Aheb and Aheb (No. 4)
[2009] FamCA 1245
•21 December 2009
FAMILY COURT OF AUSTRALIA
| AHEB & AHEB (NO. 4) | [2009] FamCA 1245 |
| FAMILY LAW – PROPERTY – Addbacks – Lengthy marriage – Agreement for equal division of property – Dispute as to the composition and value of the pool – Ongoing concerns of non-disclosure – Husband’s lack of disclosure founds the application of a robust approach to the evidence – Transactions and asset position remains imprecise due to confused evidence – Money transferred overseas by the husband credited against him as property received – Approximately equal division represents a just and equitable result |
| Family Law Act 1975 (Cth) ss 75, 79 Family Law (Superannuation) Regulations s 90MT |
| Biltoft & Biltoft (1995) FLC 92-614 Black & Kellner (1992) FLC 92-287 C & C [1998] FamCA 143 Challen and Challen [2007] FamCA 1292 Chang & Su (2002) FLC 93-117 In the Marriage of Mezzacappa (1987) FLC 91-853 In the Marriage of Weir (1993) FLC 92-338 K and K [2002] FamCA 1150 Kowaliw & Kowaliw (1981) FLC 91-092 Townsend & Townsend (1995) FLC 92-569 |
| APPLICANT: | Ms Aheb |
| RESPONDENT: | Mr Aheb |
| FILE NUMBER: | MLF | 2471 | of | 2006 |
| DATE DELIVERED: | 21 December 2009 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Justice Murphy |
| HEARING DATE: | 18-21 November 2008, 2-4 June 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Nikou SC with Mr Mort |
| SOLICITOR FOR THE APPLICANT: | Jane Baldwin Solicitor |
| COUNSEL FOR THE RESPONDENT: | Mr Wilson QC with Mr Carlile |
| SOLICITOR FOR THE RESPONDENT: | JK Lawyers & Co |
Orders
Save and except for the following, all previous orders be and are hereby discharged;
(a) All costs orders including all reserve costs;
(b)Upon compliance with the succeeding paragraphs of these orders, paragraphs 1-5 inclusive of orders made 6 November 2006;
(c) Orders made 30 December 2008;
(d) Orders made 5 February 2009;
(e) Orders made 22 April 2009.
Within 30 days of the date of these orders:
(a)The husband do all such acts and things and sign all such documents as are necessary to transfer to the wife and/or her nominee at the expense of the wife all his right, title and interest in the following properties (which are collectively referred to in these orders as “the wife’s real properties”):
(i)Unit 2 at B, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(ii)Unit 3 at B, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(iii)Unit 2 at G, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(iv)Unit 1at R, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(v)Unit 2 at R, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(vi)Unit 3 at R, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(b)The wife do all such acts and things and sign all such documents as are necessary to transfer to the husband and/or his nominee at the expense of the husband all her right, title and interest in the following properties (which are collectively referred to in these orders as “the husband’s real properties”):
(i)Unit 1 at G, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
(ii)Unit 4 at R, being the whole of the land more particularly described in Certificate of Title Volume … Folio …;
The parties shall each do all such things, sign all such documents and the husband shall pay all such reasonable fees as might be necessary to cause A Pty Ltd ABN number … (“the company”) to sell the property situated at Unit 3 at R, C/T Vol … Folio …, and pay any capital gains tax arising therefrom with the wife to abandon any right, title, claim or interest she has, or may have, in the balance remaining to the interest that same shall vest absolutely in the company or the husband as the case may be.
Contemporaneously with the transfers referred to in paragraph 2 of these orders:
(a)The wife shall indemnify the husband against all rates, taxes and outgoings of whatever nature and kind with respect to the wife’s real properties;
(b)The husband shall indemnify the wife against all rates, taxes and outgoings of whatever nature and kind with respect to the husband’s real properties and in respect of the property referred to in paragraph 3 of these orders;
(c)The husband shall do all such things, sign all such documents and pay all such fees as are necessary to cause any and all caveats in respect of the wife’s real properties at his cost;
(d)The wife shall do all such things, sign all such documents and pay all such fees as are necessary to cause any and all caveats in respect of the husband’s real properties at her cost;
(e)The wife shall be solely entitled to the receipt of rents and the sole and exclusive use of the wife’s real properties;
(f)The husband shall be solely entitled to the receipt of rents and the sole and exclusive use of the husband’s real properties;
(g)The husband and the wife shall do all such acts and things and sign all such documents as are necessary:
(i)To transfer the wife’s shares in the company known as K Limited, ABN number … (“K Ltd”) to the husband;
(ii)To clear the debt owing by the company and for K Ltd to make such declarations as are necessary to discharge the debts owed to it by the company AND IT IS FURTHER ORDERED that the parties share equally in any costs incurred including the accountant’s costs and any other disbursements, taxation charges or costs in connection with the abovementioned as to K Ltd AND FURTHER in the event that there are outstanding costs, charges, taxation or any other liabilities, those liabilities are to be paid for by the husband;
(iii)Otherwise, the husband indemnify the wife and keep her so indemnified in respect of all debts and other liabilities including all future taxation liabilities of whatsoever kind and nature.
(h)The husband and the wife do all acts and sign all documents reasonably necessary to wind up the following entities, at the expense of the parties equally:
(i)Aheb Business Trust (‘the Trust”);
(ii)The company
with the parties to be liable equally for any accountant’s expenses and other liabilities, including any taxation liabilities.
(i)The husband and the wife do all acts and things and sign all documents reasonably necessary to effect the transfer to the wife and/or her nominee at the wife’s expense, the Aheb Superannuation Fund and to effect the removal of the company as Trustee of the Aheb Superannuation Fund.
That the husband and wife do all things reasonably necessary to direct and instruct the accountant, Mr E, to do all things necessary to give effect to these orders as applicable in a timely manner.
(a) The husband pay to the wife the total of her costs pursuant to orders of the court made on 30.12.2008; 12.3.2009 and 22.4.2009 totalling $16,132.
(b)The said costs be paid by:-
i.transferring forthwith to the wife the balance standing to the credit of the following accounts MISR Account No. …34; MISR Account No. …54; MISR Account No. …08; MISR Account No. …01; K Accounts; and A Pty Ltd Westpac Business Cheque Account No. …;
ii.The balance of any amount owing thereafter, within 30 days of the date of these orders.
In default of the husband meeting the payment of any monies required under these orders, including the amount due pursuant to the previous paragraph, the wife be at liberty to sell forthwith (“the sale”) the real property situate and known as Unit 1 at G more particularly described in Certificate of Title Volume … Folio … on such terms and conditions as are agreed within 3 working days and, and failing any agreement, or agreement within that time, terms and conditions as specified by the President of the Real Estate Institute of Victoria or his nominee.
Upon completion of the sale, contemplated by the previous paragraph of these orders, the proceeds of sale be applied as follows:
(a)First, to pay all costs, commissions and expenses of the sale and to pay any council and water rates, land tax and body corporate levies outstanding in respect of the real property;
(b)Secondly, to set aside a sum for Capital Gains Tax with respect of the property as advised by Mr E, to be held by the wife’s solicitors in an interest bearing trust account in the parties’ joint names and with any surplus monies to be divided equally between the parties after payment of the tax as assessed or otherwise paid to the wife to meet compliance with these orders;
(c)Thirdly, payment of the wife of any costs due and owing to her consequent upon the husband’s default to meet his share of any payments or costs referred to herein;
(d)Fourthly, any sum owing pursuant to these orders, together with interest thereon at the rate specified in the Family Law Rules 2004, adjusted monthly from the due date for the payment;
(e) The balance to the husband.
Save as otherwise specified herein, each party be responsible for all rates, taxes (including capital gains tax) and outgoings in relation to the properties which they are to receive pursuant to these Orders from the date of compliance with the orders.
The husband retain for his sole use and benefit any and all property whether real or personal and of whatever type or description.
The husband and the wife each do all acts and thing, and sign all documents necessary in order for the wife to retain for her sole use and benefit the following accounts:
(a) National Bank of Egypt Account Number …;
(b) ANZ Wantirna Account Number …64;
(c) NAB Passbook Account Number …30;
(d) ANZ Account Number …58;
(e) Commonwealth Bank Super Fund Account ($17,000 approx).
That unless otherwise provided in these orders and except for enforcing the payment of any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all property (including choses-in-action, motor vehicles) in the possession of such party as at the date of these orders.
(b)Each party hereby retain any superannuation benefits belonging to or earned by that party to the exclusion of the other party.
(c)All insurance policies to become the sole property of the owner named thereon.
(d)Each party be solely liable for an indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
In the event that the husband fails, refuses or neglects to comply with the provisions of these Orders, then the Registrar of the Family Court at Melbourne be appointed to execute all documents in the name of the husband and do all acts and things necessary to give effect and validity to this order AND FURTHER the wife be at liberty to apply any reasonable costs incurred consequent upon the husband’s non-compliance.
