Adair and Adair and Anor

FAMILY COURT OF AUSTRALIA

ADAIR & ADAIR AND ANOR

[2018] FamCA 239

FAMILY LAW – PROPERTY – Adjustment of property interests – Where the husband and wife had eight children during their long marriage – Where the wife made the majority of the contributions towards the welfare of the family – Where the husband studied during the marriage and did not engage in paid employment – Where contributions are assessed as 70 per cent in favour of the wife – Where the husband has made significant non-disclosure – Where the wife and eldest children were subject to family violence – Where the wife is entitled to a section 75(2) adjustment of 30 per cent – Where the wife is to receive 100 per cent of the parties’ property pool.

Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4)

Kennon & Kennon (1997) FLC 92-757

APPLICANT:

Ms Adair

FIRST RESPONDENT:

Mr Adair

SECOND RESPONDENT:

Mr K Adair

FILE NUMBER:

PAC

3305

2013

DATE DELIVERED:

18 April 2018

PLACE DELIVERED:

Sydney

PLACE HEARD:

Parramatta

JUDGMENT OF:

Rees J

HEARING DATE:

26, 27 and 28 March 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT:

Bainbridge Legal

SOLICITOR FOR THE FIRST RESPONDENT:

Executive Legal

COUNSEL FOR THE SECOND RESPONDENT:

Ms Smith

SOLICITOR FOR THE SECOND RESPONDENT:

Glissan & Associates Lawyers

Orders

That the husband do all acts and things required to transfer to the wife his interest in the following properties:
(a)       L Street, Suburb M;
(b)       N Street, Suburb O and
(c)       P Street, Suburb Q.
That the wife’s application seeking a declaration as to the ownership of the property at R Street, Suburb M be dismissed.

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

IT IS NOTED that publication of this judgment by this Court under the pseudonym Adair & Adair and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: PAC 3305 of 2013

