BLM v RWS[2006] QSC 139

SUPREME COURT OF QUEENSLAND

1. MACKENZIE J:  These are proceedings under Part 19 of the Property Law Act 1974 (Qld). The claim was for a property adjustment order under which the respondent would pay the plaintiff 60% of the total net value of the partnership business, a general store, and the real property on which it was situated after payment of all debts including payout of the mortgage to the National Australia Bank (NAB).  The applicant also sought to retain all of her interest in and sole possession of premises in which she was living at the time of the application.  However, those premises have since been sold by her for reasons to be explained later. 

History of the relationship

2. There is no dispute that the parties lived in a de facto relationship within the definition of s 32DA of the Acts Interpretation Act 1954 (Qld) and s 260 of the Property Law Act.  I accept that it began in January 1998.  There was one period of separation which commenced in January 2000 but they reconciled and resumed the relationship later that year.  The applicant says it resumed in June 2000; the respondent says September.  Since police attended an incident at the unit on 19 August 2000 and because the applicant links her return partly to the end of a six month lease of the premises she lived in after her departure, her recollection seems more accurate.  There may also have been brief separations but they are of no consequence in resolving the proceedings.   The relationship ended on 2 June 2002.  It spanned a period of a little less than four and a half years, with actual cohabitation of just under four years.

3. To provide a context for considering the issues involved, it is necessary to refer to a number of factual matters. The applicant was born on 14 May 1963 and the respondent on 4 September 1953. They were acquaintances for some years before the relationship began. At the time the relationship began, the applicant was managing a shop. He was working as a sales and marketing representative for a juice company. In about mid 1998, the juice company went into administration and that employment came to an end.

4. The applicant continued working for some time after the relationship began. According to her, she worked until late in her pregnancy, until about March 1999, although the respondent’s affidavit suggests that she finished working about the same time as his employment finished. He fixed the time at which she ceased paid work by reference to imposition of a period of community service on her for social security offences in respect of overpayments made to her from October 1994 until March 1998. The community service order was made on 4 September 1998. The respondent’s version gains support from the history given to Dr Chittenden, a psychiatrist, who records that the applicant said she began her community service immediately and that she had stopped work early in her pregnancy. In this instance, it is probable that the respondent’s evidence is reliable.

5. The child of that pregnancy, B, was born on 13 April 1999. A second child, H, was born on 31 August 2001. The applicant said she earned about $500 a week in the job, which she contributed to the upkeep of the household and maintenance of the relationship. While it is not entirely clear whether all her money went into common funds, it is clear she contributed sums for groceries and other necessaries and for school expenses for her son, a teenager who was not a child of the relationship. According to her, the respondent paid outgoings for the unit and utilities from his cheque account. Her contribution must be viewed in conjunction with the evidence that as a result of the social security offences she had a debt to Centrelink which she says was $9,000 at the time the de facto relationship commenced. She said she paid this off from her account into which endowment for her son was paid. She also had a personal loan of which about $8000 remained owing, in connection with purchase of a motor vehicle. At that time she had no credit card. She had no assets apart from the car, valued at $12,500 at the time the relationship began and about $7,500 at time her statement of financial circumstances was made, and furniture and personal effects valued at $5,000. She had also received payment of $10,000 damages, during the course of the relationship following a fall on a set of stairs which was common property at the premises where they lived when B was about four months old. She said the amount left after costs was spent on things they needed for the unit and bills. After she left the relationship, she sold the car and acquired a credit card debt of $8000. She said that the respondent was working from home, trying to get the beverage business established and was on a Newstart allowance.

6. According to the respondent, at the time the de facto relationship began, he owned a unit in a high rise at Surfers Paradise purchased in 1998 for about $220,000. He said that there was a mortgage of $180,000 on it. The unit was sold in October 2001 for $155,000 because, he said, the bank would not let him refinance. He also had a unit elsewhere at the Gold Coast which became the matrimonial home, purchased in 1997 for about $287,000. This was sold in July 2001 for $325,000 representing about $316,000 net. He had a Honda motor vehicle purchased new for about $39,000. This was sold in 2001 for $25,500. He also had savings of $15,000 to $20,000 and furniture and personal possessions.

7. The significance of the disposals of property in 2001 is that on 27 November 2001 the purchase of the general store in a country town for $520,000 was completed. The respondent had aspired to running a cash business. According to the applicant, he had a hotel under consideration. Having decided not to proceed with that, it appears he became interested in the general store. There is evidence that he and the applicant visited the locality in that connection prior to the purchase. According to the applicant, the respondent surprised her, while she was in hospital after giving birth to H, with the news that he was buying it. The purchase, in joint names, was, he said, financed by the sale of the high rise unit and the matrimonial unit and by means of a $300,000 loan. (This loan was taken out in the parties’ joint names). The proceeds of the sale of the Honda were, he deposed in his affidavit, retained for use for operating expenses of the business. More will be said about financial matters later.

8. There was a suggestion, denied by the applicant, that she would not have gone to the country town if the business was not put in joint names. However that may be, I am satisfied that the enterprise was purchased in joint names as a business arrangement with intended benefits to both parties. The liquor licence was placed in the applicant’s name. A reason advanced for doing so was that the respondent apprehended that a minor firearms conviction or a domestic violence order might preclude him from holding it. When she left it was found that there was no such impediment.

9. The applicant said she believed from conversations with the respondent that he had an interest as shareholder with an associate, Mr M, in a company distributing sports drinks, an interest in a business selling books of restaurant vouchers and, with Mr M, an interest in a business selling dog food to stores. In his affidavit in response, the respondent said he did not have any interest in the dog food business and that he had attempted to establish the restaurant voucher business but it had failed. With respect to the sports beverage business, he said it had sold drinks to retail outlets but they had to be recalled. The label was sold to Coca Cola for $10,000 in 1999, with the money being reinvested in the business. He said he disposed of his shares in 1999 but did not realise anything from the sale. He said his employment with the juice company realised about $500 per week plus car expenses.

Approach to credibility generally

10. In cases of this kind, it is not uncommon that each party has a subjective perception of what happened during the relationship which, to them, is the truth. Sometimes, where there is objective evidence to compare with those versions, it proves to be the case that one or both subjective perceptions are flawed. That state of honest but skewed perception is not to be confused with instances where the witness’ evidence proves unreliable for other reasons. There is a good deal of the latter in this case. The credibility of each party has to be approached with caution for that reason. More specific analysis of credibility will occur in relation to particular subjects later in the reasons.

Domestic violence allegations

11. It is necessary to set out in some detail the allegations concerning the nature of the relationship between the parties and responses to them, since it is one of the applicant’s submissions that the infliction of domestic violence leads to an enhancement of the property adjustment in favour of the victim (Kennon v Kennon (1997) 22 Fam LR 1).

12. The applicant’s son of a previous relationship was about 13 years of age when his mother moved into the matrimonial unit with the respondent. He and the applicant’s mother also took up residence there. After a period of time, before the parties’ first child was born, she moved out. Then, according to the applicant and her son, on about 28 August 1999, after an altercation between the respondent and the applicant in which the son intervened, the son was punched in the mouth. As a result of that he left the matrimonial premises permanently and began to live with his grandmother who gave evidence that she saw injuries consistent with that account on his arrival.

13. The applicant complained of physical ill treatment of her and B during the relationship. The respondent denied categorically that he had ever assaulted her or the child (except for minor parental discipline). The first occasion complained of was in November 1998, while she was pregnant with B. It was said to have been precipitated by news that the respondent’s mother had fallen ill, and resulted in verbal abuse, pushing and shoving, attacking her throat, forcing her on to a bed by using his knee and grabbing her by the hair and shaking her head. According to the complainant, assaults and abuse of a similar level were frequent during the succeeding period. She said that on some occasions, she was punched, kicked in the shins or thrown or pushed into furniture. The verbal abuse included belittling and demeaning remarks. She said that on one occasion in May 1999, she took refuge overnight with the respondent’s mother. She said that on occasions she left the respondent and went to the police which resulted in domestic violence orders being taken out. Each time she was persuaded to come back by the respondent. It was not suggested that these periods were of significant duration. This phase ended when she separated from him in January 2000 until about June of that year. According to the applicant’s evidence, by that stage, B was beginning to react adversely to what was going on around her.

14. The applicant said that the decision to return to him was influenced by his promises not to hurt her again and the expiry of the lease on the premises to which she had moved. They resumed sexual relations which resulted in her becoming pregnant with H. Although there were occasional arguments, there was no resumption of violence during the pregnancy. After the birth, she was told by the respondent that he had decided to buy the general store. She was not happy since it meant cutting ties on the Gold Coast and she was not enamoured of the idea of country living. They moved there in November 2001, and lived in a house that was separate from the shop. According to the applicant, the physical and mental abuse resumed quickly. What she had described as controlling behaviour that had occurred previously became more pronounced. B appeared to be a source of irritation to him and, according to the applicant, he inflicted excessive punishment on her.

15. In respect of the period when the applicant’s son and mother were living at the unit, there is evidence of a general sort of arguments occurring between the applicant and the respondent. The son gave evidence of the respondent becoming “controlling” soon after they moved in. It is probably a matter of perception whether what happened was imposing rules of the household on him which he resented, or conduct demonstrating that the respondent was a “control freak”, as the witness described it. The witness’ perception is clearly that it was the latter. He said that, after he left, his mother visited him and her mother, often upset. He saw bruises and marks on her arms, face and neck on occasions.