Otherwise all extant applications be dismissed and removed from the list of cases awaiting final hearing.
Certify for Senior Counsel and Junior Counsel.
Following the expiration of the Appeal period, all subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.
IT IS NOTED that publication of this judgment under the pseudonym Aheb & Aheb is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF2471/2006
| MS AHEB |
Applicant Wife
And
| MR AHEB |
Respondent Husband
REASONS FOR JUDGMENT
The husband and wife in these proceedings for settlement of property are, respectively, 67 and 71 years old. They were married for some 38 years. Their two children are aged 40 and 30. These proceedings between the parties commenced over three years ago.
Each of the parties is represented by experienced counsel. The parties are agreed that a property settlement between them should effect an equal division of the ‘property of the parties or either of them” within the meaning of s 79.
That conclusion is, on the evidence before me, considering the length of the marriage, the respective contributions of each party (in all senses referred to in s 79) and the justice and equity of the overall result, entirely appropriate.
The trial – run over five days in November 2008 and a further three days in June 2009 – centres on one issue alone: the composition and value of the property “pool” to be divided.
The wife asserts that the husband has failed to properly disclose documents and provide financial information (contrary to his clear, ongoing obligation as a litigant in this Court). Further, she asserts that he has been less than frank in his evidence about his property and financial affairs – especially in relation to his financial affairs, and asset position, in Egypt.
The husband’s true financial position became no clearer by the conclusion of this trial. As will emerge, evidence from the husband about assets and financial dealings, particularly in Egypt, remains unclear, was often contradictory and, ultimately, is far from satisfactory.
Background
In light of the parties’ agreement as to equal property division, an in-depth relationship history and chronology of contributions is clearly not required. It is, though, necessary to provide a basic factual layout sufficient to understand the parameters of the current dispute.
The wife and husband were born in Egypt, migrated to Australia and gained Australian citizenship over 30 years ago. Throughout the marriage the parties lived in Victoria.
For some 20 years, from the 1980’s to 2003, the husband conducted property development ventures in and around Melbourne. Primarily through trust and business entities (K Pty Ltd, A Pty Ltd, Aheb Business Trust) the husband built a property portfolio consisting of nine Melbourne properties (including the former matrimonial home).
The wife worked intermittently as a teacher until about 1993, was the homemaker and primary caregiver for the parties’ two sons and, in large part, was responsible for the bookkeeping for the various entities and properties.
In about 1999 the parties purchased a unit (“the family flat”) in Egypt. This residence was largely utilized by the husband, but both parties and their two sons stayed at the family flat whenever in Egypt. The husband deposes that the family flat has been sold. The wife disputes this.
The parties divorced in January 2008. The date of separation is the subject of dispute between the parties. The wife asserts that the parties separated under the one roof in January 2005 following arguments in relation to the husband’s financial dealings in Egypt. The husband submits that separation did not occur until the wife left the former matrimonial home in late 2005. Against the background of a near 40-year marriage and the ambit of the current dispute, the difference is immaterial, although it is said to be a pointer to the husband’s lack of credibility generally.
In 2003/2004 the husband entered into an agreement to purchase a school site in Egypt. The circumstances surrounding the purchase price, where those funds were sourced, how much of the funds were transferred from Australia, and what, if any, documentation evidenced the transactions, occupied much of the cross-examination of the husband. The “school issues” are dealt with below.
Since 2004 the husband has resided mostly in Egypt. Since separation, the wife has resided in rented accommodation. The former matrimonial home has been largely left vacant and the remaining properties have continued to be managed as rental properties. The wife continues to maintain the financial records for these properties.
Orders were made by Cronin J on 30 December 2008, including that the former matrimonial home at W be sold.
The Central Role of Disclosure
Counsel for the wife submitted that the husband’s conduct has meant the court “cannot definitively determine whether assets have been secreted, lost, or whether a profit has been made” and that the court could “take the blackest view of [the husband] and the possible assets”.
In large measure I agree with this assessment of the husband’s conduct and the view I should take of it in the context of these proceedings.
The husband has provided precious little documentary or other evidence to support his many claims in respect of transactions both in Australia and overseas.
When pressed on the delay in providing – or the absence of - disclosure, the husband repeatedly said that he did not think the particular transaction was important, that he had not been asked to provide information or documents, or that he did not know where any such documentation would be. I do not accept those assertions either as to their veracity or, in any event, as an explanation for the failure or inadequacy of disclosure. Indeed, in closing address, his counsel effectively conceded this to be so.
The first day of trial in this matter provides, in my view, a cogent example of the husband’s approach to disclosure in this matter and, in turn, a solid basis for the finding just made.
Proceedings had been joined between these parties for some time prior to the commencement of trial. The husband was, at all relevant times, represented by solicitors in Australia. It was abundantly clear to the husband that the wife was asserting (at best for him) unexplained use of moneys and (at worst for him) that he had been unthruthful about his financial dealings in Egypt. Yet, an affidavit was produced by the husband to the wife on the first day of trial that deposed to the apparent ownership, and subsequent sale, of five residential units in Cairo. The units had been neither deposed to in any Financial Statement or affidavit, nor referred to in any correspondence or other document prior to that time.
The wife’s legal representatives had been advised the day before trial that an affidavit was being deposed to. Yet, neither they (nor, much less, the court) were provided with a sworn document until late in the afternoon of the scheduled first day of the trial. The hearing of this matter did not commence at all on this first day.
The fundamental obligation of disclosure upon litigants in this court, and its central importance to the determination of cases, has been emphasised time and again by this court. It needs to be borne in mind by all litigants in this Court that disclosure required by this Court extends not merely to producing documents which are in the possession, or under the control, of that party. The duty of disclosure is a general one. (See Rule 13.01 of the Family Law Rules 2004). Significantly, as the Rule makes clear, the duty is to give full and frank disclosure of all information relevant to the case in a timely manner. [emphasis added]
Of course, there are variations in the extent of the obligation, measured by the criterion of what is reasonable in the circumstances. A line-by-line explanation of post-separation expenditure may not be required in every case; it may be required in a case where, for example, wholesale fraud is joined as an issue from the outset of the proceedings. The obligation, though, also needs to be considered in the light of any request for information, reasonably made, by the other party. As the Rules make clear, proportionality is an important matter when considering reasonableness.
Here, the husband can not be heard to say that he was not on notice of the allegations expressed by the wife. Moreover, the transactions concerned occurred in a foreign country, and, although the wife, like the husband, is an Arabic speaker and is familiar with Cairo, she lived predominantly in Australia, as did her lawyers, and the opportunity for her English-speaking lawyers to investigate transactions and dealings in Egypt was concomitantly curtailed. The criterion of reasonableness must take account of matters such as those.
Whatever be the measure of reasonableness, however, it is plain that the husband’s disclosure is woefully inadequate.
The husband swore to what, in effect, were significant differences in the standards of commerce in Egypt. For example, he said that business in Egypt is frequently conducted in cash and this explains the absence of at least some of the documentary evidence that might be expected of the transactions to which reference will be made. The husband calls no evidence to support that claim, and I have considerable doubts about it. In any event, the fact is that many of the factual issues in this case centred, not on the absence of documents, but on issues arising from such documents as have been disclosed.
I see no evidence that there are significant differences in the “sophistication” of documentation emanating from Egypt to what might be expected of a similar transaction in this country, albeit that different laws or commercial cultures might underpin them. (An example is the apparent criminal prosecution, and potential jailing, of those whose cheques are dishonoured).
I accept that the husband’s first language is Arabic and not English (as is the wife’s). I see no evidence whatsoever, however, that this founds, in whole, or in part, any lack of understanding of the requirements of disclosure upon the husband.
I consider the husband’s failure to disclose documents and information (as will be discussed later) occurred either through deliberate action on his part (that is, making a deliberate choice what documents he would, or would not, produce to the wife and to the court) or through a reckless indifference to his obligation to disclose in these long-standing proceedings.
The consequences of a failure to disclose have, of course, been referred to repeatedly by the Full Court of this court. Reference has been made, for example, to “… a class of cases where the court cannot be satisfied as to the extent of the property and can thus be less cautious than might otherwise be the position when making an order”. (Chang & Su (2002) FLC 93-117at [59]).
The Full Court in that case referred also ( at [67]) to “[t]he law to be applied and the approach that may be adopted in cases where, through the lack of a full and frank disclosure, the court is unable to fully ascertain the extent of a party’s wealth” having been established in a number of earlier authorities that include In the Marriage of Mezzacappa (1987) FLC 91-853; Black & Kellner (1992) FLC 92-287 and In the Marriage of Weir (1993) FLC 92-338). The latter case includes the well-known statement that “… once it has been established that there has been a deliberate non-disclosure … then the court should not be unduly cautious about making findings in favour of the innocent party”.
