Westwood & Westwood
[2025] FedCFamC1F 94
•28 February 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Westwood & Westwood [2025] FedCFamC1F 94
File number(s): BRC 9923 of 2021 Judgment of: BAUMANN J Date of judgment: 28 February 2025 Catchwords: FAMILY LAW – PROPERTY – Where husband holds significant family lands at time of marriage – Long relationship - Lengthy period between separation and trial – Uncertainties as to the value of the husband’s superannuation entitlements at the time of the hearing – Dispute as to which part of the various land holdings each party retains Legislation: Family Law Act 1975 (Cth) ss 75, 79 Cases cited: Hickey & Hickey (2003) FLC 93-143
Stanford & Stanford [2012] HCA 52
Division: Division 1 First Instance Number of paragraphs: 73 Date of hearing: 8 & 9 February 2024 Place: Brisbane Counsel for the Applicant: Mr D Atkinson KC Solicitor for the Applicant: Hopgood Ganim Lawyers Counsel for the Respondent: Mr G Shoebridge (as he then was) Solicitor for the Respondent: Simonidis Steel Lawyers ORDERS
BRC 9923 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS WESTWOOD
Applicant
AND: MR WESTWOOD
Respondent
ORDER MADE BY:
BAUMANN J
DATE OF ORDER:
28 FEBRUARY 2025
THE COURT ORDERS UNTIL FURTHER ORDER:
1.That these proceedings be listed for further submissions at 9.30am on 27 March 2025 in the Federal Circuit and Family Court of Australia (Division 1) at Brisbane.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Westwood & Westwood has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BAUMANN J:
When the parties met and became engaged in mid-1989, the husband Mr Westwood was 46 years of old and had been engaged in the family farm most of his life, and he had benefited from transfers of property to him prior to the marriage in late 1990, when the parties commenced cohabitation.
The family continued to farm the land, but the extent to which the wife was engaged in the farming enterprise is contested – as is the date of separation, which the husband says was in 2011 and the wife, Ms Westwood says was in 2013.
The farm holdings increased during the marriage and even though the profitability of the farming enterprise has reduced, perhaps fortunately, the land in an area of New South Wales is in close proximity to popular coastal areas which have developed in recent decades – causing the land currently owned to have a total value of over $10 million.
With the husband keen to continue his life’s work as a primary producer, how the properties which now exist can be distributed to ensure both parties can finally move on with their lives, presents as the major issue for the Court’s determination.
The reasons which follow seek to explain, subject to some further submissions, how a just and equitable alteration of interests can, in the Court’s view, be achieved.
PRINCIPLES
Shortly stated, but more concisely and elaborately described in the Full Court decision in Hickey & Hickey (2003) FLC 93-143, in a property settlement case, the Court must adopt a well-known four-step process, essentially:
(a)to identify the pool of assets and liabilities generally, and usually at the time of hearing;
(b)to assess the relative contributions of both the financial, non-financial, direct and indirect nature as specified by s 79(4);
(c)to consider the factors as are relevant contained in s 75(2) of the Family Law Act 1975 (Cth) (“ the Act”); and
(d)finally, consider the ultimate analysis to determine whether the order the Court proposes to make is just and equitable to both parties.
CONTEXTUAL HISTORY
Statements of fact which follow should be construed as findings of fact.
The parties commenced cohabitation with their marriage in late 1990. The husband, aged 47 at the time, had a daughter, Ms B, from an earlier relationship, whilst the wife, aged 29 years had no children, and had commenced working on the farm in early 1990.
As I detail later in these Reasons, prior to the marriage:
(a)the husband and his father, Mr C, had purchased a property described as “D Property” in around 1964;
(b)the husband has purchased E Street land in 1983;
(c)in 1984, Mr C transferred his interest in “D Property” to the husband; and
(d)in 1989, the husband’s parents transferred a property descried as “F Property” to the husband.
The husband had debts and his nett initial contributions are detailed in his affidavit at paragraphs 83 to 86.
The parties were blessed with two children of the relationship:
(a)Mr H born in 1993, now aged 31 years and a professional; and
(b)Mr G born in 1994, now aged 31 years and a professional.
In May 1995, the husband purchased “M Property” using vendor finance (although this is disputed).
In 1997, the husband’s father passed away with the husband’s mother passing in 2004.