16. He also gave evidence that the applicant verbally demeaned him. He gave evidence that he saw the respondent frequently pushing the applicant around, and grabbing her by the neck. He said that after B was born, the behaviour was worse. The incident which caused him to permanently leave the residence and reside with his grandmother was recounted.

17. The applicant’s mother said that when she lived with the parties, she heard the respondent abusing the applicant and her son. She moved out in the hope it would give them space to sort out their problems. During the first pregnancy, and later, when the applicant visited her she saw bruises on her arms. She said that on one occasion when she was visiting the matrimonial unit, she heard, from the verandah, the respondent abusing the applicant and her screaming. She heard a scuffle in the bedroom and the respondent shouting, after which the applicant emerged crying and looking frightened.

18. There was also evidence from Mr McG, a security officer and friend of the applicant, who later assisted her to finally leave the relationship. He gave evidence of receiving a phone call from the applicant while she was living at the matrimonial unit, as a result of which he went to the unit. He said that, having gained entry to the unit block, he heard the applicant and respondent yelling at one another. When he was let in, he saw a red mark on the applicant’s cheek. He said that he asked the respondent what was going on and was told that it was “just an argument between that stupid bitch and myself…over nothing”. He was cross-examined about the plausibility of his story that he was able to be in a position to hear the argument. The evidence of the alleged conversation with the respondent was not specifically challenged. However that presumably was implicit in the challenge made to his opportunity to hear the conversation.

19. With regard to Mr McG’s affidavit, I have not had regard to the large proportion of it that is hearsay, opinion and irrelevant evidence. Some of it could not, on any view of the law of evidence, have been admissible. Some is so remote that it is open to suspicion that it was included merely to be inflammatory. The legal representatives of a party should not allow such material to remain in the affidavit, even if the information is provided by a witness. Mr McG displayed a very negative attitude towards the respondent and was well disposed towards the applicant. Having said that, however, Mr McG’s admissible evidence was limited in its scope. On balance I am prepared to accept that what he described on this occasion occurred.

20. In his affidavits, the respondent essentially denied any physical mistreatment or verbal abuse of the applicant. In his oral evidence he was asked about each of the broad categories of assaults alleged against him, and denied that they had ever happened. In his affidavits, he denied that most of the incidents alleged by the respondent had happened at all, and gave a different account, denying the role attributed to him and suggesting that the applicant was the cause of any discord, when there was an identifiable occasion referred to. For example, with respect to the allegation about the applicant leaving and going to the police and getting domestic violence orders, he denied finding out where she was and persuading her, by apologies and promises, to come back. He said one order was obtained following an occasion when the applicant was upset, and, believing he was going to leave with B, called the police. He said the order was made by consent and without admissions. He denied the allegations about B categorically; the tenor of his evidence was that he had a caring non-violent parental relationship with her.

21. I am satisfied that their relationship was volatile at times. In reaching that conclusion, I have excluded from consideration the considerable body of hearsay evidence in this regard including evidence of what was said in telephone calls by the applicant. The applicant’s counsel submitted that these were res gestae evidence.  I am satisfied that it has not been established that any instance falls within that principle.  They are narrations after the events to which they relate. There is no evidence that they were sufficiently contemporaneous to qualify as res gestae (Adelaide Chemical & Fertiliser Company Ltd v Carlyle (1940) 64 CLR 514).  I have also not admitted evidence of what the applicant said to others about being assaulted and abused on the basis that it was admissible to rebut an allegation of recent fabrication. The submission that it was admissible merely on the basis that it had been put to the applicant that she had falsely accused the respondent of that behaviour falls well short of a basis for admitting the evidence under that rule (Nominal Defendant v Clements (1960) 104 CLR 476).

22. One other matter that involved an issue of admissibility but, more importantly, impinges on the respondent’s conduct during the relationship must be specifically addressed. There was an allegation that in November 2003, the respondent sexually interfered with B, who was then four years seven months old. He was, on the basis of a complaint made by the applicant, arrested and subsequently faced committal proceedings in which the Magistrate dismissed the charge. One of the difficulties was that the child had not mentioned the alleged assault to her mother until five days after the occasion when the respondent had visited and had any time alone with the child. On a later visit, there was no opportunity, according to the applicant, for the offence to have occurred. This led to an inconsistency between the evidence of the only opportunity to commit the offence and the evidence of a medical practitioner concerning the age of marks that may or may not have been consistent with digital penetration. Because of her age, the evidence of the child was also unsatisfactory. In addition, she said things that suggested that she had had her memory refreshed shortly before giving evidence. The Magistrate described the case as “more than vague, weak or tenuous”. It was concluded that there was insufficient evidence to commit the applicant for trial on any charge. I do not doubt, having read the evidence, that the applicant believed that the child was making a complaint of sexual interference. However, even on the civil standard, on the evidence before me, the description of the case by the Magistrate still holds.

23. It was submitted that evidence concerning the allegation should be excluded entirely since the applicant had been discharged in the Magistrates Court. Section 104(2) of the Justices Act (1886) Qld provides that when, on an examination of witnesses, all the evidence to be offered on the part of the prosecution has been adduced and the evidence is not sufficient to put the defendant upon trial, the Magistrate is to order the defendant to be discharged as to the charge.  The argument in favour of exclusion was based on abuse of process. Cases relied on by Mr O'Neill for the principle that a collateral attack on a conviction or an acquittal in subsequent proceedings may be stayed as an abuse of process (Hunter v Chief Constable of West Midland Police (1981) 3 WLR 906; Reichel v McGrath (1889) 14 App Cas 665), are of no application to a committal proceeding, which is an enquiry whether there is sufficient evidence to commit for trial. In my view, discharge under s 104 is not in the nature of an acquittal.  In the end, I am satisfied the evidence was admissible, but is of such a nature that no adverse finding against the respondent can be made in respect of the allegations. 

24. It should also be noted that, according to the applicant, in May 2002, when B was just over three years old, the child, who had been wearing togs, came running back naked from swimming on a public beach with the respondent and complained that he had taken off her togs and touched her genitals. According to the applicant, he explained that he had been trying to remove sand from that area. According to the applicant’s (and the respondent’s) evidence, there were other people in the vicinity at the time. The applicant’s version was that the child had taken off her togs in view of other people. He tried to put a towel around her but she ran off to her mother. He collected the towels and boogie boards and followed her back. No complaint was made to the police. The difficulty with alleging, on this evidence, a viable case of unlawful molestation is obvious.

Domestic violence - conclusion

25. I have had regard to the possibility that, in this kind of case, fabrication of allegations against the other party is not beyond human experience and that the direct evidence of domestic violence comes from witnesses who are associated with the applicant. I have had regard to the applicant’s conviction for social security offences of which knowingly receiving payments to which she was not entitled was an element and that the conduct occurred over a substantial period, and the probability that she was complicit in making a finance application that contained false information, of which more will be said later. I have taken into account the attack made on the character of the applicant’s son. I have also taken into account that the respondent, through self interest, displayed a reluctance to be frank about the extent of his assets, and his apparent disregard of his taxation obligations and of his obligation to be accurate in his affidavits.

26. Even limiting myself to the admissible evidence, and notwithstanding the denials of the respondent, I am satisfied that there was physical violence and verbal abuse inflicted on the applicant by the respondent. From my observations of the parties, I am inclined to conclude that the combination of their personalities was a factor that may have exacerbated the situation. The extent of the actual physical violence is difficult to gauge. Certainly, there is no evidence that serious injuries were inflicted. Nevertheless, there is sufficient evidence to satisfy me that force, sufficient to cause the bruising observed by the applicant’s mother and son, was used from time to time. I am satisfied that there was a significant level of mental abuse. The findings about violence and abuse accord with the evidence from a psychiatrist, Dr Chittenden, to the effect that the applicant displays “battered woman” characteristics. As she said, “battered woman syndrome” is a collection of signs and symptoms rather than a psychiatric diagnosis. Physical abuse is a common factor but constant verbal abuse and demeaning and denigrating remarks can cause it without physical violence. Typically the woman is persuaded to enter the relationship by a person who appears charming but after a period the abusive behaviour commences. Women involved in that situation typically experience difficulty in leaving the relationship. They rarely openly reveal the nature of the problem to a medical practitioner unless they have real trust in the doctor notwithstanding that they may display signs of injury caused by physical abuse.

27. Evidence was put in, in the form of a police report, that police attended the matrimonial unit in connection with the applicant removing belongings on 29 January 2000. The report continues that after the police had departed there was a complaint that the respondent had become aggressive and abusive towards the applicant by yelling at her in relation to the ownership of property and that he had pushed her three or four times away from the phone she was trying to reach. The report continues that as there were no independent witnesses, no bodily injuries and no damage to property, the complaint could not be substantiated. I do not intend to place any significance on that report.

28. However on 19 August 2000, a 000 call which disclosed “verbal fighting in the background” was made. Police attended the unit where the applicant stated an argument had erupted and extended to hair pulling, hands around her neck and eye gouging. The respondent stated the argument concerned the complainant stating she was taking her daughter and leaving. Another police document relating to this incident records that the applicant stated the respondent pulled her by the hair from one room to another, gouged her eyes and slapped her across the right side of the face. The respondent denied any violence occurred. It records that the police located hair. It was disputed whether it was pulled from the applicant’s head by the respondent (as she alleges) or whether she removed it from a hair brush in an attempt to set him up (as he alleges). It is not possible, given my views about credibility, to resolve the truthfulness of those accounts. However it can be said that this body of evidence shows that there was an argument on that day, which resulted in police being called.

