ASHJAIM & GASPAR
[2019] FCCA 2703
•26 September 2019
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ASHJAIM & GASPAR | [2019] FCCA 2703 |
| Catchwords: FAMILY LAW –Unusual property dispute– Applicant’s business venture which created cash flow failed – Applicant sending monies overseas – Respondent on folly of her own post-separation – Respondent files affidavit admitting to lying to the court –Respondent’s lack of disclosure , transparency and honesty with the court – Referral of papers to Australian Taxation Office and Attorney-General. |
| Legislation: Family Law Act 1975 (Cth) |
| Cases cited: Jewel v Jewel [2013] FCWA 81 Sebastian & Sebastian (No.5) [2013] FamCA 191 Baglio & Baglio [2013] FamCA 105 Challen & Challen (2007) FamCA 1292 Oriolo v Oriolo (1985) FLC 91-653 Briese v Briese (1986) FLC 91-713 |
| Applicant: | MR ASHJAIM |
| Respondent: | MS GASPAR |
| File Number: | MLC 5625 of 2016 |
| Judgment of: | Judge Curtain |
| Hearing dates: | 4, 5, 6, 7 & 8 February 2019 |
| Date of Last Submission: | 9 July 2019 |
| Delivered at: | Melbourne |
| Delivered on: | 26 September 2019 |
REPRESENTATION
| Counsel for the Applicant: | Mr Weil of Counsel |
| Solicitors for the Applicant: | Pearce Webster Dudgals |
| Counsel for the Respondent: | Mr Rothschild appearing as solicitor advocate, save for 9 July, 2019 when Respondent appeared in person |
| Solicitors for the Respondent: | Brendan Rothschild Legal Group |
THE COURT ORDERS THAT:
The Applicant Father born … 1976 (“the Father”) and the Respondent Mother born … 1966 (“the Mother”) and their servants and agents be and are hereby restrained by injunction from removing or attempting to remove or causing or permitting the removal of the children X born … 2008, female, and Y born … 2007, male (“the children”) from the Commonwealth of Australia.
The children be and are hereby restrained from leaving the Commonwealth of Australia.
It is requested that the Australian Federal Police give effect to the preceding Order by placing the X and Y on the Airport Watch List in force at all points of arrival and departure in the Commonwealth of Australia and maintain the X and Y on the Airport Watch List for a period of two (2) years.
Upon expiration of the period referred to in Order 3 above and subject to any further order of a Court of competent jurisdiction, the Australian Federal Police will cause the removal of the X and Y from the Airport Watch List.
BY ORDER OF THE COURT, THE COURT ORDERS THAT:
The Respondent to pay the Applicant the sum of $83,400 (“the payment”) within 90 days (“the date”);
That contemporaneously with the payment:
(a)The Applicant do all such acts and things and sign all such documents as may be required to transfer to the Respondent at the expense of the Respondent all of his right, title and interest in the real property situate at and known as A Street, Suburb B (“the real property”); and
(b)The Respondent indemnify the Applicant against all payments and liabilities pursuant to any mortgage relating to the real property (“the mortgage”) and all apportionable rates, taxes and outgoings of or with respect to the real property of whatsoever nature and kind.
In the event that the whole of the payment has not been made by the date the real property be forthwith sold altogether out of Court (“the sale”) and on completion of the sale, the proceeds of the sale be applied:
(a)First to pay all costs, commissions and expenses of the sale;
(b)Secondly to discharge the mortgage and any other encumbrance affecting the real property;
(c)Thirdly so much of the payment as then outstanding together with interest thereon at the rate prescribed by the Family Law Act 1975 adjusted monthly from the date to the Applicant; and
(d)Fourthly the balance to the Respondent.
Pending the payment or completion of the sale:
(a)The Respondent have the sole right to occupy the real property and during such right of occupation the Respondent to pay all instalments pursuant to the mortgage and all rates and taxes and like outgoings of the real property as they fall due;
(b)The parties hold their respective interests in the real property upon trust pursuant to these orders; and
(c)Neither party encumber the real property without the consent in writing of the other party.
The Applicant have ownership of and retain the Business H business at E Street, Suburb F currently operated by him and he indemnify the Respondent in relation to all debts associated with that business, together with the debts associated with the business previously run by him, his debt in relation to his Motor Vehicle G and all other debts standing in his name
The Respondent have ownership of and retain the Business H business at C Street, Suburb D, the business (if any) at J Street, Suburb F and indemnify the Applicant in relation to all debts associated with those businesses, including superannuation debt, Australian Taxation Office debt, Bank debt, Bank debt, Gold Award Card debt, CBA overdraft, Citibank debt, the debt associated with her Motor Vehicle G and she indemnify the Applicant in relation to all of those debts and all other debts standing in her name.
The Respondent retain control of the Gaspar Family Trust, the MM Family Trust and the assets associated therewith.
The Respondent be restrained from operating a business at J Street, Suburb F, or any other premises within five kilometres of the Applicant’s Suburb F business and the Applicant be restrained from operating a business within five kilometres of the Respondent’s C Street, Suburb D business.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:
(a)Each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these orders (the furniture, personal possessions, and like chattels in the real property at A Street, Suburb B being deemed to be in the possession of the Respondent);
(b)Insurance policies remain the sole property of the owner/beneficiary named thereon/in;
(c)Each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(d)Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
Liberty be granted to the parties to seek procedural or “mechanical orders” in relation to the sale of the real property if they cannot agree on the terms and conditions of sale.
The appropriate officer of the Federal Circuit Court of Australia at Melbourne cause a copy of these orders and this judgment to be forwarded to the relevant officers at the Attorney-General’s Department and the Australian Taxation Office to investigate any possible breaches of Federal Law by these parties or either of them.
All extant applications be otherwise dismissed.
AND THE COURT NOTES THAT:
A.If after the expiration of the period set out in Order 3 above any parent seeks that the X and Y remain on the Airport Watch List for a period beyond the period specified that party must file and serve an application and an affidavit setting out the evidence which supports that application in the Family Court of Australia or the Federal Circuit Court of Australia.
