do accept that the husband had to provide for the months when his income was low and I also accept that the husband’s income was within modest bounds. As I state later in these reasons, however, I am of the view that his income is either greater than that stated by him to the court or, alternatively, that he has the capacity to generate more income if he so chooses.
The wife submitted that the husband’s evidence in relation to the payment by him of child support was false, or at least misleading, in that the only payment being made by the husband was in relation to child support arrears. The husband was shown a Child Support Assessment Notice which stated that his assessment was nil. The husband maintained initially that he was paying $180 per month and then later he maintained that he was paying $90 per month (although he may have been referring to an arrears figure). In relation to this evidence, while initially as I listened to the evidence I considered that he may have been confused about what he was paying to the CSA, I soon came to the conclusion that he was being deliberately obtuse about the matter.
In relation to child support, exhibit W6 shows the husband’s current child support assessment to be nil. This is based on the husband’s 2012 tax return which shows that he had a taxable income of $18,000. Exhibit W3 includes a copy of the CSA for the periods 6 August 2010 to 15 March 2011 and from 16 March 2011 to 30 June 2011. The first assessment required the husband to pay $432 per month and the second assessment the sum of $84 per month. In oral evidence the husband claimed that he was paying child support at the rate of $180 per month. That subsequently was perhaps closer to $90 per month. Whatever the sum, it is clear that it was to discharge arrears of an earlier child support assessment.
The wife conceded in oral evidence that the husband had contributed to the payment of school fees at a time that she could not pinpoint. She also conceded that he had purchased items for the children.
It was put to the husband that, rather than working in the market place, he has been working on his parents’ home effecting improvements. He denied that proposition and said that he had only done maintenance on the property.
It was also put to the husband that, prior to separation, he went away from home to work; that is, he stayed away because the distance was too far to travel each day to the job. He said that this occurred in the last two years of the marriage on occasion because there was no work for him in the area where the parties lived. This evidence would support the husband’s assertion of a drop in his income following the Global Financial Crisis (“the GFC”).
A number of propositions were put to the husband about his claims that he had contributed to the care of the children. To the extent that it was put to him that he did not contribute as he had alleged, he denied same. The husband denied that the wife made most of the homemaking and parenting contributions. In answer to a question that I asked on that topic, he said as follows:
Mostly it worked like this. I arrived home from work and played with the children. We would have tea and then put the children to bed. I worked all crazy hours of the night. On weekends the wife would be at work and so the children were with me.
In relation to renovation work, the husband agreed that the wife did some work on the renovations, however, he denied the suggestion that the parties’ contributions to that work were equal.
The husband was asked about his Financial Statement sworn 15 November 2010. In that document he said that he had a balance in his bank account of $58. Documents produced showed that the balance of the account on 13 November was $3,424.
The husband was shown exhibit X1 (the balance sheet) and taken to an item titled “Husband’s ANZ account”. He said that he had never owned such an account. I accept that is the case and that this arose from a mistake that his legal representative made.
The husband was asked about how he quotes for jobs and his evidence was that he does not give a written quote; he notes measurements in his diary and gives a figure to the prospective customer. The husband asserted that he provided the wife with copies of invoices. The practice of not providing written quotes seems unusual in this day and age and it certainly creates an avenue for suspicion that the practice adopted is consistent with a practice of working at discount rates for payment in cash. People who practice in this fashion would be expected to avoid creating any unnecessary paper work.
The wife submitted that the husband should not be believed about the value or extent of the tools of trade and equipment. I have reviewed all of the cross-examination of the husband about this issue and I do not accept that the wife has established this submission. I accept the husband’s evidence in relation to this issue.
In relation to the husband’s credit, the husband submitted that he has taken a conservative and sensible approach in the proceedings. He conceded that contributions until separation were equal which, it was submitted, does not appear to be the case of the wife.
The husband also conceded that an adjustment of 10 per cent should be made in the wife’s favour, having regard to the wife’s future primary care of the children. The husband amended his position during the hearing, when it became clear that the wife was not going to call Mr K as a witness. The husband submits that the wife was put on notice of the Jones v Dunkel inference that he would ask the court to make in relation to this. The husband submits that the evidence of the wife has not been able to be tested in relation to Mr K and that this was prejudicial and unfair to the husband. It is submitted that, accordingly, any adjustment under s 75(2) should not be available to the wife, or that any adjustment to the wife should be reversed or met equally by an adjustment to the husband.
Counsel for the husband submitted that the husband was prejudiced by the time taken in the hearing to deal with the manner in which the wife presented her case. The husband submits that there were two prejudices:
·With respect to cross-examination of the husband, it is submitted that the court should be slow to find that the husband was untruthful in oral evidence. The questioning of the husband, it was submitted, was often ill-conceived, difficult to follow and factually flawed. The husband was encumbered with the burden of this conduct.
·With respect to the time taken at the hearing in excess of the time it should have taken, the husband submits that it is concerning that the wife ran a case aiming for an unsustainable outcome, particularly when the evidence does not support that outcome.
In response to the wife’s submissions on the husband’s credibility at 1.1–1.4, 1.5–1.7 and 1.8 of her submissions, the husband submits that he gave his evidence in relation to these issues in a direct and forthright manner, and that his evidence was mostly supported by his affidavit evidence. It is submitted that his evidence on those issues do not attract adverse credit findings.
Finally, it was submitted that counsel for the wife continued to press for concessions in cross-examination which the husband had already given.
Determination as to the husband’s credit
The husband commenced giving his evidence in a manner that was not very impressive. He gave evidence which was directly contradictory to that which he had set out in his affidavit sworn on 1 March 2013. The evidence was about the circumstances in which the ATO withdrew funds from the controlled monies account held by the husband’s solicitors on behalf of the parties following the sale of the former matrimonial home.
The husband had moments where he appeared to be confused about documents that he was being shown. He thought a bank statement which related to an account which he held in his name was in fact a copy of a statement relating to a joint account which the parties held prior to separation. He later agreed, upon further inspection, that the document related to a period in late 2011 and early 2012 and was a statement for a bank account of his held post separation.
Thereafter, the husband’s evidence largely appeared to be given in a confident and honest manner. He was asked about transactions conducted in the last few years of the marriage and then post separation. Many of the questions related to the state of his business and also to the payment of child support post separation.
I conclude that the husband was not completely candid about matters relating to his income and the payment of child support. I otherwise found his evidence, in the large part, acceptable. I have set out in these reasons the areas where I have not accepted his evidence or, alternatively, where I have preferred the evidence of the wife.
Mr N
Mr N swore an affidavit on 21 August 2012. This affidavit attests to the fact that he is the owner of an aluminium boat, registered … . It was necessary for him to give evidence as the wife says that the boat belongs to the husband. Mr N was required for cross-examination, although, with the consent of the parties, he attended by phone.
Mr N appeared to give his evidence in a straight forward and apparently honest manner. He denied assertions that the boat belonged to the husband. He sounded convincing in his evidence.
I accept his evidence.
Ms Paige
Ms Paige is the husband’s mother. She swore an affidavit on 3 September 2012 and was required for cross-examination. In the witness box she appeared to be truthful in giving her evidence. Her affidavit evidence had been limited to paragraphs 14, 16, 22, 34, 35, 37 to 45 (and some parts of those paragraphs were struck out). The manner in which she gave her evidence was compelling of her belief it was true.
I accept her evidence.
Ms O
Ms O is the husband’s sister. She used the surname Paige when she appeared before the court, having explained that she was divorced and had now reverted to using her maiden name.
Ms O was cross-examined in particular about the statements made in her affidavit that she had assisted the wife by caring for B when he was very young and after the wife returned to work. A number of contrary positions were put to her, which she denied. Other matters which contradicted her evidence were put to her. She appeared to give her evidence in an honest manner and she did not appear confused about her evidence.
I accept her evidence.
Evidence
The wife
The wife relied on the following applications and affidavits in support of her property orders.
·Initiating Application filed 27 July 2012.
·Affidavit of Applicant sworn 2 August 2012 and filed 6 August 2012.
·Financial Statement sworn 26 July 2012.
The wife’s affidavit sworn 2 August 2012 set out the following information in relation to her property application.
At the commencement of the relationship, the wife had a Daihatsu motor vehicle, which was written off, then a Ford motor vehicle, worth about $14,000 with a $10,000 loan. She also had approximately $5000 worth of furniture and $2000 in savings. She says that the husband had minimal savings at the commencement of the relationship.
The wife says that she worked during the relationship, only taking time off when she gave birth to each of the children. She worked full-time until the birth of B, at which time she took 10 months off work. After that, she returned to work part-time. She said that she paid all expenses while the husband travelled for work, as he did not put any money in the parties’ joint account during those periods.
The wife asserts that, during the relationship, the parties bought and renovated several properties, which they sold for a profit.
