Wither and Wither & Anor
[2024] FCWA 177
•23 AUGUST 2024
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: WITHER and WITHER & ANOR [2024] FCWA 177
CORAM: TYSON J
HEARD: [REDACTED]
DELIVERED : 23 AUGUST 2024
FILE NO/S: 4906 of 2019
BETWEEN: MS WITHER
Applicant
AND
MR WITHER
First Respondent
AND
MRS WITHER SENIOR
Second Respondent
Catchwords:
PROCEDURE - Application pursuant to s 106B to set aside transactions involving the husband's mother - Where the husband's mother is the Second Respondent - Where the husband sought leave to rely upon an affidavit from his mother - Where the husband sought his mother be excused from attending trial, on the basis of her health - Where the Court declined the husband's application and required the husband's mother to be available for cross-examination, on terms - Where the husband failed to make his mother available for cross-examination and sought leave to rely upon her affidavit - Where the application was declined - Case turns on its own facts
PROPERTY - Application pursuant to s 106B - Where the wife seeks to set aside two Acknowledgements signed by the husband and two Demands signed by the husband's mother - Where the husband's mother filed a submitting notice - Where the Court is satisfied the Acknowledgements and Demands formed part of a series of transactions - Where the Court is satisfied the Acknowledgements and Demands are instruments made by or on behalf of the husband - Where the Court is satisfied that the transactions were entered into with the intention to defeat an anticipated order - In any event the Court is satisfied that irrespective of intention, the transactions were likely to defeat an anticipated order - Where the Court exercises discretion to set aside the transactions - Case turns on its own facts
PROPERTY - Where it is found to be just and equitable to make orders altering the existing legal and equitable interests of the parties - Allegations of non–disclosure and waste - Where the husband's financial contributions are substantial and warrant recognition - Where the husband's contributions exceed those of the wife - Assessment of s 75(2) factors - Where the parties have three children - Where two children live in a shared care arrangement and the eldest child continues to live with the wife - Where the husband pays child support as assessed, private school fees, and other costs - Where the husband's income and income earning capacity dwarf the wife's income and income earning capacity - Where the Court is satisfied that the s 75(2) factors support an adjustment in favour of the wife - Case turns on its own facts
Legislation:
Family Court Rules 2021 (WA)
Family Law Act 1975 (Cth)
Category: Reportable
Representation:
Counsel:
| Applicant | : | Senior Counsel A |
| First Respondent | : | Counsel C |
| Second Respondent | : | Did not participate |
Solicitors:
| Applicant | : | Law Firm A |
| First Respondent | : | Self-Represented Litigant |
| Second Respondent | : | Self-Represented Litigant |
Case(s) referred to in decision(s):
[2020] FCWAM 22
Af Petersens and Af Petersens (1981) FLC 91-095
ANZ Banking Group Ltd v Harper & Ors (1988) FLC 91-938
Bassi and KD Sales Force Specialists v Maas (1999) FLC 92-867
Benson & Drury (2020) FLC 93-998
Biltoft and Biltoft (1995) FLC 92-614
Blandford & Esmore [2022] FedCFamC1A 67
C & C [1998] FamCA 143
Chancellor & McCoy (2016) FLC 93-752
Chang v Su (2002) FLC 93-117
D'Cruz & Pierce and Ors [2008] FamCA 819
De Winter and De Winter (1979) FLC 90-605
Dickons v Dickons (2012) 50 Fam LR 244
DJM v JLM (1998) FLC 92-816
Farmer and Bramley (2000) FLC 93-060
Fields & Smith (2015) FLC 93-638
Gelley and Gelley (No 2) (1992) FLC 92-291
Gollings and Scott (2007) FLC 93-319
Gould and Gould; Swire Investments Ltd (1993) FLC 92-434
Hajduk and Hajduk; Hajduk and Hajduk (Interveners) (1993) FLC 92-383
Halabi v Artillaga & Ors (1994) FLC 92‑470
Holley and Holley (1982) FLC 91-257
Jabour & Jabour (2019) FLC 93-898
Lenehan and Lenehan (1987) FLC 91-814
Lovine & Connor and Anor (2012) FLC 93-515
M & M [1998] FamCA 42
Mallet v Mallet (1984) 156 CLR 605
Milligan & Milligan and Anor (2017) FLC 93-811
Norbis v Norbis (1986) 161 CLR 513
Pelly & Nolan [2011] FMCAfam 530
Pflugradt and Pflugradt (1981) FLC 91-052
Reimann & Reimann and Ors (No 3) [2017] FamCA 911
Rodgers & Rodgers (No. 2) (2016) FLC 93-712
Stanford v Stanford (2012) 247 CLR 108
Steinbrenner & Steinbrenner [2008] FamCAFC 193
Trevi & Trevi (2018) FLC 93-858
Wallis & Manning (2017) FLC 93-759
Waters and Jurek (1995) FLC 92-635
Whitaker and Whitaker (1980) FLC 90-813
Wither and Wither & Anor [2024] FCWA 16
Zyk and Zyk (1995) FLC 92-644
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES' NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wither and Wither & Anor has been approved by the Family Court of Western Australia pursuant to s 114Q(2) of the Family Law Act 1975 (Cth).
This copy of the Court's Reason for judgment may be subject to review to remedy minor typographical or grammatical errors (r 312(b) Family Court Rules 2021 (WA)), or to record a variation to the orders pursuant to r 311 Family Court Rules 2021 (WA).
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.
TYSON J:
1 The husband and wife are unable to agree on orders by way of alteration of property interests, following the breakdown of their marriage. While the parties have divorced, I propose to refer to them as the husband and wife, for convenience. I mean no disrespect in doing so.
2 The proceedings have been complicated by disputes as to the available property for division, allegations of non-disclosure and waste. A significant issue which has impeded any prospect of a settlement, is the question as to whether the husband owes a debt to his mother, [Mrs Wither Senior] (["Mrs Wither Senior"]). Mrs Wither Senior has been joined to the proceedings and is the Second Respondent.
3 In 2014, the parties purchased [Property A] ("[Property A]") which became the family's home. That same year, they acquired [Property B], through the [Family Trust D] ("[Family Trust D]"). Both properties were purchased almost entirely through borrowings. In 2014, Mrs Wither Senior advanced $550,000 to the husband, and in 2017, she advanced a further $350,000. Those amounts have been applied towards reducing the parties' borrowings, including the debts associated with the acquisition of Property A.
4 Despite the significant contributions which the husband and wife have each made, there is relatively modest property available for division. That situation has arisen because of the lifestyle the family enjoyed, and the fact that Property A has been sold for less than what the parties paid for Property A.
5 The wife seeks to set aside, pursuant to s 106B of the Family Law Act 1975 (Cth) ("the Act"), two Acknowledgements of Debts and Irrevocable Authorities dated 30 September 2014 ("2014 Acknowledgement") and 6 August 2017 ("2017 Acknowledgment") (collectively referred to as the "Acknowledgments"), signed by the husband, and two handwritten demands signed by Mrs Wither Senior dated 18 February 2019, in respect to each of those instruments ("the Demands"). The husband opposes the wife's application. Mrs Wither Senior has filed a submitting notice,[1] and did not participate in the trial. If those transactions are set aside, the asset pool will increase by $900,000.
What is Agreed?
[1] Filed [in] April 2022.
6 The husband will retain the Family Trust D, with the wife to assign to the husband, any interest, and positions she holds in the Family Trust D. The husband will indemnify the wife in relation to all liabilities of the Family Trust D, inclusive of any money owing by the wife and/or [Business A] ("[Business A]").
7 The husband will retain his contents, work in progress and the business debtors associated with his [work], and the wife will retain her entity, its assets, and liabilities. Each party will be solely liable for their personal liabilities and debts.
What are the Proposals of the Parties?
8 The wife seeks orders in terms of her minute.[2] Apart from the orders to set aside transactions, she seeks the net proceeds of the sale of Property A and all joint bank accounts be paid to her, [and] then closed. She seeks the husband pay to her, such sum constituting "not less than 70% of the net asset pool excluding both parties' superannuation entitlements and…the Husband's interest…in [Company B Group]". If the husband does not pay the lump sum, she proposes Property B be sold.
[2] The wife's papers for the judicial officer filed [in] April 2024.
9 She seeks a superannuation splitting order to provide her with 70% of the husband's member balance with [Superannuation Fund A]. She seeks a declaration that the husband holds half his interest in [Company B (1)] ("[Company B]") on trust for her, and be transferred to her or her nominee, or alternatively, she be appointed as the sole appointor and trustee of the [Family Trust B] ("[Family Trust B]"). The wife seeks to retain the [Motor vehicle A], [boat] and trailer, and the husband retain her jewellery.
10 The husband seeks orders in terms of his minute.[3] He seeks the joint accounts be paid to Mrs Wither Senior, and thereafter he indemnify the wife in relation to any outstanding debts. He seeks to retain the boat, trailer, and Motor vehicle A, and the wife deliver up a painting, tools, and [a] computer, which he seeks to retain.
Spousal Maintenance
[3] The husband's papers for the judicial officer, filed [in] April 2024.
11 The wife sought orders for the husband to pay periodic spousal maintenance of $600 per week, for four years. In closing, the wife's senior counsel conceded the threshold had not been established. That concession was appropriately made, in light of the wife's income, and her income earning capacity. The evidence did not sustain the wife's claim that she was unable to reasonably support herself. Accordingly, I will dismiss the wife's application for maintenance.
What is the Evidence Relied Upon?
12 The wife relied upon her affidavits filed [in] January 2021, September 2022, and [in] April 2024, and her financial statement filed [in] April 2024, together with the affidavit of her father, [Dr D] filed [in] January 2021, and her points of claim, dated February 2022.[4]
[4] The wife's affidavit filed [in] February 2022, annexure A.
13 The husband relied upon his affidavits filed [in] February 2021, and April 2024, with his financial statement filed [in] April 2024, and the affidavits of [Ms E] filed [in] February 2021, [Mr F] filed [in] February 2021, and [Dr G] filed [in] May 2024.
The evidence of Mrs Wither Senior
14 The husband sought leave to rely upon Mrs Wither Senior's affidavit and that she be excused from attending trial, based on her health. The husband relied upon the affidavit of Dr G, which included [the] medical certificate dated [in] 2024, and correspondence from Mrs Wither Senior's psychiatrist to [Dr H], dated [in] 2024.[5]
[5] Exhibit 4, The correspondence from [Dr H] to [Dr G] dated [in] 2024.
15 Mrs Wither Senior is 82 years of age and has a long-standing diagnosis of a [psychiatric disorder]. Mrs Wither Senior's psychiatric disorder has twice resulted in hospitalisations, during these proceedings. She takes medication as prescribed, and is under the care of Dr H, a psychiatrist and Dr G, her general practitioner. Mrs Wither Senior lives independently, and cared for the husband, during his recovery from surgery earlier this year.
16 I permitted cross-examination of Dr G, before entertaining the husband's application. After hearing Dr G's evidence, and submissions, I made orders requiring Mrs Wither Senior to attend the trial, by way of Microsoft Teams, with a support person, for the ex-tempore reasons provided.[6]
[6] TS [date and month redacted] 2024, 2.40pm.
17 The Court was then told that Mrs Wither Senior would not be made available for cross-examination. The husband maintained his application for leave to rely upon Mrs Wither Senior's affidavit, subject to the Court's determination as to the weight to be attached. The wife opposed Mrs Wither Senior's affidavit being admitted into evidence, or alternatively, if it were admitted, contended that no weight should be attached to it.
18 Rule 243 of the Family Court Rules 2021 (WA) ("the Rules") provides that where a deponent fails to attend Court in response to a request to attend for cross-examination, the Court may refuse to allow the deponent's affidavit to be relied upon or allow the affidavit to be relied upon on terms ordered by the Court, or order the deponent to attend for cross examination.
19 The Rules reflect the well-established principles and highlight that it is a matter of discretion for the Court, in the circumstances of each case.