In K and K (2002) FamCA 1150, the Full Court referred to the unsuccessful application for special leave to appeal to the High Court emanating from the decision in Chang & Su, above. In dismissing that application (5.11.02), Callinan J observed:
It does not matter what the principle might be said to be, a court has to do the best it can. It does the best it can, having regard to the evidence that is adduced and if the parties are not frank then, naturally, there is going to be a measure of imprecision about any findings that the court can make.
The Full Court in K & K, above, held (at [51]):
Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seen to be disadvantaged by the lack of complete candour. This is the course the trial Judge adopted. It was a course clearly open to him and one that does not merit appellate interference.
Can the Husband be Believed?
Failure to disclose, even significant failure to disclose, does not necessarily result in a rejection of that party’s evidence – although the hurdles standing in the way of being believed are, it might be thought, very significantly heightened in most such cases.
Here, it is important to record that, in assessing the husband’s credit, I have taken into account the fact that his first language is not English and some difficulties in comprehension of that language may have contributed to, for example, an impression that he was being evasive in his answers to questions. So, too, as outlined above, I have also not ignored the fact that differing legal or commercial practices might impact on credit findings; what might seem inherently improbable according to Australian standards of law or commerce may not be so by reference to prevailing Egyptian standards.
I have borne each of those matters in mind, and have also taken account of the health difficulties from which the husband said he suffers, in arriving at ultimate conclusions about credit.
I found the husband an entirely unsatisfactory witness. He contradicted himself in sworn evidence, gave evidence in respect of actions in Egypt which seem to me to be highly improbable and, in some cases, bizarre. I reiterate the findings earlier made about his non-disclosure. I consider that, rather than attempting to do his honest best to clarify the position with respect to his financial dealings in Egypt, the husband chose to obfuscate the issues by being, at best, selective in his evidence. I consider that, in some cases, his evidence was deliberately untruthful.
I have no such reservations about the wife’s evidence.
Attitude to Orders and absence of Witnesses
The husband breached an injunction issued by Mushin J restraining each of the parties from dealing with any property pending trial, by commuting unilaterally his superannuation pension to cash and expatriating it to Egypt. I will refer to this in more detail below.
The husband was also ordered at an interim stage to pay the wife $40,000.00 from an amount of about $120,000.00 which was available to the parties. He failed to pay that amount.
I have also earlier referred to the absence of witnesses called in the husband’s case which occurred in the context of the nature and breadth of the assertions made by the wife and the lack of disclosure by the husband generally. This is not so much a matter of drawing inferences pursuant, for example, to the “Rule in Jones v Dunkel”, (although that may be relevant); but is more telling and relevant as evidence that might have been called to support what is, at least, an evidentiary onus in respect of the matters raised by the wife.
In that context, it is instructive to quote the exchange occurring between junior counsel for the husband and the bench during final submissions on behalf of the husband:-
MR CARLILE: Just on that point, if in every case every party in this jurisdiction was required to produce each and every witness in respect of each and every transaction that's the subject of litigation, we would be here for months.
HIS HONOUR: That’s a very interesting submission to make in the context of this case, Mr Carlile, because you must have been in a different case to me in November [2008] because in November it was squarely put to your client – a number of matters were squarely put to your client - which had as their core that I should be profoundly suspicious and/or ultimately make findings about the nature of the transactions. Many of those transactions are said to have occurred by and through lawyers instructed by your client. In the six months since that hearing occurred despite the fact that your client is represented by senior and junior counsel and solicitors, no such document or affidavit has been forthcoming. It seems to me that that takes it out of the general run of cases in which various allegations might be sought to substantiated by affidavit.
MR CARLILE: Your Honour is then fairly understanding of why I sought the adjournment I did on two occasions in order to seek that earlier.
HIS HONOUR: On the contrary.
MR CARLILE: Are you saying we should have done that earlier?
HIS HONOUR: On the contrary. It heightens my misunderstanding of why it wasn’t obtained before …
…be careful about the point because if you, as you have in that submission, conceded that it’s relevant as, with respect, it seems to me you must, why can I not draw an adverse inference against your client by reason of the fact that it was not produced?
MR CARLILE: Because, your Honour, we would have to have done that in circumstances where I had made application for adjournment.
HIS HONOUR: Why?
MR CARLILE: Because - - -
HIS HONOUR: He’s had six months to do it.
MR CARLILE: I know, your Honour. Your Honour, can only draw an adverse inference in circumstances where the witness is not called and there’s no explanation. That is not the case in this case.
HIS HONOUR: What’s the explanation?
MR CARLILE: The explanation is that we haven’t done it.
HIS HONOUR: But you want to do it now an hour before closing?
MR CARLILE: Yes.
HIS HONOUR: That’s the explanation for not having done it in the last six months?
MR CARLILE: No, that’s the fact. That's not the explanation.
HIS HONOUR: What’s the explanation?
MR CARLILE: Well, the explanation is that it wasn’t done. It ought to have been.
HIS HONOUR: Sorry, the explanation for it not being done is it wasn’t done?
MR CARLILE: Yes.
As that extract makes clear, an important contextual matter which needs to be borne in mind is that the trial took place in two parts, separated by a period of about six months. The wife left the husband and those who represented him (including, at that time, experienced senior and junior counsel), in no doubt that she challenged the paucity of his disclosure, challenged the authenticity of some documents and suggested the husband was untruthful about his financial dealings in Egypt.
An attempt was made to “cure” some of those matters by the husband introducing (on the first day of the trial, despite the intervening six months) an affidavit. The affidavit, in many respects, made the husband’s position worse rather than better; as earlier observed it introduced, for the first time, the issue of the five units.
As part of that affidavit, the husband seeks to explain the expenditure of the very significant sums that had been expatriated to Egypt. Annexures are said to explain, or as it were corroborate, that expenditure, or, at least, a significant proportion of it. Yet some of those documents (for example the school contract) appear to contradict earlier documents. The documents do not sit with other evidence and, in other cases, make no sense if other (oral) evidence of the husband is to be accepted.
Specifics of the matters just referred to will be referred to below.
The Approach to this Case
The lack of proper disclosure by the husband, and the lack of clarity and obfuscation in his evidence makes it, even at this stage, extremely difficult to obtain a coherent picture of what has, and has not, occurred in Egypt. In order to give foundation to the findings ultimately to be made, it is necessary to refer to the evidence – such as it is – in respect of those dealings.
As the trial progressed, that evidence centred on three main issues: sale of “the family flat” in Cairo; the ownership and asserted sale of five residential units in Egypt; and the Cairo Kindergarten/School project and associated asserted establishment and running expenses.
In addition, it is necessary to examine the evidence (again within the blurred context just described) in relation to the commutation of a pension entitlement of the husband which, the wife says, resulted in loss to her.
The arguments in respect of these central issues were put, essentially, as relating to what is commonly called “add backs”. I am aware of the principles applicable to arguments of that type. For the purposes of brevity, I will, for the purposes of this judgment, repeat and incorporate into these reasons, my understanding of the principles outlined in my judgment in Challen and Challen [2007] FamCA 1292 at paras 72 – 81. I make it clear that I am applying the principles there outlined in deciding this case.
Senior Counsel for the wife, having framed the wife’s case in that way, sought sufficient clarity from the evidence of the husband so as to allow an “add back figure” to be arrived at with some precision, in respect of money expatriated from Australia, the existence or value of assets in Egypt and the expenditure of moneys in Egypt. Whilst precision is clearly to be preferred, I am of the view (for reasons which will more clearly emerge below) that such precision is not, in respect of the last two matters, ultimately possible.
In my view, the task of arriving at orders which are just and equitable (as the essential task remains) is best undertaken by looking at the evidence as to what money was repatriated to Egypt from Australia by the husband. Amidst the general evidentiary confusion, evidence about this is, it seems to me, fairly clear.
I propose to look at the evidence surrounding the specific transactions forming the focus of the trial, and to employ a robustness, and lack of cautiousness, justified, as a matter of law, by the husband’s failure to properly disclose and to draw conclusions about how the moneys moving to Egypt should be treated.
Sale of “the Family Flat” in Cairo
Both the price and date of sale for the family flat were the subject of conflicting evidence from the husband.
In his affidavit filed 24 October 2008 the husband deposed to the flat being sold in 2006 and annexed a ‘Contract of Sale’ (the original being in Arabic with an English translation titled “Extract of Contract of Sale” annexed alongside). That appears to record the sale date as 6 March 2006. In an earlier affidavit, filed on 13 October 2006 (Exhibit W17) the husband deposed to having sold the flat “about a year ago”. In oral evidence the husband made references to the sale occurring in late 2005.
Confusing, and at times contradictory, evidence was given by the husband in relation to the sale price of the family flat. In his affidavit filed 24 October 2008 the husband deposes that:
“[the purchaser] paid an initial amount of 120,000 Egyptian Pounds…in cash towards the purchase price. She also gave me 7 pre-dated cheques for 20,000 Egyptian Pounds which all were dishonoured upon presentation. My lawyers in Egypt have initiated court action against her to recover the balance of the purchase price. The first hearing took place on 9 September 2008. The legal costs for this will amount to 200,000 Egyptian Pounds in total.”