In relation to non-financial contributions during the relationship, the wife stated that she carried out renovation work on the properties, along with the husband. She set out specific types of work that she participated in whilst renovating properties.
The wife said the following in regard to her contributions as a homemaker and parent:
·she did all the housework, cooking and shopping for the family;
·she was the primary carer for the children;
·the husband did not help with the children when they were infants, nor with the cooking, cleaning and shopping;
·the husband did not take time off work if the children were sick;
·the husband did not take the children to sports practice; and
·the husband did not assist with the children in the mornings.
The wife stated that her parents lent the parties the sum of $35,000 interest free and that this was repaid. She further asserted that the husband’s parents lent the parties $40,000 at 12.5 per cent interest, which the parties repaid.
In relation to post-separation contributions, the wife set out the following:
·the husband has taken the majority of possessions from the former matrimonial home and left the wife with nearly no possessions;
·since the sale of the former matrimonial home, the wife has rented accommodation for the children to live in;
·the husband removed money from the controlled monies account to pay the ATO without the wife’s consent; and
·the husband has a boat parked on his property which the wife claimed he bought since separation.
The wife said that she was contacted in 2011 about the children’s school fees being in arrears. She could not pay the fees. The wife stated that she was not aware that the husband was making payments of $65.70 in relation to the children’s schooling.
In relation to child support, the wife stated that, while the husband said that he is earning less than the $53,049 recorded in 2010, she has not seen any records to support this. The wife said that the husband is in arrears and that he pays little or no child support.
The wife claimed that the husband pays no rent on his accommodation and has had several holidays since separation.
In relation to the wife’s claim for adjustment pursuant to s 75(2) of the Act, the wife said that she anticipates she will have the care of the three children into the future.
In relation to waste, the wife asserted the husband had not filed tax returns for his business and that his debt to the ATO was primarily penalties and interest which resulted from not filing Business Activity Statements and tax returns for his business.
In relation to add backs, the wife seeks that the money removed from the controlled monies account to pay the husband’s debt to the ATO should be added back against him. Additionally, she stated that the $40,000 which each party removed from the account to pay legal fees should be regarded as add backs.
The husband
The husband relied on exhibit H4 to state the property orders he sought. He read the following affidavits:
·Affidavit of the husband sworn 1 March 2013.
·Financial Statement sworn 3 August 2012.
·Affidavit of Ms O sworn 1 August 2012 (paragraphs 1–12; 2 –31; and 40–41).
·Affidavit of Mr N sworn 21 August 2012.
·Affidavit of Ms Paige sworn 3 September 2012.
The husband’s affidavit sworn 1 March 2013 and filed 6 March set out the following information in relation to the property aspects of the proceedings.
The husband currently lives in his parents’ house, in an apartment independent of his parents. He said that his parents have told him that he can live there for as long as he likes. There is space available for each of the children to have their own rooms.
The husband is self-employed as a tradesman and earns a modest income. He said that he earns less now than he did before the GFC but has adjusted his living costs accordingly. He stated that he is able to provide the children with nutritious food and to take them on camping holidays. The husband stated that he has paid $65.70 per week toward the children’s schooling since June 2010.
The husband set out the parties’ assets at the commencement the relationship as follows:
·the husband had a Type P boat (sold for $15,800 during the marriage), savings of $9,000 and household furniture; and
·the wife had a car bought by her parents, furniture worth “at best, a few hundred dollars” and a credit card debt of $1,900 which the husband paid out on the commencement of cohabitation.
The husband set out his financial contributions throughout the relationship as follows:
·he worked full-time in several trades; and
·he undertook renovation works on properties that the parties owned and renovated, obtaining discounts from outside tradesmen for the work done;
The husband asserted that the wife made the following financial contributions throughout the relationship:
·she assisted with some general labour on the renovation work, which assistance was minimal; and
·she worked part-time “except for a few months when each child was born”;
The husband stated that the parties bought and sold the following properties during the relationship:
·I Street, Suburb D: purchased for $356,500 in April 2001, and sold for $581,000 in October 2002;
·F Street, Suburb E: purchased for $455,000 in about August 2003 and sold for $697,500 in about December 2004;
·G Street, Suburb E: purchased for $475,000 in about September 2004 and sold for $621,000 in about May 2007; and
·H Street, Suburb J: purchased for $475,000 in about September 2007 and sold for $775,000 in about September 2010.
The husband stated that his non-financial contributions during the relationship were as follows:
·for a period of 10 months prior to separation, he cared for the children on weekends while the wife worked;
·in addition to the above, he cared for the children on Monday, Tuesday and Wednesday afternoons;
·when the children were young, the husband would start and finish work early and care for the children in the afternoons while the wife would work later and get the children ready for school in the mornings;
·the wife did more housework than he did as she worked part-time, however, he undertook some of the household chores and performed a greater proportion of outside work; and
·he performed renovation work.
The husband asserted that the parties contributed equally as parents and homemakers. He set out his contributions as homemaker and parent throughout the relationship as follows:
·the husband assisted with cooking dinner, organising the children’s baths, homework and the like in the evenings;
·he took care of some night feeds when the children were infants, at times when they were fed by formula;
·he attended to the children when they were ill, taking them to medical appointments and the like;
·he regularly attended pre-school events and open days; and
·he cared for the children when the wife was at Sport Q class;
With respect to his contributions post-separation, the husband stated as follows:
·he cared for the children five nights per fortnight until 29 November 2011, thereafter caring for the children four nights per fortnight;
·he made payments towards a credit card used by the wife, as well as mortgage repayments;
·he back-paid the children’s school fees (which he asserts were not paid by the wife during the relationship), as well as half of the children’s continuing school fees;
·he purchased household items for the children; and
·he paid health insurance for the children.
The husband set out the bases for any s 75(2) adjustment in his favour as follows:
·he estimated that the wife was capable of earning up to $80,000 per annum in her employment, which is a greater amount than that which he is able to earn;
·he is in arrears of child support payments and is paying that off by way of instalment payments; and
·he has incurred significant legal costs, including costs relating to the wife’s disqualification application (the husband expects that the monies in the controlled monies account will be expended to pay legal fees).
In relation to the issue of add backs, the husband’s position is as follows:
·The wife received a family tax benefit payment of $12,308.00, part of which the husband asserted should have been paid to him as he had the care of the children five nights per fortnight.
·The payment of his debt to the ATO (by funds removed from the controlled monies account) should not be added back against him because it was a debt accrued during the marriage.
·The wife retained a motor vehicle at separation, which was subsequently written off in an accident. The wife received $18,000 in an insurance payment from GIO, which funds the wife used to purchase a Ford Territory. The husband asserts that the add back amount should be $8,250, being the difference between the value of the $18,000 insurance payment and the value of the Ford Territory of $9,750, rather than the value of the Ford Territory itself.
·The costs incurred in relation to the appointment of a joint expert to value the husband’s business, paid from the controlled monies account, should be added back. The husband asserts that he offered to have the business valued at $5,000 and, should the value of the business be less than that, he contends that the cost of the valuer be added-back to him.
·The costs of the transcripts for the wife’s failed disqualification application should be added back against her. The husband contends that this was paid from the controlled monies account. He stated that he will file a separate costs application in relation to that Application in a Case at the end of these proceedings.
The husband also set out an extensive list of the financial and business records produced by him in the course of the proceedings.
Ms O
The affidavit of Ms O, sworn 1 August 2012, set out the following evidence in relation to property matters.
Ms O stated that she had observed the husband making meals and playing and interacting with the children. She asserted that she has cared for the children, particularly B, when they were infants and on an after-school basis when they were older.
Ms O stated that she had observed the husband’s attendance at extra-curricular activities with the children, which she also attended with her children. She said that the husband had taken her children to extra-curricular activities along with his own children.
Ms Paige
The affidavit of Ms Paige, sworn 3 September 2012, set out the following evidence with respect to property matters.
Ms Paige said that she looked after B when the parties were renovating the Suburb D property. She also visited other properties while they were being renovated and assisted in caring for the children and making them meals.
Ms Paige asserted that she collected the children from day care on occasion, in situations where the husband was going to be late.
The parties lived with Ms Paige and her husband on three occasions: once before their marriage and twice with the children when the parties were between properties. The details of those times were said to be as follows:
·a period of 18 months before the marriage;
·a period of few months in 2004; and
·a period of about six months in 2007.
Ms Paige set out a list of the bills which she said she and her husband have paid for the husband. She said that she and her husband had previously operated a trade business and that they experienced cash flow problems from time to time. She also said that, when her husband ceased working in that trade, he gave his tools to the husband.
Mr N
The affidavit of Mr N, sworn 21 August 2012, set out evidence in relation to a boat which the husband uses.
He stated that he is the owner of the boat registered … . He stated that he purchased the boat in 2006 and that he parks the boat (on its trailer) on the husband’s property.
The single expert
The parties appointed Mr R (“the single expert”) as the single expert to value the husband’s business, Business S. The single expert swore an affidavit on 4 March 2013.
