McNaulty & McNaulty (No 6) [2025] FedCFamC1F 917 (16 December 2025)

At line 11 of the table in paragraph 156 under the heading "Assets", insert the sum "$566,000.00" in lieu of the sum "$283,000.00".

At line 14 of the table in paragraph 156 under the heading "Assets", insert the sum "$11,901,326.25" in lieu of the sum "$11,618,326.25".

At line 33 of the table in paragraph 156, insert the total sum of "$9,125,966.49" in lieu of the total sum of "8,842,966.49".

In the last line of paragraph 167, replace the word "reason" after the word "for" with the words "the reasons".

In the second sentence of paragraph 172 after the words "divisible property of", insert the sum "$4,928,021.90" in lieu of the sum "$4,775,201.90.

In the second sentence of paragraph 172 after the words "the balance of", insert the sum "$4,197,944.58" in lieu of the sum "$4,067,764.58".

In the first sentence of paragraph 181 after the words "or about", insert the sum "$910,000" in lieu of the sum "$890,000".

In the first sentence of paragraph 182 after the words "an adjustment of", insert the sum "$910,000" in lieu of the sum "$890,000".

In paragraph 183 after the words "entitlement is", insert the sum "$3,287,944.58" in lieu of the sum "$3,177,764.58".

In paragraph 183 after the words "the balance of", insert the sum "$5,838,021.90" in lieu of the sum "$5,665,201.90".

At line 2 of the table in paragraph 185 under the heading "Assets", insert the sum "$566,000.00" in lieu of the sum "$283,000.00".

At line 12 of the table in paragraph 185, insert the sum "$2,204,729.49" in lieu of the sum "$1,921,729.49".

At line 16 of the table in paragraph 185 titled 'Nett assets', insert the sum "$2,023,518.85" in lieu of the sum "$1,740,518.85".

In the first sentence of paragraph 186 after the words "a further", insert the sum "$1,264,425.73" in lieu of the sum "1,437,245.73".

In the first sentence of paragraph 186, delete the words "which I will round to $1,440,000.00".

In the fourth sentence of paragraph 186 after the words "the sum of", insert the sum "$704,136.73" in lieu of the sum "$876,956.73".

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

1. The applicant shall retain as his absolute property, all his right, title and interest to and in, and the respondent shall relinquish and/or transfer to the applicant all of her right, title and interest, if any, to and in the following:

(a) AA Street, Suburb BB NSW and its contents;

(b) McNaulty Holdings Pty Ltd;

(c) McNaulty Developments Pty Ltd;

(d) McNaulty Pty Ltd;

(e) McNaulty 1 Family Trust;

(f) McNaulty Unit Trust ;

(g) McNaulty 2 Unit Trust;

(h) McNaulty 3 Unit Trust;

(i) R Pty Ltd;

(j) CC Pty Ltd;

(k) S Pty Ltd;

(l) DD Charters Pty Ltd;

(m) DD Holdings Pty Ltd;

(n) balances in bank accounts in his name or under his control;

(o) his interest in the water vessel;

(p) all funds held in any banks and/or financial institutions in the applicant's sole name and/or held jointly with any other person and/or in the name of any entity to be retained by the applicant; and

(q) the furniture, chattels and personal effects in the applicant's possession.

1. The respondent shall retain and/or receive as her absolute property, all her right, title and interest to and in, and the applicant shall relinquish and/or transfer to the respondent all of his right, title and interest, if any, to and in the following:

(a) the respondent's interest in FF Street, City GG, D State, United States of America;

(b) all funds held in accounts with any banks or financial institutions in her sole name and/or jointly with any other person; and

(c) the jewellery, furniture and personal effects in the respondent's possession.

1. The applicant shall be solely responsible for and meet payment of all liabilities in the applicant's name and the applicant shall indemnify the respondent from any liability howsoever arising thereunder, including but not limited to:

(a) his credit card liabilities;

(b) any taxation liabilities; and

(c) any liabilities and/or taxes associated with any of the assets retained by the applicant.

1. In addition to order 3 the applicant shall be solely responsible for and meet payment of the following liabilities and shall indemnify the respondent from any liability howsoever arising in respect thereof, namely:

(a) the loan from Mr HH to DD Holdings Pty Ltd made on 6 June 2022 and assigned to Mr JJ on 13 September 2022, including any interest thereon; and

(b) the loan from Mr JJ to the respondent made on 24 July 2022 including any interest thereon.

1. The respondent be solely responsible for and meet payment of all liabilities in the respondent's name (but excluding any liabilities specifically dealt with in order 4 hereof) and the respondent shall indemnify the applicant from any liability howsoever arising thereunder, including but not limited to:

(a) any credit cards held by the respondent; and

(b) the respondent's taxation liabilities.

1. Within thirty (30) days of the date of this order the applicant and the respondent (in their personal capacities or their capacities as office holder, trustee, director shareholder and/or beneficiary), shall do all acts and sign all documents necessary produced by the applicant to transfer the respondent's directorships, shareholdings and any other interest in the following:

(a) McNaulty Holdings Pty Ltd;

(b) McNaulty Developments Pty Ltd;

(c) McNaulty Pty Ltd;

(d) McNaulty 1 Family Trust;

(e) McNaulty Unit Trust;

(f) McNaulty 2 Unit Trust;

(g) McNaulty 3 Unit Trust;

(h) R Pty Ltd;

(i) CC Pty Ltd;

(j) DD Charters Pty Ltd; and

(k) DD Holdings Pty Ltd.

1. The applicant shall indemnify the respondent and keep her indemnified in relation to:

(a) any liabilities or duty, capital gains tax, income tax, fringe benefits tax, goods and services tax or any other tax or liability arising as a result of anything done pursuant to order 6 hereof; and

(b) any liability arising directly or indirectly out of or ancillary to the companies and other entities set out in order 6 hereof (including any monies which may be owing by way of loan and/or guarantees and/or indemnities or otherwise given by the respondent which she may be liable for to any third party).

1. In accordance with s 90XT(1)(b)(i) of the Family Law Act 1975 (Cth) whenever a splittable payment becomes available in respect of the interest of the respondent in the McNaulty Superannuation Fund, the applicant shall be entitled to be paid 100% of the of the splittable payment and there shall be a corresponding reduction in the entitlement of the respondent to whom the splittable payment would have been made but for this order.
2. Order 8 shall have effect from the operative time and the operative time is the day upon which these orders are made.
3. The funds standing to the credit of the parties and held on trust for them by O Lawyers be paid in their entirety and without deduction to the respondent or at her written direction and this order shall operate as a sufficient authority for those solicitors to transfer and disburse those funds as aforesaid;
4. Within ninety (90) days of the date of this order, or such other time as the parties might agree in writing, the applicant pay to the respondent $704,136.73.
5. Otherwise all outstanding applications are dismissed.

Note: The form of the order is subject to the entry in the Court's records.

Note: This copy of the Court's Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

1. On 6 June 2022 the applicant and respondent entered into what purports to be a binding financial agreement for the purposes of s 90C of the Family Law Act 1975 (Cth). The agreement purports to make provision about what is to occur with specific property in which the parties then had interests in the event of the breakdown of their relationship. The agreement expressly provides that the parties remain at liberty to agree about their remaining property and failing agreement, to pursue relief pursuant to the Act (either by way of property adjustment orders, spousal maintenance orders, or both).
2. The parties' marriage relationship has broken down with no prospect of reconciliation.
3. By these proceedings the applicant seeks that the financial agreement be set aside. He seeks a property adjustment order that takes into account all of the parties' property, including that dealt with by the financial agreement.
4. The respondent opposes the setting aside of the financial agreement. She seeks orders that require the applicant to perform his obligations under that agreement. She seeks a property adjustment order in respect of the parties' property that is not the subject of specific provision in the agreement.
5. These reasons explain why the financial agreement should not be set aside and why the property adjustment orders I have set out at the commencement of these reasons are just and equitable.
6. Before proceeding further, I record that the Family Law Amendment Act 2024 (Cth) was passed on 10 December 2024, with the relevant amendments taking effect on and from 10 June 2025 (Family Law Amendment Act 2024 (Cth) s 2(1) item 2). However, those amendments do not apply to proceedings in which the final hearing of which commenced before 10 June 2025 (Family Law Amendment Act 2024 (Cth) sch 1 pt 1 div 3 s 68). The final hearing of this application commenced on 5 August 2024. The amendments were not in effect at the date of the final hearing and the pre-amendment legislative framework governing property adjustment applications continues to apply to this application.