In 2003, the husband and Ms B sold a parcel of land at Town J for $255,000 (that had previously been acquired in part by the husband after selling a boat in 1991).
In around 2003, the wife commenced a business and says she stopped working for the husband in the family business.
In 2003, K Pty Ltd was registered and the Westwood Family Trust was established. In early 2007, the Superannuation Fund 1 (“SMSF”) was established, and shortly thereafter Lots 3 and 4 of “M Property” were transferred by the husband to the SMSF – I infer by way of a contribution, as the husband is the sole member of the SMSF.
In 2010, the husband moved from the family home to the guest house on Lot 1 of “F Property”. The wife says the marriage continued as previously, whilst the husband asserts by 2010 and when the children left home to study at L University, the marriage was over. The wife says she regarded the marriage as over in 2013.
What is not in dispute is that in addition to the wife continuing to live in the “family home”, in July 2015, the husband commenced paying the wife $700 per week, which increased to $1,000 per week in November 2021, before reducing to a level of $400 per week in 2023.
No orders for spouse maintenance (noting the parties are still married) have been made since the wife commenced proceedings in July 2021, although some Orders of relevance were made, particular on 11 July 2022, when a Judicial Registrar ordered the husband pay the wife $35,000 as a “litigation funding” order.
In July 2023, the single expert N Ltd (Mr O) released the first forensic accountant’s report after which, with mediation unsuccessful, trial directions for a hearing in February 2024 were made.
In August 2023, the husband informed the wife that a neighbour had expressed interest in purchasing parts of “M Property”, and subsequently a contract was exchanged to sell Lots 1, 2 and 3 of “M Property”, resulting in nett funds of $4,509,499.67 being deposited into the trust account of the solicitors for the husband.
The trial proceeded in February 2024. The Court expresses its regret that these Reasons were not published more quickly, but further notes that neither party, who have both been legally represented, has made any application to reopen these proceedings whilst the judgment has been reserved.
THE LANDS
Exhibit 1 is a “map” of the Westwood family properties which, with a valuation prepared by Mr P of Q Valuers, provides an understanding of the property interests.
F Property
This property (F Street) comprises Lots 1 and 2 on DP …, with the home constructed in the early 1900s located on this parcel. The adjoining Lots 3 and 4 (F Street) are collectively called “F Property”. “F Property” has the nursery, sheds, laboratory and a sizeable dam. Lot 5 is a road that goes through “F Property” and was purposed and converted to freehold land in 1998. The total area is approximately 36.00 hectares and has extensive produce.
D Property farm
Four allotments make up “D Property” (D Street) with a total area of approximately 69.00 hectares and primarily is used for grazing and has rainforest, although the husband says there is an irrigation dam on Lot 1 on DP … which he uses as required for the rest of the farmland. There is no structure on “D Property” but the property, the husband says, is crucial to the operation of the business.
M Property
Two allotments (Lots 3 and 5 on DP …) situated at M Street is about two kilometres from F Property; comprises approximately 3.50 hectares, and at the time of the trial, the home on the site was occupied by the husband, and the parcel also has produce and allows some grazing. This site is vested in the SMSF.
Lots 1, 2 and 3 on DP …
In late 2023, these three lots were sold for a total of $4,525,000 to a neighbour and had previously formed part of “M Property”. After sale costs, the total nett figure of $4,435,447.97 was deposited (on behalf of the SMSF) into a trust account of the husband’s solicitors. The possible tax consequences and the manner in which these funds may be accessed by the husband as the sole member of the SMSF, is dealt with later in these Reasons.
Mr P was the subject of brief cross-examination, including his answers to three questions (posed in a letter dated 7 February 2024) about his valuation report and his answers to those questions in his email of 7 February 2024 are before the Court (see Exhibit 4). He explained, having been instructed to assess the value of Lots 3 and 4 on its “Highest & Best (Alternate) Use” it was inconsistent with them separately assessing value on the basis of a roughly 4 hectare homesite and approximately 10 hectare rural parcel “without dwelling eligibility”. He confirmed that the ability of a property to meet dwelling eligibility falls “beyond my expertise” and, in his view, would require a formal town planning enquiry with T Council.
