20 In 2002, 2003 and 2005 various companies under the control of Y purchased real estate assets. X made no financial contribution to the purchase of the real estate. In March 2002 a company called D Pty Ltd, which is a wholly owned subsidiary of A Pty Ltd, purchased a property for $2.25 million. In 2007 that property was valued at about $4 million. It was sold by Y in October 2008 for $2,500,000. I infer that at least one of the reasons that property, amongst others, was sold at that time was to obtain funds to meet the cost of Y's defence of the criminal proceedings that he was facing.
21 X made a substantial contribution to improvements and to the conservation of the property purchased by D Pty Ltd. She obtained from the local council a bed and breakfast licence and, I infer, in conjunction with Y, converted the property to guesthouse accommodation. Later she established a wedding reception business at the property. For these tasks the parties had the assistance of building and maintenance staff and specialist consultants. X interviewed, hired and trained the building and maintenance staff and worked with a web designer and a graphics company in designing promotional brochures.
22 She also played a substantial part in developing the property as a farm and running the farm. She says that Y regarded the income from the sale of the farm produce as being important to making the property a viable business necessary for taxation purposes. She also redesigned 13 acres of gardens and carried out physical work such as mowing lawns, spraying and gardening.
23 Part of the business of A Pty Ltd is or was a seed business. This business was run by X. She oversaw the erection of a hot-house and shade plants to accommodate the plants needed. She also designed and produced marketing material for the business.
24 In December 2003, after the sale of shares in C Pty Ltd, a company called E Pty Ltd purchased two multi-storey townhouses in Manly. It bought the property as trustee of the F Trust. According to the accounts of the trust, as at 30 June 2006, the total amount spent in land and development costs up to that time was approximately $2.76 million. As at 30 June the property was revalued to market by a further $840,000.
25 Those properties were sold by Y in December 2009 and May 2010. The combined purchase price for both properties was $3 million, although the properties were sold separately.
26 The parties developed those two townhouses. X oversaw the completion of the development. She worked with architects, tradesmen, suppliers, drainage and footpath contractors. She attended at a hearing of the Fair Trading Tribunal concerning a dispute with the builder along with Y and also attended a mediation with the builder to finalise the dispute. She made a substantial contribution to the design of the development and to the design of the landscaping and garden. She was concerned in the purchase, transportation, preparation and laying of turf with the assistance of a labourer.
27 In May 2004 E completed the purchase of a block of apartments in Bathurst. Its accounts showed that it held that property on the trusts of something called the B Trust. It is this trust of which Y says he is now the trustee.
28 The property was purchased for $2,900,000. According to the financial statements for the B Trust as at 30 June 2006, land and development costs, before a very minor write-off, were some $3,880,674.30. It seems that those apartments have not been sold. As I mentioned earlier, Y, in his statement of affairs attributes, it seems, a value of only $2.5 to $2.7 million to those apartments. But there is no valuation and no explanation for the figure he ascribes to them.
29 A caveat is lodged on the title to the Bathurst apartments by BGA Capital Limited, which claims an interest as a mortgagee pursuant to a mortgage dated 9 January 2008. It is not known what amount is secured by that mortgage. The mortgage was entered into after the parties' separation.
30 As at 30 June 2006, the balance sheet for the B Trust disclosed no liabilities, except to related parties. The principal liability was to A Pty Ltd.
31 X made a substantial contribution to the development and operation of the Bathurst apartments up to the parties' separation in November 2007. She attended to the interior design. She supervised the renovation. She attended meetings with relevant parties for conversion of the property to strata title and she was engaged in the advertising, including advertising on television, and other promotion of the apartments. She was also responsible for ensuring rental payments were made on time and from time to time attended the Consumer Trader and Tenancy Tribunal on behalf of the landlord.
32 In December 2003, E Pty Ltd purchased another property in Bathurst. It was also purchased for the B Trust. According to the financial statements for the trust as at 30 June 2006, the cost of acquisition of that property and the development costs for that property totalled some $1,011,599. It was sold in May 2009 for $1,400,000.
33 That property was also renovated into nine fully renovated suites together with three suites in their original form. X again was heavily involved in the renovation and the interior design.
34 Also in December 2003 E Pty Ltd purchased a property in Collaroy. According to its financial statements, this property was held by E Pty Ltd as trustee of the F Trust. The financial statements to 30 June 2006 record development costs to that date, including acquisition costs, of $1,891,189. It was sold in December 2007 for $1.95 million.