29. Evidence was also called from Dr Seeney, a general practitioner, who saw the applicant on 8 June 1999, which was about 3 months after B’s birth. The notes record “anxious and depressed”. Dr Seeney prescribed an antidepressant and referred the applicant to Dr Murphy, a psychiatrist. Dr Seeney’s notes and his evidence contain no further explanation of the reason for the condition. Dr Murphy’s notes of the subjects covered do not refer to domestic violence. I am not prepared to draw any inference of the cause of the condition from that particular evidence. However on 10 February 2000, shortly after she had moved out, Dr Seeney records in his notes that the applicant said she was having domestic violence counselling and he had a long discussion about her domestic situation. He was not cross-examined about that entry. In its uncontradicted state, it is evidence that she was speaking of domestic violence at that stage. However as Mr O'Neill pointed out there is no record of any physical injuries in the medical record.

30. At most, the evidence accepted in the paragraphs above tends to provide slight support for the other evidence, which I accept, pointing to domestic violence in the course of the relationship.

Property Law Act requirements

31. The court has jurisdiction to declare any title or rights a de facto partner or another party to the proceeding has in property and to make orders to give effect to such a declaration (s 280, 281 Property Law Act).  The court also has power to adjust property interests.  Section 282(1) declares that the purpose is to ensure a just and equitable property distribution at the end of a de facto relationship.  That purpose is to be achieved by providing de facto partners who satisfy the requirements in subdivision 2 of Division 4 of Part 19 with particular property rights and allowing applications for an adjustment of interests in the property (Section 282(2).  In making a property adjustment order, the court may make any order it considers just and equitable about the property of either or both of the de facto partners adjusting the interests of the partners or a child of the de facto partners in the property.  In deciding what is just and equitable, the court must consider the matters mentioned in subdivision 3 (s 286). 

32. Section 289 provides that a party to a proceeding for a property adjustment order must disclose the party’s financial circumstances in the way prescribed by the rules or a practice direction. A court may make a property adjustment order in favour of the party only if the party has complied with that requirement (s 289(2)). Under subdivision 3 of Division 4 of Part 19, a number of matters set forth in ss 291 to 296 must be taken into account. Subdivision 4 prescribes additional matters for consideration to the relevant extent in deciding what is just and equitable. They comprise the matters set out in ss 297 to 309. It is therefore necessary to consider the issues between the parties in the framework of those provisions. Each case of this kind depends on its own circumstances. After the reasons relating to major issues in this case had been written, the judgment in F v H [2006] QSC 100 was delivered.  The duration of the relationship was similar to this case, and there was a custodial mother involved.  However, the financial issues were somewhat different from those in the present case.  It is not a direct analogy with the present case because of the disparate facts.    

Credibility – financial matters

33. An essential step in resolving the entitlements of the parties is establishing the pool of property to be distributed. That is perhaps the most difficult aspect of the case. There are issues that are not substantiated by any independent evidence. The only evidence with regard to them is conflicting versions of the extent of what might be classified as contributions, particularly after separation. The credit of both of the parties is impaired for reasons I will explain shortly. The lack of independent evidence in cases where documentary evidence does not exist, and adverse inferences cannot therefore be drawn on the ground that documentary evidence that should exist has not been produced, makes the decision about what should be allowed as the amount of contributions particularly difficult. It is especially so in instances where it is common ground that something in the category of a contribution occurred but the value is disputed.

34. I am satisfied that the evidence of the respondent cannot be safely relied on with regard to financial matters. His failure to disclose the existence of a term deposit, subsequently converted into a bank cheque for $84,494.97 and his subsequent resistance to producing the cheque at trial is one manifestation of the problem. His evidence relating to the financial aspects of the general store was also inadequate. The accuracy of the profit and loss statements was questionable because of inclusion of items that should not be included or inherent inconsistencies or improbabilities with respect to levels of expenditure. He undoubtedly conducted the business, both as to his staff and to his obligation to file taxation returns, with disregard for his relevant taxation obligations. There was no expert evidence in substantiation of the accounting documents produced, even though it must have been obvious from an early stage of the trial that they would be challenged. Further his attempts to dismiss clearly inaccurate information in his affidavits as mistakes or as being due to shortcomings of his legal advisers were unconvincing. Throughout his evidence he displayed a tendency to avoid answering questions directly unless pinned down to do so. That tendency went beyond the effects of lack of familiarity with the court environment. One specific example is his equivocation about the preparation of his tax returns and whether they had been lodged. Lack of candour by one party with regard to financial affairs may lead a court to adopt an approach that is not unduly cautious in assessing the entitlements of the other party (Weir (1992) 110 FLR 403; Chang v Su (2002) FLC 93-117).

35. It is necessary to deal with one particular matter which was the subject of considerable cross-examination. The respondent was cross-examined as to whether he was involved in the applicant’s application for a loan to purchase the home in which she lived after separation. Cross-examination focussed on a letter falsely advising that the applicant had been employed by the beverage business as marketing manager since 17 July 2000 at a wage of $880 per week gross, and a group certificate showing earnings for the previous financial year of $46,815 gross. It was put to the respondent that both those documents were signed by him. In the absence of any expert evidence on the subject, the authority given by s 59(2) of the Evidence Act 1977 (Qld) to form an opinion was exercised by me.  The group certificate signature looks to have an additional syllable in it and the formations of letters common to both names are not obviously or strikingly similar to signatures acknowledged to be his.  The signature on the letter is more similar to uncontested signatures but not strikingly so.  I am not prepared to say he signed the documents on the basis of this inspection.  However it can be safely said that on the respondent’s own evidence he was desirous of ensuring that his children had a “roof over their heads”.  While there is no evidence but the assertion in the applicant’s evidence that he was involved in the transaction just mentioned, his lack of recall that he had discussed finance for a home for the applicant with a NAB manager was unconvincing as was his evidence that if he had, the manager must have mistakenly written $200,000 instead of $20,000 as the net profit of the general store. This was a separate transaction from the one, involving his former business associate, Mr M, now a finance broker, in which the false documents were created.

36. The evidence of the applicant must also be treated with considerable caution. Her conviction for welfare offences of knowingly obtaining payments of sole parent pension which was only payable in part for some periods or not at all for another demonstrates her capacity to act dishonestly to improve her financial position. The same may be said in respect of her application for finance to purchase the post-separation premises in which the false information about her employment status and income was included. I do not accept, if her evidence extends further than saying that she did not prepare the documents that she was unaware that the false information was being given to the lending institution.

The valuer’s evidence

37. Mr Gooley was retained as a joint expert to value the business of the general store as a going concern, walk in, walk out basis. The valuation included plant and equipment but excluded stock in trade. Mr Gooley said he had reconstructed trading figures to reflect a fully owned and operated business with one or two active parties and, where appropriate, showing earning before interest, depreciation and tax. Additional adjustments included motor vehicle leasing, bank fees and interest and repairs and maintenance. His valuation was $540,000 at the time of valuation and he expressed the opinion that it had remained steady in the period between valuation and trial. He had relied on the assumption that the trading figures supplied by the bookkeepers were valid. They showed a net income after expenses but before tax of about $16,800 in the 2002 financial year, $15,748 in the 2003 financial year and $17,311 in the 2004 financial year. He was asked, hypothetically, about the effect on the valuation if the net income of the business was $80,000. He said it would add about $160,000 to the value, mostly attributable to goodwill.

38. In performing his valuation of the walk in walk out value of the business, Mr Gooley excluded from the expenses, items specific to the personal finances of the owners, notably interest and motor vehicle lease costs. He made reductions from other amounts shown in the profit and loss accounts, the largest of which related to wages, presumably to reflect the basis of the valuation referred to above.

39. Both counsel explored the qualification in the bookkeeper’s report. Ms McClymont drew attention to the reference to time constraints being an essential factor in preparing the reports and to the statement that expenses and purchases information was collated in part from information supplied by the respondent. She tried unsuccessfully to establish from the respondent what other “information” in addition to “available weekly sales slips, (and) banking records” in respect of the period when sales figures from tills were not available, and “cheque book stubs (and) cash invoices” in respect of purchases, had been made available to the bookkeepers. Mr O'Neill asked whether it would be normal procedure to base the financial accounts on receipts and invoices and statement and cheque butts from the business proprietor. The valuer replied:

“Sometimes it’s not always that there is a third party who produces those figures specifically for that purpose.  Sometimes it is strictly from their tax returns that these are issued, not a specific purpose report like was provided.”

He said that he had not seen taxation returns when preparing his valuation. 

Issues concerning earnings of the business

40. The base net profit figure for valuation purposes was $115,800. When the same deductions that Mr Gooley had made were applied to previous years, the years 2004 and 2003 showed $112,158 and $108,564 respectively. After capitalising this base figure, an objective measure of the worth of the business was derived. That sum was $540,000.

41. Several of the components included in the profit and loss accounts were explored in cross-examination with a view to establishing that the modest income claimed was unduly low. The purchase of the business was completed on 27 November 2001. Exhibit 28 contains financial information from the previous proprietors. Those figures were calculated on the basis that expenses directly relating to the proprietor had been excluded. On that basis the net income for the financial year 2001 was $98,635, on sales of $823,023 and a gross profit of $141,511. In the financial year 2000, sales of $824,788 yielded a gross profit of $135,022. In the financial year 1999, sales of $819,196 yielded a gross profit of $136,551. In the financial year 1998, sales of $825,601 yielded a gross profit of $132,560.