Ms Adair

Applicant

And

Mr Adair

Respondent

REASONS FOR JUDGMENT

Ms Adair (“the wife”) and Mr Adair (“the husband”) met and married in 1990 in Country F, the wife’s homeland. They had met a month before the wedding. Following their marriage the wife accompanied the husband to Australia where they have lived ever since.
In Country F, the wife was a professional with tertiary qualifications.
The husband and the wife separated in 2013 when the husband left the home.
They have eight children, three of whom are minors. Six of the children live with the wife in the former matrimonial home at L Street, Suburb M (“L Street”).
Since separation, the husband has not spent time with or seen the children and the wife has therefore made the sole parenting contributions. Furthermore, since separation, the husband has made only a marginal contribution to the financial welfare of the children as the statutory contribution from his Centrelink payment.
There were proceedings in relation to the parenting of the children which were determined by Hannam J who delivered judgment on 11 May 2016. As a result of those proceedings, the wife has sole parental responsibility for the children and they spend no time with the husband. Hannam J found that the husband had perpetrated family violence against the wife and the children and, in the case of the wife, also perpetrated controlling behaviour.
The proceedings presently before the Court relate to property.
At the time of the marriage, the husband owned a home at Suburb S, free of encumbrance. He owned and operated a business but that business was closed by the end of 1990.
There is a dispute about whether the husband earned any income from paid employment since the business ceased to operate.
The wife, when she came to Australia, spoke no English. Their first child was born in 1991.
The husband asserts that, after the sale of the business, he worked in another occupation. The wife denies that assertion. It is her case that since 1990, the only source of income of the family has been Centrelink benefits.
The wife asserts that, from the beginning of their relationship, the husband was controlling towards her and later towards the children. She asserts that their combined Centrelink entitlements were paid to him and that he refused to tell her how much they received. He gave her cash to pay family expenses and she had to account for her spending by giving him receipts. She asserted that he kept her short of money and did not provide sufficient funds to buy nutritious food, instead buying produce that was old and reduced in price. She asserted that the children could not have new clothes and that they were not able to have outings or entertainment. It was the wife’s case that the husband was thus able to use their funds to purchase real property.
In 1995 the husband bought land at Suburb T for $50,000. The husband asserts that the money for the purchase came from money he had earned. Whether or not he earned the money from employment or it came from their Centrelink payments is not relevant. It appears to be agreed that the funds for the purchase were generated during the marriage.
In 1997 the property at L Street was purchased for $120,000. The husband asserted that his mother lent $40,000 “on the basis that it would be repaid in the future from the capital gains of the property”, and the balance of $80,000 was borrowed. The husband asserted that the mortgage payments were made from his earnings from employment.
In 2002, a property was purchased at R Street for $288,000. The registered proprietor was the husband’s brother, Mr K Adair. There was a mortgage from Mr K Adair to the Commonwealth Bank in the sum of $136,000.
Mr K Adair, in 2002, was suffering from a psychiatric illness and was incapable of managing his own affairs.
The source of the money for the purchase, the circumstances of the purchase, the use to which the rent was put and the ultimate beneficial ownership of R Street are issues in these proceedings. The wife and her two adult children who gave evidence assert that on numerous occasions the husband told them that R Street was “our house in [Mr K’s] name”.
In May 2007, the husband took out a mortgage with the ANZ Bank secured over R Street. He repaid the mortgage to the Commonwealth Bank taken out in Mr K’s name and thereafter the payments on the ANZ mortgage were made by the husband. There is a dispute as to the source of the funds used to repay the mortgage.
In 2009, a vacant block at Suburb Q was purchased for $80,000. The husband asserts that the whole of the purchase price was lent by his mother “on the basis that the loan would be repaid at a future date using the capital gains from the property”.
In September 2011, the husband received a cheque for $53,641.22 from the real estate agent managing the rental of R Street. The husband deposed that he gave that money to the wife who spent it. The wife disputes that assertion. The ultimate disposition of those funds is an issue to be determined.
Suburb T was sold in 2013 for $250,000. The husband received $235,489.08 which was paid into an account with the ANZ Bank ending 0535 in the husband’s name. In addition, the husband received the balance of the deposit after deduction of the commission of $7,825, a total of $243,117. What the husband did with those funds is an issue in the proceedings.
The husband’s mother died intestate in May 2016. In January 2017, her former home at Suburb U was transferred by transmission to her seven children and, two days later, they transferred the property to Mr V Adair, one of the husband’s siblings.
For some ten years during the marriage, the husband engaged in tertiary studies gaining qualifications in engineering and teaching. There is no evidence that he utilised those qualifications for employment. The husband asserts that he has paid $58,000 in HECS debt.
From this narrative, it emerges that the issues for determination are:
·    Did the husband earn income after he sold the business?
·    What was the source of the funds for the purchase of Suburb T?
·    What were the circumstances surrounding the purchase, mortgage and mortgage repayments of R Street and in what manner, and by whom, was the rent utilised?
·    What was the source of funds for the purchase of L Street?
·    What was the source of funds for the purchase of Suburb Q?
·    How were the proceeds of sale of Suburb T disbursed?
·    Does the husband have a liability for HECS?
·    Has the husband divested himself of his entitlement to his mother’s estate?
·    Does the family violence against the wife and the children justify an adjustment in favour of the wife?
The issues had been flagged as long ago as 2016 at a Conciliation Conference on 7 November 2016 when the following notations, inter alia, were made by the Registrar:
•The 2nd Respondent is the registered proprietor of the property at R Street, Suburb M.
•The A/W asserts that the Husband and Wife contributed the sum of $100,000.00 towards the acquisition of R Street property and paid all the outgoings with respect to same including mortgage payments.
•The Husband concedes that payments for the outgoings with respect to the property went through his bank account, but it was all for the 2nd Respondent. The Husband says that the 2nd Respondent lent him $100,000.00 in the late 1980’s and the payment by the parties of the $100,000.00 was repayment of that loan.
•The Husband has not provided any evidence to the Wife of this alleged loan.
•The Wife further asserts the Husband obtained the sum of $53,641.22 from R Street account and this sum of money withdrawn by him has not been accounted for.
•Note the Wife has not sought particulars as to how these monies were applied.
•The Case Guardian advises he was not aware of the assertion by the Wife that the parties hold an equitable interest in the roperty (sic). The 2nd Respondent suffers from brain damage and became incapacitated in the 1990’s.
•Note Registrar Tran made Directions regarding a conference of the parties’ experts. Note this has not occurred.
• The Husband has not completed a Financial Questionnaire.
•The real issue in this matter more than anything appears to be whether the parties hold any equitable interest in R Street property, and the value of the properties.
•Other issues are the application by the Husband of funds withdrawn by him, valuations of the properties, and s75(2) adjustments.
It also emerged during the cross-examination of the husband that the reliability of his evidence was in issue. That matter will be examined in the consideration of his evidence in relation to each of the issues.
At the commencement of the hearing I raised with the legal representatives what appeared, on the face of the evidence, to be a breach of the Centrelink guidelines for the receipt of a means tested benefit by the husband who, on his own evidence, was the owner of three unencumbered properties whist in receipt of a Newstart allowance.

THE EVIDENCE

The wife relied on affidavits by herself and two of her adult children, Ms J and Mr Z Adair.
The husband relied on an affidavit sworn by him. Although he was ordered to file an updated Financial Statement, he did not do so.
The second respondent did not file affidavit evidence and tendered no documents.

Did the husband earn income?