The valuation of the property was undertaken, as set out in appendix D of the single expert’s report, adopting the method of net asset backing approach. The single expert was of the opinion that the usual method of capitalisation of future maintainable earnings was not appropriate in this circumstance for the following reasons:
·the business is primarily a vehicle for the husband to derive personal exertion income; and
·after allowance for a reasonable salary for the husband, there would be no maintainable earnings.
The single expert valued the husband’s business at:
·-$4,825 (negative) based on the evidence of plant and equipment given by the husband; or
·$34,450 (positive) based on the evidence of plant and equipment provided by the wife.
The Court finds that the value attributed to the business based on the wife’s information about the husband’s tools and equipment could not be accepted, as the wife was unable to prove the value which she supplied.
The Balance Sheet
At the time of trial the parties relied upon a draft balance sheet collaboratively prepared by them and dated 28 June 2012.
No updated version was prepared by the parties prior to the hearing so the version relied on at trial is set out below.
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| ASSETS | ||||
| 1. | J | Sale proceeds of former matrimonial home in CBA controlled monies account on behalf of both parties | $202,100.00 | $202,100.00 |
| 2. | H | Holden Rodeo motor vehicle – … | $9,200.00 | $9,200.00 |
| 3. | W | Holden Berlina motor vehicle (written off and $18,000.00 insurance paid to Wife). Wife now owns … Ford Territory. | Not agreed $9,750.00 | $18,000.00 Not agreed |
| 4. | H | Household contents retained | $15,000.00 | $2,500.00 |
| 5. | W | Household contents retained | $15,000.00 | $2,500.00 |
| 6. | H | [S] Business – Husband sole trader (Expert been appointed) | N/K | E$5,000.00 |
| 7. | W | Bank account ANZ | $NIL | Minimal |
| 8. | H | Bank accounts ANZ | $Not known | Varies, E$1,000.00 |
| 9. | H | Boat – … aluminium | $Not known | Not owned H |
| Total | $251,500.00 | $240,300.00 |
| ADDBACKS | ||||
| 10. | Monies spent by Wife on Sutherland Credit Union credit card post separation (adjustment to Husband who paid same) | Disputed – see notes | $3,000.00 | |
| 11. | Family Tax benefit A and B lump sum paid to Wife in the amount of $12,309.00 (50% adjustment to Husband) | Disputes – see notes | $6,154.00 | |
| 12. | Monies advanced to Husband by consent for legal fees (adjustment to Wife) | $40,000.00 | $40,000.00 | |
| 13. | Monies advanced to Wife by consent for legal fees (adjustment to Husband) | $40,000.00 | $40,000.00 | |
| 14. | Monies taken by consent by Husband for fees and disbursements including transcript fees and fees for bank statements. Husband to provide figure | $Not known | $NIL – refer to notes | |
| 15. | Monies taken by ATO for tax debt by husband without wife’s knowledge or consent | $26,241.00 | $NIL – refer to notes | |
| Total | $106,241.00 | $89,154.00 |
| LIABILITIES (AS AT DATE OF SEPARATION) | ||||
| 16. | J | Husband’s Tax Liability accrued prior to separation withdrawn from controlled monies account by ATO on 7 November 2011 ($18,110.65) and 14 November 2011 ($9,131.66). | Disputed – see notes | E$26,243.31 |
| 17. | H | Husband’s CSA debt | $Not known | $NIL – refer to notes |
| 18. | H | Credit card debt | $NIL – refer to notes | |
| 19. | W | ANZ Credit Union | $2,000.00 | $NIL – refer to notes |
| 20. | W | Wife’s legal fees | $65,000.00 | $Not known |
| Total | $67,000.00 | $26,243.31 |
| SUPERANNUATION | |||||
| Member | Name of Fund | Type of Interest | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| 21. | H | MLC - Masterkey | Accumulation | $2,064.00 | $2,064.00 |
| 22. | W | ANZ Super Advantage | Accumulation | $12,584.00 | $12,584.89 |
| Total | $14,648.84 | $14,648.84 |
| FINANCIAL RESOURCES | ||||
| Ownership | Description | Wife / de facto partner’s value | Husband / de facto partner’s value | |
| 7. | NIL | $ | $ | |
| Total | $NIL | $NIL |
Notes
In relation to any disputed items and all disputed values for items a party should state, using the item number as a heading:
Why an item should not be on the balance sheet.
Whether expert evidence is required to resolve a dispute as to value and what steps have been taken to agree upon and appoint a single expert.
Whether documents in the possession of the other party need to be provided before the value of an item can be agreed.
Any other comment a party wishes to make in relation to the disputed item.
| Item No | Husband’s Comments: |
| 3 | Wife’s Holden Berlina motor vehicle written off in car accident. Wife paid $18,000.00. |
| 4 and 5 | Household contents split by agreement as at date of separation. On 24 March 2011, Husband provided the Wife with a comprehensive list of household contents retained by both parties. No household items retained by either party of any particular value. Normal household contents. |
| 6 | Husband’s [trade] business – Husband sole trader. Business value of assets and stock only. On 24 March 2011, Husband provided wife with comprehensive list of tools of business. No goodwill Husband’s customers will only use Husband for any [of this trade] work. Not able to be sold. Joint Expert now appointed. |
| 7 and 8 | Husband’s bank account varies when paid for work performed and also when paying suppliers. |
| 9 | Boat not owned by Husband and not marital asset. Husband uses boat from time to time. |
| 10 and 11 | Wife paid using credit card which the parties held prior to separation, $3,000.00 for post separation expenses. This credit card was in Husband’s name and Husband made payments from his post separation income in order to avoid having a credit history. Credit card eventually paid out from the joint proceeds of sale of the former matrimonial home at [Suburb J]. Wife received $12,309.00 FTB A & B in a lump sum payment. Husband caring for children at that time, 5 nights per week. $6,154.00 adjustment to Husband. |
| 14 | Wife pressed for financial disclosure of Westpac Virgin Ignite bank statements from 1 July 2009 until account closed. Cost to Husband to produce same from Westpac Bank was $217.50. Wife consented to production of same. No adjustment to the Wife. Wife’s Motion to have Justice Le Poer Trench dismiss himself was dismissed. Husband awarded costs of Motion. Costs associated with ordering transcripts for Husband to provide submissions in reply to Wife’s oral motion was necessary. Wife should pay for transcript costs and legal costs due to costs order. |
| 15 | Tax liability of Husband incurred during relationship. Refer to tax portal documents provided by Husband to Wife. As tax liability incurred prior to separation, ATO liability is a marital debt. |
| 17 | Husband’s CSA debt accrued post separation therefore not relationship debt. |
| 18 | Husband has no credit card which was paid out in full from proceeds of sale of former matrimonial home at [Suburb J] |
| 19 | Wife’s credit card debt incurred post separation therefore not relationship debt. |
| 20 | Wife’s legal fees unknown. Note, Wife received $40,000.00 from former matrimonial home sale proceeds. Is $65,000.00 in addition to the $40,000.00 received ? |
| Item No | Wife’s Comments: |
| 3. | The wife’s previous vehicle was written off in an accident after separation and she used the insurance payout of $18,000 plus a loan from her boyfriend of $2000 to purchase her present vehicle. All relevant papers supplied to husband. The current red book valuation of the replacement vehicle is shown at item 3 namely $9750. the wife has not had the benefit of the $18,000 as she needed to purchase the replacement vehicle necessary for her work as she travels between stores regularly and to cater for all the children’s needs. |
| 4. | Husband had a container full of household contents after separation. Wife has sought copies of husband’s household insurance [Alternatively: The party’s household contents were insured for $40,000 just prior to separation. |
| 6 | Wife seeks valuation of business. Gross income of the husband’s business prior to separation was approximately $249,000.The husband has failed to lodge tax BASES and Tax returns for his business for last two years. The husband alleges severe downturn in his business since separation |
| 8 | Need updated figure –this asset not listed by husband |
| 9 | The husband retained the boat after separation and claims that he has since sold it but we do not know how much it was sold for and where the sale proceeds have gone. There is a new boat permanently parked outside the husband’s residence . The husband takes this boat out with the children and his mates when they go fishing. |
| 12 & 13 | Both parties agreed to take $40,000 each from monies in controlled monies account, for their respective legal fees on the condition that these sums would be added back and taken into account by the court when determining the final property split between the parties. |
| 15 | The wife has made numerous requests for copies of the correspondence between the ATO, the husband and the husband’s solicitor in regard to the direction to the ATO to garnish the controlled monies account to pay the husband’s tax debt without notice to the wife. From the husband’s documents so far supplied, it appears that most of the tax debt is for penalties and interest for the husband’s failure to file BAS returns for his business. These monies were taken from the controlled monies account without notice to the wife and without her knowledge or consent. |
| 14 | The wife has agreed to the husband withdrawing some monies by consent from the controlled monies account for disbursements for these proceedings on the basis of the husband’s statement that he has no other money to pay for them. |
| 10 & 11 | After separation the wife used monies from the Credit Union account and also Family Tax benefit to support the children. The husband has paid minimal or no Child Support for the three children. The husband’s Child Support Assessment is about $15 per week for the three children and even the very small sum the husband has not paid and he is approximately $2000 in arrears on these payments. |
| 16 & 17 | See 12. Amount of husband’s current tax debt unknown; similarly CSA debt. Updated documents needed. |
| 20 | Wife’s fees to be paid on settlement. Estimated fees: J Pinto $40,000, E. Pender $25,000 |
Submissions on the balance sheet
The wife
The wife, in her submissions, provided what she referred to as “[Weiman] Balance sheet final wife”. The document was sent by email to my Associate on 9 April 2013, however, the document itself appears to be the document set out above. The differences between the two versions of the document are only minor and were addressed further in oral submissions on 1 May 2013.