42. One matter relied on by Ms McClymont in her submissions was that the sales recorded in the respondent’s profit and loss account for the year 2000 were about $200,000 less than in the years when the previous proprietors were in occupation and about $400,000 less than in subsequent years when the parties were running the business. It was submitted that, in the absence of any credible explanation by the respondent, the only inference to be drawn was that he had underestimated sales for that year. The simpler and more obvious explanation is that the amounts for that year represent only the period during which the parties operated the store.

43. If the sales figure for 2002 is assumed to be for only the seven months of that financial year when the parties were in occupation, extrapolation on a twelve months basis shows that gross annual sales would correspond quite reasonably with the gross sales for succeeding years. Comparison of relatively stable sums such as insurance and interest expenses in the 2002 statement with those in the next years, supports this conclusion. Subject to another issue, the relationship between labour costs for those two years is not out of proportion if the 2002 figures are extrapolated to twelve month figures. Comparison of the raw 2002 figures with later years’ figures without appreciating this is erroneous.

(a)  Labour costs

44. The other issue raised with respect to labour costs concerns their accuracy. They are round figure amounts, suggesting that they are an estimate rather than records-based calculations. More importantly, the sums do not correspond with the respondent’s evidence. He said that his employees consisted mainly of five to six people, one of whom worked for twenty hours per week and the rest for lesser periods. He estimated that he employed staff for, in total, in the range of forty-five to fifty-six hours per week. At the most, the periods mentioned by him, when aggregated, were no more than sixty. Those hours had remained stable throughout the relevant period, as had remuneration of $15 per hour, subject to the exception that after the charge was laid in November 2003, he had to devote time to dealing with legal representatives and court appearances. The charge was dismissed on 6 October 2004. Initially he claimed to have recorded the hours worked in a book. Later he amended this to a “tally of hours” which he said he had given to his bookkeeper. No document of either kind was disclosed in the action. The respondent also said that he had paid the employees in cash and had never given them group certificates.

45. On the basis of the respondent’s oral evidence, it is reasonable to apply an amount within that range but towards the higher end per week, to allow for the probability that there was some variation from time to time, including times when he says his performance was affected in the aftermath of the breakdown of the relationship between him and the applicant and by attending to his legal affairs, Where there is direct oral evidence that conflicts with documentary evidence recording a greater expenditure, said to be based on source documents that are not produced, it is merely a question of which evidence should be accepted. Where the source documents for the higher sum are not produced, it is easier to conclude that the sworn oral evidence is to be preferred. It is not necessary to resort to the approach referred to above that is adopted in the Family Court where, in cases where there is deliberate concealment of financial information, it has been said that the court should not be unduly cautious about making findings in favour of the innocent party (eg Weir; Chang v Su).

46. It should be noted that the wage component after the parties took over the business is far greater than it was in the last year when the previous owners ran the business. That is probably explicable on the basis of the respondent’s explanation in cross-examination that the previous owners comprised a husband and wife, daughter and son-in-law, who all worked in the business. In calculating the profit of the business in the hands of the respondent, the wages component calculated on the basis of 45 to 56 hours per week at $15 per hour falls within the range $35,100 to $43,680 per annum.

(b) Motor vehicle expenses

47. The respondent leased a Mercedes Benz four-wheel drive in October 2002 for $1,300 per month ($15,600 per annum). It was submitted that this was indicative of the respondent’s lifestyle being more lavish than the applicant’s. He explained why he had substituted it for a cheaper vehicle. I am not persuaded that its acquisition is of significance for the purpose of assessing entitlements. There was some business component in its use. The respondent gave evidence that about 90% of the stock was delivered to the store but three or four times a week he would collect goods some of which he bought on special from supermarkets in Tweed Heads and Murwillumbah. He also said that he did his banking on the Gold Coast, which may on occasions have been combined with a visit to his mother who lived on the Gold Coast. In the profit and loss accounts, the bookkeeper reduced the motor vehicle expenses allowed as a taxation deduction by an unspecified amount. (The separate motor vehicle lease payment was discounted by about 21.5%, according to the figures in evidence). The bookkeeper’s covering letter says that the motor vehicle expenses were obtained from a collation of available vouchers and information provided by the respondent and discounted for private use. It was submitted that the deduction of only that sum did not represent sufficiently the private use component of the vehicle. There is no direct evidence as to how the bookkeeper calculated this deduction. The difficulty in accepting that that any other sum should be substituted in lieu of the allowance made is that there are several ways in which business use of a vehicle may be treated for taxation purposes. In the absence of more than the evidence discloses, I am not prepared to substitute a different figure.

(c) Legal fees

48. There is an item of $18,724.57 recorded as “legal fees”. The respondent gave evidence that part of that amount represented fees paid for the defence of the criminal charge against him. That is not chargeable to the business. The precise amount of the fees incurred in his defence is not revealed by the evidence. In the preceding two years, sums of $1,400 and $2,593 respectively were incurred in legal fees. The higher sum is for the year 2002 which was the year when the business was acquired. In the circumstances it is reasonable to assume that since the only other legal issues suggested by the respondent were minor, a deduction of $17,000 as the estimate of fees for the defence of the criminal charge is justifiable. That leaves the amount for legal fees attributable to the business in rough parity with the preceding two years. The true level of fees was peculiarly within the knowledge of the respondent but he did not produce evidence of the amount.

(d) Interest expenses

49. There was a mortgage over the land of the business and overdraft of an unused cheque account and a personal loan, apparently taken out in approximately mid 2003, to replace manual tills with new electronic cash registers which provided a better records keeping system. The respondent agreed that apart from the overdraft, which remained at a similar amount, the other loans were gradually reducing. For the year 2002, interest was shown in profit and loss account as $11,720.76 for the seven months of ownership of the business. In the 2003 profit and loss account, it was shown as $21,128.26. For 2004, it had escalated to $34,696.74.

50. When asked why, if the principal sums on the loans were decreasing, the interest had increased by that amount, the respondent said that he could not explain it. If there is an explanation, it is peculiarly within the knowledge of the respondent. No evidence was led to explain what the components of the interest expense sum were. The reliability of the document as evidence of business related expense in this regard is therefore impaired. On its face the interest expense for 2004 is not reconcilable with the sums for the preceding years, even allowing for the acquisition of the tills. In my view reduction by the sum of $12,000 to bring it in to relativity with the figures for the two preceding years is appropriate.

(e) Other issues in profit and loss accounts

51. Ms McClymont submitted that some of the interest component should have been reduced further to reflect personal use of the house on the land upon which the shop was also built. In the absence of further elaboration of this and in particular how the situation would be treated for taxation purposes, no further deduction will be made. In relation to the 2002 financial year the submission was made that a one off item “fees and charges” of $18,890.79 was not clearly a legitimate business expense. Although the respondent was unable to explain in evidence what they comprised, it is, in my view in a different category in that 2002 was the financial year when the business was purchased. Further there is no demonstrated discrepancy or lack of relativity with comparable sums for other years which might cast doubt on the inference that the bookkeeper has properly included it. In the circumstances no case is made out for excluding that sum.

     Other issues concerning profitability

52. In evidence and submissions Ms McClymont sought to rely on other evidence in support of her contention that earnings should be found to be in the vicinity of $80,000 net of expenses. Firstly she relied on evidence in exhibit 28 of the gross profits of the business in the hands of the previous owners and the net income (excluding expenses directly related to the proprietors) for 2001 of $98,635. Two things may be said about this. Firstly, there is a difference in methodology between the two calculations. Secondly the fact that one proprietor has earned a certain level of profit from a business is no guarantee that the successor will replicate it. In the circumstances the net income shown is not conclusive.

53. Secondly, statements and credit applications in November 2002 were relied on. One of them merely repeats the sum of $98,635 as the profit. The respondent said that he had included that on the assumption that he was doing as well as the previous proprietors. Given the haphazard nature of financial analysis by him at that time, no weight can be given to the inclusion of that sum as an admission

54. Thirdly, in the record of a conversation made by a NAB officer between him and the respondent, it is recorded that the respondent had advised that the net profit for the year 2002 was in excess of $200,000. The conversation was concerned with a loan in connection with the purchase of a house for the applicant. The respondent, in cross-examination advanced the theory that the bank officer had accidentally recorded $200,000 instead of $20,000. In context, that is improbable since that part of the conversation recorded concerned loan serviceability. In any event, even if that is what the respondent said, I am not prepared to treat it, in so far as it may be an admission, as truthful or accurate. That accords with my view generally of the respondent’s evidence as to financial matters.

55. Fourthly, there was a child support determination of 4 July 2005 assessing the respondent’s income for child support for the purposes as $83,200. The reasons for that decision are exhibit LMB 11 to the applicant’s affidavit filed on 11 November 2005. The methodology does not appear identical to that used in the profit and loss account. I do not gain particular assistance from it as a direct comparison.

56. In the result, none of these matters is of particular assistance in determining the respondent’s net income. However, the reconstruction to be made of the profit and loss account for the 2004 year in accordance with figures derived in sub-headings (a), (c) and (d) above does support Ms McClymont’s submission that the net income of about $80,000 for that year is established by the evidence. The mathematics involved is that expenses claimed are reduced by $17,000 in respect of legal fees, $12,000 in respect of interest and in respect of labour costs, by allowing about 52 hours per week. The “total expenses” sum therefore reduces by about $61,500, which together with the claimed profit of $17,311.63, produces a net profit of almost $80,000. Allowance for the factor that the calculations are necessarily approximate makes it not unreasonable to adopt that sum.