Furthermore, although Mr P was told that the parties had received town planning advice that “they will achieve a dwelling approval upon Lot 4”, he was still cautious (without seeing confirmation of the advice which would still be subject to formal Council approval), but in the vein of the enquiry from the wife’s solicitors assuming Lots 3 and 4 have dwelling entitlement, he offered separate valuations, being:
(a)Lot 3 – approximately 5.0 hectares improved - $1,675,000; and
(b)Lot 4 – approximately 9.8 hectares with dwelling entitlement - $2,750,000.
When asked to speculate on the value if Lots 3 and 4 had secure access to water, he indicated that would increase their value but then reduce the value of “D Property” – but no quantification of the variations was offered.
FORENSIC ACCOUNTANT OPINION
Mr O of N Ltd was retained by the parties as a single expert to prepare a report, valuing the interests of the husband and wife in a number of family entities (see paragraph 32) including the SMSF. Additionally, considering the activities engaged in by the husband in research and produce development, Mr O was instructed to consider:
(a)the value, if any, of the research undertaken by the business; and
(b)the adequacy of rent received by the SMSF.
His report dated 7 July 2023 (filed 29 January 2024) was based on financial accounts for the entities at 30 June 2022 and for the SMSF at 30 June 2021. His opinions as to value were adopted by the parties, as reflected in the joint balance sheet (Exhibit 2).
It is clear from the report and the evidence of Mr O that his opinion at paragraphs 112 to 115 that essentially:
(a)the future maintainable earnings of the business at the date of the report to be nil; and
(b)the business has “no goodwill”, because in his opinion the future maintainable earnings of the business will be insufficient to result in the value of the business exceeding the value of the nett business assets required to operate the business of $1,097,748,
was shaped not only by the financial statements (showing recent adjusted losses to 31 December 2022), but also the husband’s commentary recorded at paragraph 99, as follows:
Since the boom of [fruit] popularity in 2012, it was commonly known we had a supply shortage of [fruit] on the Australian market (prices were up to $7 each). Since then, there has been more than double the number of trees now planted, totalling now over 2.5million [fruit] trees, 40% of these are still not at full production and over 10% of the entire tree numbers planted are still not even having produced any fruit. There is now an over-supply of [fruit] being produced with fruit being dumped. Our own season which we just picked had over 40% not wanted at all by the markets so that 40% cost the business a big loss as it all still needed to be managed, picked and packed. This is a similar story for a lot of commercial [fruit] farmers. This story is the reason for the dramatic decrease in our business sales with over 95% of income being generated from [fruit] tree sales from our nursery to commercial [fruit] growers around Australia.
There is no reason for this to change for many many years as Australia (possibly decades) has a very high number of trees planted per population plus the added pressure for additional imports of fruit from [overseas] who also have an oversupply of fruit and can produce it much cheaper than Australia. The nursery has produced and sold up to 100k trees in one fin year and had future orders of over 220k trees. Our future orders are currently 10k trees which only will generate income of less than $500k.
The problem with this is that a lot of the larger expenses (interest, wages, electricity, repairs) in [K Pty Ltd] are fixed expenses, not variable, and a lot of these have actually increased dramatically in the last 2 years with inflation. The business has done its best to decrease expenses wherever possible such as wages while making many roles redundant. This expense reducing practice will continue. A large financial loss is expected in 2022 and 2023.
Possible additional markets other than Australia are only situated in [one region], with [other regions] already over supplying their own markets and can produce high quality trees for very cheap. The business is currently aspiring to venture into [one region] to generate income through tree sales but this is very difficult with the price of our trees being over 3x the rest of [the region]. [K Pty Ltd] Management have travelled to [two other countries] on two occasions but these markets will be tough to enter and will take time. [K Pty Ltd] management have the product, technology and management team to make this possible but new ventures take time and effort.
(As per the original)
The husband was challenged about the accuracy of his commentary, but I was satisfied that his knowledge and understanding of the fruit industry was at the highest level; internationally recognised and his commentary was an accurate assessment.
Mr O opined for reasons articulated at paragraphs 127 to 133 of his report, that:
(a)the rent of $90,000 per year being paid by K Pty Ltd is slightly below the lower end of the range of values for the use of 10 hectares of land; and
(b)the rent of $90,000 per year received by the SMSF is significantly below the rent that might be expected for the approximate 32.00 hectares of land owned.
