FEDERAL COURT OF AUSTRALIA

Brennan v McGuire[2010] FCA 1443

FEDERAL COURT OF AUSTRALIA

Brennan v McGuire[2010] FCA 1443

CORRIGENDUM

1.    In paragraph [129], first line, delete the words “and resources”.

Associate:                

Dated:        8 February 2011

THE COURT ORDERS THAT:

1.    On or before 11 January 2011 the parties prepare and exchange short minutes of order to give effect to these reasons.

2.    In the event that the parties have not agreed the terms of orders necessary to give effect to these reasons:

(a)    on or before 18 January 2011, the questions still in issue be referred to the Registrar for mediation pursuant to s 53A of the Federal Court of Australia Act 1976 (Cth), such mediation to occur on 21 January 2011; and

(b)    in the event that any issue remains unresolved following the mediation, on or before 4.00 p.m. on 28 January 2011 each party serve the other with his or her final draft short minutes of orders and written submissions limited to five pages on the matters on which he or she disagrees with the other and provide copies thereof to the associate to Rares J.

3.    The proceedings stand over to 3 February 2011 at 9.30 a.m. for the making of final orders.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1    Robert Brennan and Glenys McGuire lived together as man and wife in a de facto relationship for over 25 years until 6 December 2006. The couple lived in the Australian Capital Territory in a house in Forrest from mid-1985 until separation. Mr Brennan brought proceedings for property orders under s 15 of the Domestic Relationships Act 1994 (ACT). During the last 11 years of their relationship, the couple conducted most of their financial affairs through a company, Rob Brennan Facilitation and Training Services Pty Limited (the company).

2    Mr Brennan had built up a successful reputation as a facilitator and trainer, and secured considerable contracts for the company with, among others, a number of Commonwealth departments and statutory bodies. Ms McGuire administered the company’s affairs, including the considerable portfolio of investments in a self-administered superannuation scheme (the superannuation fund) for herself, Mr Brennan, and in later years, her brother, Wayne Kaufline. They acquired assets and financial resources with a net worth of about $3.75 million. These proceedings concern how their interests in that property should be adjusted.

The statutory scheme

3    The Act creates a statutory means of adjusting some rights, including in respect of property, between persons within its definition of a domestic relationship. A domestic relationship, for the purposes of the Act, is a personal relationship between two adults in which one provides personal or financial commitment or support of a domestic nature for the material benefit of the other and includes a domestic partnership but not a legal marriage (s 5(1)).

4    Proceedings under the Act may be instituted in the Supreme Court of the Territory. However, a number of jurisdictional conditions are set in ss 11, 12 and 13. So far as these are relevant here, the Court must be satisfied, before it may make any order under Pt 3 for the adjustment of property interests, that:

    either or both of the parties was or were resident in the Territory on the day on which the application for the order was made (s 11(1)(e));

    both parties have resided in the Territory for at least one third of their relationship or the applicant had made substantial contributions in the Territory of the kind referred to in ss 15(1)(b) or (c) (i.e. broadly, contributions to the assets of the parties or as a homemaker or parent) (s 11(1)(b));

    the domestic relationship existed for not less than two years (s 12(1));

    the application was made not more than two years after the day on which the relationship ended (s 13(1)).

5    Importantly, ss 14, 15 and 19(2) provide:

“14    Court to end financial relations

As far as practicable, a court shall make orders under this Part that will end the financial relationship between the parties to the domestic relationship and avoid further proceedings between them.

Division 3.2    Adjustment of property interests

15    Property orders

(1)    On application by a party to a domestic relationship, a court may make an order adjusting the interests in the property of either or both of the parties that seems just and equitable to it having regard to—

(a)    the nature and duration of the relationship; and

(b)    the financial or non-financial contributions made directly or indirectly by or on behalf of either or both of the parties to the acquisition, conservation or improvement of any of the property or financial resources of either or both of them; and

(c)    the contributions (including any in the capacity of homemaker or parent) made by either of the parties to the welfare of the other or any child of the parties; and

(d)    the matters referred to in section 19 (2), as far as they are relevant; and

(e)    such other matters (if any) as the court considers relevant.

(2)    A court may make an order under subsection (1) whether or not it has declared the title or rights of a party in respect of the property.

....

19    (2)    In exercising a power under subsection (1), a court shall have regard     to—

(a)    the income, property and financial resources of each party; and

(b)    the physical and mental capacity of each party for appropriate gainful employment; and

(c)    the financial needs and obligations of each party; and

(d)    the responsibilities of either party to support any other person; and

(e)    the terms of any order made or proposed to be made under section 15 with respect to the property of either or both of the parties; and

(f)    any payments made to the applicant, under an order of a court or otherwise, in respect of the maintenance of a child or children.”

These proceedings

6    These proceedings were commenced in the Supreme Court of the Territory, however on 17 July 2009 Master Harper ordered that they be transferred to the Family Court of Australia: Brennan v McGuire [2009] ATSC 84. On 5 September 2008, related proceedings against Mr Brennan and a Ms Deborah Avery were brought in the name of the company by Ms McGuire and Mr Kaufline. Those proceedings sought to make Mr Brennan liable for his conduct of the company’s affairs to the exclusion of its other two directors, Ms McGuire and Mr Kaufline, after Mr Brennan left the domestic relationship on 6 December 2006.

7    On 11 November 2008 Perram J made an order that the company be wound up. The value to be attributed to the company was an important issue in these proceedings. Because of the inter-relation between the two proceedings as part of a single controversy (Re Wakim; Ex parte McNally (1999) 198 CLR 511) it was necessary in the interests of justice for the two proceedings to be heard and determined together. On 23 August 2010 Faulks DCJ made an order in the Family Court of Australia transferring these proceedings to this Court so that I could deal with all issues in the single controversy between the parties. Subsequently, the company proceedings resolved and I made final orders giving effect to that resolution on the first day of the final hearing.

Principles applicable to the discretion of ordering an adjustment of property rights under the Act

8    The leading authority on the construction of the Act is Ferris v Winslade (1998) 22 Fam LR 725, a decision of Cooper J when sitting as a judge of the Supreme Court of the Australian Capital Territory: see e.g. H v G (2005) 34 Fam LR 35 at [105]-[109] per Lanyon J with whom Sulan and White JJ agreed. Cooper J observed that the Act did not equate a de facto marriage to a legal marriage. He also distinguished the nature of the statutory discretion to adjust property interests consequent on the failure of a domestic relationship under s 15(1) of the Act from that in other legislation such as the Family Law Act 1975 (Cth) and the De Facto Relationships Act 1984 (NSW).

9    Nonetheless, Cooper J discerned that the similarities in the natures of the discretions in s 15(1) of the Act and s 79 of the Family Law Act made it appropriate to have regard to decisions of the Family Court of Australia as to the applicable principles for making orders for adjustment under s 15(1): Ferris 22 Fam LR 725 at [20]. He held that (Ferris 22 Fam LR 725 at [31]-[32]):

“The requirement in s 15(1)(a) of the Act for the court to consider the nature and duration of the relationship is relevant to both the second and third stages of the process referred to above and involves an assessment of the expectations of the parties as to what each would contribute, the worth of it to the relationship and how it would be reflected in the property interests of each. So far as the evaluation under s 15(1)(d) looks to the present and future financial resources and the present and future obligations of each of the parties, the nature and duration of the relationship is relevant, for example, to whether one party, who has provided the homemaker contributions over many years, has or has not lost the work skills necessary to immediately or in the future obtain gainful employment.

Finally, s 15(1)(f), the catch-all provision, requires the court to consider any other matter which is relevant to do justice in the circumstances of any particular case before the court where regard only to the matters in paras (a), (b), (c) and (d) may not result in a just and equitable outcome for one of the parties.”

(The reference to s 15(1)(f) is a typographical error for s 15(1)(e).)

10    Cooper J explained that the task of the Court under s 15(1) is not an accounting exercise, but rather it is to make a holistic value judgment in the exercise of a discretionary power of a very general kind. He concluded that the real impact on each of the parties in money terms was the critical issue for the purpose of assessing each of the relevant matters in s 19(2) as part of the balancing exercise in arriving at an order under s 15(1): Ferris 22 Fam LR 725 at [34]-[35].

11    The exercise of the power under s 15(1) ultimately requires the Court to select a round figure or percentage to reflect an outcome that is just and equitable, as an adjustment to be made having regard to the criteria in s 15(1). This outcome is also informed by the requirement in s 14 that the Court should seek to achieve finality in the financial relationship between the parties when granting relief: cf Mallett v Mallett (1984) 156 CLR 605 at 608 per Gibbs CJ. As Stone J observed in McKenzie v Storer [2008] ACTSC 88 at [86]-[87] the Court has broad powers under the Act to make property adjustments between parties, both with and without terms and conditions. Her Honour pointed out that in Baumgartner v Baumgartner (1987) 164 CLR 137 at 150 Mason CJ, Wilson and Deane JJ said:

“The court should, where possible, strive to give effect to the notion of practical equality, rather than pursue complicated factual inquiries which will result in relatively insignificant differences in contributions and consequential beneficial interest.”

12    The matters referred to in s 19(2) can have a significant bearing on the adjustment that ought be made. Thus, in Ferris 22 Fam LR 725 at [120]-[121] (in a passage approved by the Full Court of the Supreme Court of South Australia in H v G 34 Fam LR at 59 [109]) Cooper J remarked that when one party, who had a substantial, reliable income earning capacity, left a domestic relationship, he or she took with them “the most valuable asset which a party can take out of a relationship”. The future availability of that asset to one party, to the exclusion of the other who was less capable of earning such an income, had a real impact on the latter in terms of economic need that can justify an adjustment to the property interests of the parties.

13    The exercise of the judicial discretion to make an order adjusting property rights in s 15 cannot be constrained by presupposed rules as to how an adjustment should be made or what may be the usual or ordinary case: Mallett 156 CLR at 608-610 per Gibbs CJ, 625 per Mason J, 636 per Wilson J, 639-641 per Deane J, 646-647 per Dawson J. What the Court must do is make an overall assessment of the actual contributions of the parties referred to in ss 15(1)(b) and (c) as part of the evaluation of all of the factors referred to in s 15(1). As Wilson J pointed out, the actual contribution of a party to a marriage, legal or de facto, may vary enormously in quality from exceptionally good to inadequate: Mallett 156 CLR at 636. Relationships between parties vary infinitely in their incidents and qualities. That is why there can be no legally binding presumption of some level of contribution in any particular instance. Nor can there ever be some objectively accurate means of comparing one person’s contribution to a domestic relationship with another either in the same relationship or a different one. Hence, the discretion in s 15(1) is broadly unfettered. The legislature recognised in s 15(1) that societal rules and mores are presently evolving in relation to the nature of legal and de facto marriage and the economic consequences of the separation of persons who have been in such a relationship: cp Mallett 156 CLR at 607-608 per Gibbs CJ.