20 There is a line of authority which supports the husband's proposals, that the wife's inability to cross-examine Mrs Wither Senior, is a matter which should go to weight, not admissibility. There is a different line of authority, which supports the wife's position, that Mrs Wither Senior's evidence should be excluded, on the basis that Mrs Wither Senior has not presented for cross-examination.
21 I am not persuaded to exercise my discretion to permit the husband to rely upon Mrs Wither Senior's affidavit. Mrs Wither Senior's evidence is controversial and goes to the heart of significant issues which the Court is required to determine. Mrs Wither Senior is not simply a witness in support of the husband. She is also a party to the proceedings, against whom the wife seeks orders. Mrs Wither Senior has an interest in the outcome of the proceedings, and consequently, cannot be considered an independent witness.
22 Mrs Wither Senior's evidence has the potential to impact the determination of the proceedings. Accordingly, the wife was entitled as a matter of both natural justice, and procedural fairness, to cross‑examine Mrs Wither Senior. The wife was denied of that opportunity. It would be both prejudicial and procedurally unfair to the wife, to allow Mrs Wither Senior's evidence to be admitted, without the wife being able to test and challenge her evidence.
23 Even if I had been persuaded to exercise my discretion to permit Mrs Wither Senior's affidavit to be relied upon, I do not consider that any weight could be attached to her evidence, for the reasons set out above. In my view, that would be procedurally unfair and prejudicial to the wife. I decline the husband's application to rely on Mrs Wither Senior's affidavit.
Observations of the Parties and their Witnesses
24 The husband and wife each attempted to give their evidence honestly. It was apparent there is a degree of bitterness and animosity between them. At times, I consider each party's negative views towards the other, infected their evidence. Each party's evidence was provided from their own perspective, which has been shaped and influenced by subsequent events, and the outcome which each of them seeks to achieve.
25 Each party focused on their own contributions, which resulted in a lack of proper acknowledgement, of the other party's contributions.
26 The wife made a number of concessions against self-interests, and corrected errors in her affidavits. The wife is highly suspicious of, and distrustful of the husband. Some of the wife's evidence about timing and source of funds [were] inaccurate. The wife explained, and I accept, that the husband was primarily responsible for the management of the family's finances, and she trusted and deferred to him. That explanation partly explained certain mistakes, as did the fact that some events occurred many years ago.
27 I am satisfied the wife gave truthful evidence, with respect to crucial issues pertaining to her conversations with the husband about the funds from Mrs Wither Senior. For the reasons which follow, I prefer and accept the wife's evidence about a number of material matters, over that of the husband.
28 The husband presented as an articulate intelligent individual, who gave carefully considered answers. He made a number of concessions against self-interest, including that: (1) he received cash from Business A, which he told the wife he said he would bank, but which he then retained; (2) he had mistakenly double counted some expenses in his financial statement, which artificially inflated his weekly expenses; and (3) he had not read r 199 or r 200 of the Rules, contrary to his sworn financial statement, the latter of which may have explained some deficiencies in his disclosure.
29 I found some of the husband's evidence to be unreliable and implausible. For example, the husband:
(a)Claimed that he did not know what UPE meant (unpaid present entitlement), nor what a capital loss reserve was; and
(b)Professed ignorance, when asked about the financial statements of the Family Trust D, including how income had been applied, despite conceding he is the appointor, guardian, and trustee, he had signed financial statements, and he had control of the Family Trust D.
30 It defies belief that the husband, who is a [specialised professional] with a Masters of [redacted] and a certificate in [redacted], was ignorant about these matters. I reject his evidence in this regard, which I found to be unimpressive.
31 At times, the husband was non-responsive, evasive, and guarded when questions were fairly put to him. He described financial statements as an accounting fiction, while also relying upon financial statements, when they suited him. The husband repeatedly referred to Acknowledgements as loan agreements. When the wife's senior counsel asked him to accept that a loan agreement usually involved multiple parties to the agreement, the husband stated he had "agreed with myself". I found the husband less ready to make concessions than the wife, including where some concessions ought to have been readily made.
32 Dr D is the wife's father. He was combative and hostile when cross‑examined. I accept his evidence with respect to the financial [and] practical assistance he has provided to the wife since separation, including the advance of monies to assist the wife to meet her living expenses, her legal costs, and the provision of a car.
33 Mr F and Ms E are the husband's siblings. They each gave their evidence in a frank and straightforward manner. I will consider their evidence, in the context of the s 106B claim.
Disclosure
34 The wife accused the husband of having failed to discharge his disclosure obligations, which had required her to issue subpoena to obtain documents. The husband denied the allegations and submitted he had disclosed over 2,500 documents. The husband explained that: (1) he no longer had a number of historical documents, which he had left at Property A; (2) there were some delays in provision of documents, when his bookkeeper was on leave and when he was unwell; and (3) he had done his best to provide disclosure, in response to the wife's voluminous requests.
35 The husband’s financial statement was deficient and inaccurate, insofar as the husband failed to disclose:
•The quantum of his anticipated trauma insurance payment, despite having been advised by his insurance broker of the expected amount, which was banked into his account on the day after he swore his financial statement.
•His partner's name, age, relationship to him or her gross income, as required in Part E, notwithstanding that she was living with him at the time and had been for a number of months prior to swearing his financial statement.
•That he was paying rent, utilities, and contributing to food for his partner and her child, as required in Part F, Part H and Part N, and to recognise any contributions which his partner was making to his household.
36 At trial, it became clear that the husband's disclosure was lacking in some respects. By way of example:
•After the husband was on notice that the wife was seeking to retain some of the [Company B shares], he transferred those shares, and only provided disclosure of the transfer, on [a date in] October 2023, around a month after the disposition, without providing any satisfactory explanation for the delay.
•The husband refused to provide disclosure after [a date in] March 2024, because that was the agreed date to vouch the joint schedule for trial. That situation was only remedied, immediately prior to, and during the trial, when a large volume of previously undisclosed documents were provided. The late disclosure included a number of historical documents, which the husband explained he had collated for the purposes of cross‑examination.
•The husband did not disclose documents relating to his insurance claim until after the wife had issued subpoena to [Insurance Company], which confirmed he had received a trauma insurance payout of $111,338. Further documents revealed that:
•in late January 2024, the husband had emailed his broker, making enquiries about a potential insurance claim;
•in late March 2024, the husband made a trauma and income protection claim, which his broker confirmed had been lodged, on 25 March 2024.[7] The income protection claim was rejected, because of a mandatory 90 day waiting period;[8]
•[in] March 2024, the husband's insurance broker advised the husband, that the anticipated trauma cover payment was $113,000; and
•[in] April 2024, the husband was aware that his application for trauma payment had been approved. At his request, the payment was made by way of cheque.
[7] Exhibit 25, The email exchange between the [husband] and [Ms I] dated 21 March 2024.
[8] Exhibit 26, The email exchange between the [husband] and [Ms I] dated 8 and 9 April 2024.
37 The husband's failure to provide disclosure in a timely manner, together with the wife's lack of involvement and understanding of the family's finances, have fuelled her suspicions. Those suspicions have been compounded by: (1) the number of bank accounts operated by the husband; (2) the husband's movement of funds between accounts; (3) the husband's failure to provide clear explanations to questions when raised; and (4) the timing and manner in which his disclosure was provided.
38 The wife has dedicated significant energy into attempting to conduct an effective audit of the husband's management of the parties' finances, both "pre and post separation".[9] Her affidavits were replete with her questions and concerns about how his income had been applied, and an attempt to conduct a forensic tracing exercise of the transfer of funds between accounts.
[9] The wife's first trial affidavit filed [in] January 2021 ("the wife's first trial affidavit"), [28].
39 The husband explained he transferred funds to ensure that expenses could be paid, in a financially prudent manner. During the marriage, he parked monies to pay his tax liabilities into the offset accounts for Property A.[10] Following the sale of Property A, he has continued that practice, and parked funds in the loan accounts linked to Property B.[11] He confirmed that the rental income for Property B was deposited into the Family Trust D account, but that he met some expenses from other accounts, which were adjusted and reflected in the financial statements.
[10] The husband's affidavit filed [in] April 2024 ("the husband's updating trial affidavit"), [41].
[11] The husband's updating trial affidavit, [41], [43]-[44].
40 It is well recognised that the Court is not required to perform a mathematical or accounting exercise.[12] The Court has repeatedly warned of the dangers of doing so and has been critical of those who engage in such a task.[13]
[12] See Dickons v Dickons (2012) 50 Fam LR 244 at [25].
[13] Blandford & Esmore [2022] FedCFamC1A 67 at [14]; Benson & Drury (2020) FLC 93-998.
41 In my view, the wife's evidence reflected her mistrust of the husband. While some of her criticisms of the husband's disclosure were fairly raised, by the conclusion of the trial, I was not satisfied that the husband had undisclosed income or assets. The evidence does not support the wife's criticisms of the husband's management of the family's finances, nor of how he has applied his income since separation. I am not persuaded the Court ought to adopt a robust approach about the husband's financial position.[14] As a consequence of the incomplete disclosure, I have done my best, with the available evidence.
BACKGROUND FACTS
[14] Chang v Su (2002) FLC 93-117 at 89,198.
42 The husband was born in 1975 and is a [specialised professional]. The wife was born in 1978 and is a [medical/science professional].
43 The parties married in [mid] 2003. At that time, neither had any assets of substance. They have three children, [Child A] born [in] 2007, [Child B] born [in] 2009 and [Child C] born [in] 2012.
44 The husband has worked throughout the marriage, initially as a [professional], and from 2010, as a specialised professional, earning around $500,000 - $600,000 per annum. The parties borrowed funds, to establish the husband's [workplace].
45 The wife completed her tertiary studies, then commenced working as a medical/science professional between 2005 and 2006. The wife took maternity leave around the birth of the children, and thereafter was the primary home-maker and parent, particularly when the children were young. When the wife returned to work, she combined employment with care of the children, with the assistance of the husband, nannies, and extended family support. The husband was actively involved in the care of the children, when he was not at work.
46 In 2012, the parties established Business A, through which the wife operated her business. Both parties were appointed as joint directors and shareholders.
47 In 2003, the parties purchased their first home, at [Property C] which was sold in late 2008. In 2009, they purchased [Property D] for $1,176,500 using the net proceeds of Property C, and the balance by way of a mortgage.
48 In 2014, they purchased Property A for $3,080,000. To fund the purchase, the parties paid a small deposit, and the balance was raised by way of finance, including a bridging loan of $663,000, the [Home Loan A] for $800,000 and the [Home Loan B] for $1,618,000.
49 Property D was sold for $2,140,000 and settlement occurred in October 2014. The sale proceeds were applied to discharge the bridging loan on Property A, discharge borrowings secured on Property D and $149,895 was applied into the parties' joint [offset account].
50 Each of the properties were acquired in the wife's sole name, for asset protection.
51 In April 2019, Property A was sold for $2,860,000, $220,000 less than what the parties had bought it for. The net proceeds of sale are held in a joint account.
52 The husband and wife each made a number of non-financial contributions, including cooking, cleaning, laundry and the like. The husband was primarily responsible for the maintenance, repairs, and renovations of the parties' homes.
53 In 2007, the Family Trust D was established by way of deed. The husband is the trustee, guardian, and appointor of the Family Trust D, while the children are specified beneficiaries. Each party is included in the class of general beneficiaries.
54 In 2014, the Family Trust D purchased Property B for E$1,600,000, funded entirely from borrowings in favour of [Bank A], in the form of a business loan of $1,200,000 and a [repay loan] of $800,000. Property B is an office warehouse and yard, in an industrial precinct.
55 Business A then occupied Property B and entered into a lease in favour of the Family Trust D. Business A turned over approximately $850,000, but only generated a modest income for the wife, of around $18,200 per annum. Business A had significant expenses, including the outgoings on Property B, staffing costs, and rental of $10,000 per month to the Family Trust D, which was over double Property B's mortgage.