1. The applicant is 51 years of age. The respondent is 54 years of age. They commenced their relationship and cohabitation in 1993. They married in 2001. The parties separated under the one roof in mid-2021 and were subsequently divorced in 2022.
2. The parties have two children, one 12 years of age and the other 13. The children have lived with the applicant since 22 November 2022. There are now final parenting orders in place, made in March 2024, that formalise those arrangements.
3. The applicant and the children live in New South Wales. The applicant has not repartnered.
4. The respondent has repartnered and lives in the United States of America.
5. At the outset of their relationship in 1993 neither party had property of any real value. Each had a motor vehicle and some personal possessions.
6. The applicant was a tradesperson. By 1995 he established a company called EE Pty Ltd (later known as R Pty Ltd).
7. At the same time, the respondent was working in customer service where, over time, she took on a managerial role. She subsequently had a managerial role at LL Company in City MM. She earned up to $120,000 per annum together with superannuation and other benefits. Just when this was, or for how long it lasted is not clear from the evidence. I can make no findings about that. She later took on greater responsibility by also leading the Suburb NN team for her employer.
8. On finishing her employment with LL Company (whenever that was), the respondent received a redundancy payment. Neither party gives any evidence about the size of the payment. It seems common ground, however, that it was used to fund renovations to the parties' first property at OO Street, Suburb PP, repayment of the mortgage over that property and a holiday. Subsequently, the respondent worked for QQ Company and then RR Company. For how long she does not say.
9. At the end of 2003, the parties established the McNaulty 2 Family Trust. The trustee was CC Pty Ltd and the business operated by EE Pty Ltd was thereafter operated by the trustee for the trust. At this point, the respondent commenced working for the business (described by the applicant as "our business"). She undertook administrative work such as paying invoices, preparing tax invoices, paying wages, attending to all human resources duties, opening accounts with suppliers, doing safe work method statements for projects and otherwise attending to all necessary bookkeeping matters for the business. She wrote the company's enterprise bargaining agreement and had it ratified. While the applicant continued to grow the parties' business, the respondent attended to household duties and carried out her role in the business to support its growth.
10. At the end of 2004 EE Pty Ltd changed its name to R Pty Ltd. The parties also established a self-managed superannuation fund, but just when is not set out in the evidence.
11. During their relationship and while they were living in New South Wales, the parties were active real estate investors. They purchased and sold a number of properties in which they lived. However, the applicant's evidence is almost entirely lacking in any particulars about the transactions I have set out below. They are described by the applicant in his evidence in general terms. The respondent provides a little more detail, all of which I accept, as follows:

(a) OO Street, Suburb PP. This property was purchased in about November 1997 for $200,000.00 using a deposit of $20,000.00 saved by the parties, a combination of funds borrowed from one or both parties' parents and a bank. The property was sold in June 2001 for $347,000.00;

(b) SS Street, Town F. This was purchased in about April 2001 for about $742,000.00. To fund this purchase, the parties borrowed the maximum available to them from a bank. How the balance, if any was funded is not disclosed. The property was sold in March 2015 for $1,830,000.00;

(c) Town TT, New South Wales. This was purchased in 2010, as an investment and let. It was purchased using a vehicle described in the evidence as "[McNaulty Trust]". It was likely purchased for $70,000.00 and sold for $140,000.00 in 2012;

(d) UU Street, Town VV. This property was purchased by the "[McNaulty Trust]" in about June 2012 for $375,000.00 using funds the parties borrowed from their self-managed superannuation fund. The property was occupied by the respondent's mother. The parties' provided this accommodation to her rent free, although for how long is not set out in the evidence. The property was sold for $700,000.00 in March 2021 and the proceeds, according to the respondent, were contributed to work that was done on the motor vessel (more of that later);

(e) WW Street, Suburb XX. This property was purchased in about December 2013 for $3,450,000.00. The parties borrowed the maximum amount available to them from a bank to fund the purchase, although how they funded the balance, if any, is not disclosed. When the property at SS Street, Town F was sold, the balance proceeds (which the respondent says was $1,830,000.00) was paid off this debt. The property was sold in October 2015 for $4,500,000.00. The respondent says that there were net proceeds of sale of $2.88 million after the discharge of borrowings associated with property; and

(f) Q Street, Town F. This is an investment property was purchased in about 2014. It is vacant land purchased using the vehicle "[McNaulty 2 Pty Ltd] as trustee for the [McNaulty Unit Trust]" using funds borrowed from a bank. There is no evidence about this entity or its structure. The property was purchased for $830,000.00 with a view to later completing a subdivision under a development approval.

1. The parties' children were born in 2011 and 2013. The respondent, I am satisfied, primarily cared for the children while the applicant pursued an income for the family.
2. In about October 2015 the parties moved from New South Wales to City B, Queensland. They rented expensive accommodation in Queensland for about two years.
3. Notwithstanding the move to Queensland, the parties maintained their principal business in New South Wales. The applicant would travel between the City B and parts of New South Wales for that purpose. He says it was more or less week about and the respondent says that it was for about three out of every four weeks that he was away attending to business. Neither party suggested that anything in this case turns upon a resolution of this factual issue, but what is clear is that the applicant spent a considerable amount of time away from the City B. There can be no doubt that the burden of childcare and the running of the parties' household fell principally to the respondent. She also maintained her role within the parties' business.
4. In about 2015 the parties purchased YY Street, Region ZZ. This property was purchased as vacant land for about $1.8m. The applicant says that it was purchased using funds borrowed from a bank and the respondent says they used funds liberated from the sale of the Suburb XX property. It was sold in July 2016 for $1.85m or thereabouts.
5. At some point, but likely in 2016, the parties contracted for the construction of a motor vessel named [...]. For that purpose, they incorporated DD Holdings Pty Ltd in 2016. The applicant is the sole director and the parties hold 100 shares jointly in that company. DD Holdings Pty Ltd became the trustee of the McNaulty 2 Family Trust.
6. The motor vessel is a customised water vessel. The parties used the vessel themselves and also for charter operations. It took years to build and it seems uncontroversial that in excess of $3.3 million was spent on its construction and fit out. The respondent swears that the parties had to sell real estate that was held in their self-managed superannuation fund to keep up with the build cost of the water vessel.
7. The respondent contends (but there is little evidence to show) that around this time (2016) the parties' business in New South Wales (and a branch they had opened in Queensland) was performing badly. She now contends at the trial of these proceedings that it is profitable. The issue is answered by the expert evidence concerning the valuation of the business.
8. The parties purchased AC Street, Suburb E in August or September 2017 for $3.4m using funds borrowed from a bank. This became the parties' family home in City B.
9. The respondent continued as the children's primary caregiver and she reduced her role in the parties' business but continued her book-keeping role in relation to the parties' interests more generally. The parties had, for some time, a house cleaner and a child minder to assist them.
10. The parties separated in July 2021. The respondent had formed a relationship with Mr C who lived in D State, United States of America.
11. Following separation, the applicant left the Suburb E home. The children remained there in the care of the respondent. They spent some limited time with the applicant. Just how much time is in dispute between the parties, but a resolution of that issue is not now important.
12. On 17 September 2021 the respondent contracted to purchase a residential unit off the plan known as AD Street, Suburb AE for $1,355,000.00 using a deposit of $75,000.00, provided by a deposit bond. The deposit bond was to expire on 30 July 2022. Settlement was to occur in December 2022.
13. The respondent travelled to the United States with the children between December 2021 and January 2022. In January 2022 she informed the applicant that she would like to live in the United States with the children.
14. The early months of 2022 were a busy time for the parties. In late January 2022 the applicant contracted to purchase a unit at AF Street, Suburb AE. He arranged a deposit of $155,000.00 to be paid via a deposit bond. As security for the bond, he permitted the bond provider to register a caveat over his interest in the Suburb E property.
15. At about the same time, in January or February 2022, the parties agreed to a week about arrangement for the children, and as best as I can tell from the evidence, the applicant would live at the Suburb E property every other week to facilitate this arrangement.
16. Also at this time, the parties engaged legal representatives and had exchanges about their financial circumstances. The applicant says that the parties agreed that "post separation and for appropriate management of the business through which we derived income", namely R Pty Ltd, that they would each limit their wage from the business "to $1,000 gross per week". Perhaps this is consistent with what the applicant swore earlier in the same affidavit at paragraph 17 where he says the agreed wage was "$1,676 after tax per fortnight". Whatever the case, the applicant's evidence gives the impression that this agreement was reached after the engagement of lawyers in January 2022.
17. But perhaps his allegation is that the agreement was reached earlier than that because he says (at paragraph 55 of his affidavit of evidence-in-chief) that the respondent "subsequently [to the agreement concerning the drawings] in September 2021" transferred the amount of $17,000.00 from the business account to her own personal account. He does not say that the transfer was without his consent, but perhaps that is the inference I am expected to draw from his evidence. But it is not at all clear.
18. The respondent's case is that following separation she and the applicant continued to draw an income from the business. She does not say how much each was drawing. However, from January 2022 she says that the applicant restricted her access to the company's bank account and told her that each was to receive a fixed amount per fortnight by way of wages until to 30 June 2022. I accept this evidence because I think it is consistent with the applicant's evidence that he consulted lawyers in January 2022 and there was a change in the payment arrangements. It is likely that the limit to the parties' wages was agreed, because the respondent continued her role in the company until mid-2022 and so would have been able to access the company bank accounts and pay herself more had there been no such agreement in place.
19. The parties retained the Town F property. It comprises a number of lots of vacant land which the parties intended to develop. It remains owned by McNaulty 2 Pty Ltd as trustee for the McNaulty Unit Trust. The unit holders of the trust were the applicant and the respondent who each held 10 of the 20 units in the trust. Both parties were also directors of the trustee company. This, however, changed in circumstances to which I shall come later in these reasons.
20. In late January or early February 2022, the parties agreed to sell the Town F land. The respondent thought there was interest from prospective buyers who would pay $5m for the property. The respondent authorised the applicant to conduct negotiations with prospective buyers on certain conditions and also agreed to a sale by auction with a reserve of $4.9m.
21. It seems that at about this time the parties also had conversations about the future of R Pty Ltd. In correspondence from his solicitors to the solicitors for the respondent dated 17 February 2022, the applicant clearly outlined a plan for the orderly winding down of the company's business and the re-establishment of a business under his control.
22. On 18 February 2022 he caused S Pty Ltd to be incorporated. He did that so as to "be able to continue with my business obligations in New South Wales and so that I did not need to involve the co-operation of the Respondent as a director of [R Pty Ltd]". The applicant says that his purpose in doing this "was to separate pre and post contributions to the asset pool without involvement by the Respondent".
23. On 2 March 2022 the applicant's solicitors wrote to the respondent's solicitors suggesting that the applicant and the respondent had reached an agreement in principle that they intended to formalise by way of a binding financial agreement. In general terms it provided for a sale of the Town F property, a rearrangement of secured facilities in respect of the parties' debt and the repayment of certain debt following the sale of the subdivision. It also included provisions about the winding up of the business conducted by R Pty Ltd, the sale of the parties' Suburb AG property and the sale of the motor vessel.
24. By their letter in response dated 17 March 2022 the respondent's solicitors implicitly did not accept the proposition that the parties had agreed to resolve their outstanding issues in the way described in the applicant's solicitors' letter of 2 March 2022, although what they proposed was remarkably similar. The difference was a suggestion that a single expert needed to be appointed to undertake a valuation of R Pty Ltd.
25. An auction of the Town F property was scheduled for early April with a reserve agreed by the parties at $4.9m. The applicant had his doubts that this was realistic and thought a realistic price was "somewhere in the low to mid $4,000,000 range".
26. It is uncontroversial that the property was subsequently auctioned, but there were no registered bidders and the property was withdrawn from sale.
27. Further, as matters turned out, the applicant did not complete the purchase of the AF Street property which seems to have been due in April 2022. The respondent agreed for him to take up residence in the Suburb E property again. From July 2022 the parties lived in the Suburb E property, but separately. They were able to avoid each other by living in separate sections of the house when the other party was at home.
28. It seems to be the case that from as early as the beginning of April 2022 the applicant pursued a loan from an organisation called AH Company through the agency of one Mr JJ. The applicant says that the proposed loan was to provide funding to complete the subdivision of the Town F property "and to enable the terms of the Financial Agreement to be fulfilled". That is curious evidence given that the financial agreement had not then been agreed or signed. Nonetheless, it is also uncontroversial that on 21 April 2022, the respondent resigned as the secretary and as a director of McNaulty Pty Ltd. The transfer of her shares in the company to the applicant was also approved on that date. This is consistent with the agreement the parties struck for the applicant to retain the Town F property as later reflected in the parties' financial agreement.
29. By an email dated 11 May 2022 the applicant provided instructions to his solicitor about the terms of financial agreement proposed between he and the respondent. It is clear from that email that in return for the payment of $1.595 million to the respondent, the applicant wished to achieve:

