Anirmaliha and Anirmaliha

FAMILY COURT OF AUSTRALIA

ANIRMALIHA & ANIRMALIHA

[2010] FamCA 764

FAMILY LAW – PROPERTY SETTLEMENT – Where there is agreement on the split percentage of the matrimonial property pool but no agreement on what should be included in the pool – Where the primary dispute is the value of the Husband’s business – Credibility issues with the husband’s evidence – Where the expert evidence of a forensic accountant was unchallenged – Contention as to the value of the liabilities – Parties’ initial assets to be excluded from the property pool

APPLICANT:

Mr Anirmaliha

RESPONDENT:

Ms Anirmaliha

FILE NUMBER:

BRC

3233

of

2008

DATE DELIVERED:

3 September 2010

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

Barry J

HEARING DATE:

1 – 2 March 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr McGregor of Counsel appearing for the Applicant Husband

SOLICITORS FOR THE APPLICANT:

Lehns Solicitors

COUNSEL FOR THE RESPONDENT:

Mr Barataraj of Counsel appearing for the Respondent Wife

SOLICITORS FOR THE RESPONDENT:

Davies-Graham & Associates

Orders

IT IS ORDERED THAT:

The Wife is to pay the Husband the sum of $68,289 within sixty (60) days of the date hereof.
In exchange for such sum the Husband is to transfer all of his right, title and interest in and to the N property.
Upon transfer, the Wife is to release the Husband’s liability under any mortgage secured on the property and is to indemnify the Husband for any future liability relating thereto.
At the time of settlement of transfer of the N property the Husband is to release any business liabilities from the security of the N property and indemnify the Wife for any such liability.
In the event the Husband does not do this, the Wife is to pay out the Mastercard and business loans for the business up to a maximum of $68,289 with the balance thereof to the Husband.
That all property (including real property, personal property and superannuation entitlements) registered in the name of either party vest in that party as their sole and absolute property and neither party shall have any further claim against the other.
A Registrar of the Family Court of Australia is appointed to execute any document in either party’s name and do all and things necessary to give validity to any documents required to execute the orders made herein in the event a party refuses to sign when so requested.
In the event the Wife is unable or unwilling to pay the Husband the sum of $68,289 within sixty (60) days of the date these Orders issue (or such further time as the parties may mutually agree or as may be further ordered by the Court), the N property is to be sold in such manner as the parties may mutually agree or as may be further ordered by the Court. The proceeds of sale of the property are to be disbursed as follows:
(a)       in payment of the costs of sale including agent’s commission, marketing         costs and legal fees;
(b)       in payment of the mortgage debt (excluding business loans secured on            the property);
(c)       in payment of the business loans on the property to a maximum of       $68,289 with any surplus to a maximum of $68,289 to be paid to the           Husband.
To the extent the property after deduction of selling costs realises more than $390,000 the Husband is to receive 37.5 per cent thereof.
To the extent the property after deduction of selling costs realises less than $390,000 there is to be a corresponding reduction in the amount payable to the Husband or extinguishment of the business loans.
Each party be at liberty to apply.

IT IS NOTED that publication of this judgment under the pseudonym Anirmaliha & Anirmaliha is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC3233/2008

MR ANIRMALIHA

Applicant

And

MS ANIRMALIHA

Respondent

REASONS FOR JUDGMENT

I am asked to determine property settlement issues between the parties.

Orders Sought By Husband

The Husband seeks the following Order (as set out in a document entitled “Orders Sought by the Applicant Husband” filed 5 February 2010):
“1.That the Husband transfer all of his right, title and interest in and to the property situate at [N] in the State of Queensland to the Wife, and the Wife shall retain that property as her own absolutely.
2.That contemporaneously with the transfer referred to in Order 1, the Wife shall do all acts and sign all such necessary documents so as to discharge the mortgage (account number […]) in favour of NAB and the business credit card facility (account number […]) secured by the property, and refinance the said mortgage into her sole name, and shall forever indemnify the Husband in relation to same.
3.That the Wife shall pay to the Husband the sum of $166,632.82.
4.That alternatively to Orders 1 – 3, the following shall occur:
a. That the property situate at [N] in the State of Queensland be sold forthwith, with the sale proceeds to be applied as follows:
i.To discharge the mortgage account number […] in favour of NAB;
ii.To discharge the business credit card facility account number […];
iii.To pay all agents commission and legal expenses of the sale;
iv.The payment of $166,632.82 to the Husband; and
v.The balance (if any) to the Wife and in the event that the net proceeds of sale are insufficient to meet the payment of $166,632.82 to the Husband, the Wife shall pay to the Husband the balance being the difference between the available net proceeds and the sum of $166,632.82.
5.That the Husband shall retain the company [O] Pty Ltd trading as “[O Business]” and any associated entity including the [Anirmaliha] Trust.
6.That the Wife shall retain her interest in the following properties:
a.The unit situate [in France]; and
b.The unit situate [in the Caribbean].
7.That the Husband shall retain his interest in the plot of land situated [in] India.
8.That the Husband transfer do all acts and things and sign all necessary documents so at to transfer the Hyundai motor vehicle currently in the Wife’s possession to the Wife.
9.That the Wife retain the following:
a.The furniture and contents located in the former matrimonial home at [N];
b.Any superannuation entitlement in her name;
c.The balance of the Wife’s bank accounts and investments; and
d.Her Air France pension entitlement.
10.That the Husband retain the following:
a.The furniture and contents currently in his possession;
b.Any superannuation entitlement in his name; and
c.The balance of the Husband’s bank accounts and investments.
11.That the Husband and the Wife otherwise retain all assets held in their respective names in which they hold any legal or equitable interest and indemnify and keep indemnified each other in relation to any debts including but not limited to credit card debts held in their respective names.
12.That the Wife pay the Husband’s costs of and incidental to this Application.
13.Such further or other Order as this Honourable Court deems meet.”