As will be clear from the discussion of the husband’s evidence in relation to other issues, I do not accept that the husband’s evidence is reliable.
The only evidence of the husband engaging in paid employment after 1990 was his assertion to that effect. The wife and the two adult children denied that he had done so.
The husband’s tax returns had been subpoenaed and were available for inspection. Although the whole bundle of returns was not tendered, the lawyer for the husband was asked to examine the bundle and ascertain whether any income from paid work had ever been declared by the husband in his returns.
Since none of the returns was tendered, I infer that none of them showed any income from work.
In his Financial Questionnaire filed 12 April 2017, under the heading “Financial Contributions”, the husband did not disclose any income from working although he disclosed income from the business.
The husband has not established that he engaged in paid work between 1990 and 2018.

What was the source of the funds for the purchase of Suburb T?

The husband deposed in his trial affidavit:
Land at [Suburb T] was purchased in about 1995 for $50,000. The property was purchased using money I had saved from work …, which was work that I carried on as a sole trader. The property was bought outright.
In cross-examination, the husband resiled from that evidence and said that the whole of the purchase money for Suburb T was borrowed from his mother.
No documents were tendered to substantiate that assertion.
The husband said that, at all relevant times, his mother was in receipt of a means tested old age pension. When pressed, he said that his mother in turn borrowed money from other members of the family who were working. None of those people came forth to give evidence that they had provided money to the husband’s mother or, through her, to the husband.
The two versions of the husband’s evidence about the funding for Suburb T are entirely inconsistent.
The wife asserted that the husband was able to save the money to purchase Suburb T by reserving their joint Centrelink payments and spending only the barest minimum on the family.
In the absence of any evidence corroborating the husband’s assertion that he borrowed the purchase money for Suburb T from his mother, I do not accept that evidence.
I am satisfied that the husband accumulated the funds to purchase Suburb T from family funds.

What were the circumstances surrounding the purchase, mortgage and mortgage repayments of R Street and in what manner, and by whom, was the rent utilised?

It is difficult, if not impossible, to unravel the transactions relating to R Street. Documents which might have assisted were not made available.
It is to be remembered that, at all material times, Mr K Adair was suffering from a disability and not able to manage his own financial affairs.
The wife deposed that the husband and his brother Mr K owned a property at Suburb W which they sold in about 2002 for $200,000, each retaining $100,000.
The husband denied her assertion. It was his evidence that he did not own Suburb W, did not receive $100,000 on the sale and did not contribute $100,000 to the purchase of R Street. However, that was not always his position. At the Conciliation Conference on 7 November 2016, the Registrar noted:
The Husband says that the 2^nd Respondent lent him $100,000.00 in the late 1980’s and the payment by the parties of the $100,000.00 was repayment of that loan.
The husband appears to have adopted yet another position before the Guardianship Division of the NSW Civil & Administrative Tribunal (NCAT) in relation to Mr K Adair’ affairs. Documents produced by NCAT dated 7 June 2017 record that R Street is “Jointly owned with [the husband]”. It was further recorded:
The house at [R Street] is jointly owned by Mr K and [the husband]. The property is under dispute as [the wife] is claiming equity in the property. [The husband] has been paying all relevant legal costs to endeavour to resolve this situation.
The costs letter which was tendered on behalf of Mr K Adair by his solicitor does not support the assertion that the husband was paying the legal costs incurred by his estate in relation to the ownership of R Street.
Documents tendered in the wife’s case show that in August 2001 Mr K Adair sold a property at Suburb X for $135,000.
Documents tendered in the wife’s case show that, in April 2002, Mr K Adair purchased a property at Suburb Y for $395,000. There was no mortgage over Suburb Y until May 2008 which suggests that Mr K Adair provided the whole of the purchase price.
The husband consistently said, in cross-examination, that he had nothing to do with the financing of R Street. That assertion seems to be contrary to his position before the Registrar which appears to be a concession that he contributed $100,000 as the wife alleged.
R Street was purchased in September 2002 for $288,000. The registered proprietor is Mr K Adair. A mortgage was obtained from the Commonwealth Bank to secure an advance of $136,000, signed by Mr K Adair as mortgagor. The husband witnessed the signature of his brother. Thus, on the husband’s case some $152,000 (plus costs and stamp duty) was provided by Mr K Adair.
There was no evidence of Mr K Adair’ financial position or how he, a person under a disability, unable to manage his financial affairs, was able to provide in excess of $400,000 to finance the purchases of Suburb Y and R Street.
The onus of proof in this instance lies with the wife who has not satisfactorily demonstrated that the husband, on the balance of probabilities, contributed any of his own funds towards the purchase of R Street.
I am not satisfied that the husband, as the wife asserts, is the beneficial owner of R Street.
However, that is not the end of the matter.
The husband has treated R Street as if it were his own and has obtained the benefits of ownership.
I accept the evidence of the wife that the husband frequently told her that he was the real owner of the property and that they inspected the property and chose which bedrooms would be used for the children and themselves and how rooms would be used when they moved into the property.
Ms J deposed that she was with the husband when he spotted the property in the window of the real estate agent. The husband talked about buying the property. He told Ms J that the family was going to move into the property.
Ms J Adair deposed:
My mother and me … questioned him over the years about the reasons why he didn’t put the ownership under his and her name and why he bought it under [Mr K Adair’s] (sic) name.
He told us multiple times that the reason he used [Mr K’s] name was because he didn’t trust my mum. He said my mother would sell it without his knowledge and steal the money for herself.
Mr Z Adair deposed that the husband referred to the property as “our house in Mr K’s name” or “our house on R Street”. He deposed to a conversation between his parents where the wife asked the husband why the property was in the name of Mr K and not the parties and the husband said “Just stop! I don’t trust you”.
The wife deposed that she physically made the payments on the mortgage over the property, using funds handed to her by the husband. The wife said that on occasions, she would collect a cheque from the real estate agent and deposit the cheque in the mortgage account. On other occasions, the rent would be insufficient to cover the mortgage payment and the husband would give her additional cash.
Mr Z Adair gave evidence that he recalled as a child going with his mother to the real estate agent and to the bank to pay the mortgage.
Annexed to the wife’s affidavit were a bundle of bills for utilities related to the property which were addressed to Mr K Adair. The wife said that she physically paid those bills using funds given to her by the husband.
The husband deposed that from about 2005 or 2006, the real estate agent was instructed by his mother not to use the rent from the property to pay the mortgage but to allow it to accumulate. Regardless of who gave the instructions, the rent was accumulated.
In May 2007, the husband borrowed $131,135 from the ANZ Bank on the security of R Street. How he was able to do that was unexplained. Presumably, Mr K Adair, despite his lack of capacity, signed whatever documents were required by the ANZ Bank. The mortgage in the name of Mr K Adair with the Commonwealth Bank, of about $113,000, was discharged. The husband gave no explanation of what he did with the balance of the advance.