(a) the retention of the Town F property with its potential for subdivision and all profit from that subdivision to the exclusion of the respondent; and

(b) the retention of DD Holdings Pty Ltd and any tax advantages or credits held by it to the exclusion of the respondent.

1. These matters appear to be consistent with the respondent's understanding of the agreement as sworn by her.
2. In May 2022, the respondent's partner, Mr C, purchased a property in City GG in the United States of America for $295,000USD. The respondent says that it was her intention to fund the purchase of that property using money that she anticipated she would receive from the applicant pursuant to the financial agreement that the parties were then negotiating but, because she was not residing in the United States of America nor a resident of that country, the property was purchased in Mr C's name.
3. On 18 May 2022 the applicant's solicitor sent to the respondent's solicitor a draft of a financial agreement. The applicant swears that this document was prepared on his instructions to reflect:

..what I wanted to be an interim arrangement which I had discussed with the respondent, namely that pending a division of our other property interests by any further agreement or court determination, that I receive [Town F] as mine, and the amount I pay to the respondent for the transfer to me of her interests, would remain as her money without further claims by either of us against the other.

1. On 24 May 2022 Mr JJ met with the applicant and the respondent. Mr JJ, through AH Company, intended to organise funds for the applicant to enable a payment to the respondent and the development of the Town F property. The applicant swears that Mr JJ took the parties through a "[AH Company] loan summary document" dated 17 May 2022. The document noted the Town F land value at $9.5 million and the applicant says that he expressed his belief that the value "should be $5 million for land value". In any event, the loan was subject to a valuation.
2. The applicant submits (written submissions para 41) that the evidence is that Mr JJ outlined to both parties at this meeting "the necessity for [Town F] to meet the parties' then expectations of value to enable the Husband to borrow against it to "put the financial agreement into practice". But that is not the evidence and I reject this submission. I do not accept that Mr JJ outlined to both parties at this meeting "the necessity for [Town F] to meet the parties' then expectations of value to enable the Husband to borrow against it...".
3. On 31 May 2022 and 1 June 2022 amendments to the draft financial agreement were proposed by the respondent and agreed by the applicant. The email correspondence passing from the applicant's solicitor to the respondent's solicitor makes it clear that the respondent wished for there to be an immediate part payment of $500,000. The email correspondence between the solicitors also makes clear that the parties had worked out a way in which the respondent could receive $500,000 quickly and then a subsequent payment of the balance ($1,095,000) due to her under the proposed financial agreement.
4. On 6 June 2022 the applicant and the respondent executed a financial agreement which purports to be entered into pursuant to s 90C of the Act.
5. The $500,000 that the respondent was anxious to receive was funded by a loan of $1,216,160 from one Mr HH to DD Holdings Pty Ltd organised through AH Company or Mr JJ. According to the respondent, in late May or early June 2022, the applicant told her that he needed to discharge the mortgage over the Town F property before he could pay her the funds to which she was to become entitled under the financial agreement. To do that DD Holdings Pty Ltd proposed to borrow $1,100,000 plus costs from Mr HH. Both the applicant and the respondent had to give personal guarantees for the loan. The respondent says that she needed money to complete the purchase of the City GG property and so she agreed. The motor vessel was used as security for the loan, as was the Town F property.
6. According to the applicant's evidence about this loan, he had discussions with the respondent "after separation" in which he informed her that "the company" needed additional cashflow for its work. He says that he proposed that they refinance the loan on the motor vessel (which was about $334,000) and increase the borrowings to $600,000. The applicant says that the respondent requested to have the loan increased by $500,000 "to have funds personally for her own use for which she would be liable".
7. I do not accept that either version given by the applicant or the respondent of this event is entirely accurate. I think it likely that the applicant organised for a loan to be obtained from Mr HH to assist him with his cash flow and in particular the new business he was establishing through S Pty Ltd. It is also likely that the respondent put pressure upon the applicant to receive the money that they had agreed she would receive because she had purchased the property in City GG and needed funds to settle that purchase. Consistently with the correspondence from the applicant's lawyers, the parties worked out a way in which the respondent could receive some of the funds due to her under the proposed financial agreement quickly by increasing the loan from Mr HH and making those increased borrowings available to her. I do not accept that the $500,000 paid to the respondent was a loan to her, or part of a loan to the company for which she was personally responsible to repay. I think it is far more likely, and I find, that it was a part payment to her of what was due to her under the financial agreement.
8. Whatever is the case, it is uncontroversial that pursuant to a loan agreement dated 6 June 2022 between Mr HH as lender, DD Holdings Pty Ltd as borrower and the applicant, respondent and McNaulty Pty Ltd as guarantors, Mr HH advanced $1,216,160 to DD Holdings Pty Ltd. According to the applicant's evidence, which I accept, on 7 June 2022, $659,341.04 was credited to the parties' joint NAB account. On the same day, the respondent transferred $500,000 to her personal NAB account. Of the balance of the loan, $335,058.96 was used to discharge an existing debt of DD Holdings Pty Ltd and about $270,000 was transferred to R Pty Ltd to facilitate cash flow for completion of its projects.
9. The respondent's evidence is that from mid to late June 2022 she followed up the applicant for the payment due to her under the financial agreement. The respondent says that the applicant continually promised to pay her the funds and never said to her that he would not be able to do so. Further, she swears that settlement of the purchase of the City GG property was extended to await payment by the applicant of the amount due to the respondent under the financial agreement, but it never came. She swears that she funded the purchase of the City GG property by a transfer of $297,000USD in July 2022. The delay, she says resulted in her incurring an additional $49,500 on the purchase. However, whilst I accept that settlement of this property might have been delayed, I do not accept that the reason for this falls at the feet of the applicant. The documentary evidence demonstrates that, having received $500,000 into her account on 7 June 2022, on 14 June 2022 the respondent transferred $294,147.65USD from her personal NAB account to a United States bank account. It seems then, that the respondent had the necessary funds to complete the purchase of the City GG property by no later than mid-June 2022. I acknowledge that there is no evidence about any other costs of that purchase that may have needed to be funded such as local duties or taxes, if any.
10. The respondent continued in her role with the parties' business until 30 June 2022 - for about a year after the parties' separation. At that point she ceased drawing a wage. The applicant continued to draw a wage and the business needed to fund a replacement for the respondent.
11. By the terms of the financial agreement, the respondent was required to transfer her interest in McNaulty Pty Ltd and the McNaulty Unit Trust to the applicant in return for the applicant paying her $1,595,000. The agreement provided for McNaulty Pty Ltd and the McNaulty Unit Trust and the payment to the respondent to be quarantined from any future application for property adjustment orders between the parties (e.g., see clauses 9.5 and 13 of the financial agreement).
12. It is uncontroversial that on a date which appears to be after 2 June 2022 the respondent transferred to the applicant her 10 units in the McNaulty Unit Trust.
13. On 25 July 2022 the respondent received $150,000 ostensibly from an entity associated with Mr JJ called AJ Pty Ltd. There is no evidence about this company or its status. The respondent says that she needed funds to assist her to finalise the purchase of the City GG property although why that was necessary is not clear having regard to the $500,000 that she received on 7 June 2022. She does swear that the applicant kept promising to pay her what was due under the financial agreement but did not do so and that put her in a difficult position.
14. The applicant says that he knew nothing about this loan and that the respondent organised it without reference to him. But it seems apparent from the face of the loan agreement annexed to the applicant's affidavit of evidence-in-chief that he witnessed the respondent's signature to the loan agreement and so, must have known about it. Moreover, it is readily apparent from the correspondence between Mr JJ and the applicant's solicitor (see annexure 25 to the applicant's affidavit of evidence-in-chief for example) that Mr JJ considered that he was dealing with the applicant in relation to this loan, rather than the respondent. That is inconsistent with the proposition that the applicant knew nothing about it.