Surprisingly, it might be thought, given the allegedly parlous financial state which the husband asserts for himself, the legal costs stated in that passage are about 1½ times that of the total amount being sought on the seven cheques.
In the husband’s affidavit filed by leave on 17 November 2008 the purchase price was stated to be 260,000 Egyptian pounds paid by the purchaser in 140,000 Egyptian pounds cash and six post dated cheques each of 20,000 Egyptian pounds to cover the balance. The husband deposed that all six cheques were dishonoured and that four of these had been “litigated to conclusion”. The husband further deposes that the person who “purchased” the family flat has appealed each sentence arising from the dishonoured cheques and remains in possession of the flat.
It is to be noted that each of the assertions involve facts which should easily be evidenced by documents – particularly documents apparently referrable to court proceedings in which the husband is represented by (an Egyptian) legal practitioner. No documents are produced.
In the affidavit filed in October 2006 the husband deposed to the flat being purchased by him for 180,000 Egyptian pounds and sold for 210,000 Egyptian pounds. Under cross-examination by counsel for the wife the husband provided the following evidence:
MS NIKOU: On just that date alone there are three discrepancies. Could you please explain to his Honour why you have those discrepancies?---As I said, I can’t remember the exact date because I don’t have the contract. The contract was there and gone missing. I cannot remember when exactly I sold the flat. I gave the information, possibly the very first affidavit that I signed, with regards to the flats to [the previous solicitors], probably would be closer to the truth or the accurate dates because he must have had the contract, I don’t know.
Let us look at sale price. Go back to your first affidavit, 13 October 2006, and again have a look at paragraph 8 please?---Yes
You see about the middle of that paragraph it says, “It sold for 210 Egyptian pounds.”
…
210,000 I’m sorry?---It was purchased for 180, I sold – no it should have been 260.
Mr [Aheb] please read that whole sentence for his Honour. “It was purchased” can you continue? “It was purchased” read it out, please?---“It was purchased for 180,000 Egyptian pounds and it sold for 210,000 Egyptian pounds.”
That was your evidence in October 2006, wasn’t it?---Yes, it is.
Yes. In September of this year when you swore your trial affidavit…you told the court that the sale price was 260?---It has always been 260. This could happen to be a mistake and overlooked it. I maybe didn’t read it and see it properly.
Ultimately, the husband deposed in his affidavit filed on 17 November 2008 that:
“I am unable to say that at this time there are any prospects of recovering the balance of the purchase price over and above the initial payment of EL140,000.00 from the purchaser nor my prospects of recovering the apartment.”
Counsel for the wife submitted that on the basis of the inadequate disclosure and contradictory evidence of the husband, the Court could not be satisfied not only of the sale price but also could not be satisfied that the flat had been sold at all. Ms Nikou SC submitted that the Court would be well within it’s discretion to determine that the husband still owns the family flat and therefore has the benefit of the flat’s full value.
The husband provides no documentation as to the receipt or use of the deposit (variously sworn to as being either 120,000 or 140,000 Egyptian pounds). He simply asserts that any money he received was used to pay off debts arising from the Cairo school.
In relation to the remaining sum owed to the husband for the family flat, (in the vicinity of 120-140,000 Egyptian pounds, depending on which version is preferred), I have evidence that the husband has not received it, is unlikely to receive it and has spent about 150%, or more, that is owed on legal fees trying to recover it.
As best as one can ascertain, if the husband is to be believed, the flat was sold for either 210,000 or 260,000 pounds; either 120,000 or 140,000 was recovered as deposit but not accounted for and the balance of somewhere between 70,000 to 140,000 pounds not only remaining owing, but has (so far) cost 300,000 pounds in attempted recovery.
The husband does not list the Cairo flat in his list of assets and liabilities handed up at the end of the trial; he asserts he does not own it. How a purchaser, having apparently refunded the deposit and who is in default of the payment of the balance of the purchase price retains title and/or possession of the flat remains unexplained by the husband, any Egyptian lawyer or, indeed, any other witness.
Yet, evidence of a valuation of the family flat was annexure AMA2 to the husband’s affidavit filed 24 October 2008. This valuation provided a per square metre value of 3000 Egyptian pounds and a total value, based on the flat being 146 square metres, of 438,000 Egyptian pounds.
The wife accepts the “per square metre” figure adopted but disputes the total value stating that the unit is 200 square metres and, therefore, should be valued at 600,000 Egyptian pounds. Annexure SA25 to the wife’s affidavit filed 19 August 2008 is the Arabic original and a translation of a letter from the valuer setting out that they did not enter the premises but based the valuation upon the details of total area provided by the owner (i.e. the husband).
In addition, the wife claims there were contents in that flat which she estimates (without other evidentiary foundation) had a value of 150,000 pounds.
Five Units in Egypt
As stated at the outset of these reasons the husband mentioned his ownership of five units in Egypt for the very first time on what was to be the first day of trial. This failure to disclose any information about an interest in residential units in Egypt until the eve of trial was, unsurprisingly, the focus of much cross-examination from Counsel for the wife:
MS NIKOU: Mr [Aheb], my question was why did you wait until 17 November this year to tell the lawyers for the wife that you at some stage had an interest in five units?---It totally slipped my mind and to me I did not – this asset did not exist any more and I didn’t think it was essential to this case at this time because it doesn’t exist any more. I don’t have the asset.
You didn’t think it was relevant …Is that what you’re telling his Honour?---The whole issue of that thing was it happened quickly, it has gone, disappeared, it no longer exists, it has no value to me or to her. Besides Ms [Aheb] knew about it.
The matter was also taken up by me:-
HIS HONOUR: How much did you pay for the five units in Cairo?---50,000 each Egyptian pounds, 250,000 in total.
Where did the money come from?---It came from part of the $500,000 that we borrowed in order to purchase the school.
Right. So the $500,000 that you borrowed from the Commonwealth Bank, is that what you’re talking about?---Yes, sir.
You tell us in your first trial affidavit that that money was used to purchase the school?---Yes.
You tell us in your affidavit that that money was also used partly to construct things for the school. Is that right?---Yes.
You don’t make any mention of the fact that that money was at that time used to buy five units in Cairo. Do you have an explanation for why you didn’t mention that in your affidavit? When you knew from reading your wife’s affidavit that she was concerned about how money had been spent by you in Egypt?---It just didn’t occur to me of any importance.
Ms Nikou further cross examined the husband in relation to what, if any, documentation exists in relation to the purchase and asserted sale of this real estate:
MS NIKOU: Does a contract for the purchase of these five units exist?---Not with me. But with him, yes – should have.
Who is him?---Yes, the guy who took them. The guy who bought them.
…
…Let us break it up in case you are confused. Two contracts, one when you buy the units?---Yes
And one when you sell?---Correct.
Agreed?---Yes
Where are either of those contracts?--- The contracts that I have when I purchased the flats was returned when I sold the flats, to him.
You didn’t retain a copy. Is that what you’re telling his Honour?---No, I could have a copy but I don’t know where it is. Okay, when I sold the unit to his, yes, there’s a contract signed. Once again, I really don’t know where it is, unless I have given it to my previous lawyers. I don’t know, I can’t remember
The husband gave evidence from the witness box that a year after purchasing the units he sold them for 50,000 Egyptian pounds each. His evidence was that he received 50,000 Egyptian pounds cash and five cheques totalling the remaining 200,000 amount. The five cheques were all dishonoured and the husband pursued litigation that, at the time of trial, was not finalised.
The husband deposed to the status of the litigation and how much he had received in relation to the sale stating that in the four to six months preceding the trial his lawyer had received a total of 100,000 Egyptian pounds towards the sale price of the five units. The husband deposed that he, personally, had not received any of this money as it was being held on account of sums owed to his lawyers. Ultimately the husband said that he could not be hopeful about the prospects of receiving the full purchase price of the units.
Again, the result is a surprising one – it seems that the husband contends that he has, upon the payment of a 20% deposit and with 80% of the purchase price remaining to be paid, transferred title and possession. Despite deposing, in effect, to the unlikelihood of the balance of the purchase price ever being paid, title and possession apparently continues to vest in the defaulting purchaser. Again, no evidence is produced from the husband, an Egyptian lawyer or any other witness.
Counsel for the Husband concedes that the husband has provided no documentary evidence of the money expended and received in relation to these five units (nor any other documents that might assist in respect of the matterss just mentioned).
School in Cairo
In early 2004 the husband travelled to Egypt to find a suitable building to purchase and run as a school and kindergarten. The husband gave evidence that it was a lifelong desire of his to establish and run a school, the wife knew of this dream and was aware that the purpose of the trip in 2004 was to fulfil it. This evidence does not seem to be disputed.