IT IS NOTED that publication of this judgment under the pseudonym Ashjaim & Gaspar is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 5625 of 2016
| MR ASHJAIM |
Applicant
And
| MS GASPAR |
Respondent
REASONS FOR JUDGMENT
Introduction
On 22 May 2019, when I was in the process of settling the fourth draft of my judgment in this matter, the Respondent appearing for herself caused a Notice of Address for Service and a further affidavit sworn or affirmed on the same day by her to be filed with the court. I immediately had my Associate place the affidavit in a sealed envelope unread, and arranged for the matter to be listed for Mention on 9 July, 2019 to try and understand why this has been filed after my judgment was reserved.
On that day, the Respondent appeared in person and said she had previously mislead the court at the trial and wanted to… “tell the truth.” With the consent of all parties, I read the affidavit. The Applicant did not seek to cross-examine the Respondent or challenge the contents of the affidavit.
The most relevant parts of the affidavit are as follows:
“3. I am writing this Affidavit to rectify the truth and report the false statements made by myself and Ms P (“Ms P”), of C Street, Suburb D, in my final court hearing that took place in February 2019.
5.Ms P and I first met in 2014 at our children’s school and we became acquaintances, but not friends. However, our relationship evolved into friendship in 2016 as both of us at the time were involved in family law proceedings. We had a common view that we were being harshly dealt with by our former husbands and the “family law system”. We started to support and help each other.
6.Ms P agreed to assist me on the basis that I would in return assist her in her Family Law proceedings as she was desperate in endeavouring to obtain parenting rights over her only child. Her husband had at the time, and has now, a sole custody/parenting rights and she was and currently is allowed no contact under an existing Court Order. She is considered to be an unreliable witness in The Family Court.
……
9.The truth is that, my business was never sold to Ms P.
10.On or about 26 February 2018, Ms P and I both attended the office of my accountant Mr R at his home office in Suburb D. Mr R arranged for a new company to be incorporated with Ms P as a shareholder and director. He also prepared a declaration of trust to protect my interests which he handed to Ms P to sign. Ms P signed the declaration of Trust and it was given to me to retain. Now produced and shown to me and marked “-1” is the declaration of trust signed by Ms P in the presence of Mr R.
A-G 1
Business H PTY LTD
A.C.N. …
DECLARATION OF TRUST
I MS P
Of Suburb D , VIC …
being the registered holder of 12 Ordinary Shares amounting to $1-00 each in
Ms Gaspar's business Pty Ltd – CAN …
(hereinafter called “the Trustee”),
HEREBY ACKNOWLEDGE AND DECLARE that-(i)I hold the said 12 Ordinary $1-00 shares together with all dividends, distributions, profits and any other benefits accrued and accruing in
respect thereof upon in Trust for Ms Gaspar of A Street, Suburb B VIC … (hereafter called the “Beneficial Owner”).
(ii)The Beneficial Owner has paid in full for the acquisition of the said shares.
(iii)I agree to exercise and perform all the rights, duties and voting powers conferred upon me as directed from time to time by the said Beneficial
Owner.
(iv)I agree to execute a transfer of the said shares upon the request of the said Beneficial Owner.
Dated this 26 day of February 2019
Ms P
__________________________________
WITNESS – NAME ADDRESS & DATE15.I continued to manage and conduct the business under the name of Ms Gaspar's business Pty Ltd, to all intents and purposes nothing had changed. I was signing the Group Certificate document for ATO in July 2018 and I had checked and reported to ATO wages, PAYG and superannuation and sent wages to employee’s accounts.
……
20.I upheld my end of the bargain. At Ms P’s request I passed on messages to her daughter who was attending the same school as my children and also made representation to the Department of Human Services.
……
24.I believe that Ms P is now under considerable financial pressure as she needs to pay large monthly payments to her private lender. Ms P is also disappointed that in my effort to assist her in re-establishing a relationship with her daughter was unsuccessful. Thus she is endeavouring to now dismiss me from the business and take effective control. Ms P is claiming now that she is a sole director of the company and has never signed the declaration of trust.
25.All the proceeding documents are now with the Supreme Court of Victoria.
26.I would like to tell The Honourable Court that I am really sorry for not disclosing the right documents for my final court hearing and placing false information into an Affidavit.”
Background
The parties first met in 2006 and commenced cohabitation in early 2007 when they jointly purchased a residence together at C Street, Suburb D as Tenants in Common in equal shares.
At the time the Applicant defacto husband was self-employed as a customer service officer on commission and the Respondent defacto wife was a separated mother with two children, working from home as a part-time professional. She was also pregnant with their first child.
Shortly after cohabitation the Applicant defacto husband with the assistance and approval of the Respondent defacto wife, developed a business which grew over time to approximately seven leased shops at suburban shopping centres, strip shopping villages, and around five semi-permanent stands at major shopping centres. They also both had a role in transferring the Respondent’s business from a minor operation in their home to a shopfront under the title of “Business H” in C Street, Suburb D around 2012, mortgaging further their joint interest in the home they purchased in 2007.
The business became a successful commercial venture whilst the Applicant’s business ultimately was a commercial failure. As one financially went from strength to strength over time, the other slowly shrank and became a financial burden.
One of the premises the Applicant was renting for his business was a shopfront at E Street, Suburb F. In late 2014, the parties decided to set up another branch of “Business H” in that shop.
This opened its doors in … 2015, and was generally attended by the Applicant and the Respondent’s employees, whilst the Respondent continued to solely operate the business at C Street, Suburb D.
In 2014 the parties first separated for a few months and in March 2016, the parties separated under one roof. On 10 June, 2016 the Respondent obtained an Interim Intervention Order removing the Applicant from their home.
The parties agreed to final parenting orders on 18 June 2018 in relation to their two children from their relationship Y born …, 2007 and X born …, 2008. The Respondent had two children from an earlier relationship one of whom, Ms N, born …, 1998 lived with the parties.