15. Although it seems uncontroversial that the respondent received $150,000 from this loan (together with $5,000 that went towards the fees associated with the loan agreement), it is not signed by or on behalf of the lender.
16. The applicant submits (para 44 of the applicant's submissions) that the applicant "pledged the security of the [Town F] property, the very property the husband was relying on as security himself for the purpose of carrying out the terms of the agreement dated 6 June 2022". However, I do not accept this submission. The loan agreement is in evidence (annexure MRM6 to the applicant's trial affidavit). By the terms of that document, the respondent is primarily liable for the loan as the borrower. She also charges the first $155,000 plus interest of the funds she is to receive from the "[Town F] settlement". This is plainly a reference to the funds she is to receive from the applicant pursuant to the financial agreement in return for her interest in the Town F property. It gives rise to no security over that property, but only a charge over the funds she is due from the applicant.
17. Having regard to all of this evidence, I consider that the additional $150,000 apparently loaned from AJ Pty Ltd and given to the respondent should be considered as a payment by the applicant to the respondent under the financial agreement between them. Although according to the documents the borrower of those funds was the respondent, I am satisfied that the applicant knew about the advance and probably organised it as the respondent asserts. The correspondence from Mr JJ makes it clear that he thought that he was dealing with the applicant in relation to that advance.
18. On 31 July 2022, the deposit bond organised by the respondent for the purchase of the Suburb AE unit expired. She says that she did not have the financial means to pay the deposit. She had intended to pay the deposit using funds from the sale of the Suburb E property, but it had not sold. She also thought that she could use the funds that would be paid to her pursuant to the financial agreement but the applicant did not pay them. In the end, she did not replace the deposit guarantee bond or pay any monies toward the deposit of the AD Street property.
19. The applicant swears that on 4 August 2022 Mr JJ told him that the AH Company loan would not proceed "as proposed in terms by [AH Company]". To support his case, he relies upon an email sent on 4 August 2022 by Mr JJ to his solicitor. However, the email does not set out that AH Company would not proceed with the loan. Whilst it records that the valuation prepared in respect of the development was less than that anticipated by the applicant and others, the text of the email makes it clear that the loan was to proceed (see for example paragraphs A., B. and C.) To accommodate the change in the valuation of the Town F land and the impact that had upon the lending arrangements, Mr JJ recorded that the respondent had agreed in principle to take the balance of funds available from AH Company as a part payment towards the amount she was due under the financial agreement. He suggested that she had agreed to secure the balance of those funds by way of a second mortgage over the Town F property. However, the mortgage was never taken up and those arrangements do not seem to have been advanced.
20. According to a note on page 6 of Mr Box's report that is in evidence, on 13 September 2022 Mr HH assigned his interest in the loan agreement that he had with DD Holdings Pty Ltd to Mr JJ.
21. In November or December 2022 the applicant rented a residential property at Suburb J, New South Wales. He used this a base whilst he undertook a week about attendance in the Sydney area for work. He would return to the Suburb E property every other week.
22. The Suburb E property was contracted to be sold for the sum of $5.1m in November 2022. There were apparently two earlier offers of $6m for the property made in June 2022, but the parties could not agree between themselves to accept either of them.
23. While this was going on, the respondent had planned to take the children for a holiday to the United States. Although he had originally agreed to this (according to the respondent's evidence) the applicant subsequently changed his mind and, on 17 November 2022, instituted proceedings to prevent the children from leaving Australia. The respondent departed in late November 2022 for the United States without the children, intending, she says, to return in January. From this point, the children have lived with the applicant.
24. The applicant commenced the property adjustment aspect of these proceedings on 9 December 2022. The proceeding came before the court urgently in circumstances where settlement of the Suburb E property was looming and the parties could not agree about the disbursement of funds from the sale. The lender that provided the deposit bond for the applicant's proposed purchase of the AF Street property still had a caveat over the applicant's interest in the Suburb E property. It had to be released for the purposes of the settlement of the Suburb E contract. The parties fell into dispute about how the sum due to the caveator should be paid.
25. It is tolerably clear that the respondent took the view that the applicant was reckless either when he entered into the contract for AF Street or when he did not complete the purchase. Whatever the case, she seems to have contended that the applicant should bear the caveator's debt himself and while that could be paid out of the proceeds of the Suburb E property, she should receive the same sum from the settlement proceeds to balance the ledger, as it were. The applicant however would not agree.
26. On 9 December 2022 an order was made authorising the applicant to act for the respondent (to sign documents and give instructions etc) for the purposes of the sale of the Suburb E property. Importantly, and inconsistently with the applicant's evidence about how the payment to the applicant's creditor for the release of the AF Street deposit bond caveat was made, the court ordered that from the proceeds of sale, a sum sufficient to secure the release of the caveat be paid to the caveator. Notwithstanding this order, it seems uncontentious that the applicant used funds from S Pty Ltd to make this payment and it is reflected in his loan account with that entity.
27. In January 2023 the applicant brought an application for certain orders concerning decision making responsibility for the children. In response, the respondent sought her own parenting orders and, amongst other things, an order for the provision of $50,000 as an interim payment to allow her to fund her return to Australia (curiously, she must not have had a return ticket when she left in November 2022).
28. The Suburb E sale settled in December 2022. After final adjustments were made the balance received by the parties was around $2,119,300.00. It has been secured in an interest-bearing account and has been used for various payments since. After the sale, the motor vessel needed to be rehomed as it was moored at a jetty in the vicinity of the Suburb E property. It was moved to a commercial marina and the mooring costs were apparently met by R Pty Ltd.
29. In the meantime, from 8 December 2022 the applicant ceased acquiring any new business for R Pty Ltd. Then, on 13 December 2022, S Pty Ltd commenced its first contract. To achieve this the applicant did a number of things. He caused staff from R Pty Ltd, including their owed entitlements, to be "transferred over to [S Pty Ltd]". An amount of $153,000 was recorded and carried forward in the books of S Pty Ltd being the total of staff entitlements that S Pty Ltd took on from R Pty Ltd. The respondent says that $153,817.75 was transferred "from the NAB overdraft facility" in payment of these staff entitlements.
30. On the applicant's own evidence, he accepts that some clients of R Pty Ltd went over to S Pty Ltd, but without a shred of corroborative evidence asserts that "the loyalty with clients is to me personally, not some specific business entity". I do not accept that assertion without some corroborative evidence. The business clearly had other staff and it might have been the case that the loyalty was to the business because of the skills and ability of those other staff, and not the applicant. In any event, the respondent says, and I accept because it is consistent with the evidence of the forensic accounting expert Mr Joseph Box, that the majority of the client base of R Pty Ltd became clients of S Pty Ltd.
31. The applicant also disposed of some of the equipment owned by R Pty Ltd. He says that he obtained valuations for that equipment. Some was sold to S Pty Ltd, some to third parties and some is retained by R Pty Ltd. This occurred without consultation with the respondent. The applicant says that the sale proceeds were used by R Pty Ltd to pay down debt.
32. The respondent says that on 9 January 2023 she was not in a position to complete the purchase of the Suburb AE unit because she did not have any money. I accept that was most likely the case. The seller terminated the contact and indicated they would be pursuing her for damages, although she has received no demand to make good any losses.
33. In mid-2023, the applicant purchased real property at Suburb BB for $4m. The applicant borrowed $2.5 million of the purchase price from AH Company and the balance $1.5 million from S Pty Ltd. The applicant has maintained this property and as at the date of the hearing before me, the borrowings in respect of this property were not in default.
34. I have set out below the present position with respect to the Mr HH borrowings and the action taken against the motor vessel in exercise of the security granted over the vessel in respect of that loan.