The husband found a building and, after some negotiating about the sale price, agreed to purchase the land and building for 2.575 million Egyptian pounds paying a deposit by way of two cheques totalling 1.5 million Egyptian pounds.
The husband deposes to the fact that the cheques for the deposit were provided on the agreement that they remained unbanked for some weeks to allow the husband to place funds in the appropriate account. The cheques were banked before this could occur, and, after a hearing in the Egypt courts, the husband was sentenced for the dishonoured cheques. It seems to be uncontroversial that imprisonment can, in Egypt, follow (almost, it seems, as a matter of course) the dishonouring of cheques.
The husband filed an appeal and, whilst on bail pending the appeal, he returned to Australia to organise finance to cover the deposit amount and thereby avoid the penal sentence imposed by the Egyptian court.
Again, there are no documents evidencing any of the matters just referred to, and no evidence from an Egyptian lawyer about this sentence or the law underpinning it.
Ultimately, the money was arranged by way of a mortgage secured over the former matrimonial home and guaranteed against one of the B investment properties in the amount of $500,000.
Counsel for the husband submitted that the evidence reveals that, in 2004 when the mortgage was taken over the former matrimonial home and money was transferred to overseas accounts, the wife knew the husband had purchased a building and was endeavouring to set up a school, that there was “no basis for suspicion; no consideration; no doubts.” Counsel for the husband submitted that the Cairo school project and mortgage were undertaken jointly by the husband and wife and that the wife should share the losses resulting from this project as she has shared the benefits of the investment property portfolio of the parties.
The wife agrees that there were problems in Egypt of the type described by the husband, but her evidence casts a different light on her joining in the securing of the mortgage. In her affidavit of 18 August 2008 the wife deposes:
32. …The Husband told me [in May 2004] that he had bought a property for the nursery/kindergarten in Egypt, and that he had given the vendor two cheques drawn on his account worth 1.5 million Egyptian pounds. He said that he had given the vendor the cheques on the basis that the vendor was not to present the cheques for four weeks. The Husband told me, however, that the vendor had presented the cheques the following day. The cheques had been dishonoured and as a result, the Husband was guilty of a serious crime. The Husband told me that the vendor had taken him to Court, and that he had been sentenced to two terms of imprisonment of 3 and 3½ years each, but that he had appealed and as a result was out on bail. When the Husband was out on bail, he left the country and came home.
33. The Husband told me that the only way for him to get out of the predicament was to get the money to complete the sale before the appeal was heard, and to sort the matter out directly with the vendor. If the matter was not sorted out and the Husband returned to Egypt, he said he would be arrested.
The Husband could have remained in Australia and never returned to Egypt, but that was not a viable option for the Husband because we had so much family in Egypt. The Husband wanted to take out the mortgage to borrow the money to pay the debt, and thus finalise the matter.
34. I did not want to consent to the mortgage…but I also did not want a situation where the Husband could not travel to Egypt to visit his family.
Ultimately, the wife deposes to the basis for her agreeing to the loan:
35. I agreed for the Husband to take out the mortgage through Commonwealth Bank, on the basis that the money would be used to pay out the vendor and the property in Egypt would be resold, and we would effectively cut our losses.
The mortgage over the former matrimonial home provided, then, funds to cover the deposit for the school. The remaining 1.275 million Egyptian pounds was to be paid by way of two instalments over two years. The husband says he defaulted on the instalments and says that the vendor, after some court proceedings, took possession of the school building. Following further court intervention the husband says he received a refund of 1.49 million Egyptian pounds from the initial deposit. The husband deposed that this refund was received in June 2008 and was used to pay outstanding debts for school construction works and other legal fees.
It might be observed that this outline of events by the husband by no means strikes a reader familiar with Australian law and commerce as surprising. Yet, it sits in stark contrast to what the husband says occurred with respect to the alleged contracts with respect to the family flat and the five residential units.
The evidence of the husband in relation to the school project created an, at best, hazy picture as to the period that the school was operational. In particular, what, if any, income was earned; what expenses were paid; the costs and requirements for construction works and, finally, the use of the refunded deposit monies all remain clouded in uncertainty.
Counsel for the wife cross-examined the husband about when he became the owner of the school:
When did you purchase the school as far as you were concerned? When did you become the owner of the school?---That was December 2005 – 2004, I beg your pardon. No, no, December 2004.
How do you say you became the owner of the school?---When I paid the money.
When you say when you paid the money, we know that there was a problem with paying the money. So do you mean when you first handed over the cheques, or at some later time?---I was in possession of the school when I gave them the cheques, from the first day I gave them the cheques.
Under cross-examination the husband stated that the school was operational in “late 2005, early 2006”. In reply to further questioning from me in relation to when the school commenced, the husband said:
HIS HONOUR: You say in your affidavit, your first affidavit…[that the school] was “a concrete shell”. Is that right?---Yes, sir
So is it true to say that it wasn’t fit for occupation at the time [of purchase]?---It was not fit for occupation.
Is that right?---Yes
…
You paid the cheques without there being a contract?---That was not even ready.
…
When was the contract done?---The contract was signed on July.
July 2004?---Correct, sir.
At the time July 2004, was the school operational when you signed the contract?---Yes, at the time it was partly finished, yes.
…
Was it able to be occupied at that time?---One floor was, yes.
…
So from July 2004 were you receiving income in respect of the use of the school?---The school was not making any net returns, sir, at all.
It was what?---Was not making profit.
Whether it was making a profit or not is a different question. My question is were you receiving any income, any revenue from the school?---Yes, there was, yes.
…
Can you explain why the contract says that you don’t become the owner of the school until you’ve paid all the money?---Yes
Why the vendor let you go into possession and earn income from the school although you hadn’t paid the money?---The contract say that I can take possession of the building and I make the balance on two instalments over two years with no interest.
…
Despite the fact that you were not the full owner - - - ?---I’m not the full owner at the time, no.
No. But despite that fact you were permitted and you did spend $2 million Egyptian pounds or something on the property that you weren’t the owner of. Is that right?---Yes.
The husband deposed in his affidavits, and gave oral evidence, that he engaged multiple building contractors to work on the school and that he had spent hundreds of thousands of Egyptian pounds to that effect. In his affidavit filed 24 October 2008 the husband deposed to building works being “undertaken in two parts and cost[ing] a total of 2,511,000 Egyptian Pounds.” The husband deposed that the “works were carried out for at least a 12 month period between 2004 and 2005.”
At paragraph 27 of his affidavit filed 24 October 2008, the husband deposed to his use of funds transferred from Australia between 2004-2005: “I say that the monies AUD817,017.28 that were withdrawn from my accounts during the period from 2004 to 2006 were disbursed towards the costs of the purchase and establishment of the nursery [Cairo school] business in Egypt”.
The contract of sale for the school (annexure AMA-19 to the husband’s affidavits – including a translation and the Arabic original) included a ‘clause’ that the purchaser declares that the premises have been inspected and “is suitable for occupancy/business.” The evidence of the husband that the school was (save for a small part of it) not operational and required what were clearly significant construction works, seems to sit in contradiction to the terms of the document produced.
The husband stated that he was not the ‘owner’ of the school building as he had not completed payment for it. Yet, despite owing about 1.25 million pounds for its purchase he nevertheless spent, he says, about twice this amount on construction works – all at a time when he was not the owner.
The husband’s oral evidence in relation to the running costs of the school painted an equally incomprehensible picture. It is simply impossible to compile a coherent account of what money was received and when and how it was spent.
The husband deposed to there being six staff employed at the school with 20 enrolled students who paid 300 Egyptian pounds per month. When asked how this money was handled and what, if any, banking documents could evidence this cash flow, the husband deposed that there was no bank account for the school monies. The husband’s evidence was that the cash received was handled by the manageress (who is a relative of the husband) and, it is said, on-paid by her to cover expenses, without any such monies every being banked. It remains a mystery how any accounting for the school was to be effected in those circumstances.
Needless to say, no documentary evidence was provided in relation to money received or spent in and about the running of the school.
The Husband’s Superannuation
It is accepted that the husband commuted his defined benefit ESS Superannuation fund into cash in August 2008. The fund had been valued by the single expert financial planner, Ms P, as a pension having a value for family law purposes of $575,168. When the husband commuted the pension to a lump sum and closed the super account, it is uncontroversial that he received $242,103.
The affidavit of Ms P filed 25 August 2008 annexes correspondence from the husband’s solicitors seeking advice as to the husband’s capacity to commute his pension superannuation to a lump sum. Correspondence from Ms P to both parties dated 22 July 2008 sets out: “Any commutation is at the discretion of the trustees. If approved…, we expect [the husband] would receive an amount in line with the family law valuation.” The letter goes on to advise that to confirm any such lump sum valuation the husband would need to provide a signed authority for Ms P to “speak to the super fund about specifics of this matter”.