56 In around 2015, the Family Trust D acquired shares in publicly listed companies, at a cost of $194,712. Those shares have since been disposed of, at the husband's direction. There is some ambiguity as to when the shares were sold, what net proceeds were received by the Family Trust D, and how they had been applied.
57 The Family Trust D continues to own Property B, subject to a loan of $1,100,000 in favour of Bank A, which is its principal asset. The Family Trust D owes $861,759 by way of beneficiary loans,[15] and has unpaid present entitlements owing to the wife, and each of the children.[16]
[15] With $861,759 owing to the husband, $28,063 to [Child B] and $78,851 is owed to the "[Wither] children".
[16] Exhibit 28, The financial statements for the [husband] as Trustee for [Family Trust D] 30 June 2015 to 30 June 2023 inclusive.
58 Throughout the marriage, the husband managed all aspects of the family's financial affairs, ranging from paying the family's bills, managing the Family Trust D and the financial operation of Business A. While the wife worked in Business A, the husband controlled its finances. The husband liaised with the accountant and the bookkeeper for preparation of the financial statements, income tax returns and other tax information for Business A. He conceded the wife routinely executed documents at his request. The husband had access to Business A's bank accounts, and cash[17] from the business, which was applied to meet various expenses.
[17] Which, he accepted was tens of thousands of dollars, which had been declared to the ATO as income to [Business A].
59 Those findings are further supported by an unsigned letter by the wife to the Australian Taxation Office ("ATO"), dated March 2016, which the husband disclosed shortly prior to trial.[18] The letter recorded that: (1) the wife had engaged the services of [Ms J] as a nanny; (2) the wife understood Ms J had an ABN number, but Ms J had since advised she did not; (3) the wife disclosed that as a result of that mistaken understanding, she had not paid withholding tax; and (4) the wife made a voluntary disclosure to the ATO, and enclosed a cheque for $12,859.56.
[18] Exhibit 5, The unsigned letter from the [wife] to the ATO dated March 2016.
60 I accept the wife's evidence that: (1) she could not recall having seen the correspondence; (2) she had not had any discussions with Ms J about her salary; and (3) the husband had arranged payment of Ms J's salary.
61 The family lead a comfortable standard of living, which included domestic assistance from a nanny, cleaner and ironing services. The parties received assistance from their extended families. In 2009, the parties lived in a property owned by the wife's parents, for around three months. The wife's parents and Mrs Wither Senior have assisted in the care of the children.
62 In 2010, the husband received an $80,000 inheritance from his grandmother,[19] which was applied towards the purchase of the boat and trailer, registered in the wife's name.
[19] The husband's first trial affidavit filed [in] February 2021, ("the husband's first trial affidavit"), [92].
63 In 2014, the husband received $550,000 from Mrs Wither Senior, and a further $350,000 in 2017. It appears the funds were ultimately applied towards reducing borrowings, including in relation to Property A. The evidence does not enable the Court to make any more precise findings. On 18 February 2019, Mrs Wither Senior requested repayment of $900,000 from the husband, by way of the Demands. These transactions are those which the wife seeks to set aside, pursuant to s 106B of the Act.
64 In 2017, improvements were conducted to Business A's facilities, which were met by its retained earnings.[20] The parties discussed the financial viability of Business A and engaged a consultant, who recommended various strategies to improve profitability.[21] The parties took some steps including obtaining council approval to increase the number of [redacted] which Business A could accommodate, and increased advertising. The parties had discussions about the potential sale of Business A and undertook some enquiries.
[20] The husband's first trial affidavit, [87].
[21] Exhibit 9, The report from [redacted] dated 18 October 2018.
65 In the years preceding separation, the husband and wife each acknowledge they were unhappy, and growing apart.[22] In late 2018, the parties attended marriage counselling. The husband considered the parties separated on 20 November 2018, when the wife told him she wanted to separate.[23] In January 2019, they physically separated, when the husband vacated Property A.
Circumstances Since Separation
[22] The husband's first trial affidavit, [14].
[23] The wife's affidavit filed [in] January 2021, exhibit 16, email from the [husband] to [Law Firm B] dated 11 February 2019.
66 The husband has re-partnered. Since January 2024, [Ms K] has been living with the husband, together with her 11 year old child. The wife has not re-partnered.
67 The parties have shared care of [their] children. The husband indicated he would seek part-time employment, to accommodate care of the children.[24] That did not eventuate, and the husband had assistance from nannies for a short period but has since managed to combine work with his parenting commitments, as has the wife.
[24] The wife's first trial affidavit, exhibit 16, email from [the husband] to [Law Firm B] dated 11 February 2019.
68 The parenting arrangements were suspended in late 2023 by agreement, following the husband's [redacted] diagnosis, surgeries, and recuperation. From January 2024, the children lived with the wife,[25] and spent time with the husband as agreed. In April 2024, Child B, and Child C resumed spending equal time with each parent, while Child A has continued to live with the wife.
[25] Exhibit 22, The email exchange between the [wife] and the [husband] dated 9 January 2024.
69 The parties initially continued to have access to joint finances. The husband met the mortgage and outgoings on Property A, as well as his rental costs. Each party complained about the other's access of joint funds, without notice to the other. There were disputes about how the parties could continue to meet their expenses, over two households. The husband was critical of the wife's withdrawal of $30,000 to pay her legal fees. The wife was critical of the husband's withdrawals to pay his moving and rental costs, tax, and other expenses.
70 In March 2019, the parties received an indicative offer for the sale of Business A. The parties obtained financial modelling, which predicated they could potentially earn over $800,000 in a five-year period, subject to various conditions. There were communications between the wife and a number of prospective purchasers, which did not eventuate in a sale.
71 I am not persuaded that the wife's conduct constitutes waste, as claimed by the husband, noting that:
(a)While there were negotiations and discussions, none of the offers were finalised, and some of the offers were withdrawn, following COVID-19;
(b)Business A was not a profitable business, and both parties had questioned its ongoing viability;
(c)One of the offers required the wife to commit to working as an employee for five years. Thereafter, she was subject to a restraint of trade, which prevented her from working in her field of expertise, for a further five years. Given the recent separation, and the uncertainty about the future, the wife was not agreeable to be bound by such terms. Around the same time, the wife's mother and sister were each diagnosed with cancer, [and she] had family members who were unwell; and
(d)COVID-19 occurred, which added to the uncertainties.
72 In 2019, the wife began drawing additional income from Business A, to provide her with funds to support herself. In June 2019, Business A paid a reduced amount of rent to the Family Trust D. Business A failed to pay any rent from July 2019 to December 2019.[26] At the husband's direction, the Family Trust D issued a default notice to Business A. The wife later closed Business A, and vacated Property B.
[26] Exhibit 11, Invoices issued by [Family Trust D] to [Business A] 1 June 2019 to 1 December 2019.
73 The husband deposed that Business A owed the Family Trust D $50,000 in unpaid rent and outgoings on Property B, and it owed him $115,000. In October 2022, Business A was deregistered.[27] It is conceded these debts are no longer recoverable.
[27] Exhibit 13, The statement from ASIC to the [wife] dated 5 October 2022.
74 I accept Business A's failure to pay rent, added to the financial strain on the husband, who was required to service the Property B mortgage subject to the hardship provisions provided by the bank. These are contributions which require recognition.
75 Despite the wife's denials, I accept the husband lent $115,380 to Business A, which was reflected in the financial statements.[28] The husband contends those monies were injected into Business A around the time it was established. The evidence does not enable the Court to make any precise findings as to how those loans came about.
[28] Exhibit 7, The cover sheet and enclosed balance sheets and financial statements for [Business A] as amended.
76 Following the closure of Business A, the wife has been self‑employed, operating [Business B]. She has successfully established a consultancy business and earns around $120,000 per annum.
77 The wife remained in occupation of Property A until settlement occurred in late 2019. As observed, there is little left by way of the net proceeds of sale. Each party incurred costs in preparing the property for sale, which were not of significance, but the subject of some complaints.
78 In late May 2019, the parties attended mediation, following which the husband terminated the wife's access to a number of bank accounts. On 31 May 2019, he transferred $10,000 to the wife. Since then, the parties have had essentially separate finances.
79 The wife was critical of the husband's actions and accused him of leaving her without any access to funds. That was not accurate, in light of her income, and the funds in Business A, which were available to her, acknowledging the expenses, which she was required to meet.
80 The husband has since maintained private health insurance for the children, paid the children's private school fees, extracurricular activities, and out of pocket medical and dental costs. Those expenses are significant. The wife has also incurred expenses for the children, including medical, school, and other expenses. Since July 2019, the husband has paid child support as assessed,[29] of between E$282 to E$430 each week.
[29] Exhibit 21, The screenshot from the Child Support Agency account by the [wife].
81 The husband does not accept the wife's claimed expenditure on the children. He considers all the children's costs are met by child support. The wife explained the costs she incurs for the children, both in terms of them being part of her household, as well as the specific expenses she meets for them. The wife was readily able to explain her expenditure on the children, which I found to be reasonable.
82 The wife's car required repairs. The wife considered the car was not worth repairing, given its age. She wanted to buy a new car, and her father lent her $20,000. When there was no agreement for the wife to access joint funds to put towards a new car, she returned the $20,000 to her father, who has since lent her a car to drive.
83 The wife's car has since been sold for $9,200. After payment of commission, the net proceeds of $8,000 have since been spent by the wife, towards her living expenses. The wife continues to drive her father's car, which he is keen to have returned.
84 In March 2020, the husband paid $20,000 to the wife, and interim maintenance of $500 per week, by consent. The spousal maintenance payments ceased, by consent in September 2021.
85 The wife has borrowed money from her father, to meet her legal fees ($35,000) and to meet the shortfall between her expenses and income ($35,000), which are recorded in a series of loan agreements. Dr D deposed that he expects the funds to be repaid, but he will continue to provide support to the wife, by way of further loans, if she requires.
86 Since separation, the husband has continued to generate a significant income. The wife was highly critical of the husband's expenditure. It is well recognised that parties to a marriage:
(a)Do not go into a state of suspended economic animation pending resolution of their financial arrangements and have no obligation to build assets in the period post separation.[30]
(b)Subject to meeting their obligations to pay maintenance and child support, are entitled to "get on with his or her life independent of the other", and free to apply their post [separation] income as they see fit.[31]
(c)Are reasonably entitled to spend their post separation income without a "microscopic examination".[32]
[30] M & M [1998] FamCA 42.
[31] Gollings and Scott (2007) FLC 93-319 at [68].
[32] C & C [1998] FamCA 143 at [45].
87 Given the husband's payments to the wife of spousal maintenance, child support, and the additional expenses which he met for the children, I do not consider the wife's complaints were fairly made.
88 The husband continues to manage the Family Trust D. Following Business A vacating Property B, he arranged [a] rental to a third party,[33] for a 10 year lease, initially at $85,000 per annum, plus GST and outgoings, with rent reviews. The tenant currently pays approximately $92,000 per annum, and outgoings.[34] The rent review is due in April 2025. The Single Expert Witness assessed Property B's market rent at $166,000 net per annum, plus GST and outgoings.
[33] Exhibit 14, The email from [Ms L] to the [husband] dated 23 March 2023, the [husband's] email to Ms L dated 23 March 2023 and the lease of [Property B].
[34] The Affidavit of the Single Expert Witness [Expert A], filed 11 April 2024, affirmed 10 April 2024.
89 [In] 2023, Company B and related entities were incorporated. Company B was formed to explore the prospect of a [sustainable energy] project on [Place A] operated through an entity linked to [Mr B], in partnership with Mr B's parents. Mr B is in a relationship with the husband's sister.
90 The husband, [Mr C] and Mr B were appointed as directors of Company B. Mr B is the majority shareholder, with 850 shares being issued to the [Family Trust A], while 75 shares were issued to Mr C, as trustee for [The Trust C] and 75 shares were issued to the husband.
91 The husband holds the 75 shares in Company B, on trust for the Family Trust B which was created by way of deed dated 16 January 2023. The husband is the trustee of the Family Trust B, and the children are beneficiaries.