Orders Sought By Wife

The Wife seeks the following Orders (as set out in a document entitled “Final Orders Sought by Respondent Wife” filed 3 February 2010):
“1.Within 21 days of the order made herein the Applicant execute   and deliver a transfer of his interest in the property at [N] to the Respondent.
2.The Respondent retain her right title and interest in
·    Studio unit [France]
·    The contents of the property [N]
·    Pension entitlement from Air France
·    Hyundai motor vehicle
3.The Respondent shall execute documents submitted by the Applicant to facilitate the transfer of the interest in the unit situate [in the Caribbean], to the Applicant.
4.That the Applicant and the Respondent indemnify, and keep indemnified, each other in relation to all other debts held in their respective names, including, but not limited to credit card debts, personal loans, and debts to the Australian Taxation Office.
5.That the husband retains all his right, title and interest in the following:
a.His plot of land situate in […], India;
b.His ground floor unit situate in […], India;
c.The Mitsubishi van;
d.His companies, [O] Pty Ltd and [O] (Aust) Pty Ltd.
6.The Applicant pay to the Respondent the sum of $301,000.00 within 21 days of the date of AN order in that behalf made by his Honourable Court.
7.The Applicant with his solicitors as guarantor pay the Wife costs incidental to this matter on an indemnity basis.
8.Such further or other orders as this Honourable Court shall decide.”

Statement of Agreed Facts

A statement of agreed facts was prepared by the Husband’s legal representative:
“1.The Applicant Husband was born [in] 1964 [in] India and is aged 45 years.
2.The Respondent Wife was born [in] 1957 [in] France and is aged 53 years.
3.The parties met in India in 1998 and were married [in] 1999 [in] India.
4.At the beginning of the marriage the parties initially lived at the Husband’s parents’ residence [in] India.
5.The Wife has two daughters from her previous marriage, namely:
a.[N], born [in] 1984; and
b.[T], born [in] 1988.
6.Both daughters resided with the parties for substantial periods of time during the marriage.
7.The Husband has a son from a previous marriage, namely [V], born [in] 1994. [V] resides with his Mother in India. The Husband has not had a relationship with this child since he separated from this Mother.
8.The parties separated in October 1997.
9.The parties are now divorced – the Decree Nisi became absolute on 14 February 2009.
10.At the commencement of cohabitation, the Husband owned a block of land [in] India. The estimated value of this land at the commencement of cohabitation was approximately $1,000 AUD.
11.At the commencement of cohabitation the Husband was engaged full-time in the business of selling watches, clothes and travel items in India. This business had no market value.
12.At the commencement of cohabitation the Wife owned a unit in France described as […], France which she owned outright. She had a 50% interest in a holiday unit [in the] Caribbean. She also had a sum of $141,245.00 in the Commonwealth Bank, [M Branch].
13.The Wife had previously been employed [with] Air France for many years. She ceased to work with Air France in about 1997. The money which was in the Commonwealth bank, [M Branch] came from her termination entitlement from Air France.
14.Shortly after their marriage in 1999 the parties relocated to […], France.
15.On relocation to […], the family moved into […], France, the unit owned by the Wife. At that time, the Wife’s mother was living in her own unit on the second floor of the same building. The Wife’s mother would usually take her meals with the family, but otherwise, she lived on her own in her own unit.
16.Upon relocating to [France] the Husband initially studied French, and then obtained work in [a supermarket] in about December 1999. The Wife also worked at the supermarket for a period of time.
17.The Husband also did some consultancy work with an importer of Indian goods known as “[C Company]”. He continued to do so from approximately March 2000 until about August 1004 after relocation to Australia where he began to do consultancy work for another importer of Indian goods known as [D Company].
18.The Husband and the Wife purchased another residential unit in about September 2000 [in Paris] in joint names. The purchase price of this unit was 54,000 EUR and this was facilitated by a loan of 50,000 EUR in both names and the balance of the purchase price came from the Wife’s savings in Australia.
19.In or about 2003 [A] went to live with her stepmother in her late father’s house in Paris.
20.In February 2004 the parties started a business known as “[R] Pty Ltd” with another person; namely Mr [W]. This business was engaged in importing Indian items into Australia. The parties initially operated the business from France via the internet until their relocation to Australia in November 2004.
21.The [Paris] property was sold in about April 2004 and the net proceeds after payout of the mortgage were approximately AUD $79,000.00.
22.The Husband and the Wife relocated to Australia in November 2004. At this stage [T] was already enrolled at [a private school] and living in Australia. [T] initially stayed with family friends [Mr and Mrs W], and then boarded at [school].
23.Upon the family relocating to Australia, [A] went to study [in America] for about 10 months and finally came to live with the family in Australia in about 2005.
24.The Husband initially came to Australia on a business visa with the Wife and children as dependents. Eventually, the whole family obtained permanent residency in approximately September 2006 on the basis of a Business Migration Scheme.
25.Upon relocating to Australia the family initially resided at a caravan park in rented accommodation.
26.The former home at [N] was purchased in about March 2005. The purchase price of the former home was $347,000.00.
27.The company [R] Pty Ltd was incorporated in Australia [in] February 2004 but did not commence to trade until a couple of months later. The business of this company was initially to import […] items from India to France, but by August 2005, this company was importing [items] from India to Australia.
28.[R] Pty Ltd, at all relevant times, was the trustee of the [Anirmaliha] Trust.
29.The name of the company was changed to “[O] Pty Ltd” in about 2006 simply because the name sounded better.
30.From about late 2004 through to October 2007 when the parties separated, this company and trust structure was engaged in the importing of […] items from India.
31.Shortly prior to separation in October 2007, the Wife removed a total of $24,600.00 from the business bank account.
32.Following separation in October 2007, the Husband started a new company, [O] (Australia) Pty Ltd of which he was the Sole Director and Shareholder. This company then became the corporate trustee of the [Anirmaliha] Trust. Using his powers under the Trust Deed, the Husband removed the Wife from any position of influence in the Trust. Since that time, the Husband has had the sole conduct of the business albeit under the name of a new company and trust structure.
33.The Wife has received no income from the business via the new company/trust structure since that time.
34.In or about 2007 the Wife began [working in the transport industry] and continues to do so.
35.The Wife currently resides in the former matrimonial home and is responsible for the mortgage payments of $310 per week.
36.The Wife continues to receive a pension from Air France.
37.On 3 September 2008 [Mr T, Accountant] prepared a single expert report that gave a preliminary valuation of [O Business]. The business was found to have no market value. The Husband accepts this value. The Wife does not accept this valuation.
38.The relevant asset pool comprises the following:
a.The former home at [N];
b.The business of the company, [O] (Australia) Pty Ltd as trustee for the [Anirmaliha] Trust, trading as “[O Business]”;
c.The plot of land [in] India, owned by the Husband;
d.The Wife’s unit property [in] France.
e.The Wife’s interest in the holiday unit [in the] Caribbean.
f.The Wife’s Hyundai motor vehicle.
g.The contents of the former home at [N].
39.The liabilities of the parties now consist of the following:
a.The Husband’s personal credit card debts;
b.The mortgage debt secured by the property at [N].
40.There is a business credit card debt secured by the former matrimonial home. This credit card debt has been taken in account when determining the value of the business.
41.The Husband is entitled to 37.5% of the net asset pool (as advised to the Court by Mr Barataraj of Counsel and Mr Bucknall, Solicitor on 27 January 2009).
42.[Z Valuers] have been jointly retained to undertake a formal valuation of [N property].
43.The Wife’s unit property [in] France has a value of 135,000 Euros (approximately $213,300). The Wife reserves her right at Trial establish [sic] that her Mother has a life interest in the unit.
44.The Wife’s interest in the holiday unit [in the] Caribbean has a value of AUD$30,000.
45.The Husband’s plot of land in India has a value of AUD$11,200.