In cross-examination, Ms P confirmed that the stated valuation of approximately $575,000 was the “amount in line with the family law valuation” and that she did not resile from that as representing the value of the fund. Ms P said that at no time had she received any authority from the husband to further investigate the matter and she had not been made aware that the husband had commuted the fund and received a lump sum.
Counsel for the husband cross-examined Ms P in relation to her expectations of the value of the fund were it to be commuted to cash:
…It was therefore your expectation as at 22 July this year, that if either [the husband] decided to cash in or take a lump sum he would get $570,00-odd, or $580,000 depending on the precise value at the date…?---I know that the amount [the wife] would have got in the split would be the family law value. I expected that that would be a similar value or the same value under the new provisions to be able to commute pension as applied for by the member of the fund. However, as I said in my letter, I was unable to confirm that.”
The husband said he required these funds for living expenses as the pension he was receiving was insufficient to cover mortgage repayments and afford him suitable funds for day-to-day expenses.
Counsel for the wife submitted that the husband’s failure to make full and frank disclosure, his evasiveness in providing financial information and the fact that he failed to follow up the advice from Ms P by providing a signed authority to confirm the total value of any lump sum payment should lead the Court to exercise its discretion to add back the superannuation’s potential value of $575,168 to the property pool. It was submitted that the husband’s actions in commuting the superannuation robbed the wife of a number of other options that would have enabled her to access 50% of the total fund value.
That submission derives, perhaps, additional force by reason of the fact that the husband’s dealing with the fund was carried out in breach of orders made by Justice Mushin on 6 November 2006 restraining either party from dealing with, or encumbering, any of the assets of the parties.
In response to questions from me, Ms Nikou SC for the wife conceded that the evidence in relation to the superannuation fund, and Ms P’s oral evidence in particular, did not go so far as to set out particulars of any options the wife might have had if the superannuation interest had been preserved. The assertion is that the wife is deprived of such “splitting options” as might have been available to her.
The “value amount” is that attributed to the superannuation interest mandated by the method prescribed in the Family Law (Superannuation) Regulations (see s.90MT(2)(a)). The court must take this amount as the superannuation interest’s value (s.90MT(2)).
It is unsurprising that there might, in a particular case, be a difference between a “s.90MT amount” (being in this case an amount arrived at by the application of a formula referenced to the particular nature form and characteristics of the husband’s superannuation interest) and the amount actually received upon vesting and the superannuation interest’s receipt as a lump sum. Receipt of the superannuation interest as a lump sum is different, in its nature form and characteristics, from the interest which was valued (a defined benefit pension). It is this, as it seems to me, that Ms P was referring to in the evidence above quoted; it is, in my view, why Ms P needed to speak to the superannuation fund “about the specifics” of the husband’s interest.
The apparently flagrant breach of Mushin J’s orders, the lack of disclosure as to how the cash received was spent and the confused evidence generally about how the moneys in the hands of the husband were spent, points strongly to the add-back of the moneys received by him.
However, on the evidence before me, I am not prepared to conclude that the husband’s unilateral actions ought sound in an additional amount representing what the wife asserts might have been available to her had the commutation not taken place either when it did or at all.
The Husband’s Alleged Debts
In the husband’s summary of argument, loan amounts to a Ms M and Mr L Aheb are listed as liabilities in the amounts of $71,065 and $110,801, respectively.
Throughout the course of his oral evidence the husband deposed to receiving numerous ‘loans’ from Ms M (who was the manageress of the Cairo School) and is a distant relative of the husband. Annexure AMA13 to the husband’s affidavit filed 24 October 2008 was a translation of a document entitled “Statement of Account by Manager Ms [M] addressed to [the husband]” dated 13 October 2007. This document sets out the total amount owing as 284,500 Egyptian pounds. Under cross-examination, the husband deposed to having borrowed further funds from Ms M since October 2007 and owed at trial in the range of 360,000 Egyptian pounds.
The husband’s evidence was that he could not be sure of the total amount of money borrowed as he was given money as needed to pay for his day-to-day expenses and to meet overdue expenses relating to the running of the school. The husband referred to, at times, being provided money by Ms M on an almost daily basis.
The husband stated that repayment of the monies borrowed was an obligation upon him but there was no fixed regime as to when and how the debts were to be repaid. Once again, no documentation whatsoever is produced (or said to exist) by which AMA13 might be referenced. Once again, Ms M is not a witness and no explanation is offered as to why someone who is said to be owed about $70,000 (or, more importantly, to an Egyptian living in Egypt, 360,000 Egyptian pounds) is not a witness.
Mr L Aheb, who is the husband’s brother, is also said by the husband to have loaned money to him to meet daily living expenses and to be put towards the Cairo School debts. In oral evidence the husband said that (again) there were no records of the loan amounts but that it was a question of respect and honour that he pay it back. No documentary evidence was provided setting out the loan amount/s or how it/they were calculated, when they were lent or the like. Again, the husband’s brother did not provide evidence in this case.
Ultimately, the husband claimed liabilities to Ms M and his brother of, respectively, $71,065 and $110,801. The husband also claimed to owe an amount to each of his sons, totalling $21,000. No evidence is given by the husband as to a legal requirement to repay any such sum, any demand by any person for the whole or any part of any such sum, or any plan or scheme for repayment by him.
Liabilities may be “ignored” (in the sense of not reducing the gross assets of the parties) when they are vague or uncertain or unlikely to be repaid (see e.g. Biltoft & Biltoft (1995) FLC 92-614).
Those epithets apply here and the case for ignoring the alleged debts is significantly strengthened by the lack of disclosure and the absence of evidence attending them. I propose to ignore those liabilities (in the sense earlier described) in arriving at the net “pool” or property.
The Husband’s Overseas Business Activities and Expenses
The husband was cross-examined in relation to his recent attempts to establish new business opportunities in Egypt. Photocopies of his passport pages – at least covering travels in October 2008 - were tendered as Exhibit W5 in these proceedings. Counsel for the wife cross-examined the husband in relation to whether the trips to Madrid and other European destinations were in fact business trips and indicative of the husband secreting financial information.
The husband maintained that he has been continually pursuing business opportunities in relation to the possibility of importing products such as olive oil and cosmetics into Cairo but that no fruitful business ventures had arisen and no income had been earned.
In closing submissions I asked Counsel for the Husband precisely what information in relation to income the husband had disclosed:
What has he disclosed by way of information or documentation from which I might conclude what his current source or sources of income might be?
…
MR CARLILE: He hasn’t provided any documents in respect of that, your Honour, but just let me be heard on that ---
HIS HONOUR: What information has he provided if he hasn’t provided any documents?
MR CARLILE: What he’s provided, your Honour, is evidence of what he intended to do and what he tries to do. He says that he’s trying to be involved in cosmetics, he’s tried to be involved in olive oil, and he tells this court under cross-examination…that’s what he’s endeavouring to do.
…
HIS HONOUR: Yes he tells me that, and I say, … What reliable third party documents can I go to see where the money has come from and gone to in respect of those activities or potential activities? So focusing just on that, what has he disclosed in respect of that?
MR CARLILE: All he’s disclosed is that money was transferred to Egypt. Your Honour hasn’t got any more documents.
The husband gave evidence in the witness box that he has no income producing ventures or activities; that he has not received any income from the school project and that his trips to Europe - whilst investigating potential business opportunities - had resulted in no earned income. The funding of them, I gather, has been from the alleged loans made by Ms M or his brother.
The evidence is, again confused and confusing. I am left in considerable doubt about the husband’s true income position given that I do not accept his evidence and no cogent evidence has been produced by him in respect of it.
The Property of the Parties or Either of Them
I am well satisfied that the husband has failed to meet the obligations upon him to disclose information and documents relevant to his financial affairs. I do not accept the husband’s explanations (to the extent that explanations are given) for that failure.
I propose to adopt precisely the sort of robust approach justified by authority as a consequence of that finding. I do not propose to be “unduly cautious” in making findings in favour of the wife.
Yet, the legislative imperative remains; the task is, within that lack of caution and robustness, to nevertheless effect justice and equity in making ultimate orders, to the extent that it is possible on the evidence before me.
The outline of what I consider to be salient features of the unsatisfactory state of the evidence before me permit of a number of approaches and ultimate findings in arriving at “the pool” to be divided. The simple fact is that the failure by the husband to provide a coherent account, information and documentation and to lead evidence that might assist the court in arriving at the first (and most basic) step in these proceedings leaves the evidence and thus, this court, in a state of considerable uncertainty.
Confusion and contradictions surround the school. The wife does not contend that I should find that the school still exists in the husband’s hands or somehow for his benefit. Yet, I consider it is well nigh impossible to make findings as to how much money was used, made or lost in respect of the school.
I am very troubled about making a finding that the husband still owns the five units – such a finding is tantamount to a finding that the husband has perjured himself. The evidence is confused and confusing, the responsibility for which I squarely put at the feet of the husband. The extraordinary failure of the husband to disclose, or even mention, this asset until he did has already been commented upon.