92 In September 2023, the wife filed a minute, in which she sought on a final basis, 50% of the husband's interest in Company B. The husband then caused the Family Trust B to transfer its 75 shares in Company B to the Family Trust A.
93 Interim orders were made: (1) granting the wife leave to amend her proposed final orders; (2) joining [Company A as trustee for the Family Trust A] as a party to the proceedings; (3) setting aside the transfer of 75 shares from Family Trust B, to the Family Trust A, pursuant to s 106B of the Act; and (4) restraining the husband from dealing with the shares in Company B pending conclusion of the proceedings.[35] Company A as trustee for the Family Trust A has since been removed as a party to the proceedings.[36]
Property Settlement Approach
[35] Orders dated [in] January 2024; Wither and Wither & Anor [2024] FCWA 16.
[36] Orders dated [in] February 2024.
94 These proceedings are governed by s 79 of the Act. In determining an application for alteration of property interests, I have a wide discretion conferred by the operation of this section of the Act. I must, however, firstly be satisfied it is just and equitable to make an order adjusting the existing property interests of the parties.
95 In determining what orders will be just and equitable, the Court's power is not confined by any "steps" nor any prescribed sequence. I will satisfy the legislative requirements if I identify and value the assets and liabilities of the parties, assess each party's contributions to the assets, including any assets which have ceased to be owned by the parties, assess the factors in s 79(4)(d) to (g) (inclusive) of the Act, and consider whether the proposed orders are just and equitable.
96 I am required to consider the respective contributions of the parties holistically over the whole period to trial. There is no requirement for the entitlements of the parties to be expressed in the form of percentages, nor is a strictly mathematical or accounting approach required. No particular form of contribution by its nature attracts greater weight than any other. There is no requirement for an entirely discrete consideration of the impact of, for example, initial financial contributions, nor that such contributions be quantified at a particular moment in time.
97 There is no presumption that, even over the course of a long marriage, the contributions of the parties are to be regarded as having been equal.
98 It is convenient at this point, to consider the wife's applications pursuant to s 106B.
Section 106B
99 Section 106B of the Act provides the Court with a discretionary power and wide scope to set aside transactions, including those which may affect the interests of third parties.[37] Relevantly, it provides that:
106B Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
…
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
[37] Gould and Gould; Swire Investments Ltd (1993) FLC 92-434.
100 The legislation identifies the elements which need to be established before the exercise of this discretionary power can be considered. The wife bears the onus of proof of the necessary elements.[38]
[38] ANZ Banking Group Ltd v Harper & Ors (1988) FLC 91-938.
101 The remedy prescribed in s 106B is discretionary. However, a number of essential pre-conditions must be satisfied, before the discretion can be exercised.[39]
[39] Gelley and Gelley (No 2) (1992) FLC 92-291.
102 Section 106B does not empower the Court to set aside or restrain any and all conduct at large, but only "the making of an instrument or disposition", and such instrument or disposition must be "made by or on behalf of, or by direction or in the interests of a party".[40] The critical issue is whether it was foreseeable at the time the disposition was made, that it was likely to defeat an order. The test of foreseeability is an objective test.[41]
[40] Family Law Act1975 (Cth) s 106B(1).
[41] Pflugradt and Pflugradt (1981) FLC 91-052.
103 The reference to "party" is a reference to a party to the marriage and not a party to the s 106B proceedings.[42] That does not mean that the relevant spouse must personally be a party to the instrument or disposition, but it must be made at least on their behalf or by their direction, or in their interest.
[42] D'Cruz & Pierce and Ors(No 2) [2008] FamCA 819.
104 In the reasons delivered in January 2024,[43] I set out the relevant legal principles, which I incorporate and do not intend to repeat.
[43] Wither and Wither & Anor [2024] FCWA 16 at [46].
105 The relevant factual background needs to be explored, to put the application into context.
Relevant Factual Matters
106 Mrs Wither Senior has five adult children, including the husband, his two sisters [Ms M] and Ms E, and two brothers, Mr F, and [Mr N].
107 In 2014, Mrs Wither Senior sold a property which had belonged to her parents, and provided $550,000 to each of her children, apart from Ms M who received $50,000 because she had previously received $500,000.
108 On 30 September 2014, the husband deposes he executed the 2014 Acknowledgement. On 6 October 2014, Mrs Wither Senior transferred $550,000 into the parties' joint account.
109 The 2014 Acknowledgement:[44]
[44] The wife's first trial affidavit, exhibit 2.
(a)was signed by the husband, and witnessed by [a staff member], [Ms O];
(b)the husband, defined as the borrower, acknowledged his indebtedness to Mrs Wither Senior (his mother), defined as the lender, of $550,000, defined as the debt; and
(c)recorded that:
(i)the husband wished to make provision for repayment and security of the debt, which would be repaid within 60 days of receipt of any written demand by Mrs Wither Senior.
(ii)the debt was not repayable to Mrs Wither Senior's estate, in the event of her death.
(iii)the husband irrevocably authorised Mrs Wither Senior to charge all of his "right, title and interest in any and all real property" in which the husband has an interest.
(iv)Mrs Wither Senior had discretion and an entitlement to lodge a caveat and register a mortgage against any property in which the husband had an interest, by way of security for the debt.
110 The husband deposes that: (1) he had discussions with the wife prior to the purchase of Property A, explaining he may need to borrow money from his mother; (2) before entering into the 2014 Acknowledgement, he told the wife that Mrs Wither Senior would recall the loan if they divorced, and it would need to be repaid; (3) the wife accepted and agreed with the husband proceeding with the loan, stating she did not anticipate the parties would ever divorce; and (4) he told the finance broker who was assisting them with the purchase of Property A, he would be receiving a loan from his mother of $550,00.
111 The wife accepts that Mrs Wither Senior provided $550,000. She deposes at the time, the husband told her the monies were a gift, or an advance on his inheritance. She denies having any discussions with the husband, or Mrs Wither Senior, either prior to the purchase of Property A or afterwards, where she was told the $550,000 was a loan, which was expected to be repaid, in the event of her and the husband's separation. The wife deposes she had no knowledge of the 2014 Acknowledgement until after separation.
112 In March 2017, Mrs Wither Senior lived with the husband and the wife for around six weeks. Mrs Wither Senior required support at that time, because Ms M and her husband [Mr P] had separated. Mr P was attending Mrs Wither Senior's home and had made threats towards Mrs Wither Senior.
113 The husband contends that while Mrs Wither Senior was living with them, [she] brought the loan documents associated with each of her children, and during a discussion, the wife held the 2014 Acknowledgement, and [the wife] said she was unsure why Mr P was disputing the existence of a loan to Mrs Wither Senior.[45]
[45] The husband's first trial affidavit, [54].
114 The wife disputes the husband's evidence, and deposed she came into the study to tell Mrs Wither Senior and the husband that dinner was ready, when she saw a loan document signed by Mr P, the wife then commented that she did not understand why Mr P was disputing there was a loan, because he had signed the document. The wife explained she recalled thinking how lucky she was not to have been asked to sign such a document, and how much the family loved her. The wife could not recall who handed her the document, but she was adamant it was not the 2014 Acknowledgement.
115 I found the wife's evidence on the topic to be clear, and plausible, particularly, in light of the circumstances, which led Mrs Wither Senior to move into the parties' home. The wife was unshaken in cross-examination, and I accept her evidence, over that of the husband.
116 In August 2017, Mrs Wither Senior offered Mr Wither, Mr F, Ms E, and Mr N a further $350,000, with each being able to elect whether to take the funds as a loan or gift. Ms E took the funds as a gift.[46] Mr F was unable to recall making any election, but confirmed he had not entered into an Acknowledgement. Mr F deposed if the funds were taken as a gift, "it was because we were confident our marriages would last or if they did not, we accepted the risk that the money would likely be divided between us and our former spouses".[47]
[46] The affidavit of Ms E filed [in] February 2021, [15]-[16]; The affidavit of Mr F [in] February 2021, [12].
[47] The affidavit of Mr F filed [in] February 2021, [12].
117 The husband elected to take $350,000 as a loan, because he was worried about his relationship with the wife.[48] I do not accept the husband's evidence, that he had discussions with the wife at the time, and she said she was happy for him to accept the loan from Mrs Wither Senior, which would need to be repaid if the parties divorced.[49] The wife's evidence was clear and compelling. I found the husband's evidence to be vague, short on details, and underwhelming.
[48] The husband's first trial affidavit, [47].
[49] The husband's first trial affidavit, [49].
118 On 6 August 2017, the husband deposed to signing the 2017 Acknowledgement,[50] and on 7 August 2017, Mrs Wither Senior transferred $350,000.
[50] The wife's first trial affidavit, exhibit 2.
119 The 2017 Acknowledgement is signed by the husband and is not witnessed. It records the husband acknowledges his indebtedness to Mrs Wither Senior in the sum of $350,000, which is defined as the debt. The 2017 Acknowledgement is otherwise identical to the 2014 Acknowledgement in its terms, and format.
120 Having reflected on the evidence, I am not satisfied the wife had knowledge of either Acknowledgement until after separation. I am not satisfied the husband had discussions with the wife, stating that the funds advanced by Mrs Wither Senior were loans, and specifically, loans which would be required to be repaid, in the event of their separation. I am satisfied the first time the wife saw the Acknowledgements was after separation. In addition to my acceptance of the wife's evidence, over the husband's, my findings are further supported by:
(a)In 2014, the parties' finance broker recorded the husband's anticipated receipt of a gift from his mother.[51] I consider that those records, created at the time of the first advancement, by an independent third party, are likely to be an accurate record of what he was told by the husband;[52]
(b)When the husband wrote to the wife, enclosing the Acknowledgements on 3 January 2019, he stated "these are the agreements I signed with Mum. They are what enabled mum to get her loan money back from [Ms M] and [Mr P] when the divorce went through. As I understand it [Ms M] still hasn't (sic) got any of this money back from mum and she id (sic) keeping it for girls".[53] The correspondence made no mention of any discussions between the husband and the wife, or the wife and Mrs Wither Senior about the alleged loan. There was no reference to the husband having discussed the Acknowledgements with the wife, or having shown copies to her prior to that time. The correspondence made no reference to any discussions in which the wife had allegedly agreed to the loans, on the conditions they would be repaid if the parties separated, as claimed by the husband.
(c)The husband's evidence was vague, lacking in detail and not convincing. He was unable to recall where he signed either Acknowledgement, where the original Acknowledgements were located, or who had prepared them.
[51] The husband's first trial affidavit, [37]; Exhibit 24, the email exchange between the [husband] and [the finance broker] dated 6 June 2019 enclosing an email between the finance broker and [Mr R] of 15 July 2014.
[52] Noting that the email referred to "$600k gift" when the actual amount was $550,000.
[53] The wife's first trial affidavit, annexure 2.
121 After separation, the husband proposed the net proceeds of Property A should be paid to Mrs Wither Senior in partial repayment of the alleged debts, pursuant to the Acknowledgements. The wife did not agree, and on 18 February 2019, her solicitors wrote to the husband, stating:
Your email suggests that the $900,000 loan from your mother should be repaid upon sale of [Property A].
The loan agreements associated with the amounts loaned to you by your mother state that the amount borrowed is to be repaid within 60 days of your mother's written demand for payment.
To date, there has been no written demand for payment that our client or this office is aware of and, accordingly, it cannot be said that the debt now falls due and payable (or that the repayment of the debt should occur on sale of [Property A].[54]
[54] Exhibit 15, The correspondence from [Law Firm B] to the [husband] dated 18 February 2019.
122 The husband asserted the correspondence constituted an admission and her disclosure list dated January 2019, which described the Acknowledgements as "loan agreements" also amounted to a concession.[55] I do not agree. The correspondence and disclosure list were created shortly after the parties' separation, by the wife's former solicitors. From the commencement of the proceedings, the wife has made plain that she disputes the existence of any loan owing to Mrs Wither Senior. She has been unwavering, clear, and consistent in that position.