Witnesses

List of witnesses for the Husband:
a)Mr Anirmaliha – Husband;
b)Mr S – accountant for the Husband’s business;
c)Ms H – migration agent;
d)Mrs Anirmaliha Senior – Husband’s mother (not required for cross examination);
e)Mr T – accountant engaged to value the business O (Australia) Pty Ltd (not required for cross examination).
None of the Wife’s witnesses including the Wife was required for cross examination. The evidence relied on was:
a)affidavit of the Wife filed 1 February 2010;
b)affidavit of A (Wife’s daughter) filed 1 February 2010;
c)affidavit of T (Wife’s daughter) filed 1 March 2010;
d)affidavit of Mr B (family friend) filed 1 February 2010.

Issues to be Determined

Clearly the primary dispute in this matter at all times has been what value should be attributable to the Anirmaliha Trust trading as “O Business”.
Other issues to be determined include:
·Treatment of the Mastercard debt and the business debt relating to the business.
·Treatment of the Husband’s personal credit card liability.
·Treatment of the mortgage debt.
·Assessment of the parties’ credibility.
·What assets should constitute the nett asset pool as mentioned in paragraph 41 of the statement of agreed facts.

Valuation of the husband’s business

The parties dispute the value of the Anirmaliha Trust trading as “O Business”.
On 10 July 2008 Registrar Bint made the following orders (refer paragraph 4):
“4.Unless valuations are agreed in writing, the parties must jointly obtain at least 21 days before the conciliation conference a market appraisal or opinions as to value by an agreed valuer of
…
(c) business in which Husband has any interest
The ultimate responsibility for the cost of the valuation reserved to further order of the Court.”
The parties seemingly agreed on Mr T, a forensic accountant. Mr T prepared a preliminary report dated 3 September 2008 which is annexed to an affidavit filed on 9 February 2010.
Annexure 1 is a letter of instruction from the Husband’s solicitors Lehns to

Mr T of 19 August 2008. They enclose with their letter the various documents set out at page 1 of their letter. At the final paragraph of the letter they state:
“We further confirm that this is to be a “single expert” valuation for Family Court purposes. Both our client [the husband] and the Wife [Ms Anirmaliha] are to be responsible for one half of the costs and the valuation is to be provided on the basis of “fair market value”. The solicitors for the Wife are Davies-Graham & Associates of […].”
A copy of that letter was forwarded to the Wife’s solicitors.
On the 20 August the Wife’s solicitors wrote to Mr T in the following terms:
“Re: [Anirmaliha] – Family Law – Valuation of [O] Business
We refer to the letter from Lehns addressed to you requesting a valuation.
We act for the Wife [Ms Anirmaliha] and she simply has no funds to meet the costs of doing the valuation and Lehns has been advised accordingly.
Further our client does not believe that the records kept by and presented by [the husband] are necessarily correct and that she will be seeking a different approach by the Court to the matter of the business.
We are also concerned that various documents have not been listed by Lehns in their letter to you including credit card statements [the husband] has conducted the business largely with the use of credit cards.
We have demanded the production of these credit card statements and if necessary will be seeking third party discovery to obtain them.
In the meantime please note that we cannot join in the valuation process notwithstanding that there is an obligation under the Orders made by Registrar Bint of the Family Court for a valuation to be made.”

On page 1 of his report Mr T has noted:
“Expert appointed by Lehns Lawyers, acting on behalf of the Husband
Davies-Graham & Associates Solicitors acting on behalf of the Wife”
At page 3 of the report at paragraph 1.1 he notes:
“1.1I confirm that I have been requested to act as a single accounting expert in this matter. I understand that Mr Bucknall acts on behalf of Mr [Anirmaliha] (Mr [Anirmaliha]/the Husband) and Mr Davies-Graham acts on behalf of Mrs [Anirmaliha] (Mrs [Anirmaliha]/the Wife) in their Family Law property settlement.”
At paragraph 1.2, and 1.3 he notes:
“1.2I understand that this valuation will be used for a property settlement in the matrimonial dispute between the parties and may be used in this matter before the Family Court of Australia.
1.3I confirm that I have been instructed to value the [Anirmaliha] Family Trust (the Trust) and the business that it operates, [O Business] (the business) a copy of my instructions is attached to annexure 1.”
Unless there is some further communication by telephone or correspondence which I have not been made aware of I find it difficult to understand how

Mr T could take on the role of single expert having regard to the terms of the letter from the Wife’s solicitors.
The matter would appear to be resolved by the terms of paragraph 37 of the statement of agreed facts (previously quoted) where it is stated:
“37.On 3 September 2008 [Mr T] prepared a single expert report that gave a preliminary valuation of [O Business]. The business was found to have no market value. The Husband accepts this value. The Wife does not accept this valuation.”