Notwithstanding the parties resolving their parenting dispute earlier, the Respondent at this trial sought a two year Airport Watch List Order in relation to the children. Given the Applicant’s consent to this paragraph at 11 (d) of his affidavit sworn on 8 June, 2018 and his consent to a two year order on day two of the trial, I shall make this order, noting if they wish to travel during this period they can vary, suspend or discharge the order. I do note the Applicant’s final address on this topic and can only assume he no longer consented to the Orders. However, I shall make this order in the best interests of the children and to avoid further litigation.
The Applicant is aged 42 years and operates a business the parties established in Suburb F initially titled “Business H” and now called “Business H.” The Respondent is aged 52 years and she purported to be ‘employed’ in a business also titled “Business H” in C Street, Suburb D which she ‘sold’ to her friend, Ms P.
Subsequently proceedings were issued in this Court and there were a number of interim hearings about the operation and running of their businesses.
The Applicant continued to attend the business in Suburb F whilst the Respondent operated the business at C Street, Suburb D. The Respondent said she was the moving force in establishing the Suburb F business and the Applicant played a minor role, whilst the Applicant said his role was understated and it was an equal partnership between the parties in the establishment, development and operation of the Suburb F business. Whatever the circumstances of the actual roles in relation to this other business, a dispute arose post-separation over who should operate these businesses on and 29 August, 2016 I made orders providing for the Applicant to operate Suburb F and the Respondent to operate C Street, Suburb D. I note in her affidavit affirmed 27 November, 2018 she says at paragraph 59, page 16:
“The 29th August orders gave the husband a healthy income stream (Suburb F). I too retained a healthy income stream (A Street, Suburb B).”
Although the Respondent operated the C Street, Suburb D business with a turnover of $450,000 per annum, according to her evidence in the witness box, she said that by December, 2017 it was under immense financial pressure, which was not fully explained to me, or established to my satisfaction. She pointed to unpaid superannuation and outstanding taxes of $165,800 approximately without details of how this accumulated or why she did not previously pay the taxes in relation to the business given her controlling role of the relevant trust and company. I could not understand how this situation arose and why she could not trade out of it. I formed the view that she was not being truthful with the court.
In 2018 she placed the C Street, Suburb D business in liquidation and purported to sell it to a person known to her, Ms P, who told the court that she operates ‘the business’ and employs the Respondent for a ‘wage.’ On her own subsequent admission this was a reprehensible conspiracy seeking to mislead the court about the Respondent’s interest in the C Street, Suburb D business.
Another serious error the Respondent made within a few months after separation, was to lease business premises at J Street, Suburb F on … 2016 and plan to establish a business there named “Business NN”. She told the Court it was subsequently transferred to her son Mr O on 1 … 2018. She also transferred 12 shares to him in a company established and controlled by her titled “Business H Pty Ltd.” She was the only director and secretary of that company.
Also post-separation without notice to the Applicant, she sold her interest in a 2 bedroom flat she brought into the marriage situate at L Street, Suburb M for $480,000 which settled in … 2017. She retained those proceeds (allegedly paying debts with the monies), but she clearly retained the monies for her own benefit.
A great deal of time in the trial was spent analysing the behaviour of the Respondent who was very active commercially setting up a business, putting one business into liquidation and selling an asset she brought into the marriage without full disclosure being made to the Applicant or the Court prior to, or at the same time these events were undertaken. The Respondent was criticised in cross-examination for not providing a paper trail relating to these events, with some justification, and in response said… “I was never asked to produce the documents” or words to that effect. I do not accept this and I will comment on this further in my conclusion.
The Applicant filed an Amended Initiating Application on 18 October 2018 seeking the following final orders for property relief:
“18.That the Applicant transfer to the Respondent all of his right, title and interest in the property situate at and known as C Street, Suburb D being the whole of the land more particularly described in Certificate of Title Volume … Folio … upon the payment of the sum of $280,000 and the Respondent indemnify the Applicant in relation to mortgage No. … to Westpac Banking Corporation over the property and discharge that mortgage, failing which the C Street, Suburb D property be sold and Mr Ashjaim (sic) receive the sum of $280,000 from the net proceedings of sale.
19.That the Applicant retain the business at Suburb F currently operated by him and he indemnify you (sic) in relation to all debts associated with that business.
20.That the Respondent retain Business H, C Street, Suburb D and indemnify The Applicant (sic) in relation to all debts associated with that business, including superannuation debt, Australian Taxation Office debt, bank debt, bank debt, Gold Award Card debt, CBA overdraft, Citibank debt and the debt associated with her Motor Vehicle G and she indemnify The (sic) Applicant in relation to all of those debts.
21.That the Respondent retain control of the Gaspar Family Trust and the assets associated therewith.
22.That the Applicant be responsible for and indemnify the Respondent in relation to all debts associated with the Suburb F business, the business previously run by him, his debt in relation to his Motor Vehicle G and all other debts standing in his name.
23.That the Respondent continue to be restrained from operating a business at J Street, Suburb F or any other premises within five kilometres of the Applicant’s Suburb F business.
24.That otherwise, the Respondent retain all other assets in her possession of under her control.
25.That otherwise, the Applicant retain all other assets in his possession or under his control.”
The Respondent filed an earlier Amended Response on 10 October, 2017 seeking the following final property orders:
“25. That the net asset pool be defined as $1,209,654.68
26.That due to proportion of funds both brought into the relationship as well as the funds supplied during the relationship by the respondent, the net asset pool be split 65/35 in favour of the respondent
27.The applicant transfer to the respondent all his right, title and interest in the property situate at and known as A Street, Suburb B and the respondent indemnify the applicant in relation to the current mortgage over that property and discharge that mortgage;
28.That the respondent retain control of the Gaspar Family Trust and the assets associate therewith;
29.That the applicant be responsible for and indemnify the applicant in relation to all debts associated with the Suburb F studio, the businesses previously operated by him and all other debts standing in his name.