[55] Exhibit 12, The correspondence from [Law Firm B] to the [husband] dated 5 February 2019 with an attached disclosure list dated 21 January 2019, [redacted] Loan Agreements - [Mr Wither & Mrs Wither Senior] ($550k & $350k).
123 On 18 February 2019, Mrs Wither Senior provided the Demands to the husband, seeking repayment of $900,000 within 60 days. The Demands each recorded the request for repayment "of my loan advanced" in the sums of $550,000 under clause 2 of the 2014 Acknowledgement, and $350,000 under clause 2 of the 2017 Acknowledgement.[56]
[56] The wife's first trial affidavit, exhibit 3.
124 The circumstances in which those Demands were prepared were the topic of cross-examination, where the following exchange occurred:
WIFE'S SENIOR COUNSEL: so and ok well let's break this down then so on the 18 February you are at your mother's house and what happened?
HUSBAND: I received the letter I read the letter and then said the debt the loans not payable because you haven't made a demand mum can you give me a demand because then they will accept it as a loan they will accept the loan is payable and then she hand wrote this.
WIFE'S SENIOR COUNSEL: then did you say and your mother handwrote this.
HUSBAND: yes.
WIFE'S SENIOR COUNSEL: and did you tell her what to write.
HUSBAND: we would of talked about what needed to be written but.
WIFE'S SENIOR COUNSEL: and your evidence is that she has made the demand and written because of your request that she do so.
HUSBAND: yes.
125 On 19 February 2019, the husband and wife met, and he gave the Demands to the wife.[57] The parties argued about the Demands.
[57] The husband's first trial affidavit, [57].
126 In 2014, Mr F and Ms E entered into similar Acknowledgements of Debt and Irrevocable Authorities,[58] which were in evidence. Mr F and Ms E each gave evidence, in support of the husband.
[58] The affidavit of [Mr F] filed [in] February 2021, annexure HMH-1; The affidavit of [Ms E] filed [in] February 2021, annexure LCT 1.
127 Mr F is a [consultant] and testified that: (1) he had executed an Acknowledgement in 2014 when he received $550,000; (2) he had not prepared the Acknowledgement, and was unable to recall who had; (3) the Acknowledgement he executed was not created in anticipation of any particular event; (4) Mrs Wither Senior had not made any request for him to repay any sums; (5) his marriage was intact; and (6) he understood that the $550,000 was not repayable to Mrs Wither Senior's estate, in the event of her death.
128 Ms E deposed that prior to receipt of $550,000, Mrs Wither Senior spoke with her about the funds being a loan, which Mrs Wither Senior wanted to stay "within her children and her grandchildren" and if any of the children separated from their partners, that Mrs Wither Senior would seek repayment of the loan. Ms E confirmed in cross-examination, she had not had any discussions with the wife about Mrs Wither Senior's loans, following Ms M's separation.
129 Ms E confirmed in cross-examination, like Mr F that: (1) her marriage was intact; (2) Mrs Wither Senior had made no demand for repayment of $550,000; and (3) she was unsure who prepared the Acknowledgement she had signed. Ms E was unclear about the precise circumstances in which she executed the Agreement. Ms E confirmed her mother had indicated that a demand for repayment would be made, in the event of her separation.
Elements contained in s 106B(1) of the Act
130 The Acknowledgements and Demands are each instruments. There are proceedings under the Act. The husband did not cavil with the wife's position that the Acknowledgements and Demands were a "disposition" within the meaning of s 106B(1), nor that they formed part of a chain of connected transactions, for the purposes of s 106B.[59]
[59] Bassi and KD Sales Force Specialists v Maas (1999) FLC 92-867, at [50]-[52], [67]-[73].
131 The Demands were linked to and expressly relied upon the Acknowledgements. I accept the Acknowledgements and Demands formed part of a series of transactions, constituting the relevant disposition.[60]
[60] Milligan & Milliganand Anor (2017) FLC 93-811 at [47].
132 There was no dispute that the "instrument" was made "by or on behalf of, or by direction or in the interests of a party". The Acknowledgements are instruments made by the husband. I am satisfied the Demands were made on the husband’s direction, in light of his evidence.
133 The controversy centred upon the fourth element namely, whether the instruments or disposition were "made or proposed to be made to defeat an…anticipated order in those proceedings" ("the first limb") or "irrespective of intention, is likely to defeat any such order" ("the second limb").
134 The authorities establish that there must be some anticipation of the order in the proceedings, as opposed to anticipation of a claim.[61] The test to be applied is an objective one. Elliott J said in Pflugradt and Pflugradt (1981) FLC 91-052 at 76,430 that:
…it is not a question of whether the husband expected or foresaw a subsequent property application by the wife and "anticipated" an order being made, but whether considering all of the circumstances at the time of the disposition such an application by her at some time, with a consequent order, was objectively to be foreseen to be expected by him as being likely or reasonably probable.
[61] Gelley and Gelley (No 2) (1992) FLC 92-291; Halabi v Artillaga & Ors (1994) FLC 92‑470 at 80,884 (Nicholson CJ).
135 For an order to be anticipated, it must be "expected" or "reasonably probable".[62] As based upon an objective test, a reasonable disponer would have in contemplation, or foresee at the time of the disposition.[63]
[62] Reimann & Reimann and Ors (No 3) [2017] FamCA 911 per McClelland J.
[63] Holley and Holley (1982) FLC 91-257; Hajduk and Hajduk; Hajduk and Hajduk (Interveners) (1993) FLC 92-383.
136 The critical time at which the likely effect is to be considered, is the time of the disposition.[64]
[64] Gelley and Gelley (No 2) (1992) FLC 92-291.
137 The wife's case is that the Acknowledgements and Demands, as part of a connected chain of transactions, were entered into with the intention of defeating an anticipated order, or alternatively, irrespective of intention, were likely to defeat an anticipated order.
The first limb
138 The wife asserts that the husband's state of mind with respect to receipt of the $550,000 is elicited by his evidence, where he deposed "the acknowledgement was a condition of the loan and that if [the wife] and I were to divorce then my mother would recall her loan and it would have to be repaid".[65] She points to the husband's admission that in 2017 he elected to take the $350,000 as a loan, because he was worried about the marriage, [which] [w]as indicative of his intention to defeat an anticipated order.
[65] The wife's points of claim in respect of s. 106B application dated [in] February 2022, referring to the husband's affidavit filed [in] August 2019, at [40].
139 The 2014 Acknowledgement was entered into at the time of receipt of $550,000. The Acknowledgement was not signed by Mrs Wither Senior and recorded the sum was not repayable unless called, [did] not carry interest even if called, and any capacity to call on the amount, effectively evaporated in the event of Mrs Wither Senior's death. I am not satisfied to the relevant standard, the Court can infer that the sole purpose of the 2014 Acknowledgement, was to defeat an anticipated order, as suggested by the wife.
140 The 2017 Acknowledgement was entered into at the time of receipt of $350,000. While the parties had not yet separated, their marriage was unhappy. The husband elected to take the funds a[s] [a] "loan" because he was worried about the state of his marriage. At that time, the husband was aware from his sister's separation, about the dispute which had arisen over the characterisation of funds advanced from Mrs Wither Senior.
141 The Acknowledgements and Demands formed part of a chain of connected transactions, for the purposes of s 106B of the Act. The Demands were issued after the parties' separation. At the time of the Demands, there was a likelihood of an anticipated order by way of alteration of property interests in favour of the wife, being defeated by the disposition. That is demonstrated by the fact that the parties pool of available property, was diminished by the disposition. The disposition removed $900,000 from the parties' available property, which impacted upon the anticipated order.
142 Having reflected on the totality of the evidence, I am satisfied to the relevant standard, that the chain of transactions which concluded with the Demands, were entered into with the subjective intention of defeating an anticipated property settlement order. While the $900,000 were described as loans, they were not in reality loans. They were only to be treated as loans with an expectation of repayment, in the event of any breakdown in the marriage of the husband and the wife. That is supported by the fact that: (1) no demands for repayment were made by Mrs Wither Senior during the parties' marriage; (2) Mrs Wither Senior has made no demand for Mr F or Ms E to repay the amounts advanced in circumstances where their marriages are intact; (3) Mrs Wither Senior gave Mr F, Ms E, and the husband the option whether to take $350,000 as a gift, or loan, based upon each of their assessment of their marriages; (4) only the husband entered into a further Acknowledgement, in 2017; and (5) Mrs Wither Senior only made a call for payment from the husband, after separation, at his request and urging.
143 For the reasons detailed earlier, I am not persuaded that the husband ever told or discussed with the wife, the existence of an alleged loan in favour of his mother. Having satisfied the first limb of s 106B, the Court's discretion is enlivened.
The Second Limb
144 If I am wrong in that conclusion, the wife relies in the alternative, upon the second limb, which has been recognised as a "significantly less burdensome task".[66] The husband's subjective state of mind, is not an essential element to establish the likely defeat of an anticipated order, within the meaning of s 106B.[67]
[66] Milligan & Milligan and Anor (2017) FLC 93-811, at [50].
[67] Hajduk and Hajduk; Hajduk and Hajduk (Interveners) (1993) FLC 92-383, at 79,961.
145 In Whitaker and Whitaker (1980) FLC 90-813, Nygh J said at 75,129:
…the disposition must be shown to have the direct effect, or the likely direct effect of defeating an existing…order in the sense that if that disposition had not taken place the order would have been effective. Hence, if the order was, or would in any event have been, defeated by other supervening circumstances, it cannot be said that the order was defeated by the disposition or was at any time likely to have been defeated by it.
146 In Gould and Gould; Swire Investments Ltd (1993) FLC 92-434 at 80,433–4 (Fogarty J, Nicholson CJ & Finn J agreeing), it was held that:
…an applicant…may establish [the s 106B claim] by demonstrating that the pool of property of the parties has been diminished by the making of the instrument or disposition in question to an extent that is likely to have an impact on the anticipated orders.
Put another way, there is a requirement that the husband would have an entitlement to money or property which could be used to meet an anticipated order, in favour of the wife.
147 I am satisfied the transactions were likely to defeat an anticipated order in the proceedings, irrespective of intention. The effect of the transactions was to reduce the asset pool by $900,000. It can readily be established that an anticipated order, in favour of the wife, was likely [to] be defeated by the transactions given the limited property of the husband and the wife, and [in] the circumstances of the case.
Exercise of Discretion
148 While the Court's discretion is enlivened, the Court needs to consider whether to elect to exercise its discretion, to set aside the transactions. The husband submitted that discretion should not be exercised, where Mrs Wither Senior is a bona fide third party, who had advanced the $900,000, and Mrs Wither Senior was entitled to and ought to be repaid those funds. The husband's counsel referred the Court to the decision of Pelly & Nolan [2011] FMCAfam 530 ("P & N").
149 I am mindful that "no single case is ever the same as another, and each must be dealt with on its own facts and merits".[68] For that reason, the Full Court has raised questions as to the utility of comparing cases.[69]
[68] Chancellor & McCoy (2016) FLC 93-752, at [48].
[69] See Fields & Smith (2015) FLC 93-638 in which Bryant CJ and Ainslie-Wallace J appeared to warn against the use of a table of comparable cases, compare to Wallis & Manning (2017) FLC 93-759, in which a differently constituted Full Court, comprising of Thackray, Ainslie-Wallace and Murphy J, recognised no two cases are the same, but comparable cases can assist.
150 I have read and considered P & N, which I consider is readily distinguishable. In P & N, there was a dispute about whether funds advanced by the husband's father were a loan or a gift. The husband's father testified that he had paid for some of the husband's legal fees, and advanced monies to the husband, some by way of gift and some by way of loan. The trial [J]udge found that while the husband's father had been financially generous to the husband, he required repayment of the loans. The decision plainly turned on its facts.