Yet, confused and confusing evidence seems to me to be an unsatisfactory basis for the making of such a serious finding as that referred to. Again, that specific finding is not sought and, again, it is not possible to know how much money was used, made, or lost on this venture.
The wife does seek a finding that the husband remains the owner of the family flat and includes in her ultimate list of assets and liabilities that flat as an asset of the husband, using as a basis for its attributed value, the higher floor area earlier described. She also seeks the inclusion of the value of the contents earlier referred to. For reasons I will shortly expand upon, I will not do either.
Agreement between the parties about Australian assets and their value and my core finding about the credibility of the husband allows some aspects of the pool to be readily set out. It is convenient to use table within the “Wife’s Amended List of Assets and Liabilities” handed up by senior counsel for the wife, and upon which her submissions were based, as a reference point for the ultimate findings about the “pool” of property. That table is as follows:
No.
Property Proprietor Value Retained by 1 [Former matrimonial home at W]
Husband & Wife
(joint)
C/T […]Sale Price
$610,000
Mortgage
$520,000
Expenses
$ 43,000
NET
E$57,000Wife 2 [Unit 2, B] Joint
C/T […]
Occupied by [W]$465,000 Wife 3 [Unit 1, B] Joint
C/T […]$430,000 Wife 4 [Unit 1, G] Joint
C/T […]$265,000 Husband 5 [Unit 2, G], Joint
C/T […]$262,000 Wife 6 [Unit 1, R] [Aheb] Super Fund
C/T […]$340,000 Wife 7 [Unit 2, R] [Aheb] Super Fund
C/T […]$335,000 Wife 8 [Unit 3, R] [A] Pty Ltd
C/T […]$340,000
Less:
CGT $56,943
Selling costs
E$15,000
NET
E$268,057Wife 9 [Unit 4, R] [A Pty Ltd]
C/T […]$335,000 Husband 10 Egypt apartment Husband Contract value 200 sq metres
@EGP$3,000 per sq met = $600K + Contents EGP$150K
TOTAL EGP$750K
Exchange rate
4.5 =
AUS$166,667Husband 11 Husband’s motor vehicle in Egypt Husband AU$21,000 Husband 12 a. Wife’s National Bank of Egypt
b. Wife’s ANZ notional add back $60K
c. Wife’s NAB
d. Joint ANZ Acct
e. Husband’s MISR Accs
f. [K] P/L Acc
g. [A Pty Ltd] Westpac Acc
h. Commonwealth Bank Acc (Rental income)
ACCOUNTS TOTAL
AU$6,790
AU$60,000
(Bal $5,059 Cr)$7
$4,451
$847$270
$9,841$17,000
$99,206
Wife to retain:
a,b,c,d&h
TOTAL:
$88,248Husband to retain:
e,f,g
TOTAL:
$10,95813 Motor vehicle Husband $7,600
[red book]Husband 14 Husband’s Commuted Superannuation Husband $575,168 Husband 15 Husband’s money transferred overseas being FMH Mortgage monies AND monies withdrawn for his own benefit
2004
20052006
Sundry accounts $675,427
$82,069
$35,000
$59,521
$852,017Husband
16 Monies withdrawn by wife from C’wealth Acc Joint $85,000
Monies distributed:$30,000
to Husband$55,000
to WifeH retains $30,000
W retains $55,000
17. TOTAL POOL $4,563,715
The Former Matrimonial Home
In respect of the former matrimonial home, it has been noted earlier that Cronin J ordered its sale in November 2008. The wife’s list of assets include that home at its sale price, less the expenses of sale and the agreed mortgage liability. In submissions, Ms Nikou indicated that the first page of the list (on which the former matrimonial home is listed in that manner) was not disputed. Mr Carlile was not heard to the contrary. I include the wife’s figures in that respect.
Add Backs
I turn then to consider the balance of the matters contended for arising from the central findings made in these reasons.
I accept that the adding back of amounts is the exception and not the rule. Doing so must be guided by the justice and equity of the case. Here, the abject failure of the husband to meet his disclosure obligations and the highly unsatisfactory nature of his evidence (and my unwillingness to accept his evidence generally) are highly relevant to the latter.
I reiterate the comments and findings earlier made. It will be recalled that I have determined to include the sum received by the husband as lump sum superannuation and not its family law value. The amount at item 15 thus becomes $242,103. So, too, it will be recalled that the $35,000 included as part of the sum at item 15 is a double count and the total figure should be reduced to $817,017.
Money repatriated to Europe is money that would, on the evidence, otherwise have been available to the parties (or, put another way in the case of the $500,000 mortgage, a debt that the parties would not have) if the husband did not engage in the unsatisfactorily explained activities and financial dealings in Egypt.
It is true, as Mr Carlile argues that, particularly in the case of marriages of this length, parties can be generally be expected to take the financial rough with the smooth and to share in the burdens as well as the benefits. Mr Carlile argues that this is what should apply in this case and he points in particular to the fact that the wife knew of the husband’s long-held dream of building and running a school in Cairo.
But, in my view, the argument falls over because of the husband’s abject failure to disclose and what I have found to be his obfuscation of the true financial picture. To borrow the words of the Full Court in K & K, I am “satisfied that the whole truth has not come out” from the husband in respect of his financial dealings in Egypt. It is, as the Full Court observed might occur, appropriate in this case to “err on the side of generosity” to the wife. Put another, way, the argument advanced on behalf of the argument fails, because the evidentiary foundation for it does not exist.
I have already observed that there must be in this case, in respect of the Egyptian assets and financial dealings, what Callinan J described in the citation earlier given as a “measure of imprecision about any findings the court can make”. That imprecision results, in my view, from the husband not being fully frank with the court.
Adding back to the pool the amounts expatriated to Egypt by the husband and, at the same time, adding to the pool, and attributing to him, assets in Egypt risks injustice (by reason, for example, of double counting) that is in my view not tolerable, notwithstanding the matters earlier referred to and the robustness of approach resulting therefrom.
Failure to add-back expatriated funds, and to rely upon what the husband says of what has, and what has not, occurred in Egypt (including what assets he has, and does not have, and what money he has spent on what purposes) is, in light of my findings about his evidence and disclosure, to effect significantly greater injustice to the wife.
I accept that it is open to me to take account of the findings as to the husband’s evidence by making an adjustment pursuant to s. 75(2)(o) – although such a course was not advocated, in the alternative, on the husband’s behalf. Ultimately, a decision whether to take that course in preference to adding back expatriated funds, must be based on an assessment of the justice and equity of the case. The matters earlier described in some detail point clearly in my view to the adding back of those monies as the more just course of action.
The money utilised by the husband can be identified with some precision. The list of assets provided on behalf of the wife includes an amount that is agreed between the parties as having been mistakenly added twice. The correct figure, by agreement, of moneys sent to Egypt from the mortgage on the former matrimonial home and monies withdrawn from bank accounts is $817,017.
I have already determined that it is not appropriate to add back the whole of the “value” of the superannuation interest. The cash received by the husband is agreed as $242,103, and, it is clear, this money, too, was sent to Egypt by the husband.
The total monies which I am prepared to find was sent by the husband to Egypt is, then, $1,059,120.
A final question emerges: is it just and equitable to add back the whole of the monies thus sent or should some lesser sum be adopted? Some findings might be able to be made that might point to such a conclusion - even in light of the woeful lack of disclosure and the confused and confusing state of the evidence, created, in my view, by a lack of complete frankness by the husband that might be summarised by saying that the husband has informed the wife and this court of the things that he considers she and the court should know. In general those matters can be seen to be beneficial to him.
It is, for example, clear that some monies were provided to some persons at some time in respect of some works on the Cairo school. Yet, when findings such as that are compared to the overall findings earlier made and, in particular, that is not possible to get even close to forming a coherent, believable picture of what moneys went where and what is left (in either money or other form), it is in my view clear that justice and equity in this case points to the whole of the expatriated moneys being added back to the pool and credited as having been received by the husband.
I propose then to add the sum of $1,059,120 to the “pool” of assets and credit same to the husband as property received by him as part of his equal division of the property.
Motor Vehicles
In light of the paucity of evidence about same, I do not propose to include the husband’s motor vehicle at the value nominated by the wife. I will simply include it as part of a general order in favour of the husband that he retain property of whatever type or description in which he has an interest in Egypt.
The wife adopts a “red book” value for a motor vehicle owned by the husband in Australia. I am not prepared to accept a value in that form. I will simply include that vehicle as part of property in Australia to be retained by the husband.
Cairo Flat and Contents
I have earlier set out my reasons for not including the family flat in Cairo, whatever be its true value.