30.That the respondent retain her Motor Vehicle G and the debt associate with same vehicle;
31.That the applicant retain his three motor vehicles and any debts associated with those vehicles;
32.That the applicant retain the business currently operated by him at Suburb F and all fixtures, fittings, plant and equipment located at these premises;
33.That the respondent retain the business currently operated by her at C Street, Suburb D and all fixtures, fittings, plant and equipment located at these premises;
34.That the respondent continue to be restrained from operating a business within a five kilometre radius of Suburb F business currently being operated by the applicant;
35.That the restraint of trade in item 34 above be in operation for a fixed period of three years from the date of these orders and then be discharged.
36.That the applicant transfer $51,000.00 within 21 days of the date of these Orders into the Gaspar Family Trust, representing the cash receipts from the Suburb F business for the period 29 January 2016 to 30 June 2016, so that proper taxation and statutory records for the Trust can be completed;
37.As compensation for the transfer of the intellectual property of the business as set up by the respondent, the applicant assume and discharge the following outstanding debts;
a. Australian Taxation Office - $120.221.41
b. Superannuation outstanding for the staff - $29,000.00
c. Bank loan - $20,000.00
d. Bank loan - $21,681.09
e. CBA overdraft - $40,056.00
f. Gold credit card - $32,000.00
g. Citibank credit card - $8,572.82”
The net pool of assets in this case appears to be relatively small but this did not stop the parties each spending large sums on legal costs in an attempt to control the business entities. It is clear they hold no affection for each other which sadly is reflected in what they have spent on lawyers, which could have otherwise benefited the children.
The Evidence
A.Applicant father’s material:
(a)Amended Initiating Application filed on 18 October, 2017;
(b)Affidavit of Mr Ashjaim sworn on 20 June, 2016 and filed on 21 June, 2016;
(c)Affidavit of Mr Ashjaim sworn on 17 October, 2017 and filed on 18 October, 2017;
(d)Affidavit of Mr Ashjaim sworn on 8 June, 2018 and filed on 12 June, 2018;
(e)Affidavit of Mr Ashjaim sworn on 22 June, 2018 and filed on 28 June, 2018;
(f)Financial Statement of Mr Ashjaim sworn and filed on 3 December, 2018;
(g)Affidavit of Mr S sworn on 20 August, 2018;
(h)Affidavit of Mr Q affirmed on 15 January, 2019 and filed on 16 January, 2019; and
(i)Affidavit of Mr T sworn and filed on 30 January, 2019;
B.Respondent wife’s material:
(a)Valuation of two businesses undertaken by Mr U of Business V (out of date and witness not called).
(b)Valuation of the property at C Street, Suburb D undertaken by Mr W and Company Pty Ltd;
(c)Intervention Order of 30 January, 2012;
(d)Intervention Order of 7 April, 2014;
(e)Intervention Orders of 10 June, 2016;
(f)Breach of Intervention Order on 9 July, 2016;
(g)Beach of Intervention Order on 24 May, 2017;
(h)Beach of Intervention Order on 19 November, 2017;
(i)Section 11F Family Report dated 4 November, 2016;
(j)Section 11F Family Report dated 26 March, 2018;
(k)Directors penalty Notices issued on 19 February, 2018;
(l)Business H Pty Ltd liquidation documents by Mr FF Accountants;
(m)Affidavit of Ms Gaspar filed on 10 October, 2017;
(n)Affidavit of Ms Gaspar filed on 4 June, 2018;
(o)Affidavit of Ms Gaspar filed on 29 November, 2018;
(p)Ms Gaspar's Response filed on 14 June, 2018;
(q)Ms Gaspar's Financial Statement filed on 4 June, 2018;
(r)Affidavit of Ms AA sworn on 30 May, 2018;
(s)Affidavit of Mr BB sworn on 2 June, 2018;
(t)Affidavit of Mr R sworn on 3 June, 2018;
(u)Affidavit of Mr CC sworn on 4 June, 2018;
(v)Affidavit of Mr CC sworn on 12 June, 2018
(w)Affidavit of Ms DD sworn on 13 June, 2018;
(x)Affidavit of Ms P filed 27 November, 2018;
(y)Affidavit of Mr EE filed 29 November, 2018;
(z)Financial Statement filed 29, November, 2018;
(aa)Affidavit of Ms Gaspar filed on 31 January, 2019;
(bb)Affidavit of Ms N filed on 31 January, 2019;
(cc)Affidavit of Ms P filed on 1 February, 2019;
(dd)Affidavit of Mr CC filed on 1 February, 2019; and
(ee)Affidavit of Ms Gaspar filed 22 May, 2019.
C.Mr Ashjaim
The Applicant presented as being naive and did not appear to have a clear memory of all major events but I felt he was trying to be as accurate as he could. Generally, I thought I was getting the truth subject to him sometimes… “gilding the lily.”
D.Mr Q
This was former partner of Ms P, the conspirator with the Respondent over the fictitious sale of Business H . He gave evidence of the friendship between the two women over many years and the lack of experience his wife had in the industry and profession. This was not challenged successfully on cross-examination and I accept his evidence over that of his former wife.
E.Mr S
This gentlemen is a certified valuer who assessed the value of L Street, Suburb M, at $600,000 as at 13 October, 2017 being the realty brought into the relationship by the Respondent. After separation she sold that property for $480,000. I note the property was sold in … 2017 and he valued it based on … “direct comparison with other units in the particular area.” One of the difficulties with Mr S’s evidence was that he only conduced an external inspection of the property and agreed it would have been “…beneficial…” to inspect the interior. He conceded in cross-examination that if it was poorly maintained it could have an “…impact…” on the value of the subject property.
The evidence of the Respondent’s valuer, Mr BB on this topic was that the Respondent’s property was unrenovated and therefore to have comparable sales evidence of renovated units in that development (which Mr S paid …“particular attention to…”) was unhelpful.
F.Mr T
This expert is an accredited business valuation specialist and forensic accountant who has specialised in business valuations for at least 20 years and was for 35 years a financial analyst. He valued the Business H at $94,297 in his report was dated 5 December, 2018.