There was agreement that the amount now standing to the credit of the parties in the controlled monies account was $194,201.11. The only further deduction to be made from the account was for the payment of the fees of the Independent Children’s Lawyer (“the ICL”). The parties received a bill for those services by 1 May 2013. The sum of $12,800 was sought. The wife applied for an exemption from the fees however no reply had been received to that application by 1 May 2013.
On 17 September 2013, my Associate received an email from the wife’s solicitor enclosing a copy of the last bank statement for the controlled monies account; a similar email was received from the husband’s solicitor. The amount now in the account is $182,973. The ICL has been paid.
The loan on the Holden Rodeo, which the husband uses for business, was paid out from the controlled monies account by agreement.
The wife’s car, a Holden Berlina, purchased for $18,000, is now worth $9750. The wife acknowledges this was a “bad buy”.
The wife conceded in cross-examination that each party took household goods from the former matrimonial home, however, she submits that the husband took and retained in a container most of the goods. She submits that the husband’s claim that his household goods are worth $2,500 should not be believed.
In relation to Business S, the wife submits that the valuation was done based on the husband’s information. The report states that the husband does not hire employees. The husband conceded in cross-examination that he hired sub-contractors and that it would be impossible to do that trade single handed.
The wife further submitted that the husband used money from the controlled monies account to pay his GST obligations for the business, rather than paying the debt from his income. The GST was incurred by the husband prior to separation.
In response to the single expert’s valuation, the wife submits that the court should find that the husband has been “less than frank” about his earnings for the business. As such, the single expert’s disinclination to adopt the capitalisation of future earnings methodology was not, it is submitted, because there was minimal earnings, but because the husband had not been honest about the earnings of the business.
The wife submits that the valuation, based on plant and equipment, was flawed because the husband had been dishonest about his tools and their value. She submits that the husband’s truck, shown in exhibit W9, contained four tool containers, which was far too much to contain the tools he claimed he owned. The wife further submits that she lived with and worked with the husband and saw his tools while working with him. She submits that the court should prefer her recollection of the tools that the husband owns, which, she submits, are worth much more than the valuation sets out.
The wife submits that the husband has not been honest about the number and value of accounts held by him with Sutherland Credit Union.
In relation to the boat, the wife submitted that the boat was in fact owned by the husband in every respect but name. The husband asserts that the boat was owned by Mr N but is parked at the husband’s house. The husband says that he is permitted to use it. The wife submits that Mr N’s evidence stating the husband pays for fuel and repairs to the boat should persuade the court that the husband is in fact the owner of the boat.
The wife submits that the monies paid for legal fees by the parties should be regarded as add backs.
In relation to the payment by the husband of his debt to the ATO, the wife submits that the amount should be included on the balance sheet as an add back. She relies on the judgment in Townsend and Townsend (1995) FLC 92-569 (“Townsend”), which, she submits, advocates that “the correct way in which to deal with the husband’s receipt of monies is to bring them back into the pool of assets on a notional basis and make distribution accordingly”.
She further relies on In the Marriage of Kowaliw (1981) FLC 91-092 (“Kowaliw”) which, she submits, stated that where one party had acted “recklessly, negligently or wantonly with matrimonial assets” which reduced the value of the asset pool, financial losses should not be shared equally.
It was submitted that the husband had acted in the manner described above by directing the ATO to take monies to repay his tax debt from the controlled monies account. The wife submits that the husband’s laxity in preparing tax returns is an example of negligence or waste.
The wife said the tax debt was in relation to income from the husband’s business and that he gained the value of the liability by including the liability on his BAS statements, thereby minimising the value of the business, and by inflation to his income from the unpaid tax.
The wife submits that the whole of the amount should be added back or, alternatively, that the amount of $16,000 (being the proportion of the debt which was for penalties and interest incurred by the husband’s non-payment of tax) should be added back. I note there was no evidence as to the amount of interest and penalty and that was conceded by the wife in submissions.
Another add back which the wife submits the husband should have on the balance sheet is the cost of the transcript in relation to the application of the wife made in court on 8 May 2012. The wife submits that she agreed to the husband paying for the transcript from the controlled monies account on the basis that he had no money; however, the husband’s bank account in June 2012 shows a payment of $500 as a deposit for a camping spot at Town T. The wife submits that the husband, as at the date of the application, was able to pay for the transcript and the wife paid for her own disbursements at that time, so the transcript costs should be taken from the husband’s share.
In relation to the single expert’s report, the wife states that the evidence of the single expert was nullified by the husband’s failure to disclose information, and therefore the husband should bear the full cost of the report.
The husband made submissions in relation to the balance sheet which I will refer to as I proceed to determine the various disputes.
Conclusions on the balance sheet
Assets
There is no disagreement as to the current balance of the controlled monies account. The figure was updated by the parties on 17 September 2013.
The parties agree the value of the husband’s Holden Rodeo is $9,200.
The wife’s car
The wife asserts the value of her Ford Territory is $9750. The husband submitted another figure. He says the value should be included at $18,000, which sum represents the value of a former vehicle owned by the wife. The wife was involved in an accident post separation and the vehicle was found to be a “write off” by the insurance company. The company paid the wife $18,000. She used those funds and a further $2,000 borrowed from Mr K, to acquire the Ford Territory.
It is trite to say that for the most part motor vehicles depreciate with use and age. The wife needed a motor vehicle. It was appropriate she had one. She acquired a motor vehicle which has since depreciated. I propose to include the wife’s Ford Territory in the balance sheet at $9,750.
I find the value of the wife’s Ford to be $9,750 as asserted by her.
The husband’s boat
The husband opposes any value being attributed to the boat. He submits his evidence was clear that it was not his boat. He called the owner of the boat to give evidence and he submits the owner (Mr N) was not shaken in cross-examination from the evidence in his affidavit.
The wife’s case is that the boat has all the hallmarks of belonging to the husband. He appears to have unfettered use of the boat. It is parked outside his house for most of the time. The husband and Mr N, the alleged owner of the boat, both say the husband meets fuel costs and repairs to the boat. Having said that, the wife did concede, at the conclusion of her cross-examination, that the husband was not the owner of the boat.
I am satisfied that the husband does not own the boat. He is very fortunate to have a friend such as Mr N. Clearly the use of the boat is a lifestyle resource to the husband. He seems to very much enjoy the use of the boat in pursuit of fishing.
Value of the husband’s business
In relation to the value of the husband’s business, the wife submits that the valuation was not carried out on a proper basis. Having made that submission, I then challenged the wife’s counsel about the fact that she did not cross-examine the single expert on the business valuation.
The wife referred to the valuation and focused upon a portion where the single expert said that the husband does not employ any employees. Thus, the single expert stated that income is derived from the husband’s personal exertion. The wife asserted that the husband did have employees but conceded that they were sub-contractors. It was conceded that the single expert would understand the difference between an employee and a sub-contractor. The wife conceded that she was seeking to extrapolate from the valuation that, when the single expert said that the husband’s business had no employees, in fact the sub-contractors were of the same nature as employees.
In oral submissions counsel for the wife was taken to the report of the single expert. At paragraph 1.5 of the report I read the following onto the record:
I have considered the profits in the financial statements over the recent years. The business has no employees and has little use of subcontractors and plant and equipment used is not significant.
Given that the single expert was not required for cross-examination, the above portion was not challenged.
In submissions, the wife said that in the two years earlier than those considered by the valuer (i.e. prior to the 2010 tax year), for the purpose of the valuation, the husband’s income was greater than in the years considered by the single expert. Because of that, the value of the business should be greater than the value attributed to it by the single expert. It was conceded that, even if the revenue from the business was found to be greater than might be considered by looking at the last three years from 2010 to 2012, there would still need to be sufficient surplus of profit to pay the husband a manager’s/ working wage for the business before any super profits could be considered for the purpose of valuing a future maintainable profit.