A copy of the loan application was tendered. The husband deposed to income of $3,878 per month and total monthly expenditure of $1,855 made up of repayments for the proposed loan of $915 and “Total Living Expenses (all other expenses)” of $940.
In the loan application, the husband does not disclose any other liability and, specifically, no liability to his mother for funds lent by her.
Annexed to the wife’s affidavit were a bundle of receipts from the ANZ Bank for mortgage repayments of about $915 per month. The wife deposed that she physically made those payments using cash given to her by the husband.
The husband deposed that his mother gave him the cash to make the repayments. How his mother, a pensioner on a means tested pension, was able to do that was explained by the husband suggesting that his mother was given, or borrowed, money from other family members. No family members gave evidence to corroborate that assertion.
The husband, until 2013, collected the whole of the Centrelink entitlements for the family, including the wife and the children. He managed their funds. The husband tendered a bundle of statements from a Commonwealth Bank account ending 9214 which was held in joint names. Since no submissions at all were made about what inferences could be drawn from this evidence, I was left to draw my own conclusions.
I note that in December 2012, the total receipts from benefits appeared to be about $2,017 per fortnight. The statement also shows regular monthly withdrawals of amounts of about $1,000 which is entirely consistent with the wife’s assertion that the mortgage over R Street was being paid from the income of her family.
The husband was responsible for the maintenance of R Street property and both the husband and the wife cleaned the property between tenants.
On 20 September 2011, a cheque was drawn by the managing agent of R Street in the sum of $53,641.22 representing accumulated rent. The husband, in his trial affidavit, deposed:
On 20 September 2011, I attended at the office of [the agent] and took carriage of a cheque for $53,641.22. That money constituted the entirety of the loan from my mother to myself and [the wife] to be used to improve our house in L Street.
Why the husband’s mother was entitled to deal with the rent for R Street which belonged to Mr K Adair was not explained.
In an earlier affidavit, sworn 13 March 2017, the husband deposed:
The sum of $53,641.22 was paid by [the agent] to me in about 2007. That money was the accumulation of rental cheques for the Property. After receiving the cheque, I immediately deposited it into the Mortgage Account for the Property.
Again, the two versions are entirely inconsistent.
The husband gave yet another version in cross-examination, saying that the money was given to the wife and that she spent it. The husband did not explain how a cheque payable to Mr K Adair could have been spent by the wife. The more likely scenario is that the husband negotiated the cheque through Mr K Adair’s bank accounts.
The husband has not accounted for the expenditure of those funds and has provided no documents, such as bank statements, to substantiate his version of the transactions.
Annexed to the wife’s affidavit was a letter from the managing agent acknowledging that they dealt with the property on the instructions of the husband and the wife.
Also annexed to the wife’s affidavit was a letter signed by Mr K Adair, dated 12 September 2013, addressed to the Commissioner of Taxation authorising the husband to represent him in any financial matter.
When there was a complaint by the tenants to the Residential Tenancy Tribunal about the condition of the property in August 2007, it was the husband who appeared at the hearing.
There was a further cheque issued by the managing agents in June 2012 in the sum of $11,654.35. The husband deposed that he gave that cheque to his mother. He provided no documentary corroboration for that assertion. Again, that cheque must have been either negotiated through the bank account of Mr K Adair or endorsed by him. It is likely that the husband was the ultimate recipient of those funds.
Mr Z Adair deposed to accompanying his father and his uncle Mr K to the Commonwealth Bank in Suburb AA in about 2007. Mr Z Adair deposed that the husband told the teller they needed to close an account and he was given a cheque. Mr Z Adair then accompanied his father and Mr K to the ANZ bank where the husband told the teller that Mr K wanted to open an account. Mr Z Adair deposed:
On our way home … my father said words to the effect of “shit, where did I put the cheque?” before finding it in his glasses case.
The day after … my father began shouting that he had lost his glasses case containing the “cheque of tens of thousands of dollars”. After finding it, my father told my mother that he was going to the ANZ branch in Suburb M.
That evidence was not challenged.
Mr Z Adair also deposed to a conversation between his parents in about 2007 where the husband told the wife that he would save the rent money from R Street to accumulate funds to build a house. (The wife gave evidence of conversations about demolishing one of the existing houses and rebuilding). Mr Z Adair deposed that the husband then told the wife that she was to make the mortgage payments using cash that he would give her.
Mr Z Adair deposed to a conversation with the husband in April 2017 in the following terms:
… your mother [the wife] will need to settle with me outside of court and come to some agreement so that the government doesn’t claim our house on [R Street].
Mr Z Adair deposed:
My father then blamed my mother and her “bitch lawyer” and said that he had to “lie and say the property was [Mr K’s] in Court” because my mother was a “greedy prostitute that wanted everything”.
The husband in cross-examination said that he had proposed during the marriage that the family could live in R Street while they renovated L Street. Such a proposal is consistent with the husband treating the property as his own.
There is no evidence that Mr K Adair has received any benefit from his legal ownership of R Street.
From at least 2007, when the husband repaid Mr K Adair’s mortgage and took over the burden of the debt, the mortgage over R Street was paid from the parties’ funds and the husband received the rents.
The most likely scenario is that the husband obtains the benefit of the property by using his brother’s accounts and having his brother sign documents to enable him to utilise the rents.
Whilst I am not satisfied that the husband is the beneficial owner of R Street, I am satisfied that he treats the property as his own and that only he receives any benefits of ownership.