14    Thus, in arriving at a discretionary evaluation of whether it is just and equitable to make an order adjusting the interests in property of the parties to a failed domestic relationship, the Court must have regard to all of the circumstances that bear on the assessment. These include those specifically referred to in ss 15(1)(a)-(d) as well as the more general consideration of such other matters, if any, that the Court considers relevant as provided in s 15(1)(e). The latter allows the Court to assess the overall nature of the parties’ relationship, in the context of the evaluative task of determining the just and equitable outcome in a given case.

Background – The parties’ initial position

15    Mr Brennan and Ms McGuire met in Cooma, New South Wales, in late December 1980. She was a divorcee with two young children, Ben aged 7 and Erin aged 6. She had been a hairdresser working from home and had a casual evening job. In late 1980 she received a grant to pursue further studies. She was then 34 years old. Ms McGuire owned her own home in Cooma, New South Wales, which had a small mortgage of about $2,000 and was fully furnished and equipped. She also owned a car and had about $21,000 in savings that she had accumulated principally from gifts by her parents. Other than the mortgage, she had no debts. Her former husband, Geoffrey, provided, irregularly, support for his two children, through the payment of school fees and other maintenance. Although Mr McGuire was not always regular in his payments of maintenance, he kept them up and fulfilled his parental obligations as a divorced parent then and during the subsequent years as his children were growing up.

16    Mr Brennan had had a veterinary practice in Tasmania. He was then 27 years old. He arrived in Cooma on a pushbike with no assets. He stayed initially with one of his three brothers in Cooma until late January 1981. In late June 1981 Mr Brennan returned to Cooma with his personal belongings and commenced living with Ms McGuire and her two children. At that time he was unemployed. She purchased a car for him and supported him. From that time, Mr Brennan was a conscientious step-father for Ben and Erin throughout the continuance of the relationship.

17    In mid-September 1981 Mr Brennan left Cooma to begin working as a veterinary officer in Moss Vale, in the Southern Highlands of New South Wales. Mr Brennan’s employer provided some accommodation for him in a room at the back of a house. Ms McGuire arranged for the sale of her Cooma property which realised $61,000. She packed up her belongings and moved to Moss Vale to be with Mr Brennan. They lived in a caravan and the room provided by his employer for about six months. The children attended local schools. The couple purchased a property in Bowral in about April 1982. Ms McGuire used the proceeds of sale of her Cooma property together with her savings, including interest, to pay the bulk of the purchase monies and the couple gave a mortgage to the Commonwealth Bank to secure a loan of about $30,000, being the balance of the purchase price. Mr Brennan’s parents, Jack and Enid Brennan, supported the couple’s purchase by making available an overdraft facility.

18    From this time Mr Brennan’s income, when he was employed, always exceeded the income Ms McGuire earned. Ms McGuire looked after the household finances from this time onwards. She wrote weekly repayment cheques drawn on their joint operating account and deposited these into Jack and Enid Brennan’s overdraft account in order to pay the interest that was accruing on that account.

19    In late 1982, Mr Brennan obtained work as a veterinary officer in South Australia and moved there. Ms McGuire remained in Bowral with the children and arranged for the sale of the property which occurred in February 1983. The proceeds of sale were used in part to repay Jack and Enid Brennan’s overdraft. The couple then purchased a property in Hahndorf in South Australia for $145,000. They used the proceeds of sale from the Bowral property and another mortgage of $30,000 to finance that purchase.

20    Up until this time, Mr Brennan’s income, when he was employed, had been used to assist in the payment of the household expenses, including mortgage repayments. But, Mr Brennan had not been able to make any capital injection into the couple’s finances, apart from his interest as a co-owner of the Bowral and Hahndorf properties. Of course, both parties pooled their income for the purpose of paying all household expenses, including those due on the mortgages for which each was jointly and severally liable to the bank. Thus, from the time at which they commenced to live together, the pooling of their funds contributed not only to their present accommodation expenses but to the security of their accommodation in the future.

21    Mason CJ, Wilson and Deane JJ said in Baumgartner 164 CLR at 149 that it would be unreal and artificial to say that either party intended to make a gift to the other of so much of their earnings as was applied in the payment of mortgage instalments. Here, the parties pooled their resources for the purposes of their joint relationship to secure accommodation for themselves and, at that stage, Ms McGuire’s children. Those contributions, both of a financial and other nature, assisted in the acquisition of the properties, the provision of furnishings and other comforts in the couple’s houses and their living expenses. Neither intended to make a gift to the other of his or her interest in the properties. Neither allocated his or her contribution to their pooled incomes to a particular category or categories of expenses and outgoings. Nonetheless, Ms McGuire had brought to the relationship a significant capital contribution in the form of her equity in the Cooma property, and, when it was sold, the use of that equity in the financing of the subsequent real property purchases. The mortgages of their properties held in joint names secured the performance of the parties’ joint and several obligations to repay principal and to pay interest. The payment of the instalments under the mortgages was not a payment of the purchase price but a payment towards securing the release of the charges which the parties had created over the properties they had purchased: Calverley v Green (1984) 155 CLR 242 at 257-258 per Mason and Brennan JJ, see also at 252 per Gibbs CJ and 268 per Deane J.

Mr Brennan’s divorce settlement and the birth of Frith

22    During 1983, Ms McGuire fell pregnant and their daughter Frith was born in November that year. In about October 1983, Mr Brennan settled his financial affairs with his former wife, Helen. He received two cash payments for that purpose. The first was about $23,000 which Mr Brennan used to purchase a new Volvo station wagon for a total price of $22,400, after adjustment from trading in the vehicle Ms McGuire had purchased for him in Cooma. He received the second payment in about the middle of 1984. In early 1984, Mr Brennan resigned his position with the South Australian government for a position with Elders IXL. However, he only stayed in that position for about six weeks when he again resigned and had a period of about eight months unemployment. During that period the parties remained in the Hahndorf property with the three children. They lived off savings and, no doubt, the second portion of Mr Brennan’s divorce payment when it was received.

23    Ms McGuire was not aware of the size of that payment. Mr Brennan said that he received about a total of $60,000 from the settlement with his former wife together with some savings and personal items of belongings. There is no independent evidence of that settlement. Mr Brennan owed an outstanding debt of about $8,000 to his former lawyers who had acted on the divorce. By about 1986 those lawyers had taken garnishee proceedings to obtain payment of that sum. Ms McGuire understood that the greater part of the money in the second portion was used to pay that legal bill. Mr Brennan disputed that. I prefer Ms McGuire’s evidence generally to that of Mr Brennan for reasons I will give.

24    I find that the net amount which Mr Brennan retained from the second divorce payment, after paying the outstanding legal bill, was not as substantial as the first payment. First, had a significant payment been received, both parties would have had some recollection of its size and application. Secondly, given Ms McGuire’s careful management of the joint finances over the whole period of their relationship, if a significant sum had been received, she would have utilised it to pay back as much of the mortgage then outstanding as possible, leaving the parties with minimal debt. I accept Ms McGuire’s evidence that the principal outstanding on the mortgage for the Hahndorf property was not reduced or repaid until that property’s sale in 1985. While I accept that the money Mr Brennan received from the second portion of payments by his former wife was contributed to the joint pool, I am satisfied that it was not a substantial sum and did not in a meaningful way contribute to an increase in their net capital.

The move to Forrest – The parties establish themselves there

25    In December 1984, Mr Brennan left South Australia to take up a position in Canberra. Ms McGuire stayed behind with the children and arranged for the sale of the Hahndorf property. That sale was completed in May 1985 realising $192,500. On 7 June 1985, the parties completed the purchase of their property in Forrest for $225,000. The parties again executed a mortgage over the property. Ms McGuire arranged a tight savings program that enabled the couple to pay the mortgage out in full in about seven years.

26    In 1991, Mr Brennan separated from Ms McGuire and left the family home for about six months. In about 1993, he was away in Sydney working for about seven months. In 2002 Mr Brennan again separated from Ms McGuire for about six weeks. On occasions prior to 1994 he travelled away from home for work for several weeks at a time.

27    Mr Brennan was an avid sailor. Throughout the relationship, he performed tasks around the family home, including some renovation, painting, interior decorating, landscaping and maintenance of lawns and gardens as well as fulfilling his role as a step-parent to Ms McGuire’s two children. Ms McGuire was the primary homemaker, a devoted parent and did much of the domestic chores. After Frith was born, Ms McGuire undertook a Bachelor of Arts degree at Canberra University finishing it in two years and then completed, over a longer period, a Masters degree. Mr Brennan also completed a Masters degree at around the same time and she assisted him in his coursework. There was no real dispute that each party made approximately equal contributions as a homemaker and parent when their activities in those capacities were viewed overall and bearing in mind the contributions each could make. Mr Brennan, throughout, was the primary source of external earnings that came into the relationship. This became more pronounced later, as I will explain, when he began his facilitation and training activities, initially as a sole trader and later through the company.

28    Ms McGuire worked in project management positions at the Australian National University. She then became an executive officer at the Institute of Engineers (Australia) for a national engineering education review and held that position until 1994 when she became Chief Executive Officer of RedR Australia. That was a United Nations organisation providing engineering assistance in refugee camps. She earned between about $25,000 to $40,000 in these positions.

29    Ms McGuire continued to be effective and very skilful in the financial management of the parties’ resources. As she said, generally the couple was thrifty and capable. Their pooled income paid for any educational, recreational, medical and dental needs of Ms McGuire’s two children, as well as Frith, throughout the duration of the relationship. A family friend, who was a dentist, provided dental treatment for Frith outside the school program and at no charge. Generally, because the family was fairly fit and healthy, no major medical or dental expenses were incurred during the relationship. Later the couple also made a financial contribution towards the purchase of Ben’s house in Bondi. Both made contributions to the education of Frith, including the payment of her tertiary education expenses and some tax liabilities. In addition, Ms McGuire assisted in caring for Jack and Enid Brennan as they aged and in the management of their finances. Since the separation, Ms McGuire has supported Frith.