1. Both parties accept that the agreement they signed on 6 June 2022 is a financial agreement for the purposes of the Act. The applicant does not argue that the financial agreement is not otherwise binding upon the parties for want of compliance with s 90G of the Act, but he claims that the agreement should be set aside.
2. The applicant was ordered to file a statement of claim setting out the basis upon which he said the agreement should be set aside. The statement of claim makes it clear that the only basis upon which he seeks to have the agreement set aside is that set out in s 90K(1)(c) of the Act, namely, that in the circumstances that have arisen since the agreement was made it is impracticable for the agreement to be carried out. The applicant bears the onus of establishing his case in that regard.
3. The phrase impracticable for the agreement to be carried out when used in s 90K(1)(c) (or its equivalents in the Act such as s 79A(1)(b)) has a settled meaning. It is not concerned with the outcome produced by carrying an agreement into effect. Nor is it concerned with whether an agreement should be carried out. Rather, impracticability is concerned with whether or not an agreement can be carried out: Sanger & Sanger (2011) FLC 93-484 at [86]-[95]. In that regard, the rules relating to the frustration of contracts have been seen as a useful guide to the interpretation of that phrase where it appears in the Act. Indeed, the applicant urges that I adopt the principles relating to the frustration of contracts as explained in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (1982) 149 CLR 337 at 357 and adopted and applied in Ooh Media Roadside Pty Ltd v Diamond Wheels Pty Ltd [2011] VSCA 116; (2011) 32 VR 255 at [70].
4. However, it needs to be firmly borne in mind that the court's task is to interpret and apply a provision of the Act, not the principles relating to the frustration of commercial contracts. As the Full Court of the Family Court of Australia observed in Cawthorn & Cawthorn (1998) FLC 92-805 at 85,060: "On a case-by-case basis, reliance upon authority relating to the contractual doctrine of frustration in its various facets may at times prove to be of assistance. In so doing however, care must be taken and it must remain at all times in the forefront of the Court's deliberations that the task before the Court is to interpret and administer a section of the Act." (approved in Sanger at [89]).
5. As to setting aside the financial agreement, the applicant's argument reduces to this: the valuation to be used to support the anticipated borrowings from AH Company was about $3m less than that expected by the applicant. Accordingly (although there is scant evidence of this) the amount available on loan from AH Company was reduced (although from what is not stated). Thus, the applicant submits that upon receipt of the valuation and given the parties' other debts, the agreement became impracticable to be performed "as there was no other source of funds" and it should be set aside. However, I reject this argument.
6. At its heart, performance of the financial agreement requires a transfer by the respondent of her relevant interests to the applicant in return for a payment by him to her for those interests.
7. The evidence does not demonstrate that the agreement cannot be carried out. Whilst the applicant argues that he was relying upon funds from AH Company to discharge the sum due to the respondent, that he was relying upon borrowed funds to do so merely demonstrates that the parties, and the applicant in particular, did not have the necessary liquid assets to enable the cash payment to the respondent. On any view of the evidence, they plainly had sufficient assets at their disposal for the respondent to receive the payment due under the financial agreement. In that sense, and as my findings as to the parties' assets and liabilities set out below demonstrate, nothing has changed.
8. To support his argument, the applicant submits that at the meeting at their home at Suburb E on 24 May 2022, "[Mr JJ] outlined to both parties ... the necessity for [Town F] to meet the parties' then expectations of value to enable the Husband to borrow against it to 'put the financial agreement into practice'". But the applicant's evidence does not support this submission. His evidence about this meeting is found at paragraphs 99 - 102 of his affidavit of evidence-in-chief. Nowhere in those paragraphs is there any evidence that would support this submission. At best, the applicant swears that "[Mr JJ] told the Respondent and I about the requirements of the loan was (sic) subject to a valuation and having an ABN in place for the borrowing entity. I agreed to refinancing [Town F] to enable a payout of the NAB debt". In my view this goes nowhere towards establishing the applicant's assertion to which I have just referred.
9. The applicant called no evidence from Mr JJ or AH Company. However, the email from Mr JJ to the applicant and his solicitor (amongst others) dated 4 August 2022 demonstrates that AH Company remained willing to advance funds to the applicant or his interests. It was willing to advance an amount sufficient to discharge the existing security over the property to NAB and to provide the applicant with capital, and to fund construction costs once work started on the subdivision. Further funds were said to be available for the "environmental credit scheme". The purpose of the financial agreement, namely that the applicant retain the Town F subdivision for his own purposes and the respondent receive a cash payment for her interest in it, could still be achieved.
10. In La Rocca & La Rocca (1991) FLC 92-222 Kay J drew a distinction between impracticability and enforcement in the context of an application to set aside property adjustment orders pursuant to s 79A(1)(b) of the Act. His Honour said (at 78,538):

My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the Court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.

In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell J. in Re Badische Co. Ltd. (1921) 2 Ch. 331 at 379, where his Honour said:

The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstances.

Now, in my view, what the appropriate application of s. 79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.

The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the Court property values may change, go up or down, business may flourish or not flourish, the vicissitudes of life may affect one of the parties.

In an appropriate case, such as the extreme circumstances described in Barder and Barder (1987) 2 All E.R. 440 in the House of Lords, where the mother killed herself and the children after the making of the order, then appeal out of time and fresh evidence is the appropriate answer. However the commercial failure of one of the parties post the making of the orders which will lead to the orders not being capable of being fully implemented does not, in my view, amount to a basis on which to set the order aside.

That situation leads to a problem with enforcement. It may be that the bankruptcy laws would have to take over, but it is not an appropriate basis for having the orders set aside and fresh orders made at the behest of the party who has suffered the financial embarrassment. There is no provision in the legislation to have matters looked at a second time if one of the parties suddenly becomes wealthy and, in my view, I do not see that the legislation can be appropriately read as applying when one of the parties becomes suddenly poor, in normal business circumstances.

1. These observations were approved in Cawthorn at 85,060 where the Full Court reiterated that the concept of impracticability contained in s 79A(1)(b) is quite different from problems of enforcement that may arise due to a party's insolvency. A circumstance such as bankruptcy "merely reflects the vicissitudes of life and is in harmony with the clean break principle enshrined in the Act."
2. The applicant seeks to draw support for his case from Gregory & Gregory [2014] FCCA 106 but the facts of that case distinguish it from the present. There, the deliberate act of one of the parties removed from the other party's reach the only available asset available for division pursuant to the parties' financial agreement. It was held that in those circumstances, the financial agreement between the parties should be set aside on the basis that it was impracticable. The present case arises in a very different factual context.
3. Whilst it may not suit the purposes of the applicant to carry out the terms of the financial agreement and it may have different consequences for him than he intended, that does not amount to impracticability for the purposes of s 90K(1)(c) of the Act. Nor do the circumstances described in the facts, as I have found them to be above, engage the principles relating to the frustration of contracts more generally.

The parties' assets, liabilities and financial resources

1. Both parties have furnished alternative balance sheets for which they contend. The respondent filed her written submissions first, on 20 August 2024, together with a balance sheet. The applicant filed his written submissions on 23 August 2024 and annexed to those submissions two alternative balance sheets to take account of the two alternatives open on his application to set aside the financial agreement. The respondent filed submissions in reply filed on 28 August 2024 and provided two further alternative balance sheets depending upon the fate of the application in relation to the financial agreement.
2. The balance sheets filed by the respondent on 20 August 2024 are both materially different to the balance sheet filed by her on 28 August 2024. There is no explanation in her submissions in reply for any of those changes. Her position is both confused and confusing.
3. The evidence of Mr Box demonstrates a significant level of borrowing and lending between the parties and the various entities under their control. Mr Box summarises those loans as follows:

1. S Pty Ltd is under the applicant's control and in the following table I have included it as one of his assets. The value I have found is the net value after deduction of the loan set out above. Otherwise, save for DD Holdings Pty Ltd, the parties positions are the same.
2. Neither party directly addressed me on how I should deal with the directors' loans in DD Holdings Pty Ltd. The applicant did not include them directly in his balance sheet, although he did include the total of the parties' combined loans (to and from various entities). There was no suggestion from him as to how I should deal with that net figure, however.
3. In the end, I have concluded that I should make no particular provision in the following tables for the parties' debts (to or from) DD Holdings Pty Ltd. I am comfortable taking that approach because no particular provision has been made in either parties' case about how that item matters should be managed.