What was the source of funds for the purchase of L Street?

The husband, in his trial affidavit, deposed:
The property at [L Street] was purchased for about $120,000 in 1997. The property was financed using a loan of $40,000 which was provided by my Mother … The loan was a cash loan and was given on the basis that it would be repaid in the future from the capital gains of the property. The remainder of the purchase price was financed with a mortgage to the [BB Bank] for $80,000. The mortgage repayments for the Property at [L Street] were deducted each month from my account using money from my work ...
Again, there was no explanation for the alleged source of funds from the husband’s mother and no other member of the husband’s family gave evidence in relation to those funds.
The existence of the asserted liability was not disclosed to the ANZ Bank in the loan application signed in 2007 or in any Financial Statement of the husband.
I am unable to say how the purchase was financed.

What was the source of funds for the purchase of Suburb Q?

The husband deposed:
In about 2009, a plot of vacant land was purchased at [Suburb Q]. That plot was purchased for $80,000. The land was fully funded through a loan given to me by my mother, on the basis that the loan would be repaid at a future date using the capital gains from the property.
There is no evidence that this alleged loan has ever been disclosed by the husband to any financial institution or to Centrelink.
The alleged loan was not disclosed in any Financial Statement sworn by the husband.
Given the husband’s stated financial position in the loan application to the ANZ Bank in 2007, where he asserted that he had a monthly surplus of income over expenditure of some $2,000, I cannot discount the possibility that he was able to accumulate the funds for the purchase of Suburb Q from the Centrelink payments.

How were the proceeds of sale of Suburb T disbursed?