Second Report of Mr T

At the commencement of the hearing leave was sought to file a further affidavit of Mr T to which was annexed his second report dated 26 February 2010.
Counsel for the Wife informed the Court that the second valuation was done without his client’s consent. Mr McGregor sought to read the affidavit of

Mr T sworn on 26 February 2010. Because of the late filing I indicated I would reserve on the position at that particular point in time.
Subsequently during the course of the hearing reference was made to the figures used in the second report as they were more up to date in relation to the evidence being considered.
I note at transcript page 118 Counsel for the Husband notes the updated valuation was to 30 June 2009 and it concludes on 31 January 2010.

Mr McGregor refers to:
“…The valuation I filed yesterday has the 2009 financial year in it.”
Subsequently in the course of his final submissions (transcript page 175)

Mr McGregor refers to figures produced from Mr T’s second report.
There was no objection from Counsel for the Wife.
My Associate has marked the affidavit as “filed by leave”.
It is not greatly relevant whether I treat the second report as a single expert report or as a report commissioned by the Husband only. The reality is neither report was challenged and the reports are in similar terms.
Reference was made on a regular basis to the contents of the second report. It is in similar terms to the first report in its conclusion, but provides more up to date information.
At page 22 of the report under the heading “Estimating Future Maintainable Earnings” Mr T notes:
“3.5It is my determination that after allowing for a commercial remuneration for the parties the business has a negative future maintainable earnings (FME) as detailed at schedule 3.2.
3.6As such it is my view that the value of the business does not have an element of good will and that the most appropriate methodology in valuing a trust is to adopt the nett underlying assets approach.
4.1I have detailed my adopted values of the assets and liabilities of the parties at schedule 3.1 where I have calculated the entity value of [Anirmaliha] Trust to be - $1,850.”
The two reports of Mr T were relied on as part of the Husband’s case. Somewhat surprisingly Counsel for the Wife indicated Mr T was not required for cross examination. The approach of Counsel for the Wife appeared to be that after a rigorous cross examination of the Husband and production to him of various documents, he would be able to establish that the business in fact did have considerable value. Such an approach to proving one’s case is at best always a risky business.
Throughout the hearing the Husband maintained the business has a negative value. The Wife asserted otherwise.
The Husband proposed that he would transfer the business to the Wife at no cost. This offer was not taken up – presumably for the obvious reason the business is heavily reliant on the Husband’s personal contacts in India for the supply of material.
As part of his case the Husband called the accountant for the business

Mr S. Mr S is a chartered accountant and a partner with a accounting firm. He swore an affidavit filed on 1 February 2010. At paragraph 4 he deposes that he has been the accountant for the business since 2004 and:
“… I have supervised the day to day conduct of their files since that time.”
At paragraph 5 he deposes:
“Prior to October 2007, on nearly all occasions that I or my staff met with [the husband], [the wife] was also present. Both [the husband] and [the wife] participated jointly in providing me with instructions, although I believe [the husband] was the key driver of the business.”
At paragraph 10 he notes:
“The Australian Taxation Office is currently conducting an audit of the business and have made several requests for documents. [My firm] is assisting the Tax Office with its enquiries and I do not expect there to be any negative consequences as a result of the audit.”
Mr S gave evidence on the first day of the hearing.
Nothing arose out of the cross examination of this witness which would lead me to question the veracity of his evidence or the opinions he has expressed. When queried as to the last sentence of paragraph 10 of his affidavit that he did not expect there to be any negative consequences as a result of the Taxation Office Audit he said:
“I know we have taken particular pains with this client and we just don’t see any overt signs of – unless money is being squirreled away somewhere this client is showing no signs of major asset gains or living high on the hog – the little things they look at like all sorts of the personal use adjustments we have looked at those. You know some people get a bit pushy and greedy; he has been reasonable on what he has claimed.”

Observations on the business and the Husband’s Ability to Generate Income

The Husband impressed as an astute businessman with a great deal of energy who would be well able to develop the business in the years ahead. He has managed to keep the overheads of the business (other than for international and domestic air fares) to a reasonable level. Brochures for the business (annexed to the Wife’s affidavit material) would indicate they have been prepared to a professional standard. Mr T quotes from the website of the business in his report and again it appears to be professionally presented.
Mr T elected to deduct from the value of the business fees generated by the Husband from a consultancy practice that he operates. Mr T’s evidence is not challenged but I am far from satisfied that there is not a connecting link between the consultancy business and the operation of O Business.
In the last four financial years consultancy fees were as follows:
30 June 2006  $68,940
30 June 2007  $13,852
30 June 2008 (the year of separation)                   $ 1,719
30 June 2009  $ 4,052
(refer schedule 3.2 of Mr T’s second report).
The Husband’s earnings including the consultancy fees over the four years to the 30 June 2009 total $133,819 calculated as follows:
2006  $63,417
2007  $17,254
2008  $ 9,462
2009  $43,686
(refer schedule 3.3 of Mr T’s report).
This equates to an average yearly income of $33,454.
The income disclosed by the Wife is as set out in her financial statement filed 14 May 2008 being $447 per week. I would anticipate that there would not have been a great deal of change in the years subsequent to the filing of that document in relation to the Wife’s income.