30    Both Mr Brennan and Ms McGuire were generally supportive of the three children who lived in the family home throughout their younger years. I consider that their contributions in this regard were those of loving and supportive parents, notwithstanding that Mr Brennan was the step-parent of both Ben and Erin. Mr Brennan asserted that he had made substantial financial contributions to each child’s advancement in life once the child left home. He asserted that he assisted each of Ben and Erin in acquiring their respective first homes. Mr Brennan produced no documents to substantiate those assertions. Mr Brennan gave some assistance to Erin in renovation work she did on her property. But I prefer Ms McGuire’s evidence to his as to the actual, individual, assistance that he and she provided those children. Both Mr Brennan and Ms McGuire provided Ben and Erin with some assistance in furnishing their properties. I regard the assistance each of them provided to the children as pooled contributions which they continued to make to each child as part of a family unit. Mr Brennan also asserted that he gave Frith $65,000, but again provided no documentation to support his having made such a significant gift. I do not accept his assertion.

31    Importantly, Mr Brennan had taken all of the family and company financial records from the home at Forrest when he left the relationship in December 2006. Thus he had access, which Ms McGuire did not, to any documentation that might have assisted him in substantiating any claims or assertions he made. His failure, in general, to produce such material reinforces my lack of satisfaction with his evidence.

Mr Brennan’s facilitation and training business

32    In 1994, Mr Brennan left his employment with the Commonwealth Government. He received a payout of about $12,000 in long service leave and other entitlements. He then began operating his own business as a sole trader under the name of Facilitation and Training Services. Although he suggested that Ms McGuire was not supportive of his new venture, I accept her evidence that she was. The business was run from their home. At that time Ms McGuire was still employed at the Institute of Engineers. Ms Avery, a former colleague of Mr Brennan’s in his employment, worked part-time in the new business on an hourly basis providing some administrative and typing services. Ms McGuire also assisted in the business by setting up systems and helping to establish it as a registered training organisation. She had a mobile telephone, which she took to her work, to take enquiries, liaise with clients, make bookings and sales while Mr Brennan was working. Ms McGuire also received and sent correspondence for the new business using her email address at her work. In 1995, Mr Brennan and Ms McGuire began planning extensions to their home which contemplated providing a formal office area from which Mr Brennan’s business could be conducted.

33    The company was incorporated on 29 May 1995. Mr Brennan and Ms McGuire each held beneficially five of the ten issued shares and were both appointed a director and secretary. That position has continued at all times. The company immediately began to trade and thereafter conducted the business of facilitation and training that Mr Brennan had begun to establish as a sole trader. In the month to 30 June 1995, it earned about $23,000 in fees and paid $50,000 in superannuation for its directors.

Investment strategy of the Superannuation Fund

34    In December 1995, Mr Brennan and Ms McGuire consulted Daryl Dixon, a licensed securities dealer and superannuation advisor. Thereafter, the parties regularly consulted Mr Dixon for superannuation and financial planning advice. Mr Dixon advised them to undertake the planned extensions to their home as soon as possible using cash and borrowing the minimum amount, possibly from relatives. He suggested that each of them should invest $25,000 per annum in superannuation. He advised the couple to set up their own superannuation fund. Mr Dixon pointed out that Ms McGuire’s then job was worth about $20,000 net of tax. He suggested that she resign her position as chief executive officer of RedR in order to build the new business. Ms McGuire was initially reluctant to give up her separate career, but late in 1996 she resigned her previous position and from then worked full-time with Mr Brennan. Ms McGuire assumed the role of business and investment manager while Mr Brennan continued to be responsible for providing the training and facilitation services that the company provided to its clients.

35    In February 1997, they established the Rob Brennan Superannuation Fund (the superannuation fund), with the company as the trustee. Each member of the fund was required to be a director of the trustee. They rolled over their 1996 balances from their previous superannuation trustee, FAI Insurance, into the superannuation fund. They paid an exit fee of about $6,500 each to FAI that was deducted from their balances, being about $79,600 for Mr Brennan and $25,000 for Ms McGuire. From then, Ms McGuire managed the investments in the superannuation fund and administered it with assistance from professional fund managers. She also prepared financial reports for taxation and audit purpose.

36    In August 1998, the couple met again with Mr Dixon. He advised them to continue making the maximum employer superannuation contributions allowable as deductions for income tax purposes. By then the superannuation fund had a total of about $220,000 invested in it. At this meeting Mr Brennan told Mr Dixon that he wanted to retire at 55 and sail around the world. They discussed the company buying a boat as part of the business.

37    In about February 2000, Mr Brennan wrote a document entitled “Team Work and Leadership at Sea”, subtitled “Expansion Plan for Rob Brennan Facilitation and Training Services February 2000”. That document contained a number of spreadsheets prepared by the family accountant, Terry Rooke. Ms McGuire typed the document but did not contribute to it. She said, and I find, that it was solely Mr Brennan’s plan that he had formulated with the assistance of Mr Rooke. It proposed that the company purchase a vessel by February 2005, that is, five years later. The proposal contemplated that the business would expand from 200 to 400 paid facilitation days per year. That expansion would require at least one further fulltime facilitator to be employed. There is no evidence that the business ever expanded to that degree.

38    In March 2000, the couple again visited Mr Dixon and discussed their superannuation investment strategies. Mr Dixon advised them to keep their superannuation contributions up, particularly for Ms McGuire. Mr Brennan again raised his desire to purchase a boat. I infer that he showed the February 2000 document to Mr Dixon. Mr Dixon advised them that if they wished to pursue acquiring a boat, their best option was to lease it privately or obtain a loan at commercial interest rates from their parents, which they would guarantee. However, Mr Dixon went on to identify the risks of buying a boat. He advised them that it was not really a suitable investment for their superannuation fund.

39    When they returned to visit Mr Dixon in April 2001 he told them that the purchase of a boat was precluded under the superannuation legislation. He reiterated that it was not a suitable investment for a superannuation fund in any event. He told them that they had two options to buy a boat, namely, they could sell the house, use the bulk of the money realised to pay for it and then gear themselves to purchase another residence or, alternatively, Ms McGuire could retire, by working less than 10 hours per week, and withdraw her superannuation using it to pay for the boat. Mr Dixon said that, on the basis that she then had about a balance of $400,000 in the superannuation fund, after tax she would receive a net of approximately $350,000. He told them that in any event, if Ms McGuire received a payout she could change her mind and return to work at a later stage. Mr Dixon advised them that they should continue to maximise each of their employer contributions whenever there was the money available. He told them that they should choose superannuation investments with low risk. He warned them to “be sure that the boat sums stack up sufficiently before you commit”.

40    In April 2002, Mr Brennan and Ms McGuire obtained further advice from Mr Dixon. He again told them that if they wanted to, they should get a boat for pleasure: i.e. not for the business. He said that they could fund it by retiring and drawing down the money they needed. Mr Dixon told them to keep putting as much into the fund as possible until they retired.

41    Because Ms McGuire was older, she became entitled to contribute more money to the superannuation fund for tax purposes than Mr Brennan. And, since she would be likely to retire earlier, it suited their household purposes for her to accumulate her superannuation more rapidly. In about August 2004, Mr Brennan and Ms McGuire agreed that her brother, Wayne Kaufline, should join the superannuation fund. That required him to become a director of the company and he was so appointed on 20 August 2004. Other than dealing with, and protecting, his interest in the assets of the superannuation fund, to which he made substantial contributions, Mr Kaufline did not participate in the management of the business, which remained solely the concern of his sister and Mr Brennan.

Ms McGuire’s work in the company

42    Ms McGuire resigned her employment at RedR and began working full time in the company from February 1997. Mr Brennan asserted that Ms McGuire only commenced work in the company in 1998 and then only predominantly as an administrator in the management of the office and bookkeeping. He claimed that she initially worked no more than 10 hours per week and by the time of their separation that had risen to only 20 hours per week. He asserted that at the same time she used the company’s facilities to undertake extensive financial management activities for the entire immediate family and the superannuation fund. I prefer Ms McGuire’s evidence.

43    He asserted that his claim that she worked 20 hours a week was based on her saying that she could do the job in half a week. Mr Brennan accepted that she spent a lot of time managing the funds for both their sets of parents, the children and in later years the mortgages that they all had. Mr Brennan did not type and most of the typing was done by Ms McGuire. When required, Ms McGuire worked all night to get tenders ready, sometimes assisted by Frith, particularly when Mr Brennan had to go to work the next day. In cross-examination Mr Brennan conceded that when Ms McGuire began working for the company she contributed fully, but, he asserted, in later years she lost enthusiasm. When he was pressed about what, if any, reduction there was in Ms McGuire’s level of commitment and the hours that she worked after his assertion of her slowing down, he said: “I can’t comment, I was actually at work, outside the property, usually 5 days a week”. (emphasis added)

44    Mr Brennan also accepted that when Ms McGuire participated in the company she contributed to the growing of the business. As he said, at the time of separation in December 2006 the business was a thriving business in which he was very busy being occupied in providing facilitation and training for about 200 days per year. In order to ensure that Mr Brennan would be able to work with clients to this extent to perform his role he required a considerable degree of support from Ms McGuire in arranging bookings and dealing with the business’ clients.

45    I do not accept Mr Brennan’s attempt to minimise Ms McGuire’s efforts or commitment to ensure the commercial success that each of them made of the company through its business and the superannuation fund. Because the company was the trustee of the superannuation fund, Ms McGuire’s work managing the fund was integrally connected to her corporate responsibilities. Moreover, it was a very important part of the relationship’s overall financial position.

46    Ms McGuire’s financial activities extended beyond those of the household to each of their parents’ financial affairs in later years, as the parents became older and less capable of running their own affairs. Her role was not simply as a bookkeeper or administrator, although she performed those functions. Rather, she was the financial manager of the company’s overall enterprise including the very valuable and growing superannuation fund. I am satisfied that Ms McGuire made at least an equal contribution to Mr Brennan in their work for the company. As he said in cross-examination, together they ran a very successful business.

47    The only formal meetings held by the company and its directors were those required for the purposes of the Corporations Act 2001 (Cth) and its predecessor. These were effected by Mr Brennan and Ms McGuire signing the documents prepared by their accountant or advisors. Both of them attended diligently to the furtherance of the company’s best interests while they were in a domestic relationship because that equated to their own best interests.