35 Again X contributed to the conservation and improvement of the property. She was a major participant in the renovation doing such things as choosing the interior finishes and various of the items, fixtures and fittings and floor coverings. She was also responsible for the design of the gardens and the preparation and planting of the gardens.
36 In May 2005, Y purchased a block of land at Cottage Point for $1,600,000. He and X commissioned an architect to design a house for the block of land. That proposal did not proceed and the land was sold in January 2006 for $1,700,000.
37 In about November 2006, Y purchased a house in Bayview. The parties moved into that property in November of that year.
38 X was again involved in extensive renovations of that property. She had discussions and negotiations with tradesmen and suppliers and co-ordinated the renovation works. Although the evidence is not very clear about this, I understand the parties to say, or at least Y to say, that the National Australia Bank as mortgagee has recently taken possession of the property in Bayview and has sold it as mortgagee, or at least had listed it for sale as mortgagee. In his statement of affairs Y attributes a value of $3 million to the property and, he says, that there are creditors who hold security over that property to the value of $2,800,000.
39 On 6 September 2007 E Pty Ltd purchased a block of nine apartments in Harbord. That property was sold in May 2008 for $3.25 million. It had been purchased for $2,700,000.
40 X does not give evidence of making a substantial contribution to renovations to that property. She says that "We moved the workmen to the Kennedy Place property to commence renovations to that property". It will be recalled that the parties separated in November 2007. It does not appear that work she did in respect of that property made a substantial contribution to the increase in value of that property between the time of its purchase in 2007 and its sale in May 2008.
41 In between April and June 2005, E Pty Ltd purchased a Strata development of four commercial units at Warriewood. The cost of the purchases was approximately $1,705,000. Those units were sold for $1.875 million in February 2008.
42 There is no evidence of X's having made any substantial contribution to the conservation or improvement of those commercial units.
43 It appears that after the parties' separation and when criminal charges were pending against Y, he caused the various properties to be sold. The proceeds of the sale of the properties after the parties' separation exceeds $13.8 million.
44 The balance sheets of E Pty Ltd as trustee of the F Trust and as trustee of the B Trust as at 30 June 2006, of A Pty Ltd as at 30 June 2006, and of D Pty Ltd as at 30 June 2006, show liabilities to external creditors of the order of only $2.25 million.
45 There is no explanation from Y as to how the proceeds of sale of the properties have been dealt with, except that it was suggested in the cross-examination of X that he incurred legal costs in defence of the criminal charges of approximately $3 million or more. There was no evidence as to the extent of his legal costs. There is no evidence from Y as to how the proceeds of sale have been applied.
46 Until February 2009, Y also held 300 shares in a company called G Pty Ltd. X said that that was a company which has a successful business in the hair industry. It can be inferred from the company search of that company that in February 2009, Y transferred those shares to his former wife. There is no evidence as to what consideration was paid for the shares, or how any such consideration has been applied.
47 As I have said, Y's assets include all of the ordinary shares in A Pty Ltd. He ascribes a market value of nil to those shares. There is no evidence to support such a valuation. The only evidence as to A Pty Ltd's financial position is that as at 30 June 2006 it had net assets of $22,477,309. A substantial part of those assets consisted of loans to related parties including the B Trust and the F Trust, although there was also two personal loans to Y and his ex-wife of some $7.33 million.
48 In her cross-claim, X sought an order for lump sum payment of $6,000,000 and an order that Y pay maintenance pursuant to s 27 of the Act of $3,550 per week for such period as the court thought appropriate.
49 As I understood her position, it was that an order for a lump sum payment of the order of $6,000,000 would be justified as a substantial proportion of the value of Y's assets, stripping away the niceties of assets being held through corporate entities and subject to trusts. She points to the fact that the properties had been sold for an amount in excess of $13,875,000 and that there remained other assets that are not sold, including the Bathurst apartments. She also says that Y has substantial superannuation in the form of cash and commercial property in England in classic cars and other assets, the value of which she does not know.