The husband received $235,289.08 which was paid into an account with the ANZ Bank ending …35 in the husband’s name. In addition, the husband received the balance of the deposit after deduction of the commission of $7,825, a total of $243,117.
The deposit into the ANZ bank was made on 17 April 2013. The records of the account would have been available to the husband had he chosen to produce them.
There is no evidence of the disposition of the balance of the deposit which would have come to the husband as a cheque from the agent.
The statements for the ANZ account might have given some indication of the manner in which the funds were disbursed.
The husband claims, in his trial affidavit, that the funds were disbursed as follows:
·    $123,000 – Paid into the ANZ mortgage account for the property at [R Street] in satisfaction of the loan to my mother.
·    $58,000 – Paid to the Commonwealth Government for HECS
·    $2,000 – Property valuation
·    $2,000 – Fines
·    $20,000 in rates (between 2013 and 2017) $1,000 per property per year, as at June 2017
·    $30,000 (approx.) retained by me in savings
·    $2,000 – Solicitor in conveyancing fees
·    $4,000 – Agent
·    $500 – repayment of debt to the ATO
No documents were produced by the husband to substantiate these alleged payments.
A statement tendered in the wife’s case indicates a payment to the ANZ bank in the mortgage account on 9 May 2013 in the sum of $117,000, not $123,000 as the husband deposed.
There was no document produced to substantiate the husband’s assertion that he had a HECS debt as alleged. The husband’s tax return for the year ended 30 June 2013 and the assessment was tendered in the wife’s case. The assessment indicated a payment of HECS of $1,175 had been levied.
The husband has not demonstrated that he earned income in any year of a sufficient amount to trigger the repayment of HECS.
The husband provided no document to substantiate the alleged payment. Presumably, the payment would have been made from his ANZ account and the statements of that account would be available. No statements were tendered.
No reference is made in the husband’s trial affidavit to payment of either the assessed tax or the assessed HECS levy of $1,175 and I cannot assume that either was paid. The husband deposed that he paid $500 to the Australian Taxation Office but provided no evidence of that payment.
I do not accept that the husband paid HECS of $58,000.
There are no documents to substantiate the husband’s assertion that he paid $2,000 for a property valuation. If he did so then that expenditure is part of his costs of these proceedings.
There is no evidence that the husband paid fines of $2,000. However, the wife agreed that fines were issued by the Council for failure to remove rubbish and the amount is not large.
There is no evidence to substantiate the assertion that the husband retained $30,000. In cross-examination, he said that he kept the money in cash. The ANZ statement would presumably have shown any withdrawals but no such statements were in evidence.
In an affidavit sworn on 13 March 2017, the husband deposed:
The net proceeds of the property at Suburb T were $80,000. Those proceeds were paid into my bank account and were not transferred to any related parties.
That statement is entirely inconsistent with his later sworn evidence. Absent the bank statements, I am unable to say how much cash the husband withdrew.
I accept that the husband paid rates for Suburb M and Suburb Q from 2013 onwards. However, his assertion that he paid $1,000 for each property each year does not support his calculation. On that basis, I accept that he paid $4,000 in rates for each property, a total of $8,000.
I do not accept the husband’s assertion that he paid $2,000 in conveyancing costs. The settlement statement annexed to the wife’s trial affidavit clearly shows that the costs of $950 were deducted from the proceeds of sale before the payment was made to the husband.
Similarly, an allowance has been made for the agent’s commission having been deducted from the deposit.
The husband has satisfactorily accounted for the following payments:
Mortgage  $117,000
Rates  $8,000
Fines  $2,000
Total  $127,000
The husband has failed to account for the balance of about $116,000.
The husband’s tax return for the year ended 30 June 2013 was tendered in the wife’s case. In the Capital Gains Worksheet attached to the return, the husband claimed to have paid $31,000 in interest between 1991 and 2013. That claim was also inconsistent with the husband’s evidence.

Does the husband have a liability for HECS?

I accept that the husband has obtained tertiary qualifications and that he has not paid his fees as they accrued. However, there is no evidence of the amount and there is no evidence that the husband will ever earn an income from employment such as to trigger the repayment requirements. The husband, in his trial affidavit, deposed that he was unable to find employment and foresaw relying on Centrelink to fund his retirement.

Has the husband divested himself of his entitlement to his mother’s estate?

The husband made no disclosure of his interest in his mother’s estate and it was revealed only in cross-examination.
The husband’s mother died intestate. No Letters of Administration or affidavit as to assets was provided. Other than her ownership of the house at Suburb U, the husband gave no evidence of the assets of the estate.
There is also no evidence of any call on behalf of the estate for the repayment of any funds lent to the husband.
Whatever may have been the assets of the estate, the husband’s share of the Suburb U property was transferred to his brother Mr V in January 2017 without notice to the wife.
I am satisfied that the husband has divested himself of his entitlement but I am not able to quantify that entitlement.
The husband is, however, living in his late mother’s house.

Does the family violence against the wife and the children justify an adjustment in favour of the wife?