Acquisition of the yacht

48    Ms MsGuire continued to resist Mr Brennan’s wish to purchase a yacht through the company. She and he argued over the issue a great deal over the years. She insisted that, if a yacht was to be purchased, it should be done by Mr Brennan himself, not through the company. Ultimately, in April or early May 2005, Mr Brennan located a 16 metre super maramu class fibre glass hulled ketch, which was then named the “Serena Azul”. It was located in the United States of America. At that time the couple had no debts and paid their bills when they fell due. The yacht was later renamed by Mr Brennan as “Nebo”. Mr Brennan insisted, over Ms McGuire’s objection, that the yacht be bought through the company, rather than by him personally. The purchase price payable to the vendor was USD382,500, which, at the prevailing exchange rate, equated to AUD503,620.80. The contract of sale with the American vendor named the company as purchaser. One reason Mr Brennan used the company to purchase the yacht was in order to obtain tax benefits such as deductions for running costs, interest on the loan and depreciation.

49    Mr Brennan drew the purchase price wholly out of the bank account of his parents, Jack and Enid Brennan, by using a power of attorney that they had given him. Ms McGuire prepared a deed of mortgage between Mr Brennan’s parents and the company to protect his parents’ and his three brothers’ positions (the latter in respect of their potential inheritance). Ms McGuire told Mr Brennan that he could not take his parents’ money without some sort of record. She insisted that he sign the deed. She told him that what he was doing was unlawful and that he had implicated her, and the company in his dealing with his parents’ money. She insisted that he repay his parents as soon as possible. Mr Brennan executed that deed under his power of attorney on behalf of each of his parents and Ms McGuire signed it on behalf of the company. The deed was dated 13 May 2005 and acknowledged a loan of $503,620.80 for a period of five years with interest at 7.5% p.a. or such other commercial rate as Mr Brennan notified to the company. The deed also purported to provide a mortgage over the yacht as security to Mr Brennan’s parents. However, this mortgage was never registered in the Australian Register of Ships or as a charge over the property of the company.

50    Mr Brennan caused the company to engage his brother, Andy, to sail the yacht to Australia at a cost of $51,124.47. The company had to pay $55,616.98 for GST and $25,320 customs duty on the importation of the yacht. Thus, in order to purchase and bring “Nebo” to Australia the company incurred a total outlay of about $635,000.

51    Mr Brennan asserted that the yacht was used on two occasions for training purposes. He said that both of those were on behalf of Ben McGuire when he worked for Virgin Mobile. Ms McGuire claimed that the yacht was Mr Brennan’s and not the company’s. She said that it was never used commercially by the company and had never been marketed commercially. She pointed to the fact that “Nebo” was registered under Mr Brennan’s name with the New South Wales Waterways Authority. He had sworn a statutory declaration on 12 August 2005 that he was “the sole owner or at least the equal majority shareholder and registered controller of” the yacht. Mr Brennan also took out in his name both insurance on the yacht and a mooring licence for her.

52    Ms McGuire kept an internal ledger of the principal and interest payments made to Mr Brennan’s parents. For reasons that were not explained in the evidence that schedule recorded interest being paid at 5% p.a., not 7.5% as provided in the mortgage. In late July 2005 the company paid principal and interest to Mr and Mrs Brennan totalling $148,855.56. Of that, $100,000 was lent by the superannuation fund to the company at 8% interest for two years. Ms McGuire prepared a deed of agreement dated 1 August 2005 which she executed on behalf of the superannuation fund and her brother executed on behalf of the company. The deed contained a mortgage over “Nebo” in favour of the superannuation fund (cl 4). Once again, that mortgage was never registered.

53    I reject Mr Brennan’s assertion that this deed was only prepared after December 2006. He always understood that the $100,000 had been provided by the superannuation fund to make a partial repayment of his parents’ loan. He was aware that this amount could not be anything other than a loan, since the fund was not purchasing an interest in “Nebo”. At that time, both Ms McGuire and her brother had a keen interest in ensuring that the money advanced by the superannuation fund was properly protected, since that $100,000 was to be used to replenish the depleted bank account of Mr Brennan’s parents.

54    Mr Brennan announced to Ms McGuire on 9 January 2006 that the yacht was to be sold. On 2 February 2006, Mr Brennan hand wrote a letter to the directors of the company. That letter was revealing. In it he said:

“I deeply apologise for the hurt that my poorly judged decision to buy the boat has caused [the company].”

55    The letter noted that since the purchase, the pressure of his providing facilitation services had precluded any active marketing of the yacht as part of the company’s leadership development programs. He said that “Nebo” had been written into four proposals, one for the Department of Foreign Affairs and Trade, another for Ben McGuire’s employer, Virgin Mobile, and the others for two other persons. He wrote that only two proposals had been concluded, producing a total income of $2,250. The letter noted that the discord which the purchase of the yacht had generated was damaging the success of the company. He recommended putting “Nebo” on the market for sale immediately.

56    There were only two occasions on which the company received any money in connection with the yacht. The first was when Virgin Mobile, Ben’s employer, at his request, used the yacht for a half day Christmas function on Sydney Harbour. The company charged Virgin Mobile only for the costs of the provision of the yacht (McGuire 287). The second occasion was to assist in sponsoring a training swim for Ben in Sydney where Ben paid for the fuel costs.

57    I find that the purchase of the yacht had been at Mr Brennan’s unilateral initiative and contrary to Ms McGuire’s wishes. From a business point of view the purchase had been a failure. I am not satisfied that the yacht served any commercial purpose of the company. I accept Ms McGuire’s evidence that Mr Brennan used the yacht from the time it was purchased exclusively to benefit himself and his friends.

58    On 9 March 2006, the company paid a further $4,863.56 in interest to Mr Brennan’s parents. Jack Brennan died on 24 April 2006, leaving his wife as his sole beneficiary under his will. Shortly after her husband’s death, Mr Brennan prepared a declaration for Centrelink on behalf of his mother who, I infer, was not able to complete it. For his mother to be entitled to a Centrelink pension and nursing care at a reduced rate, Enid Brennan’s net assets had to be at a particular level. Mr Brennan claimed privilege against self-incrimination under s 128 of the Evidence Act 1995 (Cth) against answering questions concerning the content of that declaration. He had asserted in his evidence-in-chief that Ms McGuire had concocted a scheme to reduce his mother’s assets by $369,224.24 in order that she would qualify for nursing care at a reduced rate and an aged pension. Mr Brennan completed the Centrelink declaration and signed it. He asserted that he did so at Ms McGuire’s direction. When she cross-examined him, he gave this evidence:

“Mr Brennan, do you recall the conversation when I walked into the office and saw the Centrelink declaration and I said, ‘You can’t do that’, and your response was, ‘It’s done’. Do you recall that Mr Brennan? ---- No, I don’t recall that. I have seen it in the affidavits.” (emphasis added)

59    Ms McGuire, who represented herself, did not give evidence-in-chief on this matter. There was no affidavit admitted in evidence with the proposition Mr Brennan referred to in the answer I have just quoted. However, I struck out many paragraphs of both parties’ affidavits at the commencement of the trial and he may have been referring to one of those. Ms McGuire gave no direct evidence at the hearing on this matter. Nonetheless, I am not satisfied by Mr Brennan’s evidence that Ms McGuire prepared the Centrelink declaration or was involved in concocting a sham scheme to obtain benefits for Enid Brennan.

60    Around 15 May 2006, Mr Brennan arranged for each of his brothers and himself to receive a payment of $92,305.56 from their mother’s bank account. This resulted in a reduction of her assets by the amount of $369,224.24. However, there was not enough money in the bank account or otherwise available to Enid Brennan or Mr Brennan, through his control of her finances, to enable all of the brothers to be paid $92,305.56. There was a shortfall of $50,000. To make up this shortfall, Mr Kaufline lent the company $49,400. The company used that money and a further $600 to pay $50,000 to pay his share to one of the brothers, Peter Brennan, together with a cheque from Mrs Brennan’s account for $42,305.56. Mr Brennan used his share, the loan from Mr Kaufline and the $600 to reduce further the amount of the loan the company owed to Enid Brennan.

61    The distribution of the $369,224.24 to each of the four brothers was described by Mr Brennan as a “forward inheritance”. He signed cheques from his mother’s account for each of his brothers and sought to explain the transaction in answer to the following question:

“How did you get a forward inheritance if you’re not a beneficiary? --- I was not a beneficiary of my father’s will and $92,305.56 was an amount of money paid to each of the four boys in advance, of any inheritance from mum’s estate. She only died on 1 January this year, but it was done with a view by you to manage the estate.”

62    The result of Mr Brennan using his “forward inheritance” and Mr Kaufline’s loan was to reduce the amount owing by the company to the estate of Jack Brennan and his wife to $227,477.56.

63    On 2 June 2006, Mr Brennan signed a new deed of agreement between himself and his mother. He executed the deed for both parties, using his power of attorney. The deed evidenced that he personally was now the borrower of $186,098.65 and that the term of the loan was two years at an interest rate of 5.5% p.a. Once again, Ms McGuire had sought to document what was owing to Mrs Brennan. The company had ceased to be the debtor to Enid Brennan. Thereafter, when interest was paid on the outstanding loan, it was paid to the four brothers and not to Mrs Brennan or her late husband’s estate because Mr Brennan treated the money as part of the “forward inheritance”. Also on 2 June 2006, the company paid $42,305.56 in respect of the loan. But this was not distributed to Mrs Brennan or her late husband’s estate. Mr Brennan paid this in equal amounts to each of the four brothers. Next, on 3 July 2006 the company paid $36,857.04 in respect of the loan reducing the outstanding balance on the loan to $151,025.91 at which it has remained. Again that payment was made to the four brothers. According to Ms McGuire’s ledger, a total of about $30,000 in interest on the loan had been paid by the company before December 2006.