151 Here, the Court has no evidence from Mrs Wither Senior. I am not persuaded by the husband that the Court should not exercise its discretion in circumstances where: (1) the Demands were made at the husband's initiation; (2) the husband, and the wife, have had the benefit and exclusive use of $550,000 since 2014 and $350,000 since 2017; (3) in practical terms, setting aside the relevant transactions, will have no material impact on Mrs Wither Senior's current circumstances. Mrs Wither Senior will continue to not have access to $900,000, noting she has provided the same amounts to her other adult children; and (4) Mrs Wither Senior has no evidence before the Court, setting out what prejudice she would suffer, or other any practical difficulties, which would flow, from setting aside the transactions.
152 I am persuaded to exercise my discretion, and to set aside the transactions. Unless the transactions are set aside, there will be insufficient funds otherwise available to the husband, to satisfy the s 79 order. I will grant the orders sought by the wife, to set aside the transactions.
In the alternative
153 If I am wrong in those conclusions, I would not have otherwise been satisfied that it was just or equitable to treat the alleged loan owing by the husband to Mrs Wither Senior, as a liability, in light of the legal principles set out by the Full Court in both Biltoft and Biltoft (1995) FLC 92-614 and Rodgers & Rodgers (No. 2) (2016) FLC 93-712.
154 I am also mindful of the comments by Nygh J in Af Petersens and Af Petersens (1981) FLC 91-095:
… In taking account of the "obligations" of the parties, I must consider how pressing such an obligation is. It is fairly common in this Court to meet a situation where a parent has made a loan to a child which is in all respects legally enforceable, but which is not in fact enforced and would not really be expected to be enforced. It is no doubt an "obligation" but if the obligation is not likely to have to be met, it should not be taken into account.[70]
[70] Af Petersens and Af Petersens (1981) FLC 91-095 at 76,669.
155 I am not satisfied that the alleged debt to Mrs Wither Senior should be included as a liability in the joint schedule, given: (1) the circumstances in which the alleged liabilities arose; (2) the alleged borrowings are unsecured liabilities; (3) Mrs Wither Senior made no requests for repayment, until after separation; (4) since receipt of the Demands, the husband has made no efforts to repay any of the alleged loans; (5) it appears unlikely that Mrs Wither Senior will take any steps to enforce or expect the husband to repay the alleged debt; and (6) the husband lacks the capacity to discharge the debt, in light of the limited available property.
One Pool or Two Pools?
156 The husband submitted that the Court ought to adopt a two pools approach, with one pool containing the boat, trailer and the Company B shares, and the other pool containing the balance of the parties' assets, liabilities, and superannuation entitlements. The wife's counsel described the approach as more akin to a puddle, than a pool.
157 The authorities suggest in most cases, the global approach is generally preferred. However, the Court may adopt an asset-by-asset approach if it considers that to be more appropriate in the circumstances. Each approach is permissible, depending on the circumstances.[71]
[71] Norbis v Norbis (1986) 161 CLR 513; Lenehan and Lenehan (1987) FLC 91-814; Zyk and Zyk (1995) FLC 92-644.
158 The parties were in a marriage of 15 years, which produced three children. They have both made substantial contributions, of a financial and non‑financial nature. I am mindful of the controversy with respect to how the boat was funded, and the fact that Company B shares came into existence after separation, seemingly as a consequence of the husband's efforts and involvement with the company. Contrary to the husband's submissions, the totality of the parties' contributions throughout both the marriage, and up until the trial, require recognition, of both a financial and non-financial nature.
159 In the exercise of discretion, I consider a global approach and the adoption of one pool is preferable. Such approach will enable a careful consideration of the myriads of contributions, both financial and non‑financial,[72] noting the differences in the nature, form, and characteristics of those contributions. This approach will avoid the risks and difficulties which an asset‑by‑asset approach can pose. In adopting that approach, I will take into account the husband's inheritance, which I am satisfied was applied towards the purchase of the boat, as well as his post separation contributions, which have led to issue of the shares, as well as the totality of respective contributions made by both parties.
WHAT IS THE PROPERTY AND VALUE OF THE PARTIES' PROPERTY?
[72] Jabour & Jabour (2019) FLC 93-898.
160 The parties prepared a joint consolidated schedule of assets, liabilities, and superannuation entitlements, vouched to [a date in] March 2024,[73] which became Exhibit 1. The most valuable asset is Property B, the value of which was agreed by the conclusion of the trial.
[73] Pursuant to Orders dated January 2024, paragraph 14.
161 I have not included the $900,000 alleged to be owing to Mrs Wither Senior, nor the debts owed by Business A to the husband and the Family Trust B, for the reasons set out. I have also excluded the wife's personal loan to her father, which she utilised towards her living expenses.[74] The amount is more appropriately taken into account in s 75(2)(o) of the Act.
[74] Exhibit 19, The loan agreements between the [wife] and the [wife's] father dated various.
162 There were a number of items which remained in dispute, at the conclusion of the trial, which I will address below.
Unpaid Debtors
163The husband contends he is owed $74,230 from business debtors, while the wife contends the amount is $141,390. The husband explained he has adopted an after-tax amount, while the wife adopted the actual figure. There was no evidence of the husband's tax liability or that the tax had been paid. In the circumstances, I intend to adopt $141,390, which accurately reflects the amount, at the agreed cut‑off date. I acknowledge that in the future, the husband is likely to pay tax on these amounts. The evidence does not permit the Court to make any findings as to what that quantum may be.
Tax liability
164 The husband seeks to include his tax liability of $113,441. The wife does not agree, primarily because the husband conceded on 29 April 2024, he had paid $90,000 to the ATO,[75] albeit he stated that payment related to a "different tax bill".
[75] Exhibit 32, The [Bank A account (2)] for the [husband's] Account ending [redacted] for the period 28 March 2024 to 30 April 2024.
165 I intend to include the husband's tax liability given: (1) the amount has been vouched; (2) the wife accepted the husband's ATO activity statement confirmed he had a payment plan for an overdue tax liability of $113,441; (3) the husband's income which gave rise to the tax liability, has been partly applied for the benefit of the family, with the payment of child support, and the children's expenses; and (4) where the wife's tax liabilities are included in the schedule.
[Bank A account (1)] and [Bank A account (2)]
166 The husband deposed that Bank A account (1) had been closed, which was not challenged in cross-examination. I accept the husband's evidence.
167 There is a small difference between the parties as to the balance in the husband's Bank A account (2). The husband deposes it has balance of $5,292, while the wife says it is $5,541. The discrepancy was insignificant, and it was not the topic of detailed evidence or submissions. I propose to adopt the figure put forward by the husband, on the basis he operates the account, and will be most familiar with the balance.
[Redacted] work in progress
168 The wife sought that an unquantified amount be included for the husband's [redacted] work in progress as at 31 March 2024. This was not the subject of any detailed evidence, or submissions. On that basis, I have not included the item in the schedule.
Company B
169 The husband contends that the Company B shares have no value. The wife contends that the shares have a value, although no figure was put forward by her. In the alternative, the wife contends if the Court is satisfied that the shares are property, then they should be treated as a financial resource available to the husband.
170 There was scant admissible evidence before the Court. The wife drew the Court's attention to information on Company B's website,[76] and the work which the husband continues to perform for the company, for no remuneration.[77] The wife asserts the husband must be confident that the shares have some value, or potential value, in light of these matters.
[76] Exhibit 18, The printout of the [Company B] website.
[77] Exhibit 31, A printout of the [husband's] calendar January 2023 to March 2024.
171 The wife's speculation and opinions are not evidence. The husband acknowledged that Company B's projects may come to something, or nothing.
172 The admissible evidence establishes that Company B: (1) is an unlisted private company, which is exploring potential [sustainable energy] projects; (2) is funded by a loan from Company A, and presently, the key entity's debts exceed its assets, to the tune of approximately $834,000;[78] (3) has entered into confidentiality agreements with other entities, as part of ongoing negotiations about the future [sustainable energy] initiatives; and (4) has obtained various reports, including an external assessment which has concluded that the proposed projects are not commercially viable.
[78] The husband's updating trial affidavit, [34].
173 The Family Trust B was paid $75, for the shares, when they were transferred in September 2024 to the entity controlled by Mr B, which has since been set aside. In the circumstances, I intend to adopt a figure of $75 for the Company B shares and will be included in the joint schedule.
Insurance Company Claim
174 As observed, the husband has received E$110,000 from Insurance Company after the agreed cutoff date for the joint schedule. I do not intend to include the amount, which will be taken into account, in considering s 75(2)(o) of the Act.
175 The wife suggested that the Court should include the husband's potential further insurance claims. No figure was advanced by her, nor was there any cogent admissible evidence, to enable the Court to be satisfied that the husband was likely to receive any further insurance payment in the future.
Paid Legal Fees
176 The husband had paid $128,642 in legal fees, while the wife has paid $348,010 in legal fees. The husband seeks to "add back" into the joint schedule, the amounts which both parties' have spent on legal fees. If the Court adopts that approach, he accepts the wife's liability to her father for legal costs of $35,000, should be included in the schedule. The wife opposes the inclusion of either party's paid legal fees as notional property. She accepts that her debt to her father, which related to her paid legal costs, should also be excluded.
177 The use of add backs is not encouraged. The Full Court has confirmed that the preferred course of action, is to deal with these issues under s 75(2)(o) of the Act.[79] The rationale for that approach, is because the property which is "added back" no longer exists and is being taken into account as notional property only. Therefore, the inclusion of notional property risks of skewing the distribution of actual property in an unfair manner, which requires careful consideration.
[79] Trevi & Trevi (2018) FLC 93-858.
178 Add backs for paid legal fees are an accepted category,[80] where paid legal fees have been met from assets, which would otherwise have been available for division. The rationale being that unless those paid legal fees are included as notional property, that would effectively require one party to contribute to another party's legal fees, without a costs order, pursuant to s 117, contrary to the Act.[81]
[80] DJM v JLM (1998) FLC 92-816.
[81] Ibid [11.6].
179 Attention must be paid to the legislative intent of s 117(1) of the Act, in considering issues which arise when parties pay legal fees from assets, which would otherwise have been available for division, in contrast to legal fees which have been paid from funds that would not otherwise have been properly available for division between the parties.
180 Limited evidence was available about the source from which each party paid their costs. The wife's cost notification stated her paid legal fees had been met from post separation income, a family loan and $15,140.35 of joint funds.[82] There was no further particularisation. In evidence, the wife said she had met her legal fees from a number of sources, including $100,000 from capital, $35,000 by way of a loan from her father, $15,140.35 from joint funds and the balance from income.
[82] Exhibit 2, [Law Firm A] cost notification dated 3 May 2024.
181 The husband asserted the wife had applied child support towards her legal fees.[83] That was not put to the wife in cross-examination.
[83] The husband's updating trial affidavit, [17], JMH-3.
182 The husband produced a schedule setting out his legal fees and disbursements.[84] He deposed that he had met his legal costs from income. It appears that the husband has had the benefit since separation, of his personal exertion income, and through the Family Trust D. The wife's senior counsel queried whether the husband had applied the proceeds of sale from shares towards his legal costs. By the end of the evidence, it was unclear precisely how those funds had been applied.
[84] Exhibit 3, The schedule of fees and disbursements paid by the [husband] with attachments.
183 The wife deposed that she felt unable and ill-equipped to represent herself, given [redacted]. The husband has represented himself for periods of these proceedings. He has also had the support from [redacted] the costs of which are not reflected in his paid legal fees.
184 The sums spent by both parties no longer exist. The amounts expended are sizeable, in the context of the parties' available property. There is a significant disparity in the amounts expended by the husband and the wife. The evidence does not allow any precise findings as to the relevant amounts and sources from which each party has paid their legal fees. In these circumstances, and noting the broad discretion retained by the Court, I do not consider it is appropriate to include the paid legal fees in the joint schedule, nor to include the wife's loan associated with her paid legal fees. I am not persuaded that approach is necessary, to deliver a just outcome in the circumstances. Instead, I propose to take these matters into account in considering s 75(2)(o) of the Act.
$20,000 paid to the wife pursuant to Court Orders
185 Pursuant to orders dated [in] March 2020, the husband paid $20,000 to the wife, subject to characterisation by the trial Judge. The husband seeks the amount be characterised as partial property settlement. At the time of the consent orders, the wife was seeking interim spousal maintenance, a lump sum maintenance of $17,000, and $14,000 for legal fees.