On 11 May 2016, Hannam J made orders restraining the husband from approaching, contacting or communicating with the wife and the three youngest female children
Those orders were made after a hearing where Her Honour found that the husband controlled the family’s finances, scrutinised the wife’s spending and required her to produce receipts to substantiate her spending.
Her Honour found:
I am satisfied that the father did engage in behaviour that coerced and controlled the mother and the children throughout the relationship. Virtually none of the mother’s evidence was challenged in this regard either under cross-examination or in the father’s own affidavit and documents from independent sources such as police provide corroboration for the mother’s contention. The father’s own evidence about the mother needing to seek his permission to travel and about monitoring the whereabouts of his children support the contention that the father was controlling in his interaction with family members.
Before me, the parties’ adult daughter Ms J gave evidence of a childhood of deprivation where fresh food was not purchased and clothes were from charities. That evidence is consistent with the husband’s assertion in his loan application to the ANZ Bank in 2007 that the whole of the monthly expenses, for this family of ten, amounted to $940.
On or about 30 July 2009, the father was charged with six counts of common assault upon the mother in July 2008; upon an adult daughter then a minor child in January 2009; and upon the same daughter and the mother in July 2009. Those charges were dismissed when the mother and the children refused to give evidence against the husband. I accept that they did so because they were afraid.
In May 2013 the husband was charged again with assaulting his daughter, then aged 17 years, and with assaulting the mother. He was convicted, after a hearing, of both offences. An Apprehended Domestic Violence Order (ADVO) was issued against the husband for the protection of the mother and two of his daughters for two years. The husband appealed against the making of that order but the appeal was dismissed.
Hannam J found that the husband had assaulted the mother and his three oldest daughters and that the risk that he would assault the three youngest daughters was unacceptable.
In her trial affidavit, the wife deposed to various instances of family violence including physical violence and financial control exerted by the husband during the course of their marriage. These allegations were not challenged.
I am conscious of the requirement, in cases where the effect of family violence is being assessed, that the circumstances must be exceptional.
In Kennon & Kennon (1997) FLC 92-757, Fogarty & Lindenmayer JJ said, at 84,294 – 84,295:
Put shortly, our view is that where there is a course of violent conduct by one party towards the other during the marriage which is demonstrated to have had a significant adverse impact upon that party's contributions to the marriage, or, put the other way, to have made his or her contributions significantly more arduous than they ought to have been, that is a fact which a trial judge is entitled to take into account in assessing the parties' respective contributions within s 79. We prefer this approach to the concept of ``negative contributions'' which is sometimes referred to in this discussion.
…
It is essential to bear in mind the relatively narrow band of cases to which these considerations apply. To be relevant, it would be necessary to show that the conduct occurred during the course of the marriage and had a discernible impact upon the contributions of the other party. It is not directed to conduct which does not have that effect and of necessity it does not encompass (as in Ferguson) conduct related to the breakdown of the marriage (basically because it would not have had a sufficient duration for this impact to be relevant to contributions). [Emphasis added]
I am persuaded that the circumstances of this case, where the husband has assaulted not only the wife but each of his three eldest daughters, are exceptional such that an adjustment should be made in favour of the wife.
I accept that the wife’s parenting and home-making contributions were made more arduous by both the husband’s control of their finances and his violence towards her and his daughters.

CREDIT AND NON-DISCLOSURE

It follows from the detailed account of the husband’s evidence which is set out earlier in these reasons, that I do not accept him as a witness whose evidence can be given any weight at all unless corroborated by independent documents.
Neither do I accept that the husband has made any attempt to give full and proper disclosure of the financial dealings in which he engaged throughout the marriage. I have no confidence that the husband has disclosed all of his assets and particularly his ability to draw on the assets of his disabled brother at will.
Tendered in the wife’s case was a document produced by Centrelink dated 30 November 2016. Under the heading “Details of your Assets”, the husband’s assets are listed as cash of $90 and personal effects of $2,500. There is no mention of the three unencumbered real properties.

THE ASSET POOL

The parties have no significant assets other than the three real properties at Suburb O, Suburb Q and L Street.
The usual orders were made for the appointment of a single expert valuer in March 2015.

In May 2015 the Registrar noted that the husband had not responded to the wife’s solicitor’s invitation to nominate the valuer from the names provided.
In April 2016 consideration was given to listing the matter as an undefended hearing due to the husband’s failure to participate.
On 26 April 2016, further directions were made for the appointment of a single expert valuer. In the event that the husband failed to sign a letter of instruction, the wife was authorised to sign on his behalf.
The wife obtained valuations of those properties in 2016. No valuations were relied upon by the husband.
Since both parties ask the Court to order the sale of the real estate, the issue of value has less significance as the orders will require the sale of the three properties and the distribution of the net proceeds of sale in accordance with the percentages which will be determined.
The values which were ascribed to the three properties in 2016 were:
Suburb O  $540,000
Suburb Q  $160,000
L Street  $600,000
Total  $1,300,000
A value of $680,000 was ascribed to R Street.
Apart from the real estate, the wife has personal property of minimal value which I do not propose to include for the purpose of distribution, in circumstances where the husband has not filed an updated Financial Statement, despite having been ordered to do so. In any event, the husband’s evidence about his financial position would not be accepted absent documentary corroboration.