64    When Enid Brennan died on 1 January 2010, her estate was sworn, by Mr Brennan as a joint executor, to probate with net assets of $771,000 including, as an asset, the loan to Mr Brennan of $151,025.91. One reason why I formed an adverse view of Mr Brennan’s credibility was because he used the power of attorney that each of his parents had given him for his own unilateral purpose without regard to either his parents’ best interests or those of his three brothers. He did not seek his parents’ or siblings’ approval of the transactions or his dealings with a very large part of their assets. He had been warned by not only Ms McGuire but also Mr Dixon that a boat was not a good investment for the business. Mr Brennan’s conduct in drawing down over $500,000 from his parents’ cash assets in order to purchase the yacht demonstrated that he was ruthless in preferring his own financial benefit to that of other persons to whom he owed not only love and affection, but also fiduciary duties. He selfishly used his parents’ money without regard to their needs, if any, and without regard to the fact that even if they were too frail ever to need, or be likely to use, that money, his three brothers each had a contingent interest as beneficiaries in the estate of the surviving parent. His parents had made mutual wills leaving their whole estate to the survivor with the residuary remainder to each of the four sons as tenants in common.

65    Thus, when Mr Brennan drew down the $500,000 to pay for the yacht, he accessed about half of his parents’ net worth. That sum amounted to double his contingent interest as a beneficiary in his surviving parent’s estate. The payment ignored the possibility that his parents may need or wish to use their own money during their lifetime for different purposes. In my view that conduct was dishonest and reflected badly on Mr Brennan’s overall credibility and integrity.

66    Ms McGuire contended that the yacht had been, in effect, assigned to Mr Brennan around 1 July 2006. I do not accept that evidence. She was aware of how to document such a transaction, had it occurred. Indeed, she would have been astute to have done so but did not.

67    On 9 June 2007, during a storm, the yacht sheared at her mooring rope and washed up on Surfside Beach near Batemans Bay. A salvor acted promptly to secure her from further damage. She was refloated on 11 June and taken for repairs. Mr Brennan, as the insured under the policy, made a claim on the insurer for the repairs and cost of salvage of the yacht which was apparently paid to the company. There was no evidence of what sum was recovered from the insurer but I infer that Mr Brennan used any funds to repair the yacht. Ultimately, the liquidator sold the yacht for $254,545.45.

68    I find that the yacht remained the property of the company as at the date of separation. However, Mr Brennan’s conduct or motivation in causing its purchase to occur and his exclusive use of it for his own purposes are relevant in arriving at an overall assessment of the parties’ position. That is a matter to which I will return.

The parties separate

69    In early December 2006, Ms McGuire went on a short break away from home. On 6 and 7 December, Mr Brennan removed some furniture, including a chair, table, bed and rug along with some personal effects with the assistance of a friend. He also took the company’s computers, and physical records together with Ms McGuire’s parents’ records and other personal records that she had maintained in the office at the Forrest home. Mr Brennan has kept all of those records and refused to return them apart from returning on 23 December 2006 the company’s and superannuation fund’s tax files under the arrangements made the previous day.

70    From the time he left the Forrest home, Mr Brennan sought to conduct the affairs of the company as if they were entirely his own. He redirected the mail for himself and the company to a new address at a GPO box and changed its listed telephone numbers to where he had taken himself to live. The effect of this was to divert all company correspondence, including that relating to the superannuation fund, and some correspondence with his surname to Mr Brennan’s attention. This diverted to the new address rate notices, correspondence such as a notice of assessment for Frith from the Australian Taxation Office, cheques in payment of services provided by Mr Brennan when acting on behalf of the company and other correspondence addressed to anyone with the surname Brennan. He did not take any steps to inform Ms McGuire of any correspondence that might be relevant to the management of the superannuation fund or company’s affairs or indeed, to the extent that they concerned her in a personal capacity herself. For some years until about 2003, Ms McGuire had also used the surname Brennan and some correspondence continued to be addressed to her in that name. Thus, when notices for council and water rates were received by Mr Brennan at his new GPO box, he did not inform Ms McGuire about them or whether or not he was paying them. As events turned out he paid rates for the first two years after he left but then ceased to do so, again, without telling Ms McGuire what he was doing.

The 22 December 2006 meeting

71    After the separation, relations between Mr Brennan and Ms McGuire were very fraught. They have remained so. On 22 December 2006 they both met in Lindfield, Sydney, with a mutual friend, Peter Ring, and Ben, who was then not estranged from Mr Brennan. The meeting lasted for about three hours. At the meeting Mr Brennan and Ms McGuire agreed to work towards a handover of the business and company to Mr Brennan solely by 31 March 2007. They agreed that they would communicate during January 2007 either by telephone or email provided that the other could veto communications. At the end of January they agreed to revisit the issue of how to communicate with one another. Mr Brennan agreed to deliver materials for the business to Ms McGuire prior to his going away overseas on 24 December. This would enable Ms McGuire to prepare the tax returns for the company and to administer what needed to be done for it and the superannuation fund.

72    They agreed that the circumstances concerning the removal of the company’s business from the Forrest home would not be discussed with business contacts by either of them for the time being. They agreed that they would later negotiate a joint text to give to clients and others around the end of January 2007. Mr Brennan agreed to inform Ms McGuire of those persons he had already told about his relocation. The parties agreed that each would be paid $5,000 in wages by the company and that Mr Brennan would arrange for Ms McGuire’s $5,000 to be transferred to her via Ben’s bank account. They agreed that the amounts in the company’s streamline bank account in Mr Brennan’s name were to be split 50-50 as at 7 December 2006 taking into account any deposits or withdrawals after that date. Both agreed that they and the company were to continue to support Frith in the ordinary course and that if she required any substantial or unusual expenses to be met, they would discuss that between them.

73    Ms McGuire was to prepare a list of all the company materials that she required by 12 o’clock the next day. Each was to work on a list of assets as an inventory in preparation for a discussion to occur in early February 2007 as to how they might split them. Mr Brennan acknowledged that the removal of contents from the office had been upsetting and committed to return them to Ms McGuire. They agreed that he would do so symbolically by handing her the keys, which he did and she then returned them to him.

Subsequent conduct by the parties

74    On 24 December Mr Brennan travelled overseas with his now fiancée, Julie Trent. He used company funds to finance that trip including to pay for business class travel for Ms Trent and himself. Needless to say, Mr Brennan had not consulted with Ms McGuire about this use of the company’s money.

75    On 11 December 2006, Amelia Murray of Ord Minett, one of the advisers which the superannuation fund used, sent an email to the company seeking an additional $90,000 to supplement the current balance of $6,000 that was available in the superannuation fund’s cash management account. Ms Murray nominated some rights issues as suggested investments which the superannuation fund should take up with that money and said that would still leave some cash available for additional investments. On 3 January 2007 Ms McGuire drew a cheque for $100,000 in response to Ms Murray’s email, however, the cheque was drawn on an account of the superannuation fund that had been closed. On 9 January 2007, Ord Minett advised Ms McGuire that the cheque had been dishonoured because of the closure of the account. On 11 January 2007 Ms McGuire drew a replacement cheque for $130,000 from a different account held by the superannuation fund. The increase of $30,000 was because Mr Kaufline had just made a contribution of $30,000 for his account in the fund.

76    In the meantime, on 8 January 2007, Ms McGuire transferred $30,000 from the company’s premium business account with the Commonwealth Bank to the superannuation fund as a contribution by her. She transferred a further $25,113 from that account on 25 January and again treated that as being a contribution by her to the superannuation fund. Mr Brennan asserted that these two contributions were made without his knowledge or authorisation.

77    Ms McGuire asserted that these monies were transferred by her in accordance with permission that Mr Brennan had given to her in a telephone conversation he had had with Ben, in her presence, on 23 December 2006. She claimed that she heard Ben asking Mr Brennan whether Ms McGuire could transfer money from the company’s bank account into the superannuation fund and that Mr Brennan had agreed that she could. She claimed that Ben then relayed the question of how much should be left in the account and that Mr Brennan said: “The usual”. Ms McGuire explained that the “usual amount” was a reference to the practice that the parties had adopted of not leaving much money in the premium business bank account, because it did not earn interest. Once money had accumulated there by direct deposits in payment of the company’s invoices, Ms McGuire had a practice of transferring it into the superannuation fund. Mr Brennan denied that he gave permission for any transfer in the conversation and claimed that no funds should have been moved from the bank account without discussion with him. After his return from overseas, Mr Brennan became concerned that Ms McGuire had drawn the cheques for $100,000, which was dishonoured, and for $130,000. He had misunderstood the purpose of these cheques and thought Ms McGuire had sought to increase her superannuation by those amounts. In fact, she had drawn the cheques on bank accounts of the superannuation fund to use money already in it at the time of separation to make available to Ord Minett for investment the $100,000 and then the $130,000 (which included Mr Kaufline’s recent contribution of $30,000). However, this misunderstanding led to a further loss of trust on Mr Brennan’s part.

78    I have hesitated about accepting Ms McGuire’s evidence that such a conversation as she recounted took place to justify her withdrawals of the $55,113. The parties at that time were in a state of some acrimony. Only the previous day, they had agreed to receive $5,000 each as wages from the company. It is not likely that Mr Brennan would have agreed to Ms McGuire removing money for her own superannuation from the company’s bank account, as opposed to, for example, paying it equally to their respective superannuation accounts. Moreover, although he was present in court, Ben McGuire did not give evidence of any such conversation. On the other hand, Mr Brennan had caused the company to expend a large sum on “Nebo” which was the asset he desired to fulfil his part of their retirement plan. They had agreed that substantial superannuation contributions be paid to Ms McGuire’s account in the two years preceding their separation to make up the difference in their respective entitlements. In addition, her retirement was more imminent and she was entitled to make larger superannuation contributions for tax purposes. They both had conducted their superannuation investments for years on the basis that spare cash in the company’s operating account would be used to make superannuation contributions. Ms McGuire’s use of the $55,113 in January 2007 was consistent with the greater accumulation of money in her account in the superannuation fund during the two year period before separation. Moreover, although Mr Brennan expressed contemporaneous concern about the two larger cheques for $100,000 (which was dishonoured) and $130,000 he did not appear to be particularly concerned in early 2007 about the $55,113.

79    On balance, I find that on 23 December 2006 Mr Brennan did agree to Ms McGuire transferring cash accumulating in the company’s trading account into the superannuation fund for her benefit leaving the “usual” amount in the company’s operating account. The conduct of Ms McGuire in paying the sums of $30,000 and $25,113 to her superannuation account is consistent with the previous or “usual” practice the parties had followed. It is likely that Mr Brennan did not give any thought at the time to the consequence of his giving that permission was that the practice the parties had adopted of putting the superannuation contributions into Ms McGuire’s name would apply.