He read the valuation report of the Respondent’s witness, Mr EE, on the same business who provided …“an indicative business evaluation.” This expert said it is mandatory for all accountants in Australia to comply with an evaluation standard and Mr EE report did not comply with that requirement. I note that Mr T gave evidence that he wrote the CP Australia Evaluation Manual on regulation compliance for 6 years from around 2005 to 2012. He was very critical of the report of Mr EE, saying that it was full of inaccuracies and contradictions. He went onto say that Mr EE report had turnover figures that could not be accurate for this Suburb F business under the control of the Applicant.
When compared to the evidence of Mr EE both in his report and in court, I preferred the evidence of Mr T for the valuation of this business.
G.Mr W
This gentleman was jointly instructed by the parties to value their residence at A Street, Suburb B. He was briefly cross-examined about the market value at the time of the hearing and said it had dropped marginally and reduced his valuation from $800,000 to around $780,000 - $790,000. I then asked him if a comfortable mid-point was $785,000 and he agreed with that concept and no one objected to that approach.
H.Ms Gaspar
From the first time I heard her in the witness box I never felt I was getting the whole truth from this witness. Her post-separation dealings surrounding the J Street, Suburb F lease and her involvement of her son troubled me. I was further troubled with the purported sale of the C Street, Suburb D business to a personal friend who had little knowledge of the operation of this business. Overall, she confirmed my doubts with the affidavit filed 22 May, 2019 disclosing that she had misled the court. It also confirmed my own concerns about the veracity of her evidence and that of some of her other witnesses which I will discuss further. Because of her deceit in relation to the business sale, a cloud of doubt hangs over all of her evidence.
Mr FF
This gentleman is an insolvency practitioner and accountant. He acted as liquidator for Business H . He appeared to have a limited memory of people and events which was made worse by not bringing his file to court, although some of his documents were previously subpoenaed.
He appeared to assume more than he actually recalled and did say that he valued the assets of the business with no intention of the business continuing forward. He said his understanding was the business had closed and that $45,000 was not a fair and reasonable market value for the business but… “at that particular point, $45,000, I was very pleased with.” He said that the Respondent introduced him to the purchaser, Ms P and there was no contract of sale, save for invoices.
J.Mr BB
This gentleman was the Respondent’s certified valuer for L Street, Suburb D, which he put at $480,000 based on a retrospective valuation. I note that he did a full internal and external valuation with an inspection taking place on 24 October, 2017.
Although it was surprising that his valuation was exactly the same figure that the Respondent sold this property for in May 2017, he said that the unit was in original condition and he did not rely on sales evidence more than 3 or 4 months old to reflect the then current market conditions. He went on to say further that 3 earlier sales of units 1, 4 and 6 in the same development were rejected by him as comparable sales evidence because they had been… “fully renovated.” As I said earlier, I preferred the evidence of this gentleman over Mr S, given the internal/external inspection and that it was in an original in unrenovated condition.
K.Mr EE
I have commented earlier on this gentlemen’s report. He is an accountant who gave evidence for the Respondent in relation to the value of the Suburb F business Business H Pty Ltd. He said he had inspected the financials of the business that did not a do a “…full due diligence…” but undertook an“…indicative report.” He put the Business H gross revenue at $743,918 for 1 year which in fact was the gross revenue for both businesses, at Suburb F and C Street, Suburb D. He regarded the 2 outlets for the business as the Suburb F business. Clearly this gentleman’s evidence was unhelpful given he relied on an inaccurate gross revenue figure and his valuation could not be seen as a full and proper assessment of the value of the Suburb F business referring to his assessment as an indicative value and a guide only.
L.Mr R
This is a witness for the Respondent and is a Chartered Accountant and tax agent by profession. He was employed by the Respondent prior to this litigation and much of his affidavit is based on her instructions, which clearly have to be questioned given that she has lied to and misled the court in relation to the C Street, Suburb D business. It is possible this witness intentionally or otherwise, mislead the court.
I note from the Respondent’s affidavit filed on 22 May, 2019 that this fellow prepared the Declaration of Trust dated 26 February, 2018 in relation to the purported sale of the C Street, Suburb D business. I also note that on or about that date the Respondent and her co-conspirator Ms P attended Mr R’s office who arranged for a new company to be incorporated for the “purchaser” as a shareholder and director. That same Affidavit goes onto say “…Ms P was instructed by Mr R to contact the liquidator to make an offer to purchase the assets of the business, the purchaser was to be the new company being Ms P’s.” This witness may have been involved with the conspiracy to mislead the court.
It is clear from the evidence that Mr R was a major player in this conspiracy and therefore, his evidence is tainted and unreliable. He should have been frank and open with the court when cross-examined about the liquidation, rather than opaque and evasive.
M.Ms AA
This deponent is a professional employed for 5 years by the Respondent, initially at the Suburb D… “branch of the business” and subsequently at the Suburb F… “branch of the business.” She was not required for cross-examination and her affidavit only added some background to this case.
N.Ms DD
This deponent claimed to be… “a family friend” of the Respondent and detailed her opinion and observation of the parties. She was not required for cross-examination and her observations and opinion appeared to be more relevant to the parenting dispute, which the parties settled before trial.
O.Ms P
This lady was the co-conspirator with the Respondent to undertake a ruse with the fiction that she purchased the Suburb D business from the Respondent.
She affirmed an affidavit on 25 November 2018, where she said they were acquaintances but not friends. I did not accept this given the evidence of her former husband. Her evidence presented as unbelievable because:
(a)She had no background in the industry. She worked as a professional;
(b)She gave no evidence of having an accountant or other expert doing a due diligence assessment of the business before purchase;
(c)She has no background in being an entrepreneur or investor;
(d)After the purchase she had no regular role in the business nor did she regularly and frequently check its profitability or progress;
(e)She sought full time employment elsewhere as a professional;
(f)The Respondent’s role did not change and there was no evidence of the terms of her “employment.”