1. Doing the best I can on the evidence, I find that the applicant has the following assets:

1. The values for all but the last two assets set out above come from the applicant's evidence (annexure 33 to his affidavit of evidence-in-chief). There was no challenge to those items or their values by the respondent in cross-examination or by her submissions. However, in her Outline of Case filed on 22 July 2024, the respondent seems to contend for an item she describes as "Jewellery (Water vessel 50%)" with a value of $384,000. Although it is not clear, I suspect it is a reference to the items set out above separately as "[Watch]" and "[Water vessel]". In any event, the amounts assigned by the applicant appear to be accepted by the respondent having regard to the balance sheets appended to her submissions in reply.
2. I have included the value of the applicant's shares in S Pty Ltd as assessed by the single expert Mr Joseph Box and as set out in exhibit 2. I have deducted from the value ascribed by Mr Box, the value of the loan owed by the applicant to the company so as to include his nett interest.
3. The applicant submits that "the value of [S Pty Ltd] does not equate to an ability to sell the shares in the private company, the earning of which are solely dependent upon the Husband". However, I do not accept this submission. According to Mr Box, much of the value of the shares in S Pty Ltd derives from the business it conducts. There is no evidence that suggests that a sale of the business could not be undertaken or would be difficult. The business and the company plainly have significant value, including the value of its plant and equipment. The applicant called no evidence to make out his submission that the company's shares or its business and other assets would not be saleable.
4. I have included the entire value of the McNaulty Unit Trust as an asset of the husband. The respondent has divested herself of her interest in the trust pursuant to the financial agreement. It is an interest beneficially owned by the applicant. Further, the value included is the nett value of the interest and leaves aside the loans from the parties to the trust or the trustee of the trust.
5. I find that the applicant has the following liabilities:

ATO Director's penalty - McNaulty 2 Family Trust GST

1. The first four liabilities set out above were not the subject of any challenge by the respondent and I accept that the applicant has those liabilities. They too, are taken from the applicant's list of assets and liabilities found at annexure 33 of his affidavit of evidence-in-chief.
2. In her latest iteration of the balance sheet, the respondent argues that the applicant should be personally liable for the accounting fees and director's penalties, but she takes no issue with the value of those liabilities. There is no evidence about these liabilities other than that they exist. In those circumstances, there is no basis upon which I could make any findings that the amounts should be somehow shared between the parties or treated as joint debts.
3. The applicant contends that the parties have debts to their self-managed superannuation fund. The only assets of the fund are said to be loans made to the applicant and the respondent. There is cash at bank of $909.00. There are external creditors totalling $44,248.00 with perhaps some provision for income tax of $18,036.00 although how that provision is constituted is not clear given that the fund only has $909.00 cash at bank.
4. Mr Box suggests that the parties' debts to the superannuation fund total $588,514.00 and he has allocated the debts equally between the parties. However, the parties' member interests only total $563,210.00. The only evidence about how these debts arose comes from the respondent who says that the parties drew on the self-managed superannuation fund to meet fit out costs in relation to the motor vessel. If that is so, and there is no evidence to the contrary, it is most likely that the borrower of the funds was DD Holdings Pty Ltd and the trustee of the self-managed superannuation fund has lost the fund's assets given the failure of DD Holdings Pty Ltd and the charter vessel enterprise. The trust deed establishing the self-managed superannuation fund is not before me, but it is likely I think, that in those circumstances, the parties' superannuation interests are nil, the trustee having lost the fund's assets through poor investment.
5. I do not accept that the parties are likely to have a liability to their self-managed superannuation fund in those circumstances. The table of liabilities for each of them as found by me reflects that view. As a corollary, I do not accept that they have any superannuation interests because the trustee of the fund has lost the assets of the fund. Consequently, I have not included any superannuation interests for either party.
6. I have recorded the applicant's debt to the respondent pursuant to the financial agreement. I am satisfied that the applicant has paid or caused to be paid $650,000.00 of the amount due under the agreement to the respondent using the funds raised by DD Holdings Pty Ltd from Mr HH and the loan from AJ Pty Ltd. While the applicant maintains that the respondent is responsible for repayment of that $500,000.00 to Mr HH (or as it turns out now, Mr JJ) and the $155,000.00 to AJ Pty Ltd I do not accept that argument. As to the first loan, the respondent was not a borrower, although she was a guarantor of the borrowing. As to the loan from AJ Pty Ltd, I consider that whilst the written agreement (unexecuted by the lender) sets out that the respondent was the lender, the funds were used to discharge part of the applicant's liability to the respondent. I have noted the sum of $945,000.00 as the present debt (leaving aside any interest owing to the respondent for late payment).
7. The applicant claims that his share of the Mr HH loan as at the date of the trial is $4,953,561.00. I do not accept that. Whilst it is uncontroversial that Mr HH advanced $1,126,000.00, just how much is left owing is entirely unclear. A little more detail about this loan is necessary.
8. The evidence demonstrates that the Mr HH loan was assigned from Mr HH to Mr JJ in September 2022. It is uncontentious that the loan has not been repaid in full. The evidence demonstrates various attempts to renegotiate its terms instigated by Mr JJ as assignee. These attempts seem to recognise that the terms of the loan (repayable within one month of the advance and interest of 10% per annum compounding monthly) are usury. Nonetheless, it is clear that Mr HH loan has not been fully repaid.
9. Mr JJ took steps to seize and sell the motor vessel in 2023 pursuant to the security that DD Holdings Pty Ltd had granted over the vessel when Mr HH made his advance. The vessel sold for $950,000.00. After commission, the nett proceeds of sale were $897,750.00.
10. At paragraph 163 of his trial affidavit, the applicant sets out his calculation of how much he says is owing on the Mr HH loan. The calculation is as follows:

(a) Mr HH Loan $ 1,216,160.00

(b) Accumulated Interest to 16/06/2024 $ 8,820,573.00

(c) Less Water vessel Sale net proceeds after commission -$ 897,750.00

(d) Balance $ 9,138,983.14

(e) One Half thereof $ 4,569,491.57

1. The basis for the accumulated interest seems to be calculations provided by Mr JJ to the applicant's solicitors by email on 8 March 2024 (annexure MRM-30 to the applicant's trial affidavit). However, as the single expert Mr Box recognises, these calculations are entirely erroneous.
2. The rate of interest according to the terms of the loan is 10% per annum on the balance outstanding, capitalised on a monthly basis. As Mr Box points out, the calculations prepared by Mr JJ are on the basis of 10% per month on the outstanding balance. Moreover, Mr JJ has calculated interest to 16 June 2024 (notwithstanding that his calculations seems to have been made in March 2024) and nowhere does it appear that the receipt of the nett proceeds of the vessel (received one year earlier) have been factored into those calculations. The net proceeds have simply been deducted from the balance as at 16 June 2024, which cannot be correct.
3. The calculation of what might be due under the loan is a relatively straightforward task. I have calculated the amount outstanding as at the date of the trial as $500,675.95. Particulars of the calculations are set out in the appendix to these reasons.
4. Two further observations need to be made about this debt. First, insofar as the applicant and the respondent are concerned, it is a contingent debt. The primary debtor is DD Holdings Pty Ltd. According to Mr Box, this company has no value and no assets beyond the directors' loans that Mr Box has adjusted as between the parties. Second, although both parties are guarantors of the company's debt, given the history of the debt and its repayment, it seems unlikely that the full amount I have assessed as might be owed will ever be called up. There is no evidence from Mr JJ who has shown a willingness to renegotiate the terms of the loans with the applicant from time to time. Be that as it may, I have recorded that each party is liable for the whole of the debt (as they may be under their guarantees) but I have no confidence that either will be called upon to pay anything further to Mr JJ.
5. Similarly, in respect of the AJ Pty Ltd loan, there seems to be a recognition that the interest rate as set out in the written loan document is usury and a much lower rate is more reasonable. Calculating the interest due under that advance on the same basis as the interest due under the Mr HH loan results in an outstanding liability of $187,597.29 as at the date of the trial.
6. The applicant includes in his balance sheets his unpaid legal costs. I have recorded them as part of his liabilities.
7. The applicant also includes in his balance sheet, perhaps as a liability (it is hard to tell), the value of the McNaulty 2 Family Trust. It is recorded by Mr Box as having a deficit of adjusted liabilities over adjusted assets of $260,532.00, that is to say, a negative value of $260,532.00. However, on the evidence there is no suggestion that either party will be responsible for any of the debts of the McNaulty 2 Family Trust, or that any demands have been made or are likely to be made in respect for the liabilities of the trustee of that trust. It has no nett value to the parties and I have not included it in the parties' assets and liabilities tables.
8. I have excluded the value of McNaulty 4 Unit Trust, McNaulty Holdings Pty Ltd, McNaulty 1 Family Trust on the basis that those values are de minimus.