Parties’ contribution to running the store

57. The applicant’s evidence about helping in the store is expressed in different ways in various phases of the evidence. In an affidavit directed towards maintenance, filed on 25 May 2004 she deposed to working full-time at the store “for the whole period she was there” performing “bookkeeping duties, banking, wages, customer service and other general duties”, for which she had not been paid. In an affidavit filed on 3 December 2004, she said she worked about three hours, five days per week in the store, with the children confined there in a playpen. She also worked two hours, five days per week, on bookkeeping and administration after the children went to sleep. In her oral evidence, she agreed in cross-examination that she helped out when she could in the store but said that her focus was the children, without help from the respondent. In re-examination she said she worked at least four hours per day there. The respondent deposed in an affidavit that the applicant spent most of her time looking after the children. The tenor of his oral evidence was that he was disappointed she did not help him more in the store but that a realistic expectation was that she could only help out when it was consistent with her mothering activities.

58. There were mutual allegations about consumption of alcohol. The applicant complained that the respondent’s performance in running the store was affected by consumption of alcohol including binge drinking. The respondent said that he drank very little but was concerned that the applicant consumed quantities of alcohol and smoked heavily. There is no cogent independent evidence supporting either version. The only comment that may be made is that there is a recurring indication in the applicant’s evidence of a preference for Baileys as her drink of choice and to requests after the separation for it, and wine, in not excessive amounts, and cigarettes, principally in the context of those items not being willingly supplied by the respondent along with other groceries after the relationship had broken down in this period when he was providing grocery items, at least for the children. There is no reliable evidence to support a conclusion, as the evidence stands, that whatever the parties’ drinking habits were, their performances with regard to running the store or homemaking and childcare were affected adversely.

59. I am satisfied that the respondent bore the major burden of conducting the business itself. The applicant performed a lesser role in that regard, but the other functions she performed counterbalanced his role in their joint enterprise of conducting the store.

Contribution of the parties

60. The financial status of each of the parties at the commencement of the relationship is summarised in paragraphs [3] to [6] and [9]. The overview is that he had Newstart payments in an unspecified sum and savings to contribute as liquid assets. She had worked for the first nine months or so which returned about $500 per week to available funds. She also had the award of damages, and endowment for her son, which she later used to pay off a debt incurred to Centrelink as a result of her conviction. He was paying the outgoings in respect of the unit. Pragmatically, at that point each of the parties was contributing to the functioning of the household in proportions that, in the absence of any clear evidence to the contrary, may be treated as equal. After the applicant ceased to work and completed her community service obligations, she gave birth to B and thereafter performed a homemaking and parenting role. Equivalence of the contributions to the functioning of the household should be assumed in that period, in the absence of compelling evidence to the contrary.

61. The respondent had brought into the relationship non-monetary assets consisting of the matrimonial unit which was debt free, the high-rise unti in which he had a small surplus at that time and a motor vehicle. Up to the time when the store was purchased, no further assets had been acquired by either of the parties. To purchase the store the respondent realised those assets, obtaining about $340,000 net. He contributed this money to the business as part of the purchase price and monies retained for the purposes of the business.

62. Given that the relationship, for the almost four years prior to the purchase of the store was essentially non-productive in economic terms, and, in particular, in accumulating assets, the process of erosion of the value of the respondent’s assets brought to the relationship should not be as marked as it might have been in other circumstances. It is accepted that in other circumstances, the rate of erosion of value might have a more exponential trend. The relationship lasted for only six and half months after the purchase of the business. It would clearly not be just and equitable to treat his financial contribution to the acquisition of property of the parties as having been eroded to the extent that the applicant would be entitled to fifty percent of the net value of the assets. For calculation purposes, $250,000 will be treated as the remaining residue of his financial contribution for calculation purposes.

Cash payments by respondent 18 July 2002 to 25 November 2003

63. There is a dispute of small proportions but nevertheless, one that must be resolved about monies paid to the applicant during this period by the respondent. The applicant admits payments of $17,350 based on perusal of her bank passbook. The respondent claimed to have paid $18,200 into the applicant’s passbook and produced a number of counterfoils of deposit slips. Several do not relate to relevant payments. The items in dispute appear to be payments, for which there are counterfoils, of $300 on 29 April 2003, $350 on 26 May 2003 and $300 on 3 September 2003.

64. Unfortunately, failure to notice discrepancies in balances in the passbook which, at relevant times, has mostly manual entries, has contributed to this impasse which has caused a disproportionate amount of time to be spent on a trivial issue. With respect to the payment on 29 April 2003 the balance in the passbook jumps from $801.98 to $1,666.46 without any explanation but an entry “mult WB/paid”. That suggests that there are deposits not specifically recorded in the passbook. I am satisfied that this deposit was made. With respect to the deposit allegedly made on 3 September 2003 there is a jump in balance from $1,522.22 to $1,963.74 with a similar notation. I note that the notation is prefaced by the date 2 September 2003 but it appears to be in the same hand as the withdrawal recorded on 3 September 2003. The counterfoil is dated 3 September 2003 and stamped on the same date by the bank. Given the unreliable recording in the passbook, I am satisfied that on the balance of probabilities the deposit was made. With respect to the $350 allegedly paid on 6 May 2003, the page relating to this date is missing from the exhibit in the applicant’s affidavit. The counterfoil appears to bear a genuine bank stamp. I am satisfied on the balance of probabilities it was made also.

65. There is one more issue. There is a counterfoil relating to a deposit of $300 on 11 February 2003 which is not admitted by the applicant. There is also a counterfoil for a deposit of $350 to the respondent’s Visa account dated and stamped on 11 February 2003 at Mullumbimby. The teller’s initial on each of the counterfoils seem similar, although there is no visible evidence of the counterfoil for $300 being stamped. It may be noted that some of the other counterfoils bear very faint stamps at best. Given the concerns over the credibility of the parties, this may have given rise to concern but for the fact that it may be inferred that the deposit was made but not entered in the passbook, because the balance as at 7 February 2005, at the end of the page, jumps without any other explanation to a balance of $300 more on 11 February 2003. I infer that payment was made also. The total amount of payments into the applicant’s bank account is therefore $18,600.

66. There were also payments of cash. The respondent said in his affidavit that he gave her $50 to $150 per week in cash throughout the period. In cross-examination, he resiled from the notion that it was a weekly payment. He said that he gave bags of coins of the order of $35 to $40 once a month or so. Allowing for the imprecision of that estimate, I will allow a rounded off sum of $750 in that respect. The applicant also said in her affidavit that towards the end of the period, he had given her additional sums of $200 cash about twice a month from mid-September to mid-November 2003. I will allow $1,000 for this. The total amount of monies paid to the applicant under these headings is $20,350.

(a)Payments relating to unit

67. The respondent said he paid $6,000 towards the purchase price of the applicant’s unit after the separation. There is no documentary evidence before me of such payment. The Visa card statement which the affidavit says relates to this payment unfortunately does not contain itemised transactions; it merely records a balance in excess of the amount said to have been paid. That state of affairs is of some concern. However, the applicant does not deny that the payment was made. She merely said that she has no recollection of being told of it by the respondent or Mr M. However, given the general lack of candour as to financial affairs by the respondent, I cannot satisfy myself that the balance on the Visa statement establishes that the payment was made. It was not controversial that Mr M had been paid $550 as a loan assessment fee.

(b)Groceries

68. It is common ground that the applicant would prepare lists of groceries which she would delivery to the respondent and that he would supply groceries to her from the shop. Several lists are annexed to his affidavit. They vary in content and length. The respondent estimated the value of the items per week at $250. The applicant pointed out that they would have been acquired at wholesale costs and disagreed in any event that even at retail rates the value would not have reached $250 per week. She was prepared to accept that he always sent everything on the list that related to the children. However, she complained that when it came to her asking for liquor or cigarettes she rarely got them. The respondent was not specifically cross-examined with regard to the quantity or value of groceries supplied. The applicant’s oral evidence which impliedly suggests that there were occasions when liquor and cigarettes were supplied is not identical to her evidence in her affidavit where she denied that the respondent ever provided alcohol. Given the imprecise state of the evidence, all that can be done is to allow a figure that appears reasonable in the circumstances having regard to such evidence as there is. I will calculate the value of groceries at $125 per week which, over the period of 72 weeks, amounts to $9,000.

(c)Cheques

69. It is common ground that when the applicant initially left the respondent, she surreptitiously removed cheque leaves from the business account cheque book and that she wrote and banked a cheque for $25,000 a few days later. It is also undisputed that, after the respondent was arrested on 27 November 2003, the applicant went to the shop and removed groceries, liquor and at least one cheque on the joint account. She says she used it to obtain $5,000. He says that four cheques were taken and an amount of $6,500 obtained. There is no corroboration of either version of events. As far as I can tell, the applicant was not specifically cross-examined about taking four cheques and $6,500. Because of the respondent’s general lack of candour with respect to financial matters, I am not able to find positively that the sum was more than $500. In the circumstances I will allow $5,000 as the amount involved.