80    On his return from overseas, Mr Brennan registered his trading name, Robert Brennan and Associates, on 2 February 2007. He has traded under that business name ever since and conducted the business on his own account. He said that when he became aware of outstanding obligations of the company, he arranged for them to be met out of money he had received on account of the company. He claimed that later on he met the company’s obligations personally. Mr Brennan said that he caused his bookkeeper to maintain two sets of books, one of the company’s receipts and expenditure and the other of his new business. Ms McGuire also caused the company to meet some of its obligations from money it had held in its bank, before deposits ceased being made to its account which she had been able to continue operating.

81    Mr Brennan wrote on his new letterhead of “Rob Brennan and Associates” to the company’s clients falsely telling them that some of its contact details had changed. For example, he wrote to the Department of Foreign Affairs and Trade on 25 March 2007 stating:

“Change of contact details

I wish to advise that Rob Brennan Facilitation and Training Services P/L has changed some of its contact details – see below.

The new bank details are:

    Robert Brennan and Associates t/a Rob Brennan Facilitation and Training Services:

[Bank account details were set out]

Please amend your records accordingly.

Thank you for your continuing prompt and accurate payments.”

82    Mr Brennan used the company’s name to obtain payment of its invoices into his account. He also misrepresented his own business by saying that it was trading as “Rob Brennan Facilitation and Training Services”, which was the company’s name in popular parlance excluding only the suffix “Pty Limited”.

83    Mr Brennan directed the Commonwealth Bank on 30 March 2007 to stop the account the company maintained in its capacity as trustee of the superannuation fund. That had the effect of denying Ms McGuire and Mr Kaufline access to the account. Mr Brennan also withheld from Ms McGuire and Mr Kaufline communications made to the company as trustee of the superannuation fund, including notices from the Australian Taxation Office that required payments to be made. Mr Brennan, again without consultation with the other two fund members, engaged Walter Turnbull Pty Ltd to perform functions that Ms McGuire had previously performed in liaising with the members of the fund to provide basic information (such as the insurance Mr Brennan had in force within the fund) and Ord Minnett. The costs of those services were borne by the members of the fund in proportion to their interest and so fell principally on Ms McGuire’s and Mr Kaufline’s shares.

84    On 12 October 2007 Mr Brennan sent an email to Ms Murray of Ord Minnett responding to an invoice Ms McGuire had submitted for her bookkeeping services stating:

“… my firm instruction is again, do not make ANY payments to [Ms McGuire]. And please do not advocate again on behalf of one member of the Superfund.”

85    From late 2007 world financial markets began to experience difficulties that became known as the “global financial crisis”. The crisis developed in 2008 reaching its nadir around September 2008. In general the value of securities and investments on markets worldwide, including in Australia, declined markedly over this period. This crisis was not the subject of any detailed evidence, but is so well known that proof of it is not necessary under s 144(1)(a) of the Evidence Act 1995. By June 2008 Ms McGuire was concerned that Mr Brennan’s refusal to allow the investments of the superannuation fund to be managed was threatening her and her brother’s interests. She wrote to Andrew Murray of Ord Minnett on 25 June 2008 saying:

“We are both concerned with the stock market downward movement, and would like these funds to remain in the trust fund until we have spoken to you. We are both very keen to protect our ‘retirements’ [as] best we can in the current environment, and that you take a highly conservative approach to any activity you may be considering on our behalf.”

She continued to press Ord Minnett for assurances about the safety of their superannuation investment during July and September 2008. Mr Murray told her:

“We’ve made so many calls, and Rob doesn’t respond. We can’t sell anything without his agreement.”

86    Mr Brennan’s behaviour in relation to the impact on the superannuation fund from the decline in stock markets and his failure to respond to Ord Minnett’s attempts to obtain instructions was unreasonable. He gave no explanation in evidence for it. Ultimately, Ms Murray of Ord Minnett emailed Ms McGuire late on 17 September 2008 saying:

“I have just called Rob – he got back from overseas yesterday hence our inability to get a hold of him.

He has approved the sales of the stocks you discussed with Andrew, accordingly I will undertake those tomorrow (market is closed today).

I also talked thru the fact that you had sent an email expressing your concern with the state of the market. He has advised that whilst he is happy to leave the investments as are he does not want you to be worried about the fund, accordingly he will approve moving to cash if that is what we decide.

Please call as soon as possible so as to discuss the course of action.” (emphasis added)

87    Mr Brennan’s belated agreement to allow the superannuation fund investments to be protected against further declines by converting them to cash in the market was coupled with his unreasonable statement to Ord Minnett that he was “… happy to leave the investments as they are”. On 30 June 2007, Mr Brennan’s withdrawal benefit was about $640,000 and Ms McGuire’s was about $1,700,000. The corresponding figures on 30 June 2006 were about $510,000 for Mr Brennan and $1,060,000 for Ms McGuire. I infer that at least $300,000 of the increase in Ms McGuire’s funds between 2006 and 2007 occurred because she had invested money from her inheritance from her late father’s estate. He had died in October 2005. There is no evidence of the position of the fund in 2008 but by 1 July 2009 the market value of Mr Brennan’s share was about $507,000 and Ms McGuire’s about $1,300,000 representing falls in value in two years of over 20%.

88    It is not possible to quantify the impact of the global financial crisis and Mr Brennan’s inaction on the value of the funds. However, given that their superannuation had fared well under Ms McGuire’s stewardship, I infer that Mr Brennan’s insouciance to the impact of the decline in financial markets prior to 17 September 2008 and his exclusion of Ms McGuire from her previous role as financial manager caused a greater (but unquantifiable) loss in the value of the parties’ investment in superannuation than ought to have occurred. While I cannot quantify the impact of this inference on the parties’ assets held in superannuation, it is appropriate to have regard to this as a factor in making any adjustment in Ms McGuire’s favour.

89    In October 2008, Ms McGuire and Mr Kaufline sought materials from Mr Brennan to enable them to prepare the 2008 tax returns for the superannuation fund but he did not respond. On 17 October 2008, Certus Law, on behalf of Ms McGuire and her brother, sent Mr Brennan notices of their resignation as members of the superannuation fund and requested a transfer of their entitlements to a new complying superannuation fund. Mr Brennan failed to comply with this request for nearly 11 months.

90     Eventually, Ms McGuire did obtain a payment of $200,000 from moneys of the superannuation fund held by Ord Minnett on 29 July 2009. She said that she used these moneys to pay her outstanding legal fees, accumulated debts and interest that she had incurred since December 2006. Ms McGuire said that she withdrew a further $100,000 from the superannuation fund on 27 November 2009. She said that she used $30,000 of these moneys to buy a car but gave no detailed evidence of how the balance of $270,000 was spent. When cross-examined about this, she produced her bank statements and made them available to Mr Brennan’s lawyers. However, she was not cross-examined on the bank statements and neither party tendered them.

91    Despite its significant value to each party, neither tendered up to date evidence of his or her superannuation entitlement at the hearing. I granted each party leave to file an affidavit as to their superannuation entitlement on or before 7 December 2010. Mr Brennan filed an affidavit sworn on 6 December 2010 that went to matters well beyond that leave. I have had no regard to the material in that affidavit other than the following information as to his superannuation:

92    The contingent asset can be ignored for present purposes in valuing both superannuation and the company because under the adjustment I propose to make Mr Brennan will control or have the benefit of the parties’ interest in the company. Thus, his superannuation entitlement is currently worth about $565,000. Mr Brennan withdrew $56,000 from the Freedom Superannuation Fund on 20 July 2010 which his financial planner, Dominic Kelly, described as “a transition to retirement pension payment”. Mr Brennan had not disclosed that withdrawal before, nor has he explained what he did with it. Mr Brennan and Ms Trent are the trustees of the Freedom Superannuation Fund. Ms Trent has no money in that fund.

93    Ms McGuire filed an affidavit sworn on 7 December 2010. It too was in an unsatisfactory form. Ms McGuire referred to a letter to her dated 7 December 2010 from a firm of accountants, Taubenschlag & Associates, that asserted that the figures it provided had been based on (unspecified) information and statements supplied to them by Ms McGuire, namely:

94    Those figures reflected a rollover sum paid by Ord Minett, of $1,103,480, after Ms McGuire’s withdrawal of $200,000 on 29 July 2009. That accorded with the evidence, however, Taubenschlag & Associates’ figure for withdrawals of $233,000 was not explained. It is inconsistent with Ms McGuire’s evidence of a withdrawal of only $100,000 and her sworn financial statement of 25 November 2010. That statement recorded $1,026,620 as her estimate of the gross value of her superannuation, about $133,000 more than Taubenschlag & Associates’ closing balance at 30 June 2010 of $893,694.00. Until 7 December 2010, Ms McGuire had not disclosed the extra reduction in her superannuation of $133,000 that had occurred months earlier.

95    After receiving the further superannuation evidence, I considered that I should afford the parties the opportunity to comment on what appeared to be a substantial and unexplained further increase of $133,000 in Ms McGuire’s drawings from her superannuation fund. I did not draw attention to Mr Brennan’s recent $56,000 withdrawal. Ms McGuire filed a further affidavit sworn on 13 December 2010 that also amounted to her submissions. She asserted that Taubenschlag & Associates had made an error in including the $133,000 and produced a new letter from them that identified the balance of her fund at 30 June 2010 as $1,026,694. This new affidavit was silent as to how any such error occurred and what Ms McGuire’s up-to-date superannuation entitlement was, beyond saying that she had not made any contributions or withdrawals since 30 June 2010.

96    In my opinion, the lack of a full and satisfactory explanation by Ms McGuire as to how she dealt with either the $300,000 or the $433,000 is a matter that I should take into account in arriving at an overall assessment of what is just and equitable to order under s 15(1) of the Act. I will also similarly have regard to Mr Brennan’s recent drawing of $56,000.

Consideration

97    The parties had a long term de facto marriage lasting over 25 years. Mr Brennan left the home on two occasions for relatively short periods, six months in 1991 and about six weeks in 2002. However, his return home on each occasion revived the de facto relationship. There was no dispute, and I am satisfied, that Mr Brennan and Ms McGuire had a domestic relationship within the meaning of the Act. Each had resided in the Territory between 1985 and 2006, and Ms McGuire has continued to do so. Each had made substantial contributions in the Territory of the kind referred to in ss 15(1)(b) and (c). The proceedings were commenced on 12 November 2007, about 11 months after the relationship ended on 6 December 2006. Accordingly, the jurisdictional requirements in ss 11(1), 12(1) and 13(1) have been met.