The wife then submitted that one of the expenses of the business was a GST payment which the business was required to pay. The wife says that was in fact paid from the sale proceeds of the house. When asked to show me where in the valuation the valuer referred to the payment of GST as a liability, the wife was unable or unwilling to do so. The wife in her written submissions referred to the 2010 tax year. She claimed that was the year in which the GST tax debt (that is, the tax which was ultimately taken from the joint account) was not paid by the business but rather from the property sale fund. She said, therefore, it should be added back into the 2010 year.
As can be seen on page 22 of the valuation, the single expert has set out the expenses of the business to which he had regard for the purpose of the valuation. An expense titled “GST payment” or the like does not appear. There is a sum of $17,359 listed as “Total other expenses”. Even if I assume that sum was the GST and, therefore, that the expense should be ignored, it would see the profit for the year rise to $70,408. That sum would then have to be added to the results for the two other years considered by the valuer, namely the 2011 and 2012 years. That would provide an average income of $38,853 for the business. That represents $746 per week before tax. I note that the husband estimates his income in his Financial Statement to be $700 per week before tax.
The submissions of the wife made on 1 May 2013 were most confused and confusing. Should there be any review of this decision I urge the reviewing court to have regard to what was said by the wife’s counsel in relation to the value of the husband’s business.
The wife submitted that the court should not be satisfied that the business has no value. She submitted the court would not accept the husband’s income is as he states. The wife says that in earlier years than those considered by the single expert to value the business, the husband showed a gross profit of $50,000 to $60,000. She said that could be used to determine a future maintainable profits figure, which then could have been capitalised by the valuer. However, the wife could not answer the question about what would be a reasonable level of remuneration to allow the husband as the manager of the business. The single expert did not say in his valuation what he set as a reasonable level of remuneration for the husband because the accounts for the business over the last three years of operation considered by the single expert produced an average net profit of $33,073 (see page 22). The single expert clearly regarded that as below a reasonable level of remuneration. In his Financial Statement sworn 2 August 2012, the husband said that his average income from his business was $700 per week gross. I take that to be before he has to pay tax.
Another aspect of the valuation evidence went to the value of the husband’s tools and equipment. The husband asserted that the value of the plant and equipment was as set out in the accounts of the business. The wife sought adjustment based upon her value of the plant and equipment. The wife told the single expert that the plant and equipment was worth $38,735. The adjustments performed by the single expert in schedule D1 on page 20 of the valuation resulted in a value to the business of ($4,285) on the husband’s figures and $34,450 on the wife’s figures. The problem for the wife is that the value she attributed to the husband’s tools and equipment could not be proved. No single expert was engaged to value the tools and equipment.
Another matter which poses a problem for the wife on the issue of what the single expert valued is to be found in the valuation itself. On page 2 of the valuation, the single expert refers to correspondence from the wife’s solicitor which sought to have him conduct an investigation of the income of the husband’s business. When he wrote to both solicitors about this request, he received a jointly signed letter from each solicitor stating:
We request that you completely disregard the email that Mr Pinto sent you on 28 September 2012, along with any documents which were annexed to that email. We request that you proceed with the valuation of [the husband’s] business based on the financial documents and information that you have received to date.
Ultimately the challenge to the valuation by the wife must fail. The single expert was not required for cross-examination, which in normal circumstances would be fatal to any challenge to the valuation. I accept, however, that in some cases it may be possible to substitute figures found on the evidence which are different to those in the valuation which have been relied upon to establish the valuation. Thus, there would be no challenge to the method of valuation only to an underlying figure such as “net profit” or a particular expense which was no longer an expense of the business. None of that was applicable in this case.
This business has all the hallmarks of a “one man show”. The husband uses sub-contractors to undertake work which he cannot when he has obtained a contract for a particular job. This may include a submission-contractor who provides labour only and is really an assistant to the husband in the work that he is actually undertaking. That seems to me to be nothing more than good management of expenses and risk.
It was common fact, in this case, that the parties had, during the cohabitation, operated the husband’s business through a corporation. That corporation had been wound up before separation (as stated by the single expert). If the business of the husband had operated at a higher level before separation, as is asserted by the wife, it certainly was not so after separation. The husband was cross-examined, to the extent desired by the wife, about his business.
Even if I ultimately do not accept that the husband has disclosed all of his income earned from his business or, alternatively, that he is deliberately running the business at a low level, I would not conclude that the husband is earning, or could in the current circumstances earn, sufficient income in the business to make it produce enough net income to warrant an exercise of valuing super profits. Super profits, so called, are only ascertainable after a reasonable working wage has been paid to the manager of the business being valued (in this case the manager would be the husband). There is no evidence as to what a reasonable level of remuneration for the manager of a business such as the husband’s might be, however, I would be surprised if it was less than $80,000 per annum. There is nothing about the evidence in this case, or the lack thereof, which convinces me that the husband has a pre-tax income of $80,000 per annum, or that he could have if he chose to run his business differently.
The value of the husband’s business should be entered in the balance sheet as nil. Having said that, I need to deal with a submission by the wife that the husband should not be accepted about the reported earnings of his business. As such I should conclude that the income of the business is higher than the figures provided to the single expert.
In written submissions, the husband said in relation to the assessment of the husband’s income:
He is a sole trader who in his own words has suffered greatly from the separation and the global financial crisis. He points to this and these proceedings as to why his income has fallen and it seems he has adjusted his focus and outlook now from working as he requires to support himself and the children and to spending quality time with his children.
This submission supports the impression I had of the husband’s work availability and, thereby, his income. It seems that the husband has a sufficient enough following or referral base so as to enable him to take work when he needs income and to refuse work when he does not need income.
I do have some concern about the husband’s evidence in relation to the work available to him and the income he earns from his business. I consider that it is unreliable to a limited extent. I consider that the husband may have understated his income by a margin of about 25 per cent. I consider this understatement to be in two possible areas. Firstly, I do not believe he takes all work which might be offered to him; alternatively, I consider the husband does not actively seek work otherwise than to keep his income at a low rate. The second area of concern relates to the husband not declaring all of his income. I have this concern because the husband clearly was a hard worker prior to the separation. The evidence shows that his business, or the parties’ company through which the husband ran his business, was more productive prior to the separation. In addition, the husband gives the impression of still being a very active person in a physical sense. It is hard to imagine the husband sitting at home doing no work if he knew that work was available to him.
Clearly the husband now has to make time to spend with and supervise his children and that will, no doubt, impede his income earning capacity to some extent.
My estimate of the husband’s income being up to 25 per cent more than that stated is not based upon any mathematical determination. It is the conversion of the impression I was left with after hearing his evidence. Even if I be correct in this conclusion I do not accept that it would give rise to a value that I could include in the balance sheet because the evidence of the single expert had not undertaken an assessment of value based upon capitalisation of future maintainable profits. There is nothing to indicate what might be a management wage which should be paid to the husband.
As stated later in these reasons, I also have a concern that part of the income earned by the husband is not accounted for. I was concerned by his evidence that he does not supply written quotes for jobs. He makes a note of the job measurements in his diary and gives an oral quote which he notes in his diary somewhere.
Bank accounts of the husband in Sutherland Credit Union and the wife’s bank account with ANZ
In relation to the husband’s credit union account I consider it to be of little value. In any event it represents his savings, if any, generated post separation. It also seems to be part of the business valuation.
The husband was cross-examined about his bank accounts with the credit union. I accept the submissions of the wife that some of that evidence was unsatisfactory in that the husband appeared to become confused as to which account was his business account and which was his personal or savings account. In any event, I do accept the husband’s evidence that from time to time he holds money in his business account which is required to be paid to suppliers, and also to meet GST payments which he has collected for the ATO.
I consider that at any particular time the amount of money which is available to the husband from his business account is equivalent to the income which he has declared in his Financial Statement. I am also satisfied that the husband does not hold any appreciable sum as savings in a bank or credit union account.
The same is true of the wife’s ANZ bank account. I consider that any funds in such accounts are monies obtained by the wife post separation. I am further satisfied that at any particular time the wife does not have any appreciable sum in her bank account. I propose to list both as having minimal value.
Household contents
In relation to the entry for household contents, it was agreed there had been a division of the household contents post separation. In the husband’s Financial Statement he listed his household contents as having an estimated value of $2,500. The wife also said she had $2,500 worth of household contents, however, she contended that the husband retained more than an equal share of the contents. She asserted he retained $12,500 in value. No expert evidence was called in relation to this issue. The wife says that the husband should not be believed when he asserts that he only has $2,500 worth of household contents. I do not accept that he should not be accepted on this issue.
Add backs
In relation to the “add backs” in the balance sheet, I note that, since the conclusion of the submissions in this case, the Full Court has delivered itself of Bevan & Bevan [2013] FamCAFC 116, which advocates that notional assets of the nature hitherto usually included as an add back in a balance sheet should preferably be considered under section 79(4) and, in particular, section 75(2).