Although the value of the husband’s interest in the SMSF was ultimately agreed, difficulties arising from the failure to lodge audited financial statements since 30 June 2021 and issues relating to compliance and tax issues could not be resolved by Mr O at the time of trial, and may ultimately depend on what steps the husband is lawfully and persuaded to undertake with further advice. These issues were dealt with in submissions and are more fully discussed by the Court below.
By reference to “Annexure 7” to his report, the drops in profitability in the business is obvious, as is the increased focus in research and development, including tissue culture lab costs;
As profitability has decreased more of the expenses, not just of the business, but the holding costs of extensive and valuable real property holdings (including land tax, rates and the like), have resulted, on the husband’s evidence in him:
(a)having accumulated a debt that is encumbering the “Westwood farmland” in the sum of approximately $2,333,963 which is attracting interest of $16,000 a month, which is being added to the balance (paragraphs 60 to 63); and
(b)caused “K Pty Ltd” to have “business debts” of $560,000 as particularised at paragraphs 78 and 79, including large creditors such as:
(i)Australian Taxation Office – $271,839;
(ii)Department of Regional New South Wales – $112,275; and
(iii)L University – $55,000.
The adopted and accepted balance sheet entry of DR$1,443,074 reflects the balance of liabilities (both secured and unsecured) over assets (other than real estate) in the “K Group” (see Mr O’s report at paragraph 150).
POOL
The respective interests of the parties in the various properties and entities, shaped by the expert opinions, enabled a mostly agreed balance sheet to be adopted as set out in Exhibit 2, and being Appendix One to these Reasons.
In respect of matters that remained in dispute, I find that:
(a)in my view, with a pool of this size and separation occurring over 10 years ago, the nominal bank accounts should be excluded; and
(b)the husband, sensibly, did not press for Motor Vehicle 1 to be included in the balance sheet – a vehicle he says he owns, but that the wife was using;
(c)at item 19 of Exhibit 2, the wife sought to include as a personal liability owed by her to Ms R, a post separation loan of $55,000. No evidence from Ms R was offered. The wife (at paragraph 208(b)) deposes to the funds borrowed from her aunt. The wife says some of the funds were used to relocate to Lot 3, part of an old dwelling which her aunt lived in, but the veranda is on Lot 2 now. It is unlikely these structures added value to the parcels of land. The wife conceded she had not discussed her actions with the husband and little discovery was made by her. In all these circumstances, although she may have promised her aunt she would repay her, it is not reasonable to include the debt in the balance sheet. The parties agree to include a value of $4,000 for the structure and I do so;
(d)Item 22 – the husband’s member benefit in the SMSF, whilst adopted at a figure of $6,839,915 is shaped by a number of uncertainties, including at the trial, the last audited financial statements were only to 30 June 2021. However, in final submissions, Counsel for the husband, Mr Shoebridge, indicated that the financial statements to 30 June 2022 were completed (but I infer not audited) and the 30 June 2023 financial statements would be finalised shortly. No attempt, whilst the Judgment has been reserved, was made to re-open the proceedings so as to update the current value of the husband’s member benefit;
(e)although Mr O gave an estimate of a potential capital gains tax liability of $107,366 payable by the SMSF arising from the sale of real estate, Mr O identified in both his report of 1 February 2024 and his evidence, some qualifications. With the attempts more recently made to ensure compliance with the statutory obligations (a position not reached at the time Mr O reported), Mr O could do no better than he did. Simply stated, the husband’s member benefit (which represents approximately one third of the total pool) could only be regarded as having an approximate balance (or perhaps better described as “notional”) at the time of the trial. As I explore later in these Reasons, this uncertainty creates significant challenges in ensuring the orders made do justice and equity to both the husband and the wife. However, for the purposes of the analysis which follows, the Court finds the notional nett pool comprising both superannuation and other interests has a value of $18,477,861, with those interests currently held being approximately:
(i)$184,000 by the wife; and
(ii)$18,293,861 by the husband.
(f)This discrepancy means that I am satisfied that it is just and equitable within the meaning of s 79(2) of the Act to make property adjustment orders (see Stanford & Stanford [2012] HCA 52) and for the superannuation interests to be included in the one pool of interests, as Counsel submitted.
CONTRIBUTIONS
Before I begin my analysis of the myriad of contributions of both a financial and non-financial character, both direct and indirect, together with efforts made by the parties as a homemaker and parents, I deal with the written submissions of senior Counsel for the wife, Mr Atkinson KC, at paragraphs 12, 13 and 14 to found his contention that “the Court would view the evidence of the [h]usband with some scepticism because he gave his evidence in ways which were, variously, high-handed, dismissive, evasive and cavalier”.