(d)Legal fees on transfer of unit

70. In written submissions, the respondent claims legal fees in the sum of $3,000 paid by him on behalf of the plaintiff in connection with the purchase of the unit. The references to paragraphs of his affidavit in the submissions do not refer to any such payment. The applicant was cross-examined about this alleged payment but made no admission that such a payment was made. As far as I can ascertain, the respondent gave no oral evidence of such a payment. In the circumstances there is no evidentiary basis to allow this sum.

(e)Cash given to the applicant by the respondent on the day of separation

71. The applicant claims she was given $100. The respondent says he gave her $4,700. The applicant’s evidence is supported by Mr McG who had come to the general store to assist her to leave without incident. His attitude towards the parties has been discussed previously. Unfortunately, the evidence is very sparse concerning the circumstances in which the money, however much it was, changed hands. According to the applicant, the respondent threw a number of $5 notes on the floor and made a derogatory remark when she was picking them up. Mr McG’s evidence is only that the respondent threw them on the floor where in the premises this occurred is not elaborated on.

72. Although there is no evidence that I can find that the respondent got the money out of the till, he was cross-examined on that basis. He said that he had got the money from the safe. He knew how much it was because it was part of the banking. He said he had taken it out of the banking bag to give to the applicant. According to the respondent, it happened at the house. It is not clear on the totality of the evidence whether the incident happened at the house or in the shop. Neither the applicant’s evidence nor Mr McG’s is explicit on the point. The following passage in the applicant’s cross-examination does nothing to clarify the matter:

“He has deposed that you in fact took $4,700?--  I will swear I did not receive $4,700 from him.  All I received was abuse all morning until my pickup came to get us.  He came down with a waddle (sic) of $5 notes which amounted to a hundred dollars.  He threw them at me while I was picking them up, ‘Pick it all up dog.’  That’s what I got and he was actually told just to back off.”

73. That passage suggests at least that the respondent carried the notes from the place where he got them to where the applicant was. That, of course, is inconclusive of the issue. The episode is an example of the lack of detail that has made fact finding unnecessarily difficult in this case. The bank book in evidence shows nothing that sheds light on the matter. There was no activity at all on the account for over a fortnight after the separation. However, during that period, the applicant was living with the McG family.

74. On the bare balance of probabilities I will allow $100 as the sum given to the applicant. It is a factor in that determination that the respondent had the means of leading other evidence in support of his contention about the sum given to her but did not.

6. Cash and stock taken from shop on day of arrest

75. The respondent alleges that the applicant took advantage of his arrest to go to the general store and take, without prior reference to him, groceries, liquor and cigarettes and approximately $9,500 cash. The applicant admitted going to the premises with the de facto wife of Mr McG. She admitted removing toiletries for her daughters, “maybe one bottle of Baileys” and a carton of cigarettes. She also took the cheque leaf discussed in (c) above. She said they went in a Mitsubishi Lancer and it would have been physically impossible to carry away in it the quantity of goods alleged by the respondent.  She denied taking any money.  She said there was only one safe key and the respondent had it.  She had keys to lock the shop up which she gave to an employee. 

76. In an affidavit, she said that she took two friends with her. It was explained in oral evidence that the second friend worked at the shop. The applicant also said she took, as well as grocery items, “four bottles of Baileys and small cartons of cigarettes”. In his affidavit the respondent said he estimated the value of the groceries, alcohol and cigarettes taken at $12,000 and the cash in the sum of about $9,500. In his oral evidence he said that when he had gone to the applicant’s home on the day of his arrest, he had accidentally left the safe unlocked. He said that the cheque book from which the cheque leaf had been taken was not kept in the safe.

77. As in the case of the money discussed in (e) above, the respondent has put in evidence no verification in the form of primary documents supporting the taking of any monies on day in question. With respect to stock, both the applicant’s and the respondent’s evidence of the value are questionable. Having regard to the applicant’s attitude towards the respondent at that time, as illustrated by T52 lines 19-21, I am satisfied she would not have been restrained in her selection of items to take. She would only have been constrained by her ability to transport the goods. Equally it is difficult to accept that the value could have been as high as the respondent contends.

78. Any sum allowed is necessarily imprecise but has been estimated in accordance with the discussion above.  I will allow $2,000 as the value of stock taken.  I should add that the amount shown as stock losses in the profit and loss accounts is not inevitably falsified by this conclusion for other purposes.  The basis of its calculation is not clearly elaborated in evidence.

Contingent liability on stock of business

79. The respondent submitted that the whole of a contingent liability for stock purchased as part of acquisition of the business should be deducted from the value of the business. The amount withheld was assessed at $73,000. Any such liability of the business would be a joint and several liability of the parties as matters are now.

80. The contingent liability has its genesis in the withholding of payment in respect of the stock. One of the reasons advanced for putting money into a term deposit, subsequently converted into a bank cheque of which mention has previously been made, was to have a reserve to cover any liability. However in the more than four years that have elapsed until trial, no demands had been made on either of the parties nor proceedings commenced in respect of the matter. In the circumstances it seems realistic to regard the risk that the matter will be revived as negligible; however it cannot be entirely discounted until limitation periods expire.

81. Deduction of the whole amount as a liability would be unrealistic in the circumstances. However if it is treated in that way, and the unlikely event of the former owner pursing the claim eventuates, it would be unjust for one party to bear the burden of discharging the liability in full, particularly if the assets and liabilities of the business are transferred to the respondent. Having regard to the assessment that the risk of any subsequent liability to pay the sum is negligible, the practical solution is for the applicant to indemnify the respondent for half of any liability fixing on him for the debt, interest and any other expenses arising from any successful claim against him by the former owners in respect of the stock not paid for. In the circumstances the $73,000 will not be deducted as a contingent liability.

Plaintiff’s debts

82. In the written submissions of the respondent it is contended that an $8,000 debt that the applicant has on a credit card and the plaintiff’s debt on a motor vehicle amounting to $15,000 in all should be taken into account as liabilities of the business. As the evidence turned out I am not persuaded that there is any basis to treat them as liabilities of the business.

Homemaking and parenting

83. In assessing the “homemaking and parenting” component in the equation (s 292), in authority on the corresponding provisions of the Family Law Act, it is accepted that the contribution made by the partner performing that role should be recognised “not in a token way but in a substantial way”.  The rationale is that performing the homemaking and parenting role frees the other partner to earn income and acquire assets (Mallet v Mallet (1984) 156 CLR 605, Gibbs CJ 609 Mason J 623, Wilson J 636, Dawson J 646).  However, there is no presumption that equality is the appropriate measure.  It is a question of fact in each case what the degree of contribution of each party is (see also E v S [2003] QSC 378, Mullins J).

84. On the evidence, I am satisfied that the applicant performed this function in an appropriate way. Nothing in the evidence suggests that there were any factors that might conceivably undervalue her contribution in this respect.

85. The issue of domestic violence has been analysed above. While the full extent of actual physical violence was in my view difficult to gauge, the evidence was sufficient to convince me that there was physical violence, and also verbal abuse, of a level that made the applicant’s contribution to the homemaking and parenting role more onerous. For that reason some allowance in her favour will be made in the final assessment.

The applicant’s health

86. It was submitted that it should be found on the basis of the opinion of the psychiatrist, Dr Judith Chittenden, that the applicant is in poor psychological health. Dr Chittenden consulted with the applicant on 8 June 2005 and 15 June 2005. At that time the applicant told her that she felt she was unable to work except to care for her children and to do voluntary work at her elder daughter’s school.

87. At the time of assessment, she had some of the symptomatology indicative of post-traumatic stress disorder but Dr Chittenden’s report said that they did not meet the criteria for that diagnosis in entirety. She was displaying anxiety, apprehension and fearfulness in her daily activities and physical symptoms consistent with that state. By the time Dr Chittenden saw her she had progressed from more severe manifestations of those afflictions. In her oral evidence, during cross-examination about her reference to post-traumatic stress disorder, she said that the applicant had the majority of the symptoms for that diagnosis but, by the time she saw her other symptoms had probably abated. She described the applicant as a “resilient lady” who “will recover up to a point”.

88. By the time she saw Dr Chittenden, she had reached a stage where she forced herself to do things which she felt uncomfortable. Overcoming such an obstacle gave her a good feeling. Dr Chittenden concluded that she should be diagnosed as suffering from major depressive disorder-single episode, and anxiety disorder accompanied by severe symptoms of obsessive compulsive behaviour amounting to a disorder. She reported in the following terms:

“I would suggest that psychiatric treatment is likely to be required over at least a two year period, and possibly longer.  She would benefit from fortnightly appointments for the first year and subsequent monthly appointments, which may well be continued past the two year period.  Counselling with her daughter with a Psychologist would probably continue over a year minimum with fortnightly appointments for the first six months and then monthly appointments.  A course of relaxation and desensitisation would require six appointments with a Clinical Psychologist with expertise in this area.”                                

89. At trial the applicant was cross-examined at some length by Mr O'Neill. She was not overawed by the experience. She was able to give fluent responses and defend her position, often with vigour, when she was challenged. In that connexion, in a passage where she was being cross-examined about her evidence of abuse and physical mistreatment, the following passage appears:

“So, he’s on your evidence, he’s beating you regularly-----/--  Yes, he was.

-----he’s abusive, he threatens you with a firearm?--  Yes.

A sundry of other complaints that you have?--  Yes.  I was scared stiff of him.

Notwithstanding all of which-----?--  I’m not now.  But I was.  I was a nervous wreck when I was with him.

But you’re not now?--  No, I’m not.”