Expenditure on Airfares

For the four years to the 30 June 2009 on my calculations the Husband has expended $58,000 on international airfares being primarily trips to India. This equates to approximately $14,500 per year. The Husband has expended in the same period $20,769 on domestic air fares. At paragraph 85 of her affidavit the Wife deposes as follows:
“85.[The husband] shows in the trading statement an annual expenditure of $20,000 for travel expenses, although [D Business] and [E Business] were paying for the consultancy trips they sent him on. All the others (sic) trips were for the benefit of his Indian company “[H Business]”. Exhibit “IP25” is a tax invoice from [the husband’s] company to [D Business].”
Annexure “IP26” is an agreement between D Business and the Husband’s company covering the period January 2005 until January 2006. On page 2 of that document the importer agrees to pay all the consultant’s travelling expenses including but not limited to reasonable accommodation costs and all economy class airfares, both domestic and international.
There was no investigation of this aspect but the Wife has annexed various invoices submitted by the Husband’s company then known as Anirmaliha & Associates Pty Ltd to D Business on the 21 June 2005.
There was no questioning of the Husband in relation to this aspect but it would appear from the Husband’s account of events that certain of this expenditure was carried out in relation to the generation of consultancy fees where he was doing consulting work for members of his family.
I note that in a financial statement filed by the Husband on the 10 April 2008 he has given an estimate for the value of the business at $25,000.
It is somewhat unfortunate that the legal representatives for the Wife elected not to call Mr T to question him on various aspects of his reports.

Credibility Of Husband

In the course of cross examination the Husband’s credibility was called into question in a number of ways.

exhibit 1 – immigration application form

An immigration application form had been completed by the parties on

21 September 2006. The form appears to have been completed with the assistance of a Migration Agent Ms H.
At question 16 of the application form the question is posed:
“Have you previously been married or been in a defacto or interdependent relationship?”
The Husband has responded – “No”.
The Husband conceded in the course of cross examination he was previously married and has a son from that relationship.
In completing the form in response to question 48 the Husband has not made mention of having a son.
The Husband claimed the Wife told him what to put in the form.
I am sceptical of the Husband’s explanation. Even if it be true, which I doubt, it does not justify the Husband providing knowingly false information in an official document.
The Husband was also questioned on representations he had made in Immigration Department documents as to the value of the vacant land he owns in India and whether or not he had an interest in the ground floor of his father’s house.
Ms H gave evidence that the Department of Immigration in assessing the financial viability of applications only looks at title deeds or bank statements as evidence of assets. The particular visa being applied for was a 457 Independent Executive Visa.
I have no reason to doubt the testimony of Ms H.
When the visa material was first being prepared the parties were overseas. They were not to know the policy of the Department of Immigration. For example, in the Department of Immigration file there are some documents in the French language. Ms H advised that all Commonwealth Departments would require translations and will only accept documents in the English language.
It appears from the Department of Immigration’s file obtained by a Freedom of Information application that there are documents on the file to which the Department would have given very little weight. Notwithstanding that it is obvious the Husband has made attempts to bolster his financial position by obtaining a spurious declaration from his father.
Annexure 1 to the Husband’s affidavit appears to be some form of purported contract valuing the land at far more than it was realistically worth.
Annexure 7 to the Husband’s affidavit is a joint statement of financial position of the parties as at 31 January 2005. It attributes $23,000 to the vacant land in India and $117,924 to his interest in his Father’s property.
Annexure 8 purports to be a deed of sale of the ground floor of the father’s property.
Whilst the Court does not condone misrepresentation to Government Departments as to a party’s financial status and whilst it reflects poorly on the Husband’s credibility, I accept that it would be commonly done for intending immigrants to engage in a degree of hyperbole or misrepresentation in relation to their financial status.
A further area where the Husband’s credibility could be perceived as questionable relates to the legal fees he has paid. The Husband has paid approximately $50,000 towards his total legal fees which were in excess of $100,000. When it was originally put to the Husband how he had managed to pay this amount in legals when the profits of the business were relatively modest, he informed the Court he had borrowed money from friends in India.
This explanation was not pursued and the Court was later informed that he had paid the money through credit cards but no documentary evidence was called for and none was supplied to verify how much was paid and on what dates.
Other areas where the Husband’s credibility could be subject to question include a statement by him in his affidavit material to the effect:
“I have purchased only minimal stock since approximately 2007.”
In the course of the evidence of the business’s accountant Mr S, he agreed that for the year ending 30 June 2009 purchases for the business included $347,000 in stock. The previous year had been for $253,000.
This once again would appear to be an inconsistency in the Husband’s evidence and a further measure of his attempts to downplay the financial viability of the business.

Husband’s Claims – French Apartment

At all times the Wife maintained her mother had a life interest in the French apartment. The Husband disputed this was the case. In the course of final submissions the Husband’s Counsel agreed to accept the value of the apartment on the basis it was subject to a life interest to the Wife’s mother.
Annexure 1 to the Wife’s affidavit is a document evidencing the Wife’s purchase of the apartment on 14 December 1987. Annexure 2 to the Wife’s affidavit is a document dated 17 December 1987 evidencing the transfer of the subject property by the Wife to her parents of a life interest. In the light of this documentation and the evidence that the Wife’s mother occupied the apartment at all relevant times, it is difficult to understand the Husband’s denial of this fact other than as an attempt to inflate the value of the Wife’s assets.