(g)She did not draw an income from the business;
(h)She was vague about the commercial facts in the “purchase” and there was no formal contract produced to the court;
(i)She did not know the monthly or quarterly turnover;
(j)The lease was not assigned to her;
(k)She did not make any enquiries with the landlord before ‘purchase’; and
(l)She did not know the Respondent’s salary
She swore two affidavits and was cross-examined during the trial. Given her dishonest behaviour, I put no weight on her evidence.
P.Mr CC
This witness is the Respondent’s son. In her confessional affidavit filed 22 May, 2019 the Respondent said at paragraph 21 as follows…
“Ms P often asked my eldest son Mr CC who is a professional to fix her computer at home. She then manipulated Mr O to place a false statement to the police that he had seen bruising on her daughter’s forehead and hand. Mr O was brought to the police station by Ms P, but he refused to sign the false statement.”
Given this fellow had lied to the police about alleged bruising on her child, (although he refused to sign the statement), it is my view that it places a very dark cloud over his evidence. Further, he assisted the Respondent to establish the post-separation business initially in secrecy at J Street, Suburb F . In my view this was done to compete with and attract the customers away from the parties other Suburb F business they created before separation that was operated solely by the Applicant post-separation.
This young man appears to be an agent of his mother, to promote her interests, rightly or wrongly, and in all the circumstances I put little or no weight on his evidence.
Q.Ms N
She is Respondent’s daughter. She filed an affidavit on 31 January, 2019 that had little relevance and she was not required for cross-examination.
Approach to property proceedings
There is a general approach to hearing married parties property applications that has been established over time by the decisions in this area by the Full Court of the Family Court of Australia. This in part was recently refined following the High Court decision of Stanford v Stanford (2012) 87 ALJR 74. In my view this approach is equally applicable to a defacto relationship, although many authorities relate to marriages. There is little difference in their outcome between section 79 and section 75(2) and section 90SM and section 90SF(3) of the Act to be able to adopt the same approach to a defacto relationship.
I adopt the approach detailed by the Honourable Justice Walters at paragraph 72 of his decision in Jewel v Jewel [2013] FCWA 81 which in my view summarises well the steps required when applying the Family Law Act 1975 (Cth) he said:
“72.Assuming a step-based approach to the determination of an application brought pursuant to the provisions of FLA s 79 is still appropriate, it is arguable that the effect of the High Court’s decision in Stanford is as follows:
a) The first “step” in the property settlement exercise is to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in their property.
b) The second “step” involves ascertaining whether it is just and equitable to make an order altering the interests of the parties in their property. In most cases – relevantly, where the parties have separated and are no longer living in a marital relationship – the underlying assumptions that the parties had to the effect that the existing property ownership arrangements were functional (or perhaps irrelevant) and could be varied by agreement between them, no longer apply. That fact alone should ordinarily persuade the court that it is just and equitable to make orders altering the parties’ interests in their property. It is only after the Court has concluded that it is just and equitable to make such orders that it should proceed to take what might be regarded as the third and fourth steps.
c) In the third “step”, the court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties.
d) In the fourth “step”, the court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established as a consequence of the previous step.
e)Finally, the court should consider the effect of the various findings and assessments it has made and make such orders as it considers are just and equitable in all the circumstances. As I have recorded above, my view is that this process does not amount to an opportunity to make a further adjustment; it is an opportunity for the judicial officer to determine finally how, in reality, just and equitable orders might be achieved having regard to all the circumstances of the case.
I also note the following approaches which are helpful in applying the Act:
A.Sebastian & Sebastian [2013] FamCA 191, Young J (at [152]-[154]):
“It is my opinion that post-Stanford a Court is required to:
· First, identify the existing and therefore divisible property of the parties;
· Secondly, evaluate whether it is just and equitable to pronounce an order; and
· Thirdly, assess what orders should be made upon consideration of all of the s 79(4) factors, including the matters referred to in s 75(2).
What remains uncertain is whether it is permissible for a Court to finally reflect upon and consider, on an overview basis, if the proposed orders are just and equitable,
My own approach at that final stage has been to reflect upon and then ask of myself the question of whether the orders are just and equitable in their division of property, their structure and particularly in their monetary outcome.”
B.Baglio & Baglio [2013] FamCA 105, Murphy J (at [181]):
“As a result of those matters, the Court’s approach to s 79 may be less compartmentalised than what a strict or unthinking adherence to four (or three) ‘steps’ might otherwise reveal. The task is essentially holistic; it is just and equitable in the particular circumstances of the particular relationship or marriage under consideration to make an order and, if so, its terms must similarly meet that criteria. Of course holistic though the approach is, it must be referenced to what the Act requires and care must be taken to ensure that the Court’s reasons make that clear…”
The pool
Assets
| ASSETS | VALUE DETERMINED ON THE EVIDENCE | |
| Asset a) L Street, Suburb M | Value determined on the evidence Net proceeds after sale costs and discharge of mortgage - $60,590 | |
| b) A Street, Suburb B | $ 785,000 | |
| c) Business H, C Street, Suburb D | $94,000 E | |
| d) Business H, E Street, Suburb F | $94,297 | |
| e) Applicant’s motor vehicle (no equity – see liabilities) | $38,000(1) | |
| f) Respondent’s motor vehicle (no equity – see liabilities) | $26,000(2) | |
| g) Ms Gaspar's Business, J Street, Suburb F | NK | |
| h) Gaspar and MM Family Trusts | NK | |
| i) Monies Applicant sent to his parents | $90,000 E | |
See Applicant’s Financial Statement sworn 3 December, 2018
See Respondent’s Case Outline, sealed 3 December, 2018
Liabilities of the Applicant
| LIABILITY | |
| Liability | (rounded to nearest dollar) |
| j) CBA Loan | $ 36,000 |
| k) Credit Card – Citibank | $10,000 |
| l) Credit Card – ANZ | $39,500 |
| m) Credit Card – OO | $6,000 |
| n) Credit Card – CBA | $45,000 |
| o) CBA Line of Credit | $23,720 |
| p) Tolhurst Druce & Emmerson – legal fees | $41,704 |
| q) Company GG | $8,000 |
| r) Mr PP (friend) | $5,000 |
| s) Company JJ | $40,000 |
| t) Suburb QQ (rent arrears) | $7,000 |
| u) Company HH – UK | $57,000 |
| v) ATO (re BAS / GST PAYG) | $57,464 |
| w) Pearce Webster Dugdales – legal fees (up to 19 December 2018) | $100,396 |
| x) Motor Vehicle G Finance | $45,000 |
| y) American Express | $100,000 |
| z) Directors fees paid in advance – due to Business H Pty Ltd | $110,614 |
| Total | $742,401 |
Liabilities of the Respondent
| LIABILITY | |
| Liability | (rounded to nearest dollar) |
| a) Citibank Credit Card | $16,000 |
| b) Motor Vehicle G Finance | $69,000 / Plus $7,700 (3) |
| c) Ms KK (Sister) | $40,000 (c) |
| d) Mr CC (son) | $12,000 (c) |
| e) Australian Taxation Office | $17,690 |
| f) Outstanding legal fees | $66,000 E |
| Total | $220,690 |
Joint Liabilities
| LIABILITY | |
| Liability | (rounded to nearest dollar) |
| Mortgage A Street, Suburb B | $529,000 (c) |
| SUPERANNUATION | |
| Superannuation | Agreed value (currently) (rounded to nearest dollar) |
| g) Applicant’s superannuation | $NK (4) |
| h) Respondent’s superannuation | $NIL (4) |
In cross-examination she said she owed $7,700 in arrears
The Applicant made no disclosure (see his Financial Statement) and the Respondent said nil in her Financial Statement.