50 In this case I do not consider that I can proceed on the basis of calculating the divisible property of both parties, and evaluating and balancing their respective contributions falling within s 20(1), to reach an apportionment between the parties on a percentage basis of the overall contribution that each of them has made within s 20 (compare Kardos v Sarbutt [2006] NSWCA 11; (2006) 34 Fam LR 550). That is so for two reasons. The first is the considerable difficulty in identifying what assets Y has. That is a difficulty of Y's making. If necessary, no doubt an appropriate conclusion could be drawn applying the principle that inferences can be more readily drawn (where there is some evidence to support an inference) where a party who has it in his power to give evidence about a matter chooses not to do so.
51 A greater difficulty is that Y brought substantial wealth to the relationship. Whilst X made a contribution to the fortunes of the C Pty Ltd which would have had an effect, albeit in a way impossible to define or quantify, on the value of the shares of that company, I do not think that her contribution in that respect can be seen to have contributed to any great extent to the moneys received by Y or his companies from the sale of shares. X was also paid for the contributions which she made to the fortunes of C Pty Ltd.
52 The period of the parties' relationship was only about seven, or, perhaps, seven to eight years. It was not a long enough period of co-habitation which would justify any substantial erosion of the fact that Y brought substantial assets to the relationship. In this case the contributions that X made falling within para 20(1)(a), that is to say, non-financial contributions to the acquisition, conservation and improvement of the property of the parties, or to their financial resources, and the extent to which such contributions should affect an order under s 20, should be measured against the increases to the value of the properties of the parties to the relationship which at least indirectly were contributed to by her efforts.
53 Because the purchase price for all of the properties was provided by Y or one of his companies, it would not be right to treat X as having had effectively from the outset of the relationship a percentage interest in those properties. Nonetheless, the properties and thereby the value of the assets of the two trusts and of A Pty Ltd, excluding the Harbord property and the Warriewood property, showed together a substantial appreciation in value of approximately $1.79 million.
54 X's contributions under s 20(1)(a) made a substantial contribution to that increase. No doubt part of the increase was also due to changes in the market and the parties were only in a position to take advantage of those changes in the market because Y's wealth was used to buy the assets. But as a starting point in considering the exercise under s 20, it is just and equitable to treat the parties as being equally entitled to that increase in value. I have excluded from that assessment the increase in value to the Harbord property and to the Warriewood property because, as I have said, it does not appear that X made substantial contributions directly or indirectly to the acquisition, conservation or improvement of those properties. In addition, either E Pty Ltd or Y owned the Bathurst apartments. There is no way of knowing to what extent, if at all, the Bathurst apartments have increased in value from the time of their acquisition, but X made a contribution to the conservation and improvement of those apartments that should be recognised in coming to a lump sum order under s 38.
55 Having regard to the matters in her affidavit in relation to those apartments, I think an allowance of between $200,000 and $250,000 would be appropriate.
56 It is also necessary to consider both parties' contributions under s 20(1)(b), that is to say, the parties' contributions made in the capacity of homemaker or other contributions made by them to the welfare of the other party, or to the welfare of the family constituted by the parties and X's child.
57 Three things stand out in respect of the parties' contributions under s 20(1)(b). The first is that X made a substantial contribution as homemaker. She said, and I accept, that during the relationship she did all the shopping, cooking, ironing and all of the housework and entertained personal and business friends over the weekends from time to time. That is a substantial contribution and not to be undervalued.
58 By the same token, however, Y made a substantial contribution by funding the parties' lavish life-style.
59 X also provided the support for Y when he suffered from bouts of physical and mental illness. Such contributions are not measurable in monetary terms, but nonetheless the section requires the court ultimately to express in money an award which takes into account things not commensurable in money.
60 There is a third matter to be taken into account in my view under s 20(1)(b), and that is what I might call a negative contribution of Y to the welfare of the family. Whilst I am told that an appeal is pending from his conviction of charges of sexual abuse of X's daughter, that appeal has not been determined and on the basis of the convictions, I should proceed on the basis that he is guilty as he has been found to be.
61 It seems to me that that aspect of Y's conduct is to be considered when making an assessment of the extent to which overall he contributed to X's welfare and the welfare of her daughter. It is also it seems to me a matter which I can take into account and should take into account in considering the nature and incidents of the relationship as a whole as providing the context within which a judgment is to be made of what adjustment of property interests is just and equitable having regard to the parties' contributions within s 20(1)(a) and (b) (see Hughes v Egger [2005] NSWSC 18 at [148]).