1. I find that the respondent has the following assets:

Debt owing to Respondent by Applicant under Financial Agreement

1. I make the following observations about the respondent's assets as found by me.
2. I am satisfied on the evidence that the respondent is the beneficial owner, in its entirety of the City GG property. That was the purport of her written evidence. I reject her claim most recently made in her financial statement filed on 23 July 2024 that she only has a 50 % interest in that property.
3. The applicant argues that I should treat as assets of the respondent the $500,000.00 received by her from the motor vessel loan from Mr HH and the additional $155,000.00 she received as a loan from Mr JJ. I decline to do that for the following reasons. First, I have found that the money from the Mr HH loan was used by the respondent to fund the purchase of the City GG property. That property has been included in the assets set out above at its purchase price (the only evidence of value before me). Second, I have found that the $500,000.00 from the Mr HH loan was payment by the applicant to the respondent of part of her entitlement under the financial agreement. That is reflected in a decrease in his liability to her under that agreement. Third, the evidence from the respondent is that she borrowed form Mr JJ personally at the instigation of the applicant because he could not pay her what she was due under the financial agreement. Although she was the borrower of those funds according to the loan agreement (which is only signed by her and the applicant as the witness to her signature, and not by Mr JJ or the lender) the funds should be seen as a part payment (to the extent of $150,000.00) under the financial agreement. I have reduced the applicant's liability to the respondent under the financial agreement by that amount. I have no doubt that the funds have been expended by the respondent and do not presently exist.
4. The respondent argues that I should not include the balance of her bank accounts because they are the remnants of the partial property payments she received during the course of these proceedings. But that submission is not supported by any evidence from her and I reject it.
5. I find that the respondent has the following liabilities:

1. I make the following observations about these liabilities.
2. I have included the Mr HH loan as a contingent liability on the same basis that I included as a liability of the applicant.
3. I do not consider that the respondent has a liability to Mr JJ for the loan of $150,000.00 (plus $5,000.00 fees), or if she does, that it will ever be called up because the lender appears to be a company called AJ Pty Ltd. There is no evidence about or from this company and no evidence about the debt and the event which triggers the repayment of the loan has not come to pass. There is no evidence or what relationship, if any, Mr JJ has to AJ Pty Ltd.
4. Whilst there is no evidence about the NAB Account or the tax debt, those matters seem to be uncontentious.
5. In her latest balance sheet, the respondent includes the sum of $75,000.00 as "failed contract [AD Street] [Suburb AE]". The evidence does not support the inclusion of this contingent liability. On the evidence there has not been any demands for the respondent to make good any losses consequent upon her failure to complete this contract.

1. The only joint asset that the parties own is the funds standing to their credit in a solicitors' trust account totalling $1,120,578.00.
2. Although the applicant contends that the parties have a joint liability to a firm of accountants in the sum of $9,454.50, there is no evidence about that liability and the respondent does not accept it by including it in her balance sheet. I am not persuaded that the parties are jointly liable for the debt.

1. For the reasons I have already given, I do not consider that the parties have any superannuation interests of any value.

1. The applicant contends for a number of add-backs that should be held to the credit of the respondent.
2. The first concerns alleged misappropriated funds which the applicant submits total $217,194.68. The argument seems to be that the respondent, having access to the company and business banking accounts, undertook a number of transactions which the applicant says were not authorised by him or were not within the respondent's authority when she worked for the business. In this regard, the applicant relies on evidence from Anne-Marie Barley, accountant (affidavit filed on 8 July 2024) who deposes to having conducted a forensic examination of many documents provided by the applicant to her and from which she concludes:

1. Based on my investigations into the matters listed at paragraphs 2(a) to 2(c), it is my opinion that there is sufficient evidence to determine:

(a) With certainty that $40,048.98 in withdrawals made from AC [...91] during the relevant date period are misappropriated funds; > > (b) With a very high degree of certainty that $122,645.70 in withdrawals made from AC [...91] during the relevant date period are misappropriated funds; and > > (c) With a reasonable degree of certainty that $54,500.00 in withdrawals made from AC [...91] during the relevant date period are misappropriated funds.

3. There can be no doubt that Ms Barley's evidence is evidence of an expert witness. The content of her affidavit and her express reference to Divisions 7.1.4, and 7.1.5 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 in paragraph 5 thereof demonstrates that she considered that she was being engaged as an expert. The purpose of her evidence was to examine and express opinions about transfers of funds and whether those transfers represented "misappropriation". In those circumstances, I consider that rule 7.10(1) was engaged such that before tendering evidence form Ms Barley or adducing evidence from her, the applicant required the court's permission. As best as I can tell from the court record none was ever sought, nor obtained. Nonetheless, there was no objection to the reception of Ms Barley's evidence.
4. I do not accept Ms Barley's opinions. The difficulty with her evidence is that some basic assumptions that underlie it and the applicant's case on this aspect of the matter are not made out in the evidence. For example, the applicant gives no evidence to demonstrate that:

(a) he did not undertake these transactions, or any of them, himself;

(b) he did not expressly authorise the transactions, or any of them;

(c) he did not implicitly authorise the transactions, or any of them, for example by knowing that the respondent undertook the transactions; or

(d) that the value of the relevant transactions, or any of them, were not taken up in the accounting for the business or company and do not find expression in the balance of the director's loans or other drawings by the parties, from time to time.

1. Evidence about these matters is necessary to make out the case of "misappropriation", because absent that evidence it cannot be contended that the relevant transactions were unauthorised or dishonest. That is especially so where so much of the "misappropriated" funds ended up in the parties' joint accounts, accounts of the entities that either the applicant or the applicant and the respondent controlled, or credit cards used by one or either of them (and recorded in the management accounts as such). I reject Ms Barley's conclusions that because many transactions were recorded in the ways described by her in her report, the applicant did not know about them, authorise them or acquiesce in them being recorded in that way, and they therefore amount to "misappropriated funds" (a term that Ms Barley does not define in her opinion).
2. I reject the applicant's argument that I should add-back the "misappropriated funds" in the sum of $217,194.68.
3. As to the other add-backs, the applicant contends that "there should be 'add-backs' of funds included in the balance sheet namely the funds received by the Wife since separation", seemingly without any consideration of the basis upon which those funds were received or the use to which those funds were put by her. The amounts contended for are:

1. As to the first item, by an order made on 22 February 2023, it was provided:
   1. That by 4:00pm (AEST) today, 22 February 2023 the Applicant and Respondent provide an irrevocable authority to [O Lawyers] to pay $125,000.00 to the Respondent's lawyer's trust account towards the Respondent's legal costs and outlays in these proceedings and the Respondent's day to day living expenses, with the classification of the payment to be determined by the Trial Judge.
2. It is uncontentious that the respondent received those funds, but what became of them is not revealed by the evidence, although the terms of the order provides some clue. The day before the order was made, the respondent filed a costs notice setting out that her paid costs were $65,077.76. According to the notice those costs had been paid from loans. A further $14,300.00 to $25,000.00 was expected to be incurred up to and including an anticipated interim hearing. There were further estimates. Further, the order referred to the funds (or some of them) being used by the respondent for day to day living expenses. That they were so clearly labelled indicates a need for maintenance on the respondent's part at that time.
3. Doing the best I can on the evidence, and in the absence of anything but the most cursory of submissions on the point I think the best way to deal with these matters is to take up the respondent's receipt of this amount under s 75(2)(o) of the Act.
4. The reasons for judgment delivered by the senior judicial registrar who made the order on 15 March 2023 make it plain that he ordered that the respondent receive $315,000.00 from certain money held in trust for the parties, by way of partial property settlement. I will treat those funds as such. So too, the sum of $80,000.00 received pursuant to an order made on 12 June 2023, $150,000.00 received pursuant to an order made on 22 September 2023, and $250,000.00 received pursuant to an order made on 8 May 2024.
5. The applicant seeks that the respondent's paid costs be treated as "add-backs" but to do so would be to double count the amounts she received by way of partial property settlement, it not being suggested that she had any other source of funds from which to pay those costs.
6. The applicant concedes (by including them in the balance sheet for which he contends) that his own paid legal costs should be an "add-back". According to his submissions, they total $1,589,103.17.
7. In the balance sheet most recently delivered by the respondent on 28 August 2024, she did not contend for any "add-backs" that should be brought to account against the applicant.
8. However, I caused the parties to provide further written submissions on the question of add‑backs which were most helpful. However, the written submissions delivered by the respondent went far beyond the request I made of the parties for further assistance about the question of add-backs. Whilst I have considered her submissions I have given them little weight in the circumstances. Much of the matters raised in the submissions was not the subject of cross-examination by the respondent's counsel at the trial.