Cross examination of the husband by counsel for the wife

There were numerous allegations put to the Husband throughout a lengthy cross examination. The allegations included the following:
·    The quarantine expenses set out in the financial statements of the company were too high. I am not satisfied that this was established.
·    The Husband is invoiced by his brother in India who operates the business “H Business” for expenses for domestic travel in India and the Husband pays the brother on such invoices but also identical expenses can be found on the Husband’s credit card. Again, I was not satisfied that this line of questioning established anything other than considerable confusion.
·    There was a suggestion that the Husband was a partner in “H Business” with his brother. There were certain telltale signs that this was the case. At transcript page 111 when giving evidence about this aspect the Husband said when being questioned about a letter which had been disclosed he replied:
“Your Honour this is a letter from…who is my shipper from India. She has written a letter to me regarding [H Business], because when we formed [H Business] they also needed to have export documents to ship to me.”
[underlining added]
There was another document produced (refer transcript page 123)                    where the Husband had written and said:
“My brother is the managing partner of [H Business] and I am a partner….”
The difficulty with this aspect is that whilst there is a suspicion that the Husband has had some involvement in the formation of H Business it is not borne out by any official documentation. The Husband was questioned about Annexure 13 to his affidavit being the Five Partnership document. The Husband was consistently challenged that he had deliberately omitted pages from official records which would have disclosed the existence of three other partners. At all times the Husband protested his innocence.
He went so far as to refer to the Internet address on the bottom of the document which had been printed out and he invited anyone in the Court to check that address and obtain a copy of the registration form of the H Business partnership.
Counsel for the Husband did precisely that and it was confirmatory of the Husband’s evidence.
·At paragraphs 74, 89 and 90 of her affidavit the Wife deposes as follows:
“74.In January 2006, [the husband] remarked that as he was spending too much money travelling to and from India. (sic) He was also drawing money from our personal account (CBA account […]) while in India. He was planning on creating a new company named “[H Business]” in India with his brother […]. When I asked him why he had not involved me he replied it was none of my business as I am not part of his family. I was shocked since I had shared everything I had with him without hesitation.
89.In December 2006 he started transferring money to his Indian company “[H Business]” (a total of $30,000) in a few months. He also asked me to do a transfer and I did. Exhibit “IP30” are copy transfers of funds to [H Business] in India.
90.I found fraudulent consultancy invoices paid to [H Business] for consultancy regarding organic tea, coffee, pulses and organic sample food which [H Business] was exporting. Our Australian company [O Business] only has an importing license for [clothing]. Exhibit “IP31” are copies of invoices.”
“IP31” are invoices from H Business (Indian products consultants). It appears that there has been a consultancy charge on the 4 January 2007 in the amount of $3,409.09 for “men and women garment – designing, styling, pattern making etc.”
Of greater concern is an invoice of the 12 May 2007 – consultancy charges for tying up with natural incense manufacturers in India, certified organic coffee and tea suppliers, certified organic pulses, certified organic spices etc, providing samples of natural incense and organic foods $2,400 (travelling, boarding and lodging expenses for May 2007 within India $1,200).
There was no cross examination of the Husband on this aspect. It would seem that there is legitimacy in the Wife’s allegation in relation to this as seemingly O Business has been charged consultancy charges in relation to a range of products in which they have no interest.
There may be an explanation that the Husband was seeking to diversify into these areas and it is somewhat unfortunate that there was no examination in detail of this aspect.
During the course of his final submissions (transcript page 176) Counsel for the Husband observed in response to the connection between the Husband’s consultancy income and the profits of the business in the following terms:
“As I understand, the consultancy figure is not related to the clothing side of things. I think that is more the incense and the like. But it is still part of importing/exporting.”
Counsel seemingly was confusing consultancy fees for incense and the like as being consulting done by the Husband whereas the particular invoice in question is for consulting work done by some representative at H Business in India and for which O Business has been charged.
On balance whilst I am satisfied that the Husband is not formally listed as having an interest in H Business I am prepared to make a finding that he does have an interest in this business but the extent and value of that interest I am unable to quantify.
·The Husband was questioned on large scale drawings from his bank account. By way of a spot check I invited Counsel for the Wife immediately preceding an adjournment to identify five particular transactions to the Husband and give the Husband the opportunity during an adjournment to find financial documents to explain that the transactions were bona fide.
I am satisfied that of the five transactions there was nothing suspicious whatsoever other than in the mind of Counsel for the Wife.

On balance whilst there are some areas where the Husband’s credibility as to the conduct of the business, are the subject of serious question, I am prepared to accept that the valuation of the business is as set out in the report of Mr T. My reasons for so concluding are:
·Mr T’s evidence as an expert forensic accountant has not been challenged.
·Mr T’s evidence to some extent is corroborated by the chartered accountant who does the books for the company and is satisfied that the books have been properly maintained.
There was one disturbing aspect in that Counsel for the Wife filed an affidavit asserting that additional documents had been added to documents which the Husband had delivered to the Court many months previously.
My Associate had done a summary of the documents for the purpose of being able to inform Mr T as to the nature of the material in the boxes delivered by the Husband to the Court pursuant to my direction. As I understood the position the boxes were at all times held in the Court’s subpoena room.
There was some evidence from the subpoena room documents that the Husband, without his legal advisors being present, visited the room on four occasions.
The Husband steadfastly denied that he had added any additional documents.
If established, the allegation certainly had the potential to be quite serious.
However, the upshot of all of this would have been the trial would had to have been aborted in the sense that Counsel cannot be an advocate and a witness in the same cause and it would be inappropriate for the presiding Judge to have to have his own Associate’s credibility called into question.
It seemed to be common ground that in view of the delays in bringing the matter on for hearing and in view of the expense the parties had already faced, the allegation could be left in abeyance and the matter proceed without a resolution of this separate issue.
In relation to the claims that the Husband has stripped the business of its assets or has issued bogus invoices or by other means misled his accountant and the forensic accountant as to the true financial position of the business, I can only conclude that there are some grounds for suspicion but mere suspicion does not amount to proof.

Credibility Assessment of the Wife

Neither the Wife nor her witnesses was required for cross examination. The evidence of the Wife is before me on an unchallenged basis.
Where there is conflict between the evidence of the Wife and that of the Husband, I would be far more inclined to accept the evidence of the Wife in that I had misgivings about the veracity of the Husband’s evidence in a number of key areas.
I have perused the Wife’s trial affidavit. It paints a consistent picture of the Husband over a period of time taking over her finances and thereafter acting in a very controlling manner.
The parties had met on the 28 October 1998 and by December that year the Husband was requesting the Wife to call into the University and pay his student fees for him.
Much of the Wife’s evidence as deposed to in her in affidavit is corroborated by the large number of annexures to that document.
The evidence is before me on an unchallenged basis. It is corroborated to an extent by the affidavits of the Wife’s other witnesses who were also not required for cross examination.

Summary of assets and liabilites of the business

The parties were largely agreed on the value to be attributable to the various assets but there was no agreement as to what should or should not be included in the property pool.