Whilst I agree in some respects the husband was a less reliable historian than the wife, I did not regard him as a witness who I could not rely upon – although as the Reasons which follow reveal, there are some factual disputes between the parties and where, on a matter of significance, it is necessary to make a finding, I identify why I prefer one party’s evidence over the other. I would not attribute some of the husband’s vagueness at times as attributable solely to his advanced years – but simply his longer life means he has had more to remember.
As final submissions by both Counsel reflect, the husband brough significantly more property into the relationship in late 1990 than did the wife. The chronology, already set out, reveals how the generosity of the husband’s parents in gifting and transferring property to him – some of which had been in the family for generations – meant his real property interests at the time of cohabitation/marriage included (and adopting retrospective opinions of value from Mr P):
(a)D Property – $250,000; and
(b)F Property – $1,290,000.
Additionally, it is accepted by the wife, that the husband owned two parcels of lang described as the E Street Property. The husband says (at paragraph 93) he sold this property for $450,000. How the husband used the funds from this sale is disputed, but most likely it was introduced into the working capital or to defray debts.
I am satisfied that the husband owed some monies to the National Bank and a small sum to his mother (which she subsequently forgave). I agree with the submission of Mr Atkinson KC that the husband’s failure to assist the Court with any evidence about the true level of his debt may be contrasted with his need to dimmish the rather paltry assets of the wife at cohabitation, by referring to her debt of $1,000, which he paid.
The evidence establishes that at least by 1995, there was an indebtedness owed by the husband to the bank – of around $137,380 (see balance sheet at page 52/88 at 30 June 1995). That balance sheet identified the husband at that time still had an interest in the Town J land with his daughter, Ms B, subsequently sold in 2003 for $255,000.
Mr P, in explaining briefly in cross-examination his retrospective valuations, acknowledged that of course he had not inspected the lands at that time. This was a fair, yet important concession, as it is clear that at 1990, the accumulated farm lands were a working farm, on which funds had been invested in stock and structures. Again, the balance sheet at 30 June 1995 reflects this to be the case.
The husband says that the proceeds of sale of the E Street property “in mid 2008” were used to purchase the lots of land referred to as “M Property”. I do not accept this evidence. It is more logical to accept, as I do, that the funds from E Street were contributed into the working needs of the farm, but when the “M Property” was purchased much earlier in 1995, finance was necessary – the wife says in the nature of “vendor finance”. Whilst I am not critical about the inability to corroborate this transaction that took place nearly 30 years ago with documents, I am comfortable in accepting the wife’s recollection.
Relevantly, Mr P opined the retrospective value of E Street was $65,000 at late 1990.
I therefore find M Property was acquired during the relationship, with any deposit and ongoing holding costs including financing being met by the income from the farm during the relationship.
The husband’s experience and expertise in the fruit industry meant, I find, that from cohabitation to at least 30 June 2019, through hard work, he ran a profitable business and was alert to improving his stock through research and exposure to international trends. He was the “face” of the business, and although I find that wife was supportive (including running a little side business), the husband was the “main person”.
The wife concedes as much, but was understandably disappointed when the husband, in his evidence, sought to not only diminish the effort she made as a homemaker and parent (including maintaining the gardens around the historical home ), but asserted she basically did “nothing”. I thought his lack of genuine acceptance, as I find is the case on the wife’s evidence, that from at least the birth of the two children, the wife was committed to their welfare and the need to support the husband in the business he operated, and as homemaker, did the husband little credit. I do find that, when not working, the husband did make a contribution to the home and parenting, including taking the children to school, supporting their extra-curricular activities and help with homework and meals. As much is said by Mr H (now aged 31 years) in his affidavit – thankfully not required for cross-examination – who readily admitted he developed a stronger relationship with his father.
It is not necessary to determine when the marital relationship broke down, although physical separation occurred when the husband moved to the guest house in 2010; the boys left for university some time in 2011, but the wife remained living in the family home. The husband’s continued financial support, when there were no proceedings launched until 2021, I accept whilst helping to keep the status quo, can be seen (as I do) as a show of respect to his wife. There is no evidence to suggest she had received funds as a discretionary beneficiary.