90. Later, the following passage appears:

“MR O'NEILL:  There’s no reason at all why you cannot go to work when your youngest child is at school, was there?--  Sorry?

There’s no reason at all why you cannot return to work once your youngest child commences school, is there?--  At this stage, no.”

91. With reference to this evidence, Dr Chittenden was asked in her oral evidence by Ms McClymont whether, in view of her diagnosis of the likely duration of the need for psychological and psychiatric treatment, she had reservations in respect of the applicant’s evidence contained in those two passages. She expressed the view that she thought that the applicant might feel better, as the evidence of her voluntary work at her daughter’s school demonstrated, but that she would be happier if the applicant was having counselling before and after she started work to support her in coping with problems that might arise at work. She considered that she was vulnerable to relapse if she did not start in a low stress job before progressing to one that suited her background better.

92. My impression of the applicant, gained from seeing her in the witness box and under some pressure, was that she appears to have improved further since her consultations with Dr Chittenden. She seemed to be innately outgoing from my observations of her. I accept that she now believes she is ready to resume remunerative work once her children are at school. She seemed to be naturally suited to work of the kind she was doing in the past. I accept that there is a possibility that she may feel the need to resort to psychiatric counselling as she adjusts to the pressures to the workplace although I am not persuaded that she is the kind of person who will feel it necessary on a regular basis. The orders will allow for the possibility of a need for further occasional consultations, taking into account that assessment.

Extravagant expenditure

93. Mr O'Neill submitted that the applicant’s conduct after the relationship ceased amounted to extravagant expenditure which should be treated as a disentitling factor. This issue appears not to have been directly addressed in the applicant’s affidavit except in the broader context of whether or not she had a spending problem, the focus of the allegation by the respondent being that it existed during the course of the relationship. She denied the allegation and responded, in effect, that she had been starved of funds by the respondent. The cross-examination of her with respect to her expenditure after she left the respondent established that she had borrowed $158,000 to purchase a unit, employing an application which she conceded contained false information about her assets and liabilities, her financial state and her employment status. She said that the document had been prepared by Mr M and she had merely signed it.

94. As the value of the unit increased, she borrowed further sums of $50,000, $25,000 and $15,000 over a period of 7 months. This resulted in her having to sell the unit because of financial difficulties into which she got herself. She agreed that, at that time, she was “buying the kiddies things all the time”. She said that following the incident with B which led to the respondent being charged, “everything got too much” for her and she “did everything in her power” to “overwhelm” the children with gifts.

95. When questioned about the individual sums borrowed, she said that she spent the $50,000 on a car for her son, his eighteenth birthday party, security and air conditioning systems for the premises, paying off her Mitsubishi Lancer and “bits and pieces”. She said that she borrowed the subsequent amounts because she was in financial difficulty with regard to meeting her repayments.

96. That oral evidence varies to some extent from the evidence in her first affidavit. In that affidavit she said that her son’s motor vehicle cost about $12,000 and was registered in her name although it was treated as his vehicle. The birthday party cost about $3,000. She said that the balance of the monies had been spent on “general family living expenses including body corporate fees, council rates, school fees, motor vehicle expenses, groceries and other similar family expenses”. She said that the $25,000 increase was used to pay general household accounts including house insurance, car maintenance, body corporate fees and council rates. She said it was from this extension of the loan that she purchased the air conditioning unit for $2,200 and television for $950. The third increase was used to pay out her car loan and for living expenses. The mortgage had grown to $248,000 with repayments of $1,756 per month. By early 2005 she had fallen into serious financial difficulties and on about 24 May 2005 she vacated the property and gave possession to the mortgagees. On 6 June 2005 the property was sold for $275,000. According to the applicant she received nothing in consequence of the transaction.

97. Dr Chittenden’s description of the applicant’s conduct appears in a passage of her report in the following terms:

“the applicant is not financially well-off, and although she admits that she spent an excessive amount on her children, she realises that this was part of her compulsion to ‘make up’ to them for their experiences (and having bought one child something, she would have to make sure that it was equal), and this has led into considerable financial difficulties which I understand she is now coming to terms with.  She has unfortunately had to move from a reasonably nice house in a secure setting into another house with less security, but she appears to be more consistently able to work out her financial situation.

Apart from her overindulgence of the children to make up for what had happened to them, she has also had a number of realistic expenses due to moving house and then again moving house, making houses suitable for habitation, and dealing appropriately with the needs of her children on her own.”

98. In her report Dr Chittenden also said that the applicant, as a result of her relationship, had lost a great deal of self-esteem and self-confidence and had developed extreme signs of fear and anxiety to the point of panic attacks, which was, however, resolving in the way described in paragraph [87]. She was slowly beginning to do some of the things she had done previously and “being a mother”. Her main focus was the children and their needs. She continued:

“This has particularly got her into some financial difficulties as she was so upset by what the girls had gone through she tried to make up to them by buying them things based on her guilt about what had occurred and which she felt she had ‘allowed to occur’ by staying in the relationship”. 

99. Later Dr Chittenden said that the applicant had an extreme level of self blame with respect to staying in the relationship for so long. She had developed an obsession with cleanliness which the applicant realised was obsessive and unreasonable but could not stop. Dr Chittenden also said, in summary, that the applicant’s self-confidence, self-esteem and “to a certain extent, her commonsense” had been eroded as a result of the relationship.

100. In cross-examination about the applicant’s spending in the period after she left the relationship, Mr O'Neill asked Dr Chittenden about the spending of a sum the doctor believed was over $70,000 in a four month period. The following exchange then ensued:

“Do you regard that as symptomatic of an obsessive or compulsive type of behaviour?-- Within the context of the fact that she was desperately trying to make up to her children.  She had overwhelming guilt, and she did explain to me some of the expenses that she had.  They weren’t entirely on her children, although she had bought, I believe, her son a car in order that he could get to work, but she also had relocating expenses and a lot of other things that she was spending out on, but also she did admit that she had spent a lot on the children, and I think a bit obsessive at that time.

A bit obsessive?  Just a bit?--  Well, life’s expensive, and when you leave a partnership, there are very real expenses involved.

101. There is nothing in the evidence that convincingly suggests that the applicant did not appreciate that she was spending more than she reasonably should on the children. Dr Chittenden’s evidence provides an explanation for her lack of willpower but does not, as I understand it, extend to a lack of understanding of what she was doing or go beyond saying that she felt obliged to do so to lavish gifts on the children to compensate for what had happened during the relationship. The principal focus of events involving the children during the relationship was clearly B, but she felt it necessary to treat H similarly for reasons of equality. The expenditure on the son’s birthday party and on the motor vehicle for him was not specifically traversed in cross-examination.

102. It is an issue of some difficulty whether and. if so, what consequences this kind of expenditure should have. Dr Chittenden makes the point that not all the spending from the additional sums borrowed is in the category of excessive expenditure. Some was for ordinary living expenses and reasonable home improvements. In the end, I am satisfied that I should take into account a proportion of the expenditure, $15,000, as falling within the principle on the basis that it can be characterised as reckless. It is inherent in the applicant’s own evidence (eg T62) that it went beyond necessity and mere overindulgence which would not be factors adverse to the applicant. I reject the notion implicit in the respondent’s submission that all of the expenditure should be treated as reckless extravagance.

Ongoing psychological treatment of B

103. It was agreed fact that the child B had been receiving treatment from a psychologist contracted to Bravehearts since 1 December 2003, initially weekly but fortnightly from a time shortly before trial. Such treatment would be required once a fortnight for a further year with a likelihood of a requirement of further counselling as a teenager and/or as an adult. There is no evidence that there was any actual cost to the applicant for the treatment itself. However, while the child is of tender years it will be necessary for her to incur some expenditure in attending the sessions with the child. That will be factored into the outcome.

The applicant’s share of profits

104. Ms McClymont submitted that any contributions by the respondent should be offset against the share of profits the applicant had not received since she left the relationship. She submitted for each of the years since the store was taken over by the parties the profits should be assumed to be of the order of $80,000 of which the applicant was entitled to one half. Calculated on that basis, that translated into after tax sums amounting to almost $114,800.

105. The years for which indicative profit and loss accounts have been prepared should be treated individually. It is necessary to do so since the 2004 account which supported a net income before tax of about $80,000 was affected by items not replicated in other years. There were other items in the 2002 and 2003 accounts that were questioned. It is necessary to look at each years accounts to ascertain within their limitations, what the net income was.

106. For the year ending 2002, where the business was run for thirty-one weeks, reduction of labour costs to reflect the respondent’s evidence by similar proportion to the 2004 accounts produces a round figure of $25,000 for labour. An amount of “fees and charges” in addition to separate items for accounting and legal fees was the subject of cross-examination. I am not persuaded that in the year of acquisition of the business, there is any demonstrated reason to find that those fees were not incurred. For that year there is a net income of a little over $33,000. That would equate to a net income of about $55,350 if the same earnings were extrapolated over the whole year.

107. In the year ending 2003, reducing the labour costs by a similar proportion to the other years gives a round figure of $41,000 for labour costs and a net income in round figures of $39,750. In that year there were said to be stock losses of $48,600. There is no evidence that that figure is inaccurate. That loss has the effect of deflating the net income that would have been obtained but for the unrecouped loss. However for the purpose of estimating the applicant’s share of profits the actual net earnings figure must be applied. It is a case where losses should be equally shared as well as profits.