Partial property payment of $40,000 to each party
Each party agrees that they received an advance of $40,000 from the sale proceeds of the former matrimonial home. Each expended $30,000 of those sums on legal fees.
Although there was some debate in submissions about whether it was necessary to include this notional asset in the balance sheet, I will include same.
Tax paid from the joint account of $26,241
The wife seeks to include as an add back the amount taken from the joint account by the ATO in order to pay the husband’s outstanding taxation. The total of that sum is $26,241.
The submissions of the wife on this issue are most confusing. She intertwines the business of the corporation owned by the parties and placed in liquidation before separation with tax responsibilities of the husband’s arising from the business he subsequently conducted.
The wife argues that the husband was entitled to funds from the joint account to meet primary tax incurred prior to separation, however, she asserts that she should not have to contribute to the penalties or interest incurred on same. The logic of this position is difficult to follow. In any event, when the wife’s counsel was before me on 1 May 2013, it was conceded that there was no evidence to establish the quantum of the penalties and interest charged.
The husband says that by the time he received the tax assessment/tax demand he did not have the funds to pay it. The wife says that the tax paid was GST which was collected by the husband and not passed on to the ATO as required. The husband says it was a combination of personal tax and GST.
There is authority of the Full Court on the precise circumstances now under consideration. The Full Court has determined that in circumstances where the parties have accrued benefits as a result of non-payment of tax, even in circumstances where that has been fraudulent, the liability for debt to the ATO, including penalties and interest, is a joint one: see Lemnos & Lemnos (2009) FLC 93-394 (“Lemnos”).
In the Full Court decision in Lemnos, Thackray and Ryan JJ (Coleman J was in agreement but for different reasons) made comments in relation to a similar set of circumstances. In that matter, the husband to a marriage had for a considerable number of years made fraudulent tax returns and had, at the time the matter was before the court, declared himself bankrupt, with the ATO as one of his creditors. The Full Court was asked to decide whether the trial judge had been correct in prioritising the non-bankrupt wife’s claim on a remaining property over that of the ATO. Their Honours set out as follows at [240]–[247]:
240.His Honour concluded (in paragraph 88 of his reasons) that the husband had been “reckless and negligent” in the way in which he had completed his taxation returns and that the wife had not been complicit in the filing of those returns. On that basis, and apparently that alone, he concluded (at paragraph 89) that the husband should satisfy the entire taxation liability from his own resources. His Honour invoked the “waste” principles enunciated in Kowaliw & Kowaliw (1981) FLC 91-092 to support his ruling.
241.There was no challenge to his Honour’s finding that the husband had been “reckless and negligent” in the way he had completed his income tax returns. Nor was there any challenge to the finding that the wife had not been complicit in the husband’s conduct. We do not, however, see how these findings could form a sufficient base for determining that the husband (or the trustee) should be solely responsible not only for the interest, penalties and costs that were incurred as a result of his behaviour, but also that he (or the trustee) should be entirely responsible for the primary tax that would have been payable had the husband completed his taxation returns properly.
242.In Kowaliw (at 76,644), in a passage that has received widespread appellate support, Baker J said:
As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
243.We are unable to accept that the husband’s conduct came within either of the exceptions to the general principle enunciated in Kowaliw. This was not a case in which the husband’s conduct was designed to diminish the value of the matrimonial assets. On the contrary, the husband’s actions were designed to increase the matrimonial assets. Although we have not been persuaded that the husband could never have retained the former matrimonial home without the benefit flowing from the deductions, it was not suggested that the deductions had not assisted him to do so. Having had the benefit of the funds flowing from the husband’s conduct, it would seem to us to be neither just nor equitable for the wife to escape all responsibility for payment of the primary tax that would otherwise have been paid.
244.In coming to this decision, we respectfully adopt the views expressed in Johnson and Johnson [1999] FamCA 369 where Ellis, Kay and Dessau JJ said:
20.4 We are of the view that his Honour's discretion miscarried when he failed to provide for the wife to share in any penalties that may be imposed by the taxation commissioner.
20.5 In our view the fact that the wife was or was not involved in the tax avoidance process which may lead to the imposition of penalties was only one consideration that his Honour needed to weigh up when determining liability for the penalties as between the parties. The benefits indirectly gained by the wife in having the pool of assets otherwise increased as a result of the availability of funds which would otherwise have been paid out in tax also have to be considered.
20.6 In the context of an examination of twenty years of financial dealings by the parties, which dealings were almost entirely within the province of the husband, in our view, unless there were compelling circumstances to the contrary, a just outcome demanded that the wife take the good with the bad. Whilst there is a sense of culpability about the penalties, they represent no more in this case than an outgoing incurred in creating the asset pool.
20.7 In coming to this view, we would underline the fact that the parties’ fortunes were gained and lost within a volatile trading structure. It is to be remembered that the assets for distribution in their property settlement were built up after the husband’s business collapse. Absent any suggestion that the husband was on a frolic of his own and acting contrary to the wife's express wishes, we see no reason for his Honour to have left the husband to shoulder the burden of the tax penalties.
245.The views expressed in Johnson relate to allocation of responsibility for income taxation penalties. Although in the instant case it is accepted the husband was “on a frolic of his own” we do not accept that the wife’s lack of knowledge or complicity in the husband’s wrongful deductions is determinative of whether she should ultimately share responsibility for the payment of primary taxation on his income earned during the marriage. In our view, to adopt their Honours’ description, the proposition that spouses should generally “take the good with the bad” has even more force when applied to allocation of responsibility for primary taxation.
246.We do not suggest that the “principle” identified in Johnson is of universal application. The Full Court itself allowed for the possibility of “compelling circumstances” leading to a different outcome. In this matter, however, the trial Judge appears to have given no consideration to the significance of the fact that the wife had undoubtedly enjoyed the benefits flowing from the income taxation deductions. This was, in our view, a necessary matter for his Honour to have considered alongside his finding that the wife was not complicit in the husband’s conduct.
247.We should add that while we see the “principle” identified in Johnson as having some application here, we make no comment on its application in proceedings between a non-bankrupt spouse and a trustee in bankruptcy in circumstances where liabilities to unsecured creditors could only be met by resort to property already owned by the non-bankrupt spouse. Such cases would raise for consideration the definition of “matrimonial cause” in s 4(1) of the FLA and the court’s power in such proceedings to deal with anything other than “vested bankruptcy property”.
Having considered the matters set out in the cases referred to above, I will take this aspect of contribution claimed by the husband into account when I come to consider s 75(2).
Ms O also gave evidence about the husband’s care for the children. She observed him caring for B as a baby. She said she had observed the husband making meals in the home. The wife said he did not do that. I accept the evidence that he did. I accept that it was the wife who did most of the cooking and domestic tasks in the house. I accept the husband did maintenance and gardening including mowing lawns.
Later in the marriage the wife worked on weekends. I accept the husband’s evidence that he cared for the children at those times.
I accept that the husband did perform tasks in caring for and interacting with the children. The wife’s case would leave the impression that he did none of that work. Having conceded in cross-examination that the husband cared for the children on some occasions when she attended at Sport Q classes, I challenged the wife about her statements that he did nothing to care for the children. She replied that she was referring to the time when they were little. I do not accept that. I accept that the husband did contribute as a parent in a significant way, however, I find that the wife performed the majority of those tasks. This finding is contrary to the husband’s submission that the parties’ contributions as parents should be seen as equal.
The wife was the primary care giver to the children during the course of the marriage. Contrary to the case run by the wife that the husband played virtually no role in the care of the children, I find he did play a significant but minor caring role when compared to that of the wife. I accept that at some time during the cohabitation he cared for the children on weekends when the wife worked. This was for a period of ten months towards the end of the marriage. I also accept there were occasions when the husband collected the children from school and otherwise supervised them before the wife returned from work. I also accept that the husband played a role in supervising the children’s pre bedtime and bedtime rituals.
The parties bought, renovated and sold a number of properties during the cohabitation. The husband arranged the financial aspects of the purchases and sales. When the parties did not have a simultaneous sale and purchase, the husband was responsible for investing the parties’ capital.
Both parties worked on renovating properties which they owned. I accept that the husband did more of the heavy work on those renovations than the wife. I also accept that at times when the husband was working on the renovations the wife was caring for the children.
In relation to the acquisition of property during the marriage I find the wife’s parents made a contribution on her behalf through the provision of an interest free loan of $35,000 which was repaid on the sale of property. I also find that the husband’s parents made a contribution on his behalf through the loan of $40,000 at an interest rate of 12.5 per cent. Both loans were unsecured.
During the cohabitation and marriage the parties resided with the husband’s parents for periods accumulated to 18 months. No rent was charged however the husband did effect some improvements to his parents’ home during this period.
The wife sought a greater assessment of contribution in her favour arising from the combination of all her contributions, in particular her earning income and also caring for the children and domestic duties for the family. I am against the wife in relation to that submission.