In final submissions, Counsel for the husband contended that contribution based entitlements (in the case outline of the husband being 30% for the wife) was 35% “but no more than 40%”. Counsel for the wife, whilst conceded an allowance has to be made for the initial contributions brough in by the husband, says the wife’s contribution based entitlements should be 45% “but no less than 40%”.
It is fair to see much of the growth of the property portfolio is due to market force – rather than significant improvements. The “business” has no commercial value but the husband sees potential in continuing his life’s work, now with others, in the fruit industry.
This is not a case where some effort to improve the land value through development, rezoning or the like has occurred. It is much more being located in the “right place at the right time” – although the husband’s family would unlikely, over one hundred years ago, have anticipated how the area of New South Wales has become such a desirable place to live.
In the post separation period, whilst the wife did receive some benefits arising from the business income, the husband has effectively continued to borrow to stay “afloat” including developing the business. By so doing, and with the bank debts being incorporated in the balance sheet, thus reducing the nett pool, the wife is in effect contributing to those debts.
I take all the various contributions into account and find the parties’ contribution based entitlements are 41.5% to the wife and 58.5% to the husband – a differential of 17% – or on this pool of $18,477,861 a sum of $3,141,185. In view of the initial contributions of the husband, despite the myriad of other contributions since the mortgage, I regard this difference as fair.
SECTION 75(2) FACTORS
In the wife’s submissions (at paragraph 23), her Counsel contended that:
This is not a case, it is submitted, where section 75(2) factors are engaged. The age and the health of the parties do not agitate for any significant adjustment. At most it might be said that, having regard to the fact that the [w]ife is significantly younger than the [h]usband, she is likely to have needs for a longer period.
Counsel for the husband broadly agreed with this submission – as do I – and he did not contend for any adjustment to the contribution based assessment.
As required by law, notwithstanding the parties’ broad agreement on this issue, I have considered the evidence and do not find a further adjustment to the contribution based assessment is required because:
(a)although the wife (being some 18 years younger than the husband) will live longer and have more needs financially, the nature of the orders I propose to make will enable the wife to more than adequately meet her needs. The wife’s Financial Statement filed 18 January 2024 set out her total personal expenditure of $870 per week – although, with the husband meeting the running costs of all the properties (from the business income and borrowings), the wife has not had to meet many of those expenses;
(b)the effect of the orders I propose to make, as discussed next, will result in the wife owning an unencumbered home property (“M Property”) excised in some way from SMSF worth at least $2,870,000 and have cash available for investment, eventually, of around $4,500,000 (after allowance is made for what the wife says she owes for legal expenses and for her aunt Ms R) which would attract interest (even at say 4%) of a gross annual income of approximately $180,000;
(c)the husband will remain, as he has for, I suspect, all his working life, “asset rich but cash poor”. He will need to make some decisions about how he meets the balance of his obligations to the bank (and sundry unsecured creditors) from his available cash and many need to finance his remaining debt differently and/or sell some of the land. These are not easy decisions, but he is likely to have the assistance and support of his sons, Mr H at least says in his affidavit that he and Mr G have had discussions about operating the farm when “dad is ready to pass the farm down to us”, although he goes on further to say that although he “cannot rule out taking over the farm due to the sentimental importance of continuing the [Westwood] Farmland for generations to come, I currently would not take over the farmland if mum was to live on any piece of the [Westwood] Farmland.”
WHAT ORDERS DO JUSTICE AND EQUITY?
Despite a long period of separation before proceedings were even commenced, the wife is, as her Counsel articulates, keen to achieve now some finality.
The sale of property in late 2023, notwithstanding the involvement of the SMSF, has provided an available cash fund that enables some finality to be achieved fairly.
Whilst I accept the wife’s genuine and heartfelt expressions of connection with the F Property parcel of land on which the ancestral home has stood for over 100 years, on balance I agree with the husband’s submissions that F Property and D Property should be retained by him. I know this is not the wife’s preference, but considering:
(a)the husband’s family connection and his before cohabitation in 1990 was long and rich and the farm expanded from the F Property base and his commercial/research facilities and how irrigation has been designed to mean the F Property and D Property facilities operate as one farm;
(b)if the wife receives a transfer of M Property – which was purchased during the relationship, as the plan (Exhibit 1) demonstrates, the land does not have a common boundary with either F Property or D Property and, in fact, is approximately two kilometres away. The physical separation is relevant, although in the end, it is not a matter for either of the sons to tell their mother where she can live; and
(c)how the wife chooses to use the acreage surrounding the home on M Property, once it is transferred by Court orders to her, is a decision she can confidently make as and when she chooses to do so.