186 The presiding Magistrate was not satisfied that the wife was unable to adequately support herself, or that she was unable to pay her own legal fees.[85] On the basis that the husband had made an open offer to pay to the wife of $500 per week, and a lump sum of $20,000, the outstanding applications were dismissed.
[85] Exhibit 8, [2020] FCWAM 22, delivered [in] March 2020.
187 It is unfortunate that the payment was not characterised. The Court did not have the benefit of any detailed submissions, nor evidence, in support of why the sum should be now treated as partial property. It is seemingly common ground that the funds have been spent, and no longer exist. I am not persuaded that the sums should be characterised as partial property settlement. Instead, I will take the payment into consideration pursuant to s 75(2)(o) of the Act.
Trust losses carried forward
188I am not persuaded by the wife, that the tax losses in the Family Trust D, of $29,399 should be included in the schedule. Her senior counsel conceded that such losses are not property. The losses will remain in the Family Trust D, and be available to offset any capital gain which the trust may make, in the future. That is a matter which can be taken into consideration pursuant to s 75(2)(o) of the Act.
189 Adopting the form of Exhibit 1, I am satisfied the property, liabilities and superannuation entitlements of the parties are as follows:[86]
[86] Ignoring the cents and omitting the items which have no value. The schedule includes as the husband's assets, [Motor vehicle A] (despite it being registered in the wife’s name), and the [Company B shares] (which he holds on trust for the [Family Trust B]).
| Husband's Assets | Value |
| Company B (Family Trust B) | $75 |
| [Redacted] Office Furniture (including artwork) | $570 |
| Household Contents, trailer, outdoor equipment | $15,870 |
| Bank A account (2) [account number redacted] | $5,292 |
| Unpaid debtors | $141,390 |
| Motor vehicle A | $47,000 |
| Sub-Total Husband's Assets | $210,197 |
| Liabilities | |
| [Credit Card A] | $206 |
| [Credit Card B] | $608 |
| [Credit Card C] | $11,480 |
| Tax Liability | $113,441 |
| Sub-Total Husband's Liabilities | $125,735 |
| Husband's Net Assets | $84,462 |
| Wife's Assets | |
| [Bank C] account (1)] | $150 |
| [Bank C account (2)] | $487 |
| [Bank C account (3)] | $398 |
| [Bank D] account] | $2 |
| Jewellery | $22,200 |
| Boat, trailer & accessories | $36,000 |
| Solicitors' Trust account | $47,203 |
| Artwork & Furniture & chattels | $8,500 |
| Sub-Total Wife's Assets | $114,940 |
| Liabilities | |
| Tax liability | $4,573 |
| Sub-Total Wife's Liabilities | $4,573 |
| Wife's Net Assets | $110,367 |
| Joint Assets | |
| [Bank A account (3)] [account numbers redacted] | $109,926 |
| [Bank A account (4)] [account numbers redacted] | $96 |
| [Bank E] trading account (1) [account numbers redacted] and (2) [account numbers redacted]] | $31 |
| JOINT NET ASSETS | $110,053 |
| BUSINESS B | |
| Assets | |
| [Bank C account (4)] | $8,527 |
| [Bank F] account] | $1,176 |
| [Credit Card D] | $4,469 |
| Sub-Total Entity Assets | $14,172 |
| Liabilities | |
| Tax Liability | $12,412 |
| Sub-Total Entity Liabilities | $12,412 |
| ENTITY NET ASSETS | $1,760 |
| THE FAMILY TRUST D | |
| Assets | |
| [Bank A business account] [account numbers redacted] | -$-6,613 |
| Property B | $2,375,000 |
| Sub-Total Entity Assets | $2,368,387 |
| Liabilities | |
| [Bank A Loan account] [account numbers redacted] | $1,130,120 |
| Sub-Total Entity Liabilities | $1,130,120 |
| ENTITY NET ASSETS | $1,238,267 |
| TOTAL NET ASSETS | $1,544,909 |
| SUPERANNUATION | |
| Husband [Superannuation Fund A] | $217,448 |
| Wife [Superannuation Fund B] | $68,779 |
| TOTAL SUPERANNUATION | $286,227 |
| TOTAL NET ASSETS AND SUPERANNUATION | $1,831,136 |
IN LIGHT OF THE PROPERTY OF THE PARTIES, IS IT JUST AND EQUITABLE TO MAKE AN ORDER AS TO ALTERATION OF PROPERTY INTERESTS?
190 The husband and wife have been separated since 2019. Following the irretrievable breakdown of their marriage, and where there is no longer any 'common use' of property,[87] both parties now seek to alter their property interests and to separate their financial affairs. In these circumstances, I am satisfied it would be just and equitable to make an order by way of alteration of property interests.
[87] See Stanford v Stanford (2012) 247 CLR 108.
WHAT IS THE ASSESSMENT OF CONTRIBUTIONS?
191 I am required to weigh and assess the contributions of all kinds made by each party.[88] I must consider the respective contributions of the parties, both financial and non-financial, holistically over the whole period to trial.[89] That requires an assessment and analysis of the nature, form, and extent of all contributions, of all types. The task does not lend itself to a strictly mathematical approach.[90]
[88] Jabour & Jabour (2019) FLC 93-898.
[89] Dickons & Dickons (2012) 50 Fam LR 244 at [21]; Mallet v Mallet (1984) 156 CLR 605 at 640 -641.
[90] See for example, Lovine & Connor and Anor (2012) FLC 93-515 at [41].
192 In assessing the parties' respective contributions, I find as follows:
(a)The husband and wife each made significant contributions, in a number of direct and indirect ways. Despite some criticisms which each party levelled against the other, I am satisfied the husband and wife each worked hard, and did their best during the marriage, and have continued to do so, since separation.
(b)Neither came to the relationship with any assets of substance. Both parties made non-financial contributions as home-makers and they each attended to the necessary tasks for the functioning of their home.
(c)The wife was the primary home-maker and parent. Those contributions are to be taken into account in a substantial, and not in a token manner. The wife's care of the children and her role as a home-maker, enabled the husband to work on a full‑time basis, and progress in his career. That too is an important contribution which requires recognition.
(d)When the wife resumed working, the husband was actively involved in the children's care, when he was not at work. That included caring for the children on weekends when the wife worked. He too has made contributions as a home-maker and parent. The husband has also supported the wife's career, and Business A.
(e)The husband was the primary income earner and managed the family's finances. He earnt significantly more than the wife. The wife made financial contributions including through her income, the income which Business A generated, which flowed through to the benefit of the family, including the rent paid to the Family Trust D.
(f)The husband's inheritance of $80,000 and receipt of $900,000 from Mrs Wither Senior, are substantial financial contributions, which require recognition. I accept that the inheritance was applied towards the boat, and that the funds from Mrs Wither Senior have been applied towards the acquisition of Property A, and reduced the parties’ borrowings. These amounts are not to be simply adopted as a mathematical calculation, as against the available property for division.
(g)Contrary to the husband's submissions, the wife's contributions are not to be measured only in terms of her financial contributions, or particular contributions as against particular property. The task of the Court is to assess contributions, in a holistic manner, across the course of the totality of the parties' relationship, up until the time of trial.
(h)The family enjoyed a comfortable standard of living. They made financial decisions and structured their lives, in a manner which suited them. Unfortunately for the parties, despite their efforts, there is modest property now available for division.
(i)The husband and wife were married for approximately 15 and a half years. The post separation period is approximately four and a half years, which represents just over 22% of the total period, over which I am required to assess contributions.
(j)Since separation, both parties have continued to work, and to combine their employment with care of the children. The husband has paid child support, private school fees and a raft of expenses for the children. Each party has continued to make contributions as home-makers and parents. Each party has made financial contributions. The husband's contributions have been greater than the wife's, reflecting his greater income, including the servicing of the borrowings on Property A prior to sale, and costs associated with Property B. He has continued to have the benefit of the Family Trust D and the income which it generates.
(k)While acknowledging the wife's efforts, I am satisfied that the husband's overall contributions exceed those of the wife. His inheritance from his grandmother, and the advances from his mother, which total nearly $1,000,000 are substantial. The funds were only made as a consequence of the husband's relationship with his grandmother and mother, and they are contributions for which he is to be credited.
193 Consistent with the authorities, the task of the Court is to weigh those contributions, with all of the other contributions. The "leap from words to figures" has been recognised as problematic.[91] Justice Finn in Farmer and Bramley (2000) FLC 93-060 at 87,947 wrote:
[91] Steinbrenner & Steinbrenner [2008] FamCAFC 193 at [234].
… [I]t has to be said, that it is not generally possible in the exercise of the discretion under s 79 to say or to ascertain why a particular award is ultimately arrived at. Given that awards under s 79 are virtually never calculated with mathematical precision, no amount of enumeration of, or indeed evaluation of, contributions, or of the s 75(2) matters, or indeed of any of the matters listed in s 79(4), can ever explain exactly why a particular figure, or more usually a percentage, is eventually arrived at (other than it is within the recognised "range"). Absent a strict mathematical approach, the reasons for judgment requirement ultimately becomes impossible of total fulfilment in the jurisdiction under s 79.
194 I have carefully considered the parties' differing contributions in the particular circumstances of their marriage, up until the date of trial. In my assessment, by reason of contribution, the percentage division should be 65% to the husband and 35% to the wife. The net property and superannuation entitlements of the parties are worth $1,831,136. The effect of this finding as to contribution is the wife is entitled to receive property and superannuation to the value of $640,898, and the husband is entitled to receive property and superannuation to the value of $1,190,238. I consider a differential of 30%, which equates to $549,341, reflects the parties' contributions in a way which is just and equitable.
SHOULD THERE BE ANY ADJUSTMENT IN FAVOUR OF EITHER PARTY?
195 It was not suggested any proposed order would affect the income earning capacity of either party. The wife is not cohabiting with anyone. Neither party is in receipt of a pension, allowance, or benefit. Neither party has a responsibility to support any other person. Neither party is proposing to undertake any further education or training. There is no financial agreement or former financial agreement that is binding on the parties. The wife's application for maintenance has been dismissed.
196 I will now consider the relevant s 75(2) matters to be taken into account.
197 The husband is 48 years of age. In December 2023, he was diagnosed with [a disease] and has undergone [surgery] in December 2023 and February 2024. Fortunately, he has made a positive recovery, and resumed working on a full-time basis. The husband will require ongoing testing and monitoring of his health, for at least the next five years.[92]
[92] The husband's updating trial affidavit, [17], JMH-3.
198 The wife is 46 years of age. Since separation, she has undergone treatment for [a] [medical condition] and experienced a decline in her general health with [redacted] symptoms.
199 There was no admissible medical evidence to suggest that either parties health impacts upon their capacity to work.
200 Both parties are self-employed and each works on a full‑time basis. In the 2023 financial year, the husband's taxable income was $625,103, while the wife's was $129,143. In the current financial year, the husband anticipates that his income may be higher, and his gross [revenue] may be around $1,000,000.
201 The husband is unequivocally in a stronger financial position than the wife. The wife's income will never match the income which the husband can achieve, given his qualifications, and experience.
202 The husband will retain the Family Trust D. Subject to the outcome of these proceedings, that will include Property B. The Family Trust D operates at a profit, which will increase, with Property B's rent review in April 2025.
203 Apart from the proceeds of sale of Property A, and the equity in Property B, there is limited net property available for division. Each party has superannuation entitlements, as reflected in the schedule.
204 Child A is 17 years of age, Child B is 15 years of age and Child C is 11 years of age. Child B and Child C continue to live with both parents. Child A lives with the wife, and given her age, her wishes will determine her living arrangements.
205 At the time of trial, the husband was paying child support of $993 each week, in addition to the fees at [Private School A] and [Private School B], and the other expenses identified. The husband has utilised income from the Family Trust D towards the school fees,[93] which are reflected in loan accounts now owing by the children to the trust. It is anticipated when the Agency update their assessment to reflect the current care arrangements, that the amount which the husband is required to pay to the wife will reduce. The Court is unable to make any precise findings.