98    Both parties made substantial financial and non-financial contributions directly and indirectly to the acquisition, conservation and improvement of their property and financial resources within the meaning of s 15(1)(b). In the early years, Ms McGuire introduced a substantial capital base which Mr Brennan’s income helped to conserve and improve by assisting with mortgage repayments while also principally maintaining the day to day needs of the household. When she earned income, Ms McGuire also contributed to that conservation and improvement.

99    The combination of Ms McGuire’s initial capital contributions, their joint liability as mortgagors of each property in joint names and Mr Brennan’s, or the couple’s pooled, earnings enabled them to pay off the mortgage on the Forrest property relatively quickly. This allowed more of their pooled income to be applied to the superannuation fund at an earlier time than many family units find possible. However, Mr Brennan’s decision to purchase “Nebo” through the company and against Ms McGuire’s wishes has had the consequence of significantly diminishing the present value of the parties’ property.

100    Additionally, both parties made substantial contributions as homemakers and parents. Mr Brennan accepted the role of step-father to Erin and Ben. Both he and Ms McGuire fulfilled their parental or quasi parental roles with all three children (see s 15(1)(c)). Sadly, one outcome of the breakdown of Mr Brennan’s and Ms McGuire’s relationship has been his estrangement from both Frith and his step-children.

Value of the company

101    I have valued the company at $150,000, being the approximate amount that the liquidator indicated will be available for distribution to creditors. Apart from the amount in Mr Brennan’s proof of debt, that the liquidator has admitted, there is no evidence of any other liability owed by the company. I infer that Mr Brennan has discharged any liabilities of the company known to him. This is because, first, the nature of the items that Mr Brennan claimed in his proof of debt and, secondly, the fact that Mr Brennan sought to step into the shoes of the company’s business in his new activity as a sole trader under the name “Rob Brennan & Associates”. He gave evidence that he discharged the company’s liabilities from first, moneys that he received and later from his own money. Mr Brennan was in a position to prove what the assets and liabilities of the company are. He had its records, at least up to the time of liquidation. He had direct contact with its debtors and creditors. He had no evidence to suggest that he had left any creditors unpaid.

102    Mr Brennan had made a report as to affairs to the liquidator that asserted that creditors claims exceeded $660,000, plus any amounts owed to the Australian Taxation Office. However, the liquidator rejected over $125,000 of Mr Brennan’s proof of debt and neither party led any evidence of any other claims that had been made on the liquidator. Mr Brennan had also submitted a proof of debt to the liquidator that the balance of the debt of $151,025.91 that he owed to his mother’s estate was due by the company. No doubt that proof was rejected because Mr Brennan was the debtor, as his probate affidavit showed.

103    In arriving at this valuation I have also considered that while the liquidator has admitted Mr Brennan to proof for about $217,000, Mr Brennan has agreed that he owes the company $205,000 that I infer consists wholly or largely of moneys that he appropriated from its debtors after he left the relationship. It is likely that those two sums will be able to be set off.

104    I have no confidence in Mr Brennan’s claim that he or the company owed Ms Avery any money for her assistance to him in the period after he left the relationship. First, there is no objective evidence of any contract that Ms Avery made. Secondly, there was no evidence that she did any substantive work for the company. Mr Brennan and Ms McGuire had agreed on 22 December 2006 that Ms Avery could be used on proposals by the company. There is no evidence that Ms Avery worked on any proposals. Rather, the evidence points to Ms Avery assisting Mr Brennan in his decision to arrogate the assets and business of the company to himself. For example, in late January 2007, Mr Brennan had asked her “… to screen” Ms McGuire in forwarding his emails to him). Ms Avery contrived to check whether Ms McGuire was reading Mr Brennan’s emails by creating a false story about Ms Avery’s child. I am not satisfied that Ms Avery made any contract with Mr Brennan or the company.

105    Thirdly, Ms Avery rendered an invoice dated 30 June 2007 to “Rob Brennan Facilitation & Training Services” for $22,853.60 for “administrative services”. That is the name Mr Brennan was using for his own business as he had informed creditors such as the Department of Foreign Affairs and Trade (see [81] above). Ms Avery charged at the rate of $408.10 per day (including GST) for a total of 56 days work up to 30 March 2007. There is no evidence that Mr Brennan paid that invoice despite having had the benefit of the company’s income and engagements while Ms Avery supposedly did this work. Had she done work of any value, it is likely that Mr Brennan would have paid her. It is difficult to believe that Ms Avery rendered services worth over $2,000 per week. Moreover, Mr Brennan’s assertion of this claim reflects poorly on his assertion that Ms McGuire only worked about 20 hrs per week for the company doing largely secretarial work. I am not satisfied that he or the company owed Ms Avery any money.

Adjusting for “Nebo” and the company

106    There was a substantial loss on the company’s investment in “Nebo”. This is approximately $260,000 that I have calculated as follows:

107    These figures do not take into account the loss of use of any funds that were paid by the company for “Nebo” which it could have paid to Mr Brennan’s or Ms McGuire’s superannuation fund and any growth that such an investment may have realised.

108    I have also had regard to the impact on the parties’ financial position of Mr Brennan’s decision to purchase the yacht. He owes the estate of his late mother $161,701 as the balance due under the 2 June 2006 loan agreement. He also is entitled as a beneficiary to one quarter of her residuary estate. Mr Brennan’s interest in his mother’s unadministered estate is that of a residuary beneficiary and is probably best characterised as a financial resource, not as property. Although he is one of two executors of that will, his interest as executor is a beneficial one only to the extent that he may use the property to pay the testator’s debts and the costs of administration of her estate: Commissioner of Stamp Duties (NSW) v Buckle (1998) 192 CLR 226 at 246-247 [49]-[51] per Brennan CJ, Toohey, Gaudron, McHugh and Gummow JJ. That right is of no moment here. More relevant is Mr Brennan’s right to compel the proper administration of the estate. That right is in a limited sense a beneficial interest. It is not an immediate proprietary interest for the reasons explained by Viscount Radcliffe in giving the advice of the Judicial Committee of the Privy Council in Commissioner of Stamp Duties (Q) v Livingston (1964) 112 CLR 12 at 23-24, 27. For present purposes, however, there is little doubt that this resource is, on a practical level, equivalent to an actual present interest of Mr Brennan in the estate with a value of about $180,000.

109    As a joint executor, on 7 April 2010, Mr Brennan swore that the value of the estate (including the principal outstanding on the loan of $151,025.91) was worth about $780,000. His quarter share was therefore worth slightly more than the debt. He had treated his use of his parents’ money in acquiring “Nebo” as his “forward inheritance”. Now that he has an actual inheritance, he can set off his debt to the estate against his use of its resources as his “forward inheritance”.

110    However, this would not fairly adjust the consequence of Mr Brennan’s decision to buy the yacht and the amount of the company’s funds that were used or lost as a result. Not only did the company have to pay over $125,000 for Mr Brennan’s brother to deliver her, and for GST and customs duty, it made substantial payments of principal and interest of about $200,000 more. Moreover, the company suffered a capital loss of over $250,000 on the sale of “Nebo”. Thus, about $575,000 that the parties would have had available to invest in superannuation, was spent or lost on the investment in “Nebo”, after netting off the recovery by the liquidator of her sale proceeds.

111    In my opinion, it is just and equitable to treat the acquisition, associated repayments, costs, and expenditures and losses relating to “Nebo” by making a significant notional adjustment in Ms McGuire’s favour. First, the acquisition and other costs and repayments can be seen as, to some extent, balancing the apparent discrepancies between Ms McGuire’s and Mr Brennan’s superannuation accounts. His plan was to have a yacht in his retirement. By unilaterally advancing the acquisition of “Nebo” and involving the company in the expense involved, Mr Brennan brought about a substantial adjustment of the parties’ financial position. In his letter of 2 February 2006, he recognised the discord that his decision to acquire the yacht had caused.

112    Mr Brennan should assume sole ownership of the company. He can benefit from any return to shareholders but also carry the burden of the unsuccessful investment in “Nebo”. He should also bear the risk that there are other unpaid creditors whom the liquidator will admit to proof that may diminish any benefit that his beneficial ownership might otherwise have brought him. In the circumstances when he had control of the company for nearly two years after separation his failure to lead any evidence to suggest that the company has unpaid creditors and his positive assertions that he had paid its creditors to make it just and equitable that he bear the risk that there are any unpaid creditors.

113    In all the circumstances it is just and equitable that I treat the apparent inequality in the parties’ superannuation as of less moment because some of it is due to Mr Brennan’s decision to buy “Nebo”. Had he not taken that decision, a large amount would not have been spent on it and ultimately lost by the company. That money would have been available to augment his and, perhaps to a lesser extent, Ms McGuire’s superannuation.

Value of superannuation

114    In final submissions, Mr Brennan’s counsel argued that Ms McGuire had received $300,000 as a premature distribution of an asset of the relationship and had not established that she had used it reasonably, so that it should be treated as still part of the available pool of assets. His counsel referred to In the marriage of AD and AC Townsend (1994) 18 Fam LR 505 at 509-510 per Nicholson CJ and Chorn and Hopkins (2004) FLC §93-204 at 79313-79314 [20]-[21] per Finn, Kay and May JJ.

115    Ms McGuire’s most recent affidavit was unsatisfactory. It failed to address how Taubenschlag & Associates’ letter of 7 December 2010 had included the withdrawal of $133,000 and then, how that was supposedly recognised as a mistake. However, she was prepared to have her superannuation entitlement taken into account at a value of about $1,025,000. This is the amount it would have been at 30 June 2010 if the $133,000 entry were an error and it had not been withdrawn. Thus, it is not necessary to determine whether the $133,000 was withdrawn by her and not disclosed. However, her evidence concerning her current superannuation entitlements and what she did with her drawings has lacked candour. She also, made a bare assertion that she owed her son, Ben, about $75,000. Again, in her evidence at the trial, she did not establish how that debt arose or why no part of it was reduced from her receipt of the $300,000.

116    I am not satisfied that Ms McGuire has adequately established that all of the $300,000 she withdrew from the superannuation fund was spent on her debts. Nonetheless, I do not accept that the consequence of Ms McGuire’s failure to explain adequately her expenditure of the $300,000 should result in it all being treated as part of the current pool of assets. As a matter of commonsense, Ms McGuire would have incurred debts over the period of four years since separation. Her taxable income for the four years since 1 July 2006 was a total of about $22,000. That was very small. It is likely that she incurred legal fees and other debts amounting to a considerable portion of $270,000 (after allowing for the acquisition of the car). She has been in receipt of a New Start Allowance benefit of $469 per fortnight since 6 September 2010. Additionally, Mr Brennan had the use of the company and his own income in the same period but did not provide any support to Ms McGuire.