Assets

The assets are as follows:
Former matrimonial home at N:  $390,000
Husband’s vacant land in India:  $ 11,200
Wife’s French apartment – the Wife’s French apartment was valued
at €101,250. As at the date of the hearing on 2 March 2010 that
amounted to $152,458, At transcript page 181, I informed the
parties I would adopt the figure of $152,458  $152,458
Wife’s interest in a unit in the Caribbean  $ 30,000
Wife’s vehicle and contents of former matrimonial home  $    5,000
Gross assets:  $588,658

Liabilities

There was some contention as to the value of the liabilities. At the time of separation the Wife withdrew funds from the business’s accounts. Thereafter the Husband unilaterally set up a new entity of which he was the sole director and had sole control of the accounts.
As I understood the evidence of Mr S, the company accountant, prior to that time the profits were divided equally between the parties and credited against their drawings.
After the date of separation no credit was given to the Wife for any profits of the business.
Annexure 12 to the Husband’s affidavit appears to be the beneficiary account breakup from 1 July 2006 through to 30 June 2007. The attached document seems to be an explanation for the particular expenditure. For the period from 1 July 2007 until December 2007 there are also details given.
It is noteworthy that many drawings are shown as being attributable simply to, “[the wife]”, whilst other drawings are shown as half share drawings. There does not appear to be any evidence that any drawings were attributable solely to the Husband’s account.
In the financial statements for the business a current liability of the company was the Husband’s beneficiary account which as at 30 June 2008 was said to be $7,5981.
For the three previous years the corresponding figures were are as follows:
30 June 2005  $35,270
30 June 2006  $42,665
30 June 2007  $30,478
The corresponding current liabilities of the company for the Wife’s beneficiary current account were as follows:
30 June 2005  $35,271
30 June 2006  $42,665
30 June 2007  $   3,271
One of the assets of the company was the beneficiary current account in the name of the Wife which for 30 June 2008 was shown as $34,234 and for

30 June 2009 is $42,222.
This was the second largest asset of the company after stock in hand of $48,000.
The upshot of all this is that the Wife technically owes the business $42,222.
I propose to make an order requiring the Husband to indemnify the Wife in relation to this amount. I take this approach fully appreciative of the fact that this is notionally a significant asset of the company. Balanced against this, the Wife had every entitlement to a share of the business in the period since separation on any one of a number of grounds, principally because a significant share of the monies invested in the business came from her contribution but also there was no consultation by the Husband in divesting the Wife of her interest in the company which previously operated the business.
As I understood the position of Counsel for the Husband he did not object to this approach being taken.

Remaining Liabilities

Leaving aside the mortgage on the N property (the former matrimonial home) the other liabilities are as follows:
Mastercard liability for the business as at 30 June 2009  $37,447
NAB Business Card   $19,193
Husband’s personal credit card liability (approximately)             $43,000
The first two liabilities are secured on the matrimonial home. Both these liabilities are taken into account when arriving at the conclusion that the company has no value.
In the previous period for the 30 June 2008 the Mastercard/business loan combined totalled $44,261. There does not appear to be a break down of the composition of that liability.
In the year ended 30 June 2006 the combined Mastercard/business loan was $21,605. For the financial year ending 30 June 2007 it had risen to $38,682.
I propose to make a separate order that the Husband indemnify the Wife for these liabilities. I will hear from the legal representatives for the parties as to how to remove the loan from being secured on the N property.

Husband’s Personal Liability

At paragraph 72 of his affidavit the Husband deposes as follows:
“72.I have personal credit card debts of about $43,000. At the date of separation these credit card debts were about the same.”
I do not accept that the Husband is entitled to have these personal credit card liabilities brought into account. Firstly, there is no evidence produced to corroborate the statements the Husband makes in paragraph 72 of his affidavit. There is no evidence as to how the liability at the time of separation, if it was $43,000, was made up. Clearly it was not business expenses. There is no evidence as to what items the Husband has expended his credit card on to reach its present liability of $43,000.

Mortgage on N Property

At paragraph 71 of her affidavit the Wife deposes that on 17 March 2005 the parties purchased the N property for $347,000. $120,000 came from the funds which had been received by the Wife from Air France which had been deposited in an account in Australia. A mortgage seemingly was taken out in the fixed rate home loan choice package at $230,000.
It would appear that in the five years since that time, the mortgage has only reduced from $230,000 to approximately $213,000.
Annexure IP37 to the Wife’s affidavit is a bank statement showing the debit balance on the NAB tailored home loan account as at the 13 January 2010 was $212,812. A further bank statement was forwarded to the Court by agreement between the legal representatives which reveals that as at the 3 February 2010 the debit balance was $212,896.50.
I proceed on the basis that this is the indebtedness on the home loan only. The Wife has been in occupation of the property since separation. She has met the mortgage repayments of $310 a week.
The Husband at paragraph 46 of his affidavit deposes:
“46.The [N] property is encumbered by a mortgage of approximately $210,000. The property is further encumbered by a business loan secured by the house in the sum of approximately $37,000 leaving equity of approximately $183,000. At separation this business loan was in the order of $50,000.
The Husband meets the liabilities of the business by a Mastercard credit card and by a business loan card. As previously noted, the most recent figures in

Mr T’s updated report would indicate the Mastercard debt is $37,447 and the business card is $19,193.
I have previously given my reasons why I do not propose to bring those business liabilities into account.

Contributions – Including Initial contributions

In covering this aspect I am only too conscious the parties have agreed that the property is to be divided 37½ per cent to the Husband and 62½ per cent to the Wife.
The parties have not been able to agree on the property pool.
The Wife deposes, and I accept her evidence, that she first met the Husband in October 1998. It appears that they formed a relationship shortly thereafter.
In paragraph 8 the Wife sets out her assets at that time in the following terms:
“a. Studio in [France] Exhibit IP1 is a letter concerning the studio.
b.Exhibit IP2 refers to this studio as an Usufructuary gift to my parents.
c.The studio in [the Caribbean] Exhibit IP3 is a letter concerning the [Caribbean] studio.
d.The savings of $141,245 which I had in a Commonwealth Bank account in Australia since May 1998 (Exhibit IP4) is a bank statement showing my Commonwealth Bank account in 1999.
e.The little retirement pension I would have from Air France once I turned 50 years old.
f.As a former Air France [employee] my entitlement to staff discounts on air fare from Air France and other airlines for my family and in-laws.
i.INR$136,084 (equals A$4,536) on my savings passport with the Canara Bank, India (Exhibit IP5) is savings bank statement.
j.The child support payments I receive from my ex-husband for my two children which was a total of €1,128 per month. Exhibit IP16 is a statement regarding the child support payments.”
There is no challenge but that this represents an accurate account of the Wife’s initial contributions.
The Husband’s initial contributions on the other hand is a vacant block of land in India which he says at the time of the commencement of cohabitation was worth A$1,000 and is now said to be worth A$11,200.