62 If I were satisfied that Y had no assets, then the short answer to the application should be that I would make no orders for adjustment of the parties' interests in property, and I would make no lump sum order because there was no property of Y's to be dealt with. But I am not satisfied, notwithstanding the filing of the debtor's petition and the Statement of Affairs, that that is the position.
63 There is simply no explanation as to how the very substantial assets shown in the financial statements of the companies as at 30 June 2006 and reflected in the disposition of assets yielding some $13.875 million could have simply disappeared. The suggestion that Y has incurred $3 million or more of legal costs does not explain the position.
64 In my view it is appropriate to proceed on the basis that he has assets available which are more than sufficient to satisfy the lump sum order that I propose to make under s 38. It is appropriate to proceed under s 38(1)(d) because it does appear that Y has creditors. It is probable that if he is not already bankrupt, he will become so, unless perhaps the Official Receiver is provided with further information concerning his financial position which raises doubt about the debtor's petition. Y may already be bankrupt. It would not be appropriate to make an order in relation, for example, to shares held by Y in A Pty Ltd and to direct that X have a percentage interest in those shares. If Y has already become bankrupt, then such an order would achieve nothing because those shares would not be property which could be the subject of the order. On the other hand, if he is not bankrupt but is insolvent, then such an order would operate to the prejudice of his creditors.
65 The appropriate course is to make a lump sum order. Whether or not the debt created by the lump sum order will be provable in bankruptcy is not an issue before me. If it is not provable in bankruptcy, it could be enforced if and when Y has assets against which a judgment can be enforced.
66 For the reasons earlier outlined, I think two integers of an appropriate lump sum order are sums of $895,000 representing 50 per cent of the increase in value of the particular properties referred to, and $225,000 for the work done by X in relation to the renovations of the Bathurst apartments. In addition, there should be a further integer reflecting her contributions under s 20(1)(b) when weighed against Y's contributions.
67 I think a figure of approximately $280,000 to $300,000 would be appropriate for the third integer. It is then necessary to step back and consider whether the figure which those integers would suggest is appropriate.
68 In considering the matter as a whole, I consider that an order for a lump sum payment of $1,400,000 is the order which would be just and equitable under s 20. I will make that order in due course.
69 The other claim is for an order under s 27 of the Act for maintenance. To obtain the order for maintenance, X must show that she is unable to support herself adequately because her earning capacity has been adversely affected by the circumstances of the relationship. I would also need to be satisfied that an order for maintenance would increase her earning capacity by enabling her to undertake a course or program of training or education and that it is reasonable, having regard to all of the circumstances, to make the order.
70 The parties consented to an interim order for maintenance in the amount of $1,000 per week. X currently earns approximately $70,000 gross. She works as a boarding school housemistress. She is provided with a two-bedroom flat in which she lives with her daughter by the school. She currently has very few assets. She has a minimal amount of superannuation. She owes debts, including substantial debts for legal fees. Y has not complied with the order for interim payments of maintenance.
71 X's background in marketing and advertising, and before that as a model, do not appear to provide her at the moment with alternative sources of employment.
72 I accept that in her current financial circumstances, and before payment of the lump sum order which I will make, X is not able to support herself adequately and I accept that that is because her circumstances have been adversely affected by the relationship. It appears that after the sale of C Pty Ltd, her work in advertising and marketing wound down and she devoted her skills in that area substantially to the businesses and properties to which I have referred. It is not known what security of tenure X has in her present occupation. It appears to me that an order for maintenance would increase her earning capacity by enabling her to undertake a course or program of training or education.
73 In all of the circumstances of the case it is reasonable to make such an order to apply up to such time as X receives, if she ever does receive, the lump sum order that I will make.
74 No doubt if Y becomes bankrupt, X would only be able to enforce the order for maintenance to the extent to which an amount has become payable prior to the bankruptcy as a debt provable in the bankruptcy (see s 82(1A) of the Bankruptcy Act). However, it does not seem to me that that affects the order for maintenance I should make.
75 It is not clear on what basis an order for maintenance of $3,550 is sought, but as the order for maintenance under s 27(1) is directed to enabling an applicant to increase his or her earning capacity through a course or program of training or education, I think the order should not be premised upon her remaining in full-time employment. In making an order under s 27 I have regard to each of the factors in subs 27(2). However, for the reasons I have given, I am not able properly to assess the income, property and financial resources of Y.
76 In my view an order for maintenance of $2,000 per week is the appropriate sum having regard to the matters in s 27.