Section 90SM(3)the court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Both parties seek different property orders. Therefore, in my view it is just and equitable there were proceedings to determine an appropriate outcome between competing proposals.
Contributions
Section 90SM(4) In considering what order (if any) should be made under this section in property settlement proceedings, the court must take into account:
(a)the financial contribution made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them;
Contributions on cohabitation
The Applicant had an interest of unknown value in an unit at Street RR, Town SS along with savings between $15,000 to $20,000 and an unused line of credit of $23,000, which the Respondent believed he had already drawn down.
The Respondent also said he owned a van subject to debt along with an interest in a unit at Town LL but it appears from the evidence that she confused that with his interest in a unit at Town SS.
The Respondent on cohabitation was the sole proprietor of unit L Street, Suburb F. I note at paragraph 15 of her affidavit affirmed 10 October, 2017 she said it was then worth approximately $250,000 with a $200,000 mortgage loan, leaving $50,000 equity.
However at paragraph 9 of her affidavit affirmed 27 November, 2018 she alleged it was worth approximately $315,000 with a $200,000 mortgage. She annexed to that affidavit at Exhibit 1, a market opinion dated 15 September, 2007 which said… “if it is offered for sale… it would be sold in the vicinity of $285,000 to $315,000”. None of these conflicting assessments of its value were corrected by the Respondent in the witness box, nor was she cross-examined on this topic. It appears she had equity of $50,000 to $100,000 on cohabitation. She also said she had a motor vehicle worth around $10,000.
Also at the time of cohabitation, the Respondent was operating a small one person business from the spare bedroom at her Suburb F home. She also had her child from an earlier relationship Ms N, then 7 years, living with her.
On or around cohabitation, the parties purchased a three bedroom unit at A Street, Suburb D for $395,000 plus stamp duty and other costs, with a mortgage loan from the Commonwealth Bank of approximately $350,000. The Applicant in his evidence said he contributed somewhere between $12,000 to $20,000 to this purchase while the Respondent alleges it was only $7,000 which he disputed. The Respondent alleged she contributed around $31,000 to $40,000 to this purchase and I suspect both have overstated their contributions to acquiring this property.
Applicant’s business
On cohabitation the Applicant was a customer service representative working for commission. Subsequently with the support of the Respondent he opened up his own businesses under the names of ‘Company HH’.
Whilst he worked hard to establish and develop this business to a point where he had numerous outlets, it appears that it was not as successful as he would have hoped. In 2008 a loan of $98,000 was secured against the A Street property which was mainly invested in his business. Subsequently, he borrowed a further $39,000 to open his first business in Suburb TT but this proved to be a failure as he chose the wrong location and he wasted, in his own words “…$25,000 or $50,000 or even $60,000, maybe more.” In late 2014 he borrowed $60,000 over a six month period in a transaction that can only be described as ‘a loan shark’ deal as within six months he had to pay $76,000 in principal and interest for this loan.
In or around August 2015, he borrowed against the Respondent’s L Street, Suburb M property and invested a further $45,000 in that business. From the same source of monies he invested a further $5,000 in September.
Ultimately, as I indicated earlier this business failed and it last traded around January, 2016.
The business, however, supported the family for some years as the Applicant said in chief that the business made a profit from around 2006/2007 to 2012/2013… “but every single cent I made was going back to the business, except for money we were spending to live on”... He said that was one of the reasons why he managed to grow the business from nothing to seven shops with permanent leases. In relation to the monies drawn from the business for household bills he said that he had been paying the mortgage and putting money into his former partner’s credit card to pay daily expenses such as gas and electricity. When queried he said… “I never pay (sic) detailed attention (to) what was getting paid (by her).”He also said he financially supported the ... “Suburb B business”…for a couple of years as well as paying for the shop fitout.
In the case of Kowaliw & Kowaliw (1981) FLC 91-092 at page 76,644 Justice Baker said the following:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage where there are such losses resulted from a joint or several liability, should be shared by them (although not necessarily equally).”
This statement has been adopted by subsequent decisions and although it refers to a marriage in my view it has the same application to this case. Whilst the Respondent complained about the monies the Applicant spent on his business ultimately she did not seek a financial adjustment in her favour in relation to this issue, nor in my view was it warranted. It was a ‘shared’ venture that ultimately failed.