Further Contributions

The relationship was for a period of nine years, from late 1998 until late 2007.
During this period the parties acquired an apartment in Paris. They held this for a few years and when they sold this property it realised a profit of approximately A$79,000 (refer paragraph 21 of statement of agreed facts).
I accept that this is a contribution made by each of the parties although one could infer that it was the Wife’s asset position which provided the security for the borrowing.
It would appear from the material that during the course of the relationship each of the parties has worked to the best of their capacity.
As detailed earlier in these reasons the main issue of conflict in this litigation was the Wife’s contention that the Husband has not been honest in his dealings with her or in his dealings in the management of the company and that it should in fact have a far greater value than the nil balance attributed to the value of the enterprise.
I have already given my reasons for being unable to make a positive finding as sought by the Wife’s legal representatives.
For reasons previously given, in determining the asset pool I have elected to omit liabilities other then the mortgage debt on the N property.

Statement of Agreed Facts

I note in the statement of agreed facts that the parties set out at paragraph 38 the relevant asset pool as including the N property, the French apartment, the unit in the Caribbean and the Husband’s vacant land.
At paragraph 39 the parties set out the liabilities including the Husband’s personal credit cards and the mortgage debt on the N property.
What was never agreed at any time was what assets should be brought into account.
In the event I took the property pool as set out in paragraphs 38 of the statement of agreed facts (omitting the Husband’s personal credit card debits) and divided the assets between the parties in the proportions agreed to this would result in the Wife having to make a payment to the Husband in the sum of $126,747, calculated as follows:
N property  $390,000
French apartment  $152,458
Caribbean property      $ 30,000
Indian land  $ 11,200
Wife’s car and contents   $    5,000
Gross assets  $588,658
Less:
Mortgage balance on N property  $212,896
Nett assets  $375,762
Wife’s interest @ 62.5 per cent  $234,851
Wife has in her possession nett assets   $364,562
The difference between the property holding of the Wife as at the present time and the amount to which she would be entitled  $129,711
Where the Wife has brought the French apartment into the relationship and the Husband has made no contribution to same; where the Caribbean land was brought by the Wife into the relationship and the Husband has made no contribution to same, I do not see why such assets should be included in the property pool.
At paragraph 119 being the final paragraph of her trial affidavit the Wife says:
“119.It is my submission that given my initial contributions to the matrimonial pool, I am entitled to not only retain my [French] unit and the property at [N] (to the exclusion of [the husband]) but also a substantial interest in the business (of which I was part until 2007) now conducted by [the husband] including undistributed trust dividends.”
For similar reasons I do not believe the Indian land should be brought into account.
In the orders sought by the parties the Husband does not contend other than the Wife should retain the French apartment and her 50 per cent interest in the unit in the Caribbean. He is also by order 1 prepared to transfer the N property to the Wife. The major difference between the parties is how much the Wife should pay to the Husband in exchange for the transfer of his interest.
In the orders sought by the Wife she seeks similarly that she retain the French property and the Caribbean property and that the Husband transfer the N property. She proposes that he retain the Indian land, his interest in the company, but should pay her $301,000. As previously noted there was no indication how this calculation was made.
During the course of the hearing there was a proposal from the Wife that she would transfer her 50 per cent interest in the Caribbean property to the Husband as she was sceptical that it could be valued at $30,000.
For reasons similar to the ones where she was not prepared to accept the Husband’s offer of the transfer of the company, it would seem highly impractical for the Wife to transfer a half interest in the Caribbean property beset as it is with certain legal difficulties relating to inheritance rights.
The remaining assets then are the N property with its mortgage, the Wife’s vehicle and the contents of the N house. These are the only assets I propose to bring into account.

Summary of assets and Liabilities

Summary is as follows:
Value of N property as agreed  $390,000
Mortgage (as per NAB statement for 3 February 2010)  $212,896
Equity in N property  $177,104
Wife’s car and contents  $    5,000
Total assets:  $182,104
Wife’s entitlement @ 62½ per cent  $113,815
Husband’s entitlement @ 37½ per cent  $ 68,289
I will hear submissions from the parties before finalising the property settlement orders but the draft orders are set out at page 2 of these reasons.
The nett effect of the draft orders is the Husband is to transfer to the Wife his interest in the N property in exchange for payment by the Wife of the Husband’s entitlement fixed at $68,289.
The Wife is to arrange to release the Husband from any liability under the mortgage secured over the property other than the Husband’s liability pursuant to the business loans.
I propose to give the Wife sixty days to raise the money to be paid to the Husband. The time of sixty days may be extended by agreement of the parties or further order of the Court.
In the event the Wife is unable or unwilling to pay the monies due to the Husband there will be an order for the property to be sold and the proceeds distributed in terms as set out in the draft orders.
In the event the Husband has not released the N property as security for the business debts by the time of the transfer, then the Wife is to make such payments in lieu of payment to the Husband. I proceed on the basis that at the present time the business debts do not exceed the amount of $68,289.
In the event of a sale it is also appropriate to put in place orders to adjust the payment due to the Husband in the event the property is sold for greater or less than the value adopted for the purpose of the litigation.
That value is to be ascertained after deduction of selling costs including vendor’s legal fees, real estate agent’s commission and marketing costs.
I appreciate the orders are only in draft form but I am satisfied orders in such terms constitute a just and equitable settlement as between the parties.

I certify that the preceding one hundred and fifty (150) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry

Associate:

Date: 3 September 2010

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Anirmaliha and Anirmaliha [2010] FamCA 764

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[2010] FamCA 764

3 September 2010

Key Legal Topics

Areas of Law

Family Law

Property Law

Legal Concepts

Remedies

Costs

Injunction

Res Judicata