It is just and equitable to do so.
On the assessment of a division of the pool of notional interests, as to 44.5% to the wife and 58.5% to the husband, the wife would be entitled to receive $7,668,312 calculated as follows:
41.5% of $18,477,861 equals $7,668,312 made up of:
M Property $2,870,000 Partial property settlement and relocatable dwelling $184,000 Total cash payable by the husband to the wife of approximately $4,614,312 $7,668,312
As the submissions reflected, if the wife was to receive cash (I estimate in the vicinity of $2,500,000), initially then the funds that remain for the husband to defray creditors and the secured mortgage would be reduced but he could make arrangements to pay creditors and, on the basis he will need to attend to some refinancing with his long term financer.
The husband proposes that the wife receive cash of around $2 million and would allow the husband some time – he said 18 months from the trial (which was now 12 months ago) to pay the balance. The wife, although aware of the creditors and secured mortgage, not unreasonably submits she would receive a fair proportion of the available funds, and any balance should be payable within a reasonable period – and with any such debt to her remaining to attract interest and be properly secured over the F Property.
The challenge facing the Court at the moment arises from the uncertainties that existed at the trial, stemming from the SMSF, including:
(a)the non-compliance issues;
(b)the tax liability of the Fund arising from the sale in late 2023; and
(c)what actually is now (or at least at say 30 June 2024) the husband’s balance, and are there any impediments to the release of funds in the SMSF to the only member, the husband?
I require further submissions from the parties, which would need to include:
(a)a more accurate estimate of the husband’s member benefit at 30 June 2024; and
(b)satisfaction about tax liabilities of the SMSF and, of course, the likely impact of tax on any accruals from the funds invested on behalf of the Fund since the sale of the property in late 2023.
The Court’s preliminary position is that the wife should:
(a)receive “M Property”;
(b)receive Motor Vehicle 1;
(c)have the right, at her cost, to relocate the parts of aunt Ms R’s home from F Property to L Property, if she wishes to do so;
(d)receive $2,500,000 (being the “first instalment”) upon which she will vacate the F Property and the husband will vacate the “house on the hill” on M Property; and
(e)the balance due to the wife be secured over the F Property properties – with priority to any debt/mortgage to the bank – and the capital shall be paid within six months from the date of the orders, with interest at 6%, calculated on a simple interest basis from the date of payment of the first payment until it is paid in full, with the interest paid with the final instalment.
I will list these proceedings for further submissions on these issues at 9.30am on 27 March 2025.
I certify that the preceding seventy-three (73) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann. Associate:
Dated: 28 February 2025
APPENDIX ONE
Ownership Description Value Husband K Group net indebtedness per first N Ltd report -$1,443,074 Husband F Property (Q Valuers report with Lots 3 & 4 combined). $9,935,000 Husband D Property (Q Valuers report) $2,775,000 Husband Proceeds of sale from Lots 1 and 2 M Property was $74,051.70 (currently held in the Simonidis Steel Lawyers trust account, balance remaining was $44,461.70 after the following invoices paid:
- 22.12.2023 S Valuers invoice $8,690
- 22.12.2023 N Ltd invoice $20,900)
Part of the Q Valuers and N Ltd updated report invoices are to be paid from these funds and nil will remain
$0 Husband Two motor vehicles $10,000 Husband U Pty Ltd Shares $14,648 Wife The Dwelling (removable, situated on Lot 3) Estimate $4,000 Total $11,295,574 LIABILITIES Joint S Valuers invoice dated 31 January 2024; N Ltd Invoice and Q Valuers $16,628 Total $16,628 Net pool excluding superannuation $11,278,946 SUPERANNUATION Husband Superannuation – SMSF
(notional – subject to further update)$6,838,915 Net pool Prior to addbacks $18,117,861 ADDBACKS Husband Legal fees paid from capital on 23.01.2024 $180,000 Wife Legal fees paid from capital on 24.01.2024 $180,000 Total notional pool $18,477,861
0