The wife’s assertion about the value of contents in the family flat in Cairo falls into a similar category. I appreciate that there may have been difficulties in arriving at a valuation of these items, but I am not prepared to act upon the wife’s estimate which attributes a dollar value (said by her to exceed $30,000) to those items. Again, I will include same as falling within the general order proposed in respect of property retained by the husband in Egypt.
Amounts paid to each of the Parties
An issue arises as to the treatment of monies paid from an Australian bank account to each of the parties. The parties are agreed that $85,000 was withdrawn with the wife receiving $55,000 and the husband receiving $30,000.
It seems to me that the sum paid to the husband falls into a different category to the sums totalling the million-dollar figure earlier mentioned. The intention, I gather, was that the parties would have an amount to meet ordinary post-separation debts and living expenses.
The husband contends, in effect, that if neither is added back, injustice results from the wife receiving $25,000 greater than the husband. However, I am satisfied that, in the midst of the litigation between these parties, the availability of over $1million dollars to the husband and the wife’s attempts to ascertain an accurate picture of what had happened to such money, adding each sum back (which has the net effect of reducing her potential entitlement by $25,000) is inequitable to her.
Put another way, I am content to find that each of the sums was used reasonably by each of the parties on living expenses in the post-separation period and that neither sum should be added back.
Bank accounts
The table includes amounts of cash standing in bank accounts attributed to each of the parties and to them jointly. There are some differences in the lists of each of the husband and wife. I accept the wife’s list as likely to be the more accurate and adopt it.
However, as part of item 12, a figure of $60,000 is used and described as “…notional addback $60,000”. But, the amount column indicates a balance of $5059. This would appear to indicate, then, an addback, not of $60,000 but of $55,000. I note this is the sum paid to the wife by agreement as discussed above. The picture is confused by reference to that amount in item 16. This point was not the subject of specific submission, but it seems to me that there is double counting of the amount of $55,000 (which was moved by the wife between a superannuation bank account and term deposit bank account. I make the assumption just described when arriving at the net pool. In any event, I have determined not to addback this $55,000 to the pool.
The Property of the Parties or Either of Them
When account is taken of each of those matters, the net result is that, to the table outlined, above:
§Addbacks comprising $242,103 representing the lump sum superannuation used by the husband and the sum of $817,017 agreed as the amount transferred to Egypt by the husband, a total of $1,059,120 should be included;
§The motor vehicles will be removed
§The Cairo flat and its contents will be removed; and
§The amounts payable to each of the parties will be removed (and, by reason of the assumption mentioned above, not only will the amounts at item 16 not be included, but the ANZ balance at item 12 will be included at $5059 and not $60,000).
I have already found that the liabilities claimed by the husband should be “ignored” in the sense referred to earlier. The only other liability is the mortgage debt which has already been taken up in the total earlier referred to.
The net pool of property for division, then, becomes $3,860,442.
Justice and Equity of Orders
I have already referred to the fact that the parties are agreed that an overall result of equality is appropriate in light of all of the s. 79(4) considerations relevant to this case. Axiomatically, what is sometimes referred to as the “fourth step” – the justice and equity of the ultimate result – is incorporated in that assessment.
An equal division of the property of the parties or either of them would see each of the parties obtaining property to the value of $1,930,221.
It is uncontroversial that one of the parties’ sons lives in one of the units forming part of the property pool. Again, it is common ground that he would continue to do so. The wife says that she wishes to live next to her son. She is 70; she has endured much, the husband makes no legitimate case against the proposition and I consider it appropriate that this unit form part of her property settlement.
In terms of the other division of real property, it is submitted on behalf of the wife that she wishes to keep some geographic distance from the husband and to have, as it were, the unfettered use of any property to which she becomes entitled by reason of orders of the court. Again, I consider that those submissions are well made and can see no reason why orders giving effect to same ought not be made.
I propose to make orders broadly in line with those contended for by the wife.
The wife, contends that she should receive the proceeds of sale of the former matrimonial home and the real properties listed at items 2, 3, 5, 6 and 7 of the above table. She also contends that she should receive the property listed at item 8. I will refer to that property in a moment.
If the wife receives the other real property contended for and the cash amounts listed at items 12 (a), (b), (c), (d) and (h) she will (making the assumption in respect of item 12(b) noted above) receive $33,307 in cash. – a total of $1,922,307. That would leave her $7,914 of the precise 50% entitlement calculated above.
If the husband is credited with the $1,059,120 in addbacks, receives the real property listed at items 4 and 9 and the cash sums referred to at items 12(e), (f) and (g), he will receive $1,670,078. He needs to receive an additional $260,143 to make up his 50% entitlement.
It will be noted that the above table includes a property listed at item 8 in the table (Unit 3 at R) which is owned by the husband’s company, A Pty Ltd. It is agreed to have a value of $340,000. But, included in the table is a calculation of capital gains tax and an estimate of sale expenses. No evidence attends the calculation of same.
However, if that property (which, in respect of capital gains tax, it should be noted is owned not by a spouse but a third party) is sold, the tax payable shall crystallise and so, too, will sale expenses. If the corporation (which is effectively owned and run by the husband) does not sell the property, neither capital gains tax, nor sale expenses, will be incurred (although the property may be pregnant with the former). The differing events have, then, different consequences for the husband’s entitlement.
The “gross” value is agreed at $340,000. The “value”, net of the capital gains tax and estimate of sale expenses, is $268,057. If the husband receives the former together with the other property mooted above, his total entitlement will be $2,010,078. That is $79,857 more than his 50% entitlement (or, about 2% of the pool determined by me). If, however, the “net value” for the property is used, he would receive $1,938,135. He would benefit to the same extent that the wife would “lose” – i.e. $7914. So, too, if the capital gains tax is payable, but the sale costs are not incurred, the benefit to the husband would be in the region of $60,000 more than his calculated entitlement.
It will be appreciated that, whilst precise figures have been used by the parties, have been included in the table submitted by the wife and have been used by me in the calculations just undertaken, the s. 79 exercise is not, and is not intended to be, a precise exercise or an accounting exercise. Nor, is it, then, susceptible to arithmetic purity.
The difference of $7914 is not something I am prepared to adjust and is well within the limits of imprecision embraced in the exercise, particularly in the absence of evidence about, for example, precise sale figures.
By way of contrast, however, the figure of $75,000 (or $60,000) potentially flowing to the husband, whilst only representing about 2% (or slightly less than 2%) of the “pool” is not an allowance I am prepared to countenance occurring in his favour in light of the findings made in respect of his evidence and lack of disclosure.
By reason of those considerations, it is in my view, just and equitable to order the sale of the property in order to crystallise both capital gains tax and sale expenses.
To the extent that there might be any “rise or fall” arising from the actual sale price and capital gains tax or sale expense, I consider it appropriate to simply allow that to fall to the husband. In particular, if that leaves the husband short of the precise 50% figure calculated above, I am content that doing so is just and equitable by reference to the robustness and ambit of generosity emanating from the factors and findings earlier set out. Conversely, I am not prepared to order the winding up of the company and see the property transferred to the husband if, in the absence of a sale, no capital gains tax is payable and no sale expenses are incurred.
Effecting a property settlement in the terms otherwise indicated would see the equal division expressed in the following way.
The wife would receive 5 real properties. One would provide her with a place to live and the remaining four would provide a woman now in her 70s with a rental income. She will have no significant debts. She would live next to one of her adult sons. She would, in addition, have a modest amount of cash.
The husband will have received the benefit of over a million dollars in cash. I strongly suspect he continues to have the benefit of assets, or income, or both that is neither disclosed nor ascertainable. He will, in any event, have two properties in Australia with a combined value of about $600,000 each of which return rental income. He will have a significant amount of cash, emanating from the sale of the property ordered to be sold. He has made it clear that he intends to live predominantly in Egypt.
It seems to me that the approximately equal division of the property of the parties or either of them by the orders proposed represents a just and equitable result.
Reserved Costs
Unsurprisingly, it might be thought, the lack of disclosure and other matters earlier referred to in these reasons have given rise to a number of costs orders against the husband.
I gather that the quantum of these is agreed between the parties as contained in the Wife’s Amended List of Assets and Liabilities document earlier referred to with the agreed addition of $1,000 – the total being $16,132.
I am pessimistic that, left to his own devices, the husband would pay those costs. I propose, then to secure the payment of those costs by order.
I will, firstly, order that the husband pay to the wife costs pursuant to orders of the court made on 30.12.2008; 12.3.2009 and 22.4. 2009 totalling $16,132 within 30 days of the date of the orders made by me.
Secondly, I will order that this obligation be met by the husband forthwith transferring to the wife the moneys standing to the credit of the bank accounts listed at items 12(e), (f) and (g) (totalling, in that document, $10,958) with the balance to be paid within the said 30 days. Finally, in default of such payment, I will make orders for the sale of property owned by the husband.
I order in accordance with the orders set out at the commencement of these reasons.
I certify that the preceding one hundred and eighty-eight (188) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy
Associate:
Date: 21 December 2009
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