SECTION 79(2)

All of the assets of this family are owned by the husband.
It is just and equitable that, after a marriage of twenty eight years that produced eight children, the wife should have some portion of those assets.
Each party asks the Court to make a distribution.

CONTRIBUTIONS

The wife had no assets at the commencement of the relationship.
The husband owned Suburb O and the video store. He had some savings which he deposed had been used to pay for their wedding and to pay out a small student loan owed by the wife.
The video store was closed within the first year of the marriage. The parties lived in Suburb O until L Street was purchased in 1997. There is no evidence that Suburb O has produced any income since 1997.
Since the birth of their first child in 1991, the wife has been engaged as a parent and home-maker for their family of eight children.
The husband has not engaged in paid employment although he has, he deposed, degrees in engineering and teaching and diplomas, or advanced diplomas, in management, business, marketing, real estate and laboratory studies. He chose to devote his time to academic interests rather than remunerative ones.
Both the wife and their daughter gave evidence, which I accept, that the husband did not assist with the care of the children, except to occasionally take the children to school, and that he did not assist with housework.
The wife did most, if not almost all, of the home-making and parenting of the family.
I accept that, as the wife conceded, the husband took care of the exterior of the home but, as the photographs provided by the valuer show, the home, when he inspected it in 2016, was in such poor repair that demolition was an option.
The husband managed the finances of the family until separation and he was solely responsible for arranging the acquisition of the real property.
The husband and the wife both cleaned and prepared R Street between tenants.
The husband paid the rates on all of the properties after separation.
After separation, the husband’s sole contribution to the care of the children was the fortnightly payment allocated by Centrelink which is currently $48. He has otherwise taken no part in the care of the children and the wife has been solely responsible both for their physical care and their financial support. In April 2013, when the parties separated, there were eight children living with the wife of whom five were under the age of 18 years.
In the unusual circumstances of this case, I assess the wife’s contributions to be 70 per cent.

SECTION 75(2)

The wife still has the care of three minor children, the youngest of whom is 10 years old.
There is no likelihood that the husband will make any significant contribution to their physical or financial care.
The wife has not been in paid employment since 1990 and she has no qualifications for employment.
I am not able to assess the husband’s qualifications and capability for paid work but as he has refrained from paid work since 1990, his prospects of paid employment are slim.
However, the husband has chosen to divest himself of his entitlement to the estate of his late mother and he has had access to significant funds which have not been utilised for the benefit of the family.
The husband received some $116,000 from the sale of Suburb T for which he has not accounted. In addition he has received $53,641 from the rents of R Street and probably received a further $11,654 from the same source. Those funds amount to some $181,295.
Further, the husband borrowed $131,135 to discharge his brother’s mortgage over R Street, a property in which he maintained he had no legal interest. Between May 2007 and April 2013, a period of six years, the husband made mortgage payments on that loan of about $915 per month, a total of about $66,000, and in April 2013 he paid $117,000 to discharge that mortgage. Thus a further $183,000 of family funds was diverted, the husband would say, to his brother’s property.
I am unable to say what funds the husband has had but the amounts which can be quantified and are set out above total some $364,000, or 28 per cent of the value of the real estate assets in 2016.
In addition, the husband has access to significant funds which, although owned by his brother, appear to be used by him as he chooses. There is little evidence of the assets held by Mr K Adair but he is the owner of R Street which is unencumbered and in 2014 he sold the property at Suburb Y for $825,000. Documents produced by NCAT show that, in 2016, Mr K Adair had no bank accounts.
The husband is living in his late mother’s house at Suburb U.
Those two circumstances require a significant adjustment to be made to the wife and I consider that an adjustment of 30 per cent is appropriate.
In those circumstances, the wife will receive the whole of the real estate assets of the marriage. I consider this to be an appropriate outcome. The husband will retain the benefit of R Street property which I am satisfied that he has, notwithstanding the property being in Mr K’s name. He currently lives in his late mother’s home in Suburb U and there is no evidence that he will not have the continued benefit of living in that home.

CONCLUSION

Since the wife will receive the three parcels of property, she should not be required to sell them if she wishes to retain any of them. The wife gave evidence that her preference, if it were possible, would be to demolish L Street and build a new home on the block. She should be allowed to do so if she wishes.

I certify that the preceding one hundred and eighty seven (187) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 April 2018.

Associate:

Date: 18 April 2018

[2018] FamCA 239

18 April 2018

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Constructive Trust