Summary - assets, liabilities and financial resources

1. Having regard to the above, I consider that the parties have the following assets amenable to a property adjustment order in this application:

Legal Fees paid & incurred to 19 May 2023 - per Costs Notice (W)

ATO Director's penalty - McNaulty 2 Family Trust (H)

ATO Director's penalty - McNaulty 2 Family Trust GST (H)

1. The lion's share of the property accumulated during the parties' relationship is in the hands of the applicant to the exclusion of the respondent. In those circumstances, given that they no longer have joint use of that property, I consider that it is just and equitable to make a property adjustment order.

1. The parties' submissions on contributions were brief.
2. At the commencement of their relationship both parties had property of minimal value.
3. However, both were gainfully employed and the evidence demonstrates that both worked hard in the respective fields of endeavour with good success.
4. The applicant argues that following separation, he incorporated S Pty Ltd "in order to continue operating and secure contracts postseparation from the Wife". He submits that in those circumstances she has made no contribution to "this entity whatsoever". However, I reject this submission. The respondent permitted the applicant to transition to the parties' business (as he described in his evidence) to his sole control without demur. She permitted him to encumber assets over which she had an obligation as a director (for example as a director of DD Holdings Pty Ltd) without demur.
5. Following their births, and until November 2022 the respondent undertook the lion's share of the parties' childcare responsibilities. Since that time the applicant, with the assistance of paid care, has undertaken that role.
6. The applicant argues that the respondent refused of a number of financial proposals resulting in financial loss to the parties, but I do not accept that characterisation of the parties' dealings. He points to the failure to sell the Town F land by auction but there is no evidence that any contract prior to that would have come to fruition.
7. The applicant submits that the respondent should be held accountable for her conduct in failing to accept an offer to reduce the interest rates on both the Mr HH Loan and the AJ Pty Ltd Loan, from "10% compounded monthly to 3.5% compounded monthly, thus resulting in the enormous debt according to the default notice". I have dealt with this above. I do not consider that there are enormous debts owing to either of these entities as contended for by the applicant.
8. The applicant submitted that to the date of separation the contributions of the parties both financial and non-financial to the acquisition, conservation and improvement of property including non-financial contributions to the welfare of the family, should be assessed as equal. So too, the respondent.
9. The applicant argues that post-separation, however, "virtually all the contributions, financial, direct and indirect" were made by him. I do not accept this submission. Whilst I accept that he has made a larger contribution than the respondent, it is not accurate to say that she has made no contribution.
10. The applicant argues that the respondent was responsible for losses that came about because she did not accept a renegotiation of the Mr HH loan terms or the AJ Pty Ltd loan terms, but for the reasons I have set out already, I reject that argument.
11. Further, he argues that the respondent was responsible for a loss on the sale of the motor vessel. There was an offer to purchase the vessel at $1,000,000.00 which according to the applicant, after commission would have netted the company $987,000.00. As it was the vessel was sold for $950,000.00 and after commission netted DD Holdings Pty Ltd $897,750.00. Why the commission on the sale at $1,000,000.00 would be significantly less than the commission on a sale at $950,000.00 was not explained. That requires explanation especially given that it was the same broker in both cases.
12. On the other side of the ledger, the respondent argues that the applicant was responsible for the gross over capitalisation of the vessel. The ultimate sale price did not reflect the many millions of dollars contributed to the fit out of the vessel at the applicant's insistence.
13. I have taken these arguments into account but do not consider that either carry any particular weight.

Conclusion - sections 79(4)(a), 79(4)(b) and 79(4)(c)

1. Overall, I accept that the applicant has made a greater contribution to the parties' assets set out in the table of assets and liabilities for distribution in these proceedings set out above. His contribution to the welfare of the family following separation is also greater than that of the respondent.
2. In my view, the parties' contributions ought to be assessed at 54% to the applicant and 46% to the respondent - or a differential of 8% of the nett property, namely a little over $700,000.00. This would mean a division of the parties' divisible property of $4,928,021.90 for the applicant and the balance of $4,197,944.58 for the respondent.

Sections 79(4)(d), 79(4)(e), 79(4)(f) and 79(4)(g)

1. The applicant proposes orders that would see that he retains the income producing assets available for distribution. The respondent does not seem to seek orders that would upset that position. I say "seem" because the respondent has not furnished the court with any minute of the orders that she seeks. I have however, had regard to her amended response filed on 28 April 2023 which claims orders consistent with that supposition.
2. The applicant is 51 years old and the respondent is 54 years old. There is no evidence that either have any health concerns.
3. The applicant continues in his business I have described above. It returns a good income as evidenced by Exhibits 2 and 3. Although the applicant does not swear to his income, he swears to annual expenses (including much discretionary expenditure) of $783,512.00. Further annexure MRM-34 to the applicant affidavit of evidence-in-chief shows the applicant's "family and business expenses" incurred and paid by the applicant without assistance from the respondent for the period 31 December 2021 to 8 March 2024. Over that period he had family expenses of $346,530.54 and business expenses of $1,425,783.88 that he paid without assistance from the respondent. The business had income, it seems, over the same period of $2,963,281.90.
4. The respondent, I accept has an earning capacity, but on the evidence it is impossible to quantify. Her evidence is that she presently has no income. What is certain, I am satisfied, is that it is nowhere near the earning capacity of the applicant. The respondent has been out of the open workforce for many years although worked in a significant capacity for the parties' business until the end of June 2022. There is no evidence of her employment opportunities in the United States. The respondent has remarried in the United States. Her husband has an income of $1,418 (presumably USD) per week.
5. The parenting orders made in March 2024 provide for the children to live with the applicant in Australia. They spend holiday time with the respondent. I accept the applicant's submission that apart from the time that the children spend with the respondent over holiday times, he will care for them without any financial support from the respondent. I accept that this will be a financial obligation upon the applicant for at least the next six years.
6. I take into account pursuant to s 75(2)(o) that the respondent has received a lump sum by way of an order made on 22 February 2023. I also take into account that she has had the use of other funds that she has accessed from the parties' assets from time to time.
7. The financial agreement between the parties provides for the parties to have their entitlements set out in that document quarantined from any property adjustment. The terms of the document do not go so far as to suggest that the fact that the parties hold the property the subject of the agreement in accordance with it should not be taken into account. In that respect, I take into account that the applicant holds the McNaulty 4 Unit Trust and the respondent has received $650,000.00 due to her under that agreement. I take into account that there is a debt due to her from the applicant under the financial agreement of $945,000.00.
8. I have also taken into account that the applicant should be responsible for the loans from Mr HH and AJ Pty Ltd but that there is some real doubt about whether he will ever be called upon to make any further payments in respect of them. Perhaps he will, but as I have set out above, on any view his liability will be nowhere near that claimed by him.
9. The applicant submits that that an appropriate adjustment under these subsections of the Act (and specifically for s 75(2) of the Act) is 10% or about $910,000 in his favour. The respondent makes no specific submission about either the appropriate contribution-based assessment or any adjustment to the contribution-based assessment for the matter arising under s 79(4)(d) ‑ (g) of the Act.
10. Balancing all of these matters against each other, I accept that an adjustment of $910,000 to the parties' contribution-based entitlement is appropriate to take into account these matters. The applicant will bear the responsibility for the children financially and in other non-financial ways. Whilst he has a greater earning capacity than the respondent, he also bears the risks associated with the business and the responsibility for the Mr HH and AJ Pty Ltd loans if they ever come home to roost.
11. Taking that adjustment into account, the respondent's entitlement is $3,287,944.58 and the applicant is entitled to the balance of $5,838,021.90.

1. The orders sought by each party will see the applicant retain the parties' property in specie and there be a cash payment to the respondent. The orders sought by the applicant are set out in his amended case outline filed on 31 July 2024 and supplemented by a document handed up in the course of the trial. Those sought by the respondent are set out in her case outline filed on 22 July 2024.
2. Leaving aside the liability for the Mr HH loan, which I consider should be borne by the applicant, the respondent has the following divisible property:

ATO Director's penalty - McNaulty 2 Family Trust GST (H)

1. To receive her entitlement, the respondent must receive a further $1,264,425.73. The respondent should receive all of the funds in the O Lawyers trust account. That will deliver to her $560,289.00. The balance due will be subject to a cash payment by the applicant to her in the sum of $704,136.73. Whilst on its face, the applicant has no ready source of liquid funds from which he might make this payment or make payment of the amount due under the financial agreement, as is apparent from the table above, he has sufficient assets from which to do so.
2. Notionally, the parties have interests in their superannuation fund, but the interests are illusory. There is no evidence as to the most effective way to wind up the fund, but it seems to me that a superannuation split of the respondent's notional interest to him will be the most effective way, but it should not be seen as delivering to the applicant, nor creating on the part of the respondent, any tangible asset or imposing any liability upon her to make good her the amount identified by Mr Box as owing to the fund.
3. Otherwise the applicant should retain all of the parties' corporate and trust interests as he proposes.
4. There will be orders accordingly.

I certify that the preceding one hundred and eighty-nine (189) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jarrett.

Appendix - Interest calculations on loan from Mr HH