108. For the purpose of the exercise that Ms McClymont submitted should be undertaken, the relevant net income before tax for 2004 is taken to be $80,000; for 2003, $39,750 and for 2002 $33,000. The after-tax shares attributable to the applicant, using the methodology that she was entitled to only four weeks income in the year 2002, (representing the period after she left the relationship), amounts, in round figures to about $50,000 in all for those three years. I have adopted round figure calculations since it is meaningless to do otherwise given the imprecise state of the evidence.

109. In the absence of any evidence from the respondent upon which I am prepared to rely as to earnings in 2005 and for the period of 2006 up to trial, I act on the inference that the net income was at a similar level to that 2004. That adds about $40,000 to the profits due to the applicant on the basis that she is entitled to fifty percent of the net profits. The total offsetting after tax sum, according to Ms McClymont’s methodology is therefore, according to my calculations, $90,000 in round figures. In coming to that conclusion, I have not overlooked that the loan for the business is in the form of a joint obligation which carries with it the joint and several liability of the applicant to contribute. As the servicing of the loan is reflected in the profit and loss accounts no further account needs to be taken of it. Also, if extra expenditure had been incurred in running the business because the applicant was no longer spending some hours per week directly related to it, such expenditure should have been reflected in the profit and loss accounts. The evidence is silent on the issue in respect of the years for which no accounts have been prepared.

Subdivision 3 matters

Contributions to property or financial resources (s 291)

110. These are dealt with principally in the sections headed “History of the relationship”, “Parties’ contributions to running the store” and “Contribution of the parties”.

Contributions to family welfare (s 292)

111. These issues have been analysed in a variety of places elsewhere in these reasons particularly in the section headed “Homemaking and parenting”.

Effect of proposed order on future earning capacity (s 293)

112. The draft order contended for by Ms McClymont would effect a buyout of the applicant’s interest in the business by the respondent. The effect of Mr O'Neill’s submissions is that the business would remain with the respondent. If the business is run by the respondent as sole proprietor, that will enhance his earning capacity, but render him liable to a higher level of contribution to support his children. To supplement the income derived from child support and any other Centrelink payments, the applicant’s earning capacity, as discussed principally in the section headed “The applicant’s health” and “Resources and employment capacity” would have to be utilised. She would have no remaining financial interest in the store.

Child support (s 294)

113. The issues relating to this have been analysed elsewhere in these reasons.

Subdivision 4 matters

Age and health (s 297)

114. The applicant is 42; the respondent 52. It was submitted that in view of Dr Chittenden’s evidence, the applicant should be found to be in poor psychological health. By the time of trial, that characterisation was, for reasons expressed above, unduly pessimistic. It was submitted that, although the respondent claimed to have limited use of his left arm, he should be found to be in reasonable health, particularly because no medical evidence of the level of incapacity of the arm had been led. There is an assertion that the extent of loss is 10% in his statement of financial circumstances. My impression, from the evidence about his levels of activity, is that, accepting he has a problem with the arm, it is an inconvenience rather than a serious hindrance. He said he was “totally shattered” by the criminal proceedings, with residual hurt and loss of self-esteem and functioning in the running of the business. He also said he had high blood pressure. Otherwise, he said he was in average health. I will act upon that basis in regard to him.

Resources and employment capacity (s 298)

115. This requires consideration of the income, property and financial resources of each of the de facto partners. The respondent is in occupation of the store and has been running it since separation. The parties own it jointly. However, the applicant has not received any moneys identifiable as a share of profits despite her rights consequential upon joint ownership. Apart from that, she has only government benefits as income.

116. Section 298 also requires the physical and mental capacity of each party for appropriate gainful employment to be considered. For the reasons given earlier in these reasons, each has those capacities to engage in appropriate gainful employment. It was submitted by the applicant that if the respondent were to seek other employment, he would be capable of undertaking employment in retail sales. That is so. However a consequence of not continuing to run to store and being employed in a sales job would almost certainly be a reduction in his earning capacity, given the profit level inferred for the business. His financial resources would be diminished. The respondent has sought that the orders make provision for him to own and operate the store into the future.

Caring for children (s 299)

117. At the time of trial the applicant had fulltime care of the two children aged seven and four and a half. Although the applicant has commenced an application for parenting orders, it is more probable that, for some time to come, and probably until they are self supporting, the primary role of caring for the two girls will fall on the applicant.

Necessary commitments (s 300)

118. According to the applicant’s latest statement of financial circumstances dated 15 September 2005 she requires $734 per week. The respondent’s last estimate on 20 August 2004 showed weekly recurring outgoings for expenses of about $1,600 per week.

Responsibility to support others (s 301)

119. The applicant has responsibility for supporting the two children of the relationship. The respondent has a responsibility to pay assessed child support. At the time of trial the actual amount of the liability was uncertain as it was under review by the Child Support Agency. The respondent was also in default of such payments for a period from about the time he was charged until not long before trial. There is nothing to suggest that that liability does not remain current notwithstanding default.

Government assistance (s 302)

120. The applicant receives a parenting allowance from the Commonwealth Government. The respondent is not government assisted.

Appropriate standard of living (s 303)

121. There is nothing to suggest that the current standard of living of the respective parties is not of a reasonable standard for each of them. It was submitted that the applicant’s leasing of a Mercedes four wheel drive showed he enjoyed a self-indulgent standard of living. He was cross-examined at some length about its acquisition but it was maintained that he had sold his Honda CRV to provide working capital for the business and then leased a 6 months old Tarago van which proved unsuitable for country conditions. He said that he got a good changeover figure from the dealer to lease the Mercedes in substitution. According to the evidence it is partly used for transport purposes in connection with the business. In the circumstances I am not persuaded that its acquisition went beyond appropriate bounds or demonstrated an unjustified lifestyle.

Contributions to income and earning capacity (s 304)

122. This requires consideration of contributions made by either of the parties to the income and earning capacity of the other party. The allegation that the respondent had “a significant negative effect on the earning capacity of the applicant” has been discussed in detail elsewhere. So has her role in the running of the store. It was submitted on behalf of the applicant to the effect that the applicant by joining in the purchase of the store “which provided the respondent with self-employment after 3 ½ years of unemployment” had contributed positively to his earning capacity is ambiguous and capable of misleading if taken at face value. The financial circumstances of the relationship are summarised in paragraphs [5] and [6] and [60]-[62]. If there is an implication in the submission that for three and a half years the applicant’s contributions may have been greater than his because he was unemployed, it is not supported by the evidence. The issues with respect to contributions towards running the store are fully discussed elsewhere.

Length of relationship (s 305)

123. The relationship lasted for a little under four and a half years with an interruption of about six months in the first half of 2002.

Effect of relationship of earning capacity (s 306)

124. Because of the applicant’s responsibilities as a mother and homemaker for two young children born in the relationship, her earning capacity is diminished. She has expressed a willingness to work once both are at school. However, it is most probable that there will be some reduction in her earning capacity because of the demands of her parenting role. It was accepted by the applicant that the relationship had no demonstrated effect on the respondent’s earning capacity. The evidence does not otherwise suggest it did.

Financial circumstances of cohabitation (s 307)

125. There is no evidence that either party was cohabiting with any other person at any material time.

Child maintenance (s 308)

126. This requires relevant payments provided for maintenance of a child in the care of either partner to be taken into account. The applicant has, in the role of supporting her children, expended monies in respect of their maintenance. Issues concerning the respondent’s financial contributions and contributions of a material kind are discussed in detail elsewhere.

Other facts and circumstances (s 309)

127. A variety of issues that may fall under this heading have been discussed in detail earlier and will be taken into account in the ways indicated above.

      Conclusion

128. The following lists the findings about financial matters:

129. The essential thrust of what has been said above is that, so far as the conduct of the business was concerned, the parties’ contributions were similar, although each performed different roles. So were their contributions as a household unit from the commencement of the de facto relationship until the acquisition of the business. The starting point in the just and equitable property division is, in this case, equality in relation to the assets available for division.

130. The applicant is entitled to $3,000, being the difference between her “offsets” and his “contributions”. That leaves $335,495 to be divided. In deciding the final entitlements, the other factors in the applicant’s favour have to be assessed by way of adjustment.

131. Principally they are the related issues of the more onerous burden on the applicant because of domestic violence and its effect on her future earning capacity, standing alone and relative to his. Caring for the children will impact on both her earning capacity and financial burden as well. She will be entitled to payments from the respondent for whatever child support or other maintenance order is made. However, such payments are unlikely to relieve all her additional financial burdens related to caring for the children, even having regard to any social security payments to which she may be entitled.

132. A small allowance should also be made for ongoing expenses relating to B’s counselling, and any further counselling needed for the applicant.

133. Weighing up all of these factors, it is just and equitable to divide the sum of $335,495 in the proportion of 60% to the applicant and 40% to the respondent. That produces a sum of $201,297. Adding to it the sum of $3,000 mentioned in [130] above, the entitlement of the applicant is assessed as $204,297. The entitlement of the respondent from that pool is $134,198; the $250,000, representing his residual entitlement to the property contributed at the time the de facto relationship began, has been accounted for in calculating the pool to be divided.

134. The kind of orders proposed by Ms McClymont appear generally suitable to a case of this kind. I will allow the parties to consider and, if possible, agree on their precise form and the appropriate costs order in light of the reasons. If an agreed form of order is initialled by the parties and forwarded to my Associate, I will initial it without the need for further appearance. Failing agreement, they may make further submissions about appropriate orders and costs no later than 4pm on Wednesday 21 June 2006.