I find that the parties’ contributions to the date of separation were equal. I reject the wife’s case that her contributions were greater. Such submission was based upon the court accepting the totality of the wife’s evidence and that has not occurred.
Contributions post separation
Following the parties’ separation, the wife has had the major role in caring for the children. They have lived with her and spent up to five days per fortnight with the husband until 29 November 2011. They have spent four days a fortnight with him thereafter and will do so into the future pursuant to the consent orders made during the trial.
In relation to child support, exhibit W6 shows the current assessment to be nil so far as the husband is required to pay. That is for the period 1 October 2012 to 24 February 2013. This is based upon the husband’s 2012 tax return which shows he had a taxable income of $18,000. There is no copy of a Child Support Assessment for the period from 30 June 2011 and 1 October 2012. Exhibit W3 includes a copy of the CSA for the periods 6 August 2010 to 15 March 2011 and from16 March 2011 to 30 June 2011. The first assessment required the husband to pay $432 per month and the sum of $84 per month. In oral evidence, the husband claimed he was paying child support at the rate of $180 per month. That subsequently was perhaps closer to $90 per month so far as it related to arrears. Whatever the sum it is clear it was to discharge arrears of earlier child support assessment.
The wife conceded in oral evidence that the husband had contributed to payment of school fees. She also conceded that he had purchased items for the children. With respect to the manner in which the parties’ parent the children, they each have a full set of clothing for the children and nothing passes between the houses. Thus, duplication in all areas of provisions for the children is required.
The husband paid a credit card debt of the wife post separation. This occurred shortly after separation.
The husband made mortgage payments on the home between separation in April 2010 and sale in October of that year. He also paid health insurance for the children for some unspecified period following the separation. His Financial Statement relied upon in the hearing shows no health insurance premiums now being paid.
The wife submitted that the post separation contributions should favour her because she had the greater share of the care of the children and during that time she has received relatively small amounts of child support from the husband. In response, the husband submitted that he has been badly psychologically affected by the breakup of the marriage together with the financial impact of the downturn in available work. It was further submitted that the wife conceded the husband had paid other expenses for the children such as school fees, whilst relatively modest, are still a contribution. It was further submitted that the husband has had to provide the children with a full set of clothing in his house as no clothing transitions between houses. The husband also submitted that immediately post separation the amount of child support assessed against the husband was greater than the current nil assessment.
The wife submitted that her post separation contributions should be assessed as greater than those of the husband because she had the care of the children for a greater time than the husband and she also received relatively little by way of child support. At the date of the hearing the husband’s Child Support Assessment was nil although he was still meeting arrears of child support from earlier assessments. It was also acknowledged that the husband had contributed to school expenses for the children. I also need to consider that the husband had to establish new wardrobes for the children as they did not travel between residences with any clothing, toys or activity equipment.
Taking all those matters into account, I consider the wife’s contribution is greater than that of the husband. The parties have been separated since April 2010 under the one roof and physically since October 2010. That is a period of almost three years. During this period, the contribution in caring for the children for the majority of the time, together with receiving for much of that time small amounts of child support, in my assessment move the balance from one of equality. I assess that difference to be 5 per cent.
Conclusion based on contribution
All in all I assess the contributions of the parties to be weighted 55 per cent to the wife and 45 per cent to the husband.
Contributions to superannuation
The husband’s superannuation appears to have been largely established and grown during the marriage. The wife’s consisted of a number of small funds which she has now amalgamated into one. She has continued to contribute post separation.
There does not appear to be any reason why contributions to the superannuation should not be assessed in the same proportions as the other contributions namely 55 per cent to the wife.
The superannuation pool is $14,648. The wife’s share based on the assessment of contribution would be $8,057. The husband would receive $6,592.
No splitting order is sought by either party. There was no submission directed to assessing contributions and section 75(2) matters to separate pools of assets and superannuation.
Section 75(2) considerations
I find the following are relevant matters in this case.
The husband is 38 years of age and the wife is 40 years of age. There is no suggestion either suffer any ill health. Each has employment, however, the husband has a business which has the capacity to allow him to earn a greater income for him than that which he currently earns.
The husband has a stated income of $700 per week. As set out earlier, I consider the husband is either currently earning more than that or, alternatively, that he could do so if he so chose. I form that conclusion with the knowledge that the husband will have a responsibility under the parenting orders to care for the children four days per fortnight in school term and for half of the school holiday periods.
The wife earns $1,040 per week from part-time employment. I consider that she will be unable to increase her time in work for a number of years due to the age of the children and her need and desire to care for them out of school hours, if that be possible.
At this time I am satisfied that the parties’ weekly incomes are not significantly dissimilar.
Given the income recorded for the husband in pre separation years, I consider that he has the capacity to earn and maintain an income of about $60,000 per annum should he chose to do so. Further, I consider that he has the knowledge and experience to build capital in housing assets as he and the wife did during the marriage. He will need a capital base to commence building such assets and it may be that his parents will be able to lend him money as they did in the past. The wife may also be able to borrow from her parents as she did in the past.
Having reached that determination, I take into account that the Child Support Registrar has power to set a rate of child support based upon an assessment of earning capacity and is not restricted to actual income earned in an appropriate case. I accept that the Child Support Registrar would not be bound by my conclusion on the husband’s income earning capacity. I consider that, either because the husband chooses to increase his earning capacity and disclose same to the ATO, or because the Child Support Registrar determines an income figure for the husband, it is probable that he will be assessed to pay child support in the future. I accept that the amount to be paid by the husband will be reasonably modest, given that the wife has an income of $1,000 per week and his income will probably be between $1,000 and $1,200 per week.
The wife resides with Mr K, her partner. His financial circumstances are difficult to quantify. He is relevant only as a resource to the wife. The evidence of the wife about the contribution which Mr K makes to the household in which he and the wife reside is that his contribution is limited. The wife told me in her oral evidence that Mr K commenced sharing a residence with her in October 2010. She said that they did not form a romantic attachment until 2011 (inferentially October 2011). Initially, they shared the residence as close friends. When he moved in with the wife he did not contribute to the rent. He paid no expenses associated with the accommodation. Between October 2010 and January 2012, Mr K’s daughter, U, stayed in the accommodation mostly every second weekend.
In February 2011 the wife and Mr K moved to a residence in Town V. The rent was $525 per week. Mr K did not contribute to the rent until about October 2011. In October 2011 the wife said she advised Centrelink that she no longer required the single parents’ pension. The wife said the relationship between she and Mr K did not commence until October 2011.
Mr K is said by the wife to be a self-employed tradesman. The wife said she did not know what he earned. She said she had been asked what he earned. This much is verified by the requirement to complete her Financial Statement.
The wife said that Mr K did not commence to pay anything towards rental until February 2012 when they moved to premises at W Street, Suburb E. The wife says that Mr K does not contribute any other funds towards the running of the household but that he pays all of the rent. If the wife goes out socially with Mr K, he pays for her. If the children are with them, the wife pays. If the wife is short of funds, Mr K helps her with payment of electricity accounts. The wife’s mother has also helped her financially to meet household bills.
When asked why Mr K had not contributed to the cost of rental or household costs the wife said he had moved in to protect her and the family. This was said in re-examination and no application was made to cross-examine on this fresh fact. The wife did not say what it was that the family required protection from.
I find that the wife and Mr K did commence the current relationship much earlier than she represented to the court it commenced. I find that she does have a good understanding of his income and financial commitments but that she chose not to disclose this to the court. I find that, in those circumstances, Mr K is a significant resource for her in the future and this weighs heavily against the imbalance in the parties’ future income earning capacity as determined by me.
The wife currently works between 15 and 23 hours per week. The most hours she can work in that job is 23 hours per week because it is a part-time role. The wife receives a travel allowance and superannuation. She has been with the same employer for about five years.
The parties’ other financial circumstances are set out in their financial statements. In particular, I note the liabilities each currently has. I note the commitments of each party to support members in their household where that is disclosed. I note the wife and the husband both receive family benefit payments.
Each of the parties has maintained a modest to frugal standard of living post separation. That seems to be the case during the marriage as they were applying all available funds to the renovation of their properties.
The duration of the marriage and the requirements of parenting have restricted the wife’s income earning capacity in that she has been unable to take on full time employment.
Each of the parties clearly intends to make themselves available to care for the children during the times the children will be residing with them. That will restrict each party’s capacity to increase their income earning capacity. It will impact on the ability for each party to extend their earning capacity. I took this into account when I considered what the husband’s income earning capacity might be.
Having accepted that the husband does not own the boat which he has the use of, it was not included as an asset in the balance sheet. It is a resource to him which I take into account at this stage.
Each of the parties has incurred substantial legal costs which appear from the exhibits. Exhibit W1 shows that the wife has incurred legal costs of $114,307 and has paid $30,000, leaving a balance of $84,307 to be paid, presumably from the order made by me. Exhibit H3 is the husband’s cost letter. The husband’s costs are $97,057 of which he has paid $30,000. The balance presumably to be paid from the orders I will make.