[93] The husband's updating trial affidavit, [40].
206 Child A is in year 11, Child B is in year nine and Child C is in year six. Given the children's ages, the future school fees will continue for a number of years, particularly for Child B and Child C. The husband will assess his ability to continue to pay the fees, following the outcome of these proceedings, his health and income.[94] Prior to his [disease] diagnosis, the husband indicated he intended to continue to meet those costs. It appears both parents value the education and have made sacrifices, to facilitate the children's schooling.
[94] The husband's updating trial affidavit, [21].
207 Each party will continue in their parenting roles. I am not satisfied those commitments, will impact upon their capacity to work, in light of the children's ages, and the care arrangements.
208 The husband and the wife each have commitments for their self‑support. The husband has been providing financial support to Ms K. He has no legal obligation to do so. He deposes that while Ms K works on a full-time basis [as an] [advisor] she is in debt and unable to support herself.
209 The parties enjoyed a comfortable standard of living during the marriage. The husband continues to do so, and he remains in a stronger financial position than the wife. The wife has been reliant on capital and financial assistance from her family, to support herself at times since separation. While the wife is supporting herself, she considers that has not been to the same standard as the husband, or to her satisfaction. The wife is capable of meeting her reasonable needs, in light of her income. Her financial position will improve, with an end to the litigation.
210 In light of the property of the parties, coupled with the husband and wife's respective income earning capacities, I am satisfied they are each likely to enjoy a reasonable standard of living into the future.
211 Both parties have liabilities, which must be borne in mind when property orders are crafted.
212 The parties were in a relationship spanning approximately 15 years. The wife's income earning capacity has been impacted, by the birth of the children, taking maternity leave and returning to work on a part-time basis. Each party has completed studies during the marriage, to enhance their qualifications and income earning capacity.
213 In the wife's Papers, she asserted that the following matters required recognition pursuant to s 75(2)(o):
(a)The husband's "financial and psychologically coercive and controlling behaviours towards the wife";
(b)The husband's "failure to financially to provide for the wife when he had the capacity to do so";
(c)The husband's "failure to provide full and frank disclosure";
(d)The husband's "conduct and how it has increased the wife's legal fees";
(e)The husband's role as trustee of the Family Trust D which he has "used …to change the financial benefits and liabilities of the beneficiaries of the Trust"; and
(f)The husband's "failure to make proper provision to pay his tax out of earned income" together with his interest in Company B and related entities.[95]
[95] The wife's papers for the judicial officer filed [in] April 2024, [63]-[69] inclusive.
214 I do not agree. The evidence does not support a finding that the husband has behaved in a controlling or coercive manner towards the wife. The husband had no obligation to make financial provision for the wife, post separation, absent orders. The Court is not determining any application for costs. Such applications, if pursued, are the appropriate contexts in which the Court will assess each party's conduct as a litigant, amongst other relevant considerations pursuant to s 117 of the Act.
215 In my view, the following matters require recognition, pursuant to s 75(2)(o):
•Since separation, the wife has had the benefit of $20,000 from the husband, some joint funds and the proceeds of sale of the [Motor vehicle B]. Those funds have been expended, no longer exist, and are not reflected in the joint schedule.
•Each party has spent money in meeting their legal fees, which are not reflected in the joint schedule. The wife's expenditure is significantly more than the husband's expenditure. The monies which the wife's solicitors hold on trust, have been included in the joint schedule, by agreement. It is anticipated those funds will be expended in full, based upon the cost notification letter.
•The wife deposes to having a debt to her father, of $70,000, which has been applied partly towards her paid legal fees, and in partly towards her living costs. The wife deposes that she is required to repay those sums, from her property entitlements. I have excluded the amounts from the joint schedule.
•The husband deposes that he owes his mother $900,000, which he is expected to repay. I have set aside the transactions to which those sums relate. I have excluded the amount from the joint schedule.
•The husband has received E$110,000 by way of an insurance payment, which he has applied in part towards discharge of his tax liabilities. That amount is not reflected in the joint schedule.
•The Family Trust D has retained losses, which will be available to offset future capital gains.
ASSESSMENT OF S 75(2) FACTORS
216 The purpose of an adjustment for s 75(2) factors is to assist the Court in arriving at a just and equitable result.[96] The objective of the section is not to equalise the financial strengths of the parties, but rather to affect a redistribution, should the Court consider it just and equitable to do so.[97]
[96] See Waters and Jurek (1995) FLC 92-635.
[97] Wilson J in Mallet v Mallet (1984) 156 CLR 605.
217 The wife submitted that there should be an adjustment of at least 20%.[98] The husband conceded an adjustment should be made in favour of the wife, of 10%,[99] noting that submission was predicated upon his position as to the available property.
[98] The wife's papers for the judicial officer filed [in] April 2024, [J].
[99] Noting that was based upon the husband's position that the [boat] was excluded, and $900,000 to [Mrs Wither Senior] was included as a liability, the husband's papers for the judicial officer filed [in] April 2024, page [6].
218 I am satisfied that an adjustment in favour of the wife is required, to do justice between the parties. I consider the disparity in the parties' available property, the disparity in the parties' income earning capacity, in addition to the insurance payment which the husband has received, which is not included in the joint schedule, warrant an adjustment.
219 The husband concedes his income and earning capacity exceeds that of the wife. The husband's 2023 taxable income was nearly five times the wife's income. Based upon the husband's [revenue] to date, his anticipated income in the financial year is likely to be greater. The husband's income also needs to be viewed, in light of the net property of the parties. While making those observations, I have taken into account the husband's child support obligations, and the likely future expenses he will continue to incur, for the children into the future. Given the ages of the children, the school fees will be an ongoing expense for a number of years.
220 The husband's superannuation entitlements are worth more than three times of the wife's entitlements. Given the parties' ages, it will be a number of years before they will be able to access those entitlements.
221 In reaching those conclusions, I have taken into account each party's parenting commitments, the future parenting obligations, coupled with the financial obligations, including the husband's payment of child support, together with other costs for the children. I have also kept in mind the funds which have been spent by the wife and are not reflected in the schedule, and the disparity in the parties' expenditure on legal fees. After a careful examination of the s 75(2) factors as set out above, I consider that an adjustment of 25% in favour of the wife is warranted. 25% represents $457,784.
Section 79(4)(d)
222 The orders proposed by each of the parties will not have any impact upon the earning capacity of either of them.
JUST AND EQUITABLE
223 It is necessary to determine an outcome which is just and equitable in the circumstances of these parties. In De Winter and De Winter (1979) FLC 90-605, Gibbs J noted the discretion conferred upon the Family Court to make orders affecting financial interests under s 79 of the Act is "extraordinarily wide".
224 The outcome is one whereby the wife receives $1,098,682 being 60% and the husband receives $732,454 being 40% of the parties' property. The disparity is 20%, which amounts to $366,227.
225 I must consider the practical effect of the division I intend to order. The parties' have superannuation entitlements worth $286,227, and net property worth $1,544,909. While the wife expressed a preference for cash, there is limited net property available for division. In the circumstances, I am satisfied it is just and equitable for their superannuation entitlements to be divided, such that the wife receives 60% and the husband receives 40%.
226 The wife will retain her entitlements of $68,779. A superannuation splitting order will be required to pay a base amount to the wife of $102,957. It appears that the notice provided to the trustee of the husband's fund was for a percentage superannuation split, as opposed to a base amount. I propose to hear from the parties as to the form of the orders, and to require procedural fairness to be provided to the trustee.
227 While each party sought orders to retain property which was in the possession of the other party, and which has been in their possession since separation, I am not satisfied that those orders are just or equitable. The wife will retain the computer, power tools and painting in her possession and the husband will retain the boat and Motor vehicle A.
228 I am not persuaded by the wife that the husband should retain her jewellery. If the wife does not wish to keep the items, she can elect to sell them. I propose the husband retain the shares in Company B, in circumstances where he remains a director, with his sister's partner. Any order for the wife to receive shares in Company B, has the prospect of causing further litigation. Such an order is also not consistent with Court's obligation to achieve finality between the parties, pursuant to s 81 of the Act.
229 The parties have agreed to retain various property, which is set out below. To provide the wife with her entitlements, she will receive the funds held in the joint accounts, which can then be closed.
230 To implement the agreed division, and reflect my determination, the husband will retain or receive the following:
ASSETS
Value
[Redacted] Office Furniture (including artwork)
$570
Household Contents, trailer, outdoor equipment
$15,870
Bank A account (2) [account number redacted]
$5,292
Unpaid debtors
$141,390
Motor vehicle A
$47,000
The boat
$36,000
Family Trust B
Company B shares (Family Trust B)
$75
Family Trust D
Property B
$2,375,000
Less Bank A Loan account [account numbers redacted]
-$1,130,120
Less Bank A Business account [account numbers redacted]
-$6,613
SUBTOTAL ASSETS
$1,484,464
LIABILITIES
Credit card liabilities
$12,294
Tax liability
$113,441
TOTAL LIABILITIES
$125,735
HUSBAND'S NET ASSETS
$1,358,729
SUPERANNUATION
Superannuation Fund A
$217,448
Less superannuation splitting order
-$102,957
TOTAL SUPERANNUATION
$114,491
TOTAL NET ASSETS AND SUPERANNUATION
$1,473,220
231The wife will therefore receive or retain:
ASSETS
Value
Bank A account (3) [account number redacted] (joint)
$109,926
Bank A account (4) [account number redacted] (joint)
$96
Bank E trading account (1) [account numbers redacted] and (2) [account numbers redacted] (joint)
$31
Bank C accounts (1), (2) and (3) (personal)
$1,035
Bank D account (savings)
$2
Jewellery
$22,200
Solicitors’ Trust Account
$47,203
Furniture, artwork and chattels
$8,500
Business B
Bank C account 4 [account number redacted] (savings)
$8,527
Bank F account [account number redacted] (business)
$1,176
Credit Card D [account number redacted]
$4,469
TOTAL ASSETS
$203,165
LIABILITIES
Tax liability (Business B)
$12,412
Tax liability (wife)
$4,573
TOTAL LIABILITIES
$16,985
WIFE'S NET ASSETS
$186,180
SUPERANNUATION
Superannuation Fund B
$68,779
Plus superannuation splitting order
$102,957
TOTAL SUPERANNUATION
$171,736
TOTAL NET ASSETS AND SUPERANNUATION
$357,916
232 To give effect to the proposed division, the husband will then need to pay to the wife, $740,765. Given the quantum of the payment, and the parties' available property, I consider it appropriate to afford the parties an opportunity to consider the timing of the payment. It is proper that the husband have some time to consider how he may wish to raise those funds.
233 In closing submissions, counsel for each party acknowledged the possibility for any proposed lump sum to be paid on terms. In light of my findings, I propose to hear from the parties as to the form of the orders, to give effect to the Reasons, including the timing of the husband's payment to the wife, whether the amount is to be paid by way of instalments, and if so, what security and interest ought be paid.
234 If the husband is unable to make the payments, or if he elects to make the payment by the sale of Property B, then that should be included in the proposed orders. If Property B is to be sold, then the sale price, together with the costs of sale, capital gains tax, less any capital losses available in the Family Trust D, will need to be taken into account. Those figures will then need to be included in the joint schedule at [189]. Those amounts will be quantified at settlement and will enable the parties to calculate the adjusted cash sum to be paid to the wife, to give effect to the overall division which I have determined is just and equitable.
235 While both parties may be disappointed with the outcome, I am satisfied the orders are just and equitable in the circumstances. I propose to give the parties an opportunity to consider the findings, confer as to the form of the orders, provide procedural fairness to the trustee of the husband's superannuation fund, with a view to submitting a joint Minute of Proposed Orders. Failing agreement as to the form of the Orders, each party will have the opportunity to make submissions.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
CD
Associate
23 AUGUST 2024
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