117    I infer from Ms McGuire’s unexplained use of the $300,000 from her superannuation that she has undisclosed assets in the order of $200,000.

Mr Brennan’s earning capacity

118    Both parties recognised that Mr Brennan continues to be able to exploit his substantial and reliable income earning capacity whereas Ms McGuire has only a very limited opportunity to engage in remunerative work at her age of 64. However, Ms McGuire has to some extent undermined Mr Brennan’s income earning capacity by informing some of his clients about what she considered to be his unsatisfactory conduct. She claimed that she did so in order to obtain information about the company’s relationship with the relevant clients after he failed to respond to her requests for that information. But she also asserted that she had a duty on behalf of the company to tell clients about his conduct.

119    Whatever justification or lack thereof, each of Ms McGuire or Mr Brennan may think those actions had, there is no direct evidence, other than Mr Brennan’s assertion of a decline in forward bookings, to suggest that Mr Brennan will suffer any financial loss by reason of Ms McGuire’s conduct. I do not consider that I should give substantial weight to Mr Brennan’s assertion. Had Ms McGuire’s actions reduced his income earning capacity that would have appeared in his earnings. The history of his gross earnings through the company and in his own name in evidence in tax returns, and Mr Brennan’s 2009/10 profit and loss management accounts showed the following gross receipts:

120    The position for 2006/07 is unclear. There are no accounts in evidence for the company for that year. The $205,000 that Mr Brennan owes to the company under the consent judgment is likely to understate the amounts earned and received by the company before he left the relationship on 6 December 2006, although the judgment sum will include some of those fees.

121    Mr Brennan accepted that his services were the predominant source of his income but he referred to the fact that he also charged clients for supplying the services of two subcontractors, Noesis Pty Ltd and his fiancé, Ms Trent. He claimed that he paid the subcontractors 90% of the amount he invoiced the clients but later asserted that he did not deduct 10% from Ms Trent’s payments. Mr Brennan’s tax returns and 2009/10 management accounts do not identify to whom any fees were paid. The tax returns have an item called “Contract payments”, including one for “JT” for $48,000 in the 2009 return. Absent a sound evidentiary basis to understand these entries, I do not consider that the net income figures of Mr Brennan’s business are of assistance. It is essentially a business with few substantive overheads other than payments for services of third parties, employees and superannuation.

122    I do not accept Mr Brennan’s evidence that he owes Ms Trent $48,000 or any sum. I am not confident that Mr Brennan has explained fully what financial arrangements he has made with Ms Trent and how these are reflected in his tax returns and other financial records. I do not accept his evidence about financial matters where it is uncorroborated. There is no independent evidence of which he may have paid to Noesis Pty Ltd or Ms Trent. There was no evidence of any tax invoices rendered, or tax returns, by Ms Trent. It is difficult to believe that in one financial year Mr Brennan paid her nothing and owed her the entire amount she earned, but in the next year he paid her exactly $56,000. He claimed that she earned $300 per hour, but $56,000 equates to 186.67 hours or less than 3.5 hours per week. I do not accept that Mr Brennan has given a full disclosure of the financial arrangements he has with Ms Trent.

123    In final address Ms McGuire asked that any final orders should allow her to keep the Forrest house, even if that resulted in an order that she cause most or all of her superannuation to be made over to Mr Brennan. The rates and taxes owing on the Forrest house amount to about $10,500. Ms McGuire claimed that she and her neighbour have agreed to work involving removal of a number of large trees and the replacement of a fence that will cost her about $20,000.

124    In arriving at my overall assessment, I have also had regard to the fact Ms McGuire has continued to live in the Forrest home while Mr Brennan has had to find and pay for his own accommodation.

Conclusion

125    I find that the parties had the following approximate financial position at the time of the trial:

126    I have given nominal values to each party’s personal chattels of $30,000 and cars of $15,000. No doubt over a long relationship parties acquire items for sometimes large sums that objectively have little or no resale value either at the time of purchase or many years later. Here, neither party produced a valuation of his or her property or cars. If either had personal property that materially may have affected the assessment of his or her net assets, then a valuation of the item or items would establish its current worth. The fact that each party was content to rely on his or her own assertion of the value of these items has resulted in there being no reliable foundation to ascribe a value beyond the nominal sum I have adopted. I have taken the value of Mr Brennan’s office furniture from his depreciation schedule in his 2009 tax return.

127    Notionally, Mr Brennan ought to bear the consequences of the failed investment in “Nebo” by it being treated substantially as a distribution to him. Of course, this will treat the $575,000 at its present value, rather than as money that could have been invested in superannuation in 2005 and 2006 and which is likely to have grown somewhat before the impact of the global financial crisis, and later is likely to have recovered its value to some degree. Nonetheless, this sum also represented a lost opportunity for both parties for which Mr Brennan was responsible. Even though this is not a present asset of any value I consider that it is just and equitable to take it into account in making an adjustment.

128    Mr Brennan argued that his contributions to superannuation since separation should be treated as irrelevant to an assessment of the parties’ current assets. I do not accept that submission. He frustrated the management of the parties’ superannuation position during the development of the global financial crisis because he prevented Ms McGuire continuing her previous role of managing the fund and he refused to take any steps to allow this valuable investment to be managed or protected until mid September 2008. Before that, he ignored the superannuation fund’s advisers’ attempts to get instructions. As with “Nebo”, his conduct adversely affected the parties’ overall net worth, albeit that it is not possible to quantify by how much his inaction on the management of superannuation affected that worth.

129    In arriving at the adjustment of the parties’ interests in their property and resources of roughly 52.5% to 47.5% in accordance with Baumgartner 164 CLR at 150, I have made notional adjustments to take account of their drawings on superannuation, the impact of “Nebo” and the other matters which I have just discussed to arrive at the following broad distribution:

130    The evidence as to financial matters was unsatisfactory in many respects. However, the broad financial position of the parties is that described above. In my opinion, having regard to all of the matters I have referred to above, and the considerations in s 15 of the Act, the just and equitable adjustment of the interests in the property of the parties is to allocate 52.5% to Ms McGuire and the balance to Mr Brennan.

131    The effect of these adjustments, before adding back to Mr Brennan’s share the notional benefit of “Nebo” of $575,000 will be to leave him with about 40% of the parties’ overall interest in their currently existing property. I have considered carefully whether such a position reflects a just and equitable outcome for the purposes of s 15 of the Act having regard to the fact that, whatever the rights and wrongs of his decision to purchase “Nebo”, the parties have since sustained the significant loss to their net assets of at least $575,000. Mr Brennan claimed some expenses of maintaining “Nebo” from the company in his proof of debt. He appeared to have had the use and benefit of the yacht at least up to the commencement of the liquidation. He gave no explanation as to why she realised so much less than her landed priced in Australia when the liquidator sold her. As I have found above, Mr Brennan made the decision to commit the parties’ resources to purchasing “Nebo” as his unilateral choice of pursuing, early, his retirement plan. There are significant differences between his and Ms McGuire’s current and likely future earning capacities. She has a more present need for some cash or superannuation. Having regard to all of the matters in s 15 and s 19(2) and the whole of the circumstances of their relationship, I am satisfied that the net effect of the adjustment I have proposed that leaves Mr Brennan with about 40% of the parties’ current interests in their property represents a just and equitable outcome.

132    Given that Ms McGuire has been able to access her superannuation as she pleases, without suffering any substantive detriment, it can be treated for the purposes of adjusting the parties’ interests in their joint property as an asset: cp In the Marriage of Wunderwald (1992) 106 FLR 138 at 142 where Nicholson CJ, Strauss and Cohen JJ referred to the distinction between “property” and a “financial resource” in a case like this as one without a difference. Thus, she can pay, or cause a rollover of, her superannuation to benefit Mr Brennan so as to give effect to the adjustment I have made. Having regard to Ms McGuire’s wish to retain the Forrest house, Ms McGuire will need to transfer $775,000 of her superannuation to Mr Brennan and her shares in the company. He will need to transfer his interest in the Forrest house to her.

133    I would have ordered costs against Mr Brennan because he has substantially failed. Initially, he claimed 70% of the assets, but at the hearing scaled that back to 50%. He failed to take appropriate account of the benefits he obtained and the adverse financial consequences caused to the parties by the purchasing of “Nebo”, his exclusion of Ms McGuire from her role as financial manager, his use of the company and its assets and his earning capacity. However, Ms McGuire failed to comply with her obligations of disclosure relating to her draw downs from her superannuation and what she did with that money. Then again, Mr Brennan also failed to disclose, until after the hearing, his drawdown of $56,000. Their significant breaches of their obligations and its consequence of frustrating a full investigation of their present positions was unfortunate. Overall, my adjustment of the parties’ current assets has significantly favoured Ms McGuire because I have taken account of the notional benefit Mr Brennan obtained (and thus lost for their joint benefit) by his decision to purchase “Nebo”. He should pay 50% of Ms McGuire’s costs.

134    The parties should prepare orders to give effect to these reasons. I consider orders of the following nature to be appropriate:

(1)    Mr Brennan execute a transfer of his interest in the Forrest house in favour of Ms McGuire.

(2)    Ms McGuire execute a transfer of shares in the company in favour of Mr Brennan, an assignment to him all her rights against the company in its own right and as trustee of the superannuation fund, her resignation as a director and secretary of the company and do all things reasonably necessary on her part to be done to procure her brother to execute such an assignment and resignation.

(3)    Ms McGuire cause to be paid to or rolled over in favour of Mr Brennan out of her superannuation fund $775,000

(4)    Mr Brennan should pay 50% of Ms McGuire’s costs of the proceedings.

(5)    Mr Brennan should return Ms McGuire’s personal records of herself, her children and family.

(6)    Both parties should sign all necessary documents to enable the other to prepare any superannuation and tax returns and authorise their financial advisers and accounts to provide their counterparts with such information.

(7)    If the parties fail to do what is necessary to assist in finally resolving their financial affairs, I will appoint the Registrar to sign whatever is necessary to do on their behalves.

Associate:

Dated:    21 December 2010