Each of the parties received interim distributions of $40,000 from the sale proceeds of the home. They each paid $30,000 in legal costs. The wife sought that the interim distributions be included as notional assets, as the funds came from the parties’ pre separation property. I have acceded to that request against the submission of the husband, although the husband submitted the wife’s case on this issue was not without merit. I here take into account that those funds are no longer available to the parties, each having applied $30,000 to legal costs and the balance of $10,000 having been spent.
During the trial, the parties settled the arrangements for the future care of the children; those orders provide for equal shared parental responsibility. The children are to live with the wife and spend time with the husband as follows:
·four nights per fortnight during school term;
·for half of the term 1, 2 and 3 school holidays;
·approximately half the time broken into three groups of time; and
·on other special occasions.
An issue on the balance sheet was a claim for an add back of $12,309 or thereabouts, which the husband contended the wife had received as a lump sum family benefit referable to the pre-separation period. The wife denied she received any lump sum payment but said that she had received periodic payments post-separation which may have totalled the said figure. No other evidence was produced to establish the case put by the husband. I do not propose to take into account against the wife any funds which she may have received as family benefits.
The division of the parties’ pool of assets (which totals $287,141, not including superannuation) based on the contribution-based finding of 55 per cent to the wife will result in the wife receiving $157,928 and the husband receiving $129,213. The difference is $28,715.
Based upon assessment of contribution towards the superannuation pool, the wife will receive a greater share by a margin of $1,465.
The wife failed in her application for me to disqualify myself from further hearing in the case. I made a cost order against the wife arising out of that failed case. The husband seeks a payment of $6,000 for those costs. I consider that the amount of costs the wife will be assessed to pay will be something less than that sum, however, in the circumstances of this case it will be a significant impost on the funds which will be available to the wife from the orders of this court because the pool of assets is small.
The wife submitted that unless she is to receive about 80 per cent of the asset and superannuation pools, she will have insufficient funds to pay her legal fees. As far as I know, there is nothing in the Act to warrant such an outcome (i.e. that a party should be required to receive sufficient property to at least meet their legal costs). This submission is based on a needs assessment rather than the matters referred to in section 75(2).
I propose to make the same adjustment in respect of superannuation as I make in respect of the non-superannuation asset pool. I can see no reason to do otherwise. Consequently, and because no splitting order is sought, I propose ultimately to apply the division percentages across the one pool of assets and superannuation. That will leave the wife with $12,584 in superannuation and the husband with $2,064 in superannuation. I also take into account that the parties will be able to build superannuation in the future.
The husband sought to rely upon a contribution made by his sister in caring for the child B for a period of months whilst the wife worked. The wife agreed that she cared for the child for five weeks and no longer. I have accepted the evidence of the husband and Ms O on this issue. It is not a matter of any significant weight, however, I do have regard to it at this point.
The wife submitted that the husband’s conduct of the proceeding should be considered under section 75(2)(o). No authority was referred to which might suggest that the subsection is capable of being used in that fashion. It seems to me that the arguments put forward in relation to this matter are really costs arguments and should be considered after this case is determined, if there be any costs application made.
The wife submitted that the husband had committed waste through the failure to pay his tax on time. I have considered this matter earlier and referred to court authority in relation thereto.
Conclusion on section 75(2)
Having regard to all the above matters, I conclude that it is appropriate to make an adjustment in favour of the wife of 10 per cent.
In relation to superannuation, I consider the adjustment should be in the same proportions. Thus, there will be an adjustment of 10 per cent to the wife.
Overall division of assets
The above determination will see the wife receive 65 per cent of the parties’ assets and superannuation with the husband to receive 35 per cent of both.
Just and equitable
The division of assets would see the wife receive $186,641 worth of net assets and $9,522 in superannuation (collectively $196,163).
The husband will receive $100,499 worth of net assets and $5,127 in superannuation (collectively $105,626).
Consequently the wife will have $90,537 more in net assets and superannuation than the husband. In a pool of assets and superannuation of the size found in this case, that is a very significant difference.
Given that neither party seeks a splitting order, I propose for ease of framing orders to consider net assets and superannuation in the same pool for the purpose of dividing same. Given that most of the superannuation, although modest, is the wife’s, this is likely to adversely impact upon her as she will have as part of her asset group $12,584 which she will be unable to access at this time. I have taken that into account when considering the adjustment under section 75(2).
In the circumstances of this case I determine that result to be just and equitable.
Orders which should be made
Before dealing with the orders to be made I will deal with a submission made by the wife under Rule 13.14, which reads as follows:
Consequence of non-disclosure
If a party does not disclose a document as required under these Rules:
(a) the party:
(i) must not offer the document, or present evidence of its contents, at a hearing or trial without the other party's consent or the court's permission;
(ii) may be guilty of contempt for not disclosing the document; and
(iii) may be ordered to pay costs; and
(b) the court may stay or dismiss all or part of the party's case.
Note 1: Under rule 15.76, a party who discloses a document under this Part must produce the document at the trial if a notice to produce has been given.
Note 2: Section 112AP of the Act sets out the court's powers in relation to contempt of court.
The wife seeks the remedy set out in subparagraph (b) of Rule 13.14, namely a dismissal of all or part of the husband’s case.
I do not propose to dismiss part or all of the husband’s case. The wife has not established that the husband has deliberately or recklessly failed to produce documents. Part of the wife’s case is that the husband has not been entirely candid or, alternatively, that he has either deliberately hidden income or failed to take up employment which might reasonably be available to him. In part, I have accepted that that is the case.
I do not accept that the husband did not disclose all of his bank accounts. In his Financial Statement he referred to two accounts with Sutherland Credit Union. In cross-examination it was put to the husband that he had failed to produce copies of bank statements which had been requested. He denied that. The husband was asked about an account number …29 with Sutherland Credit Union. It was put to him that on 16 November 2011 the balance was $6,716. The husband acknowledged that was true and then asserted that the funds were not all his.
It was put to the husband that in exhibit W5 he had asserted to the Child Support Registrar at November 2011 that he had no funds. He was shown account number …21 with Sutherland Credit Union which had a balance of $1,421 at that time. The husband was taken to his credit union accounts which he told the court he recognised by different numbers to the ones which counsel for the wife used. It was put to him that in January 2012 one of his accounts had $14,000 in credit. He acknowledged that could be true, however, he claimed that the money was not his. He said he has 60-day account terms with his suppliers. He also said he knows that December is his busiest month and that he then has little work for the first three months of the year. It was put to him that he could afford to holiday with the children in January 2012. He said that was true but noted that the holiday was a camping holiday and the fees were $1,000. He later agreed that he had paid $2,127 to Business L for camping.
In the circumstances of this case, save for any costs application which may be made following the making of the orders pursuant to this determination, I do not propose to take any other action against the husband in relation to the matters raised above.
I propose orders which will give effect to the following division.
The wife will receive:
| Assets | ($) |
| Wife now owns Ford Territory | $9,750.00 |
| Household contents retained | $2,500.00 |
| Monies advanced to Wife by consent for legal fees (adjustment to Husband) | $40,000.00 |
| Superannuation: ANZ Super Advantage | $12,584.00 |
| Total assets (including superannuation) | $64,834.00 |
| Liabilities | |
| Nil | |
| Total liabilities | $NIL |
| Net assets (including superannuation) | $64,834.00 |
The wife is entitled to 65 per cent of the combined pool of $301,789 which is $196,163. The wife will retain $64,834 in assets and superannuation, which means that she needs to receive a payment of $131,329 from the joint account.
The husband will receive:
| Assets | ($) |
| Holden Rodeo motor vehicle | $9,200.00 |
| Household contents retained | $2,500.00 |
| Monies advanced to husband by consent for legal fees (adjustment to Wife) | $40,000.00 |
| Monies taken by consent by husband for fees and disbursements including transcript fees and fees for bank statements. Husband to provide figure | $217.50 |
| Superannuation: MLC - Masterkey | $2,064.00 |
| Total Assets (including superannuation) | $53,981.50 |
| Liabilities | |
| Nil | |
| Total Liabilities | $NIL |
| Net Assets (including superannuation) | $53,982.00 |
The husband is entitled to 35 per cent of the combined pool of $301,789 which is $105,626. The husband will need to receive a payment of $51,644 from the joint account.
Section 79(4)(d)
There is no order which is proposed which will affect the earning capacity of either party. I have already considered that the parenting orders, made by consent, will put certain constraints on each of the parties’ availability to work.
Costs
Each party addressed various matters to costs. I advised them that I would not deal with any costs application until the property orders were made.
In the event that no application for costs is filed within the time limit, there will be no order as to costs.
I certify that the preceding three hundred and fifty-two (352) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Le Poer Trench.
Associate:
Date: 19 September 2013
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