Business H at, C Street, Suburb D
On cohabitation, as I indicated earlier, the Respondent was running a small business from her Suburb M home. The business continued to operate from their home in A Street, Suburb D until around 2012/2013 when it moved to shop premises at C Street, Suburb D and they set up a formal business under the same name of “Business H.” It appears this was a plan that was jointly advanced by the Applicant and the Respondent, with the Applicant assisting in a significant way to establishing the shopfront business by arranging, instructing and paying for shop fitters to fit out those premises for business to be undertaken.
Subsequently the Respondent wholly operated this business with some minor assistance from the Applicant.
Business H (Business H Pty Ltd) at E Street, Suburb F
The evidence discloses that in late 2014 or early 2015 the Applicant realised his business was failing and as he had unused rental premises at E Street, Suburb F he proposed to the Respondent that he should establish a business in that shop, much like the C Street, Suburb D business. According to the Applicant, the Respondent proposed they should do it as a 50/50 partnership and they started the process for an agreement to be drawn up to reflect that arrangement. They further arranged for the shop fittings to be undertaken to transform the Suburb F shop into a studio in early 2015 and it first opened for business in April, 2015 approximately 11 months before separation. It appears that around May, 2015 they were going to establish a formal partnership through a new company and trust but this went no further. I am satisfied they both operated the business with the Applicant being in frequent attendance as he shut down his business. From January, 2016 he attended this business 6 days a week.
He said the following in evidence in chief… “I opened all the business accounts with all centres. The only reason why I open up on (sic) my ex-partners name because, unfortunately, after I closed my businesses there was outstanding accounts I was scared that I am going to get bankrupt (sic) and because it was a new business I thought it can be in my ex-partner’s name because it’s family.”
J Street, Suburb F business
The Respondent entered into a lease on 1 August, 2016, some 4 or 5 months after separation and did not disclose this at the time. There was a hearing in my Court on 29 August, 2016 when this was first disclosed to the court.
The Respondent said in cross-examination that she spent around $50,000 on rent and having it fitted out as a studio with monies drawn down from the home mortgage. The applicant believes she spent a larger total sum.
This post-separation business venture will be discussed further under section 90SF(3)(r) below.
(b) the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the de facto relationship, or a child of the de facto relationship:
(i) to the acquisition, conservation or improvement of any of the property of the parties to the de facto relationship or either of them; or
(ii) otherwise in relation to any of that last-mentioned property;
whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the de facto relationship or either of them;
There was little evidence lead on this area, but what there was suggested that both parties made non-financial contributions to their assets, business ventures and to benefit their family.
(c) the contribution made by a party to the de facto relationship to the welfare of the family constituted by the parties to the de facto relationship and any children of the de facto relationship, including any contribution made in the capacity of homemaker or parent;
The parties had two children born into their relationship Y born … 2007 and X born on … 2008. It is common ground that the Respondent mother remained at home and was the primary carer for these children when they were very young. I note she also cared for the child Ms N from her earlier relationship. The Applicant said in cross-examination that from cohabitation to 2014 he was… “working, working, working to build his business” and he made that his priority. The evidence disclosed that the Respondent was the primary carer from 2007 and continued that role with the Applicant becoming more involved in parenting the children as he became more available to them over time.
(d) the effect of any proposed order upon the earning capacity of either party to the de facto relationship;
These parties have developed their own earning capacity and my orders are not likely to have any negative effects on same.
Section 90SF(3) The matters to be so taken into account are:
(a)the age and state of health of each of the parties to the de facto relationship (the subject de facto relationship);
The Applicant is aged 42 years, the Respondent is aged 52 years and both enjoy health relative to their years. Neither complained of any particular health issue.
(a)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment;
Both have the mental and physical capacity for appropriate gainful employment as evidenced in their operation of business entities in the past. Their income, property and financial resources as set out in their respective Statements of Financial Resources, although the Respondent’s is more opaque and questionable given she mislead the court about the sale of her business.
(c) whether either party has the care or control of a child of the de facto relationship who has not attained the age of 18 years;
The Respondent has the primary care of the two children of the relationship, now aged 12 and 11 years. I have taken this into account when considering a just and equitable outcome. It is a significant issue in this case, more so given the lack of regular Child Support payments.
(d) commitments of each of the parties that are necessary to enable the party to support:
(i) himself or herself;
This is detailed in their respective Statements of Financial Circumstances.
(ii) a child or another person that the party has a duty to maintain;
Both have a duty to maintain the children of the relationship. The Respondent has no duty to maintain Ms N or her brother but the reality of life is that she probably makes some contribution to their financial needs from time to time, although they are no longer minors. This is not a significant issue.
(e) the responsibilities of either party to support any other person;
See (d) above.
(f) subject to subsection (4), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
The Applicant does not have any superannuation. The Respondent disclosed none. The Applicant did not produce evidence of receiving any pension allowance or benefit. The Respondent detailed in her Financial Statement that she receives two forms of Family Allowance payments, totalling less than $80 per week.
(g)a standard of living that in all the circumstances is reasonable;
Both have a reasonable standard of living that should not be affected by these orders.
(h) the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
Neither sought maintenance.
the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant;
Not relevant.
(j) the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
Not relevant.
(k) the duration of the de facto relationship and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
This is not relevant.
(l) the need to protect a party who wishes to continue that party's role as a parent;
Both wish to undertake a parenting role, with the Respondent continuing her role as primary carer.
(m) if either party is cohabiting with another person--the financial circumstances relating to the cohabitation;
Not relevant.
(n)the terms of any order made or proposed to be made under section 90SM in relation to:
(i) the property of the parties; or
This has been considered, particularly section 90SM(3).
(ii) vested bankruptcy property in relation to a bankrupt party;
Not relevant.
(o)the terms of any order or declaration made, or proposed to be made, under this Part in relation to:
(i) a party to the subject de facto relationship (in relation to another de facto relationship); or
(ii) a person who is a party to another de facto relationship with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii);
Not relevant.
(p)the terms of any order or declaration made, or proposed to be made, under Part VIII in relation to:
(i) a party to the subject de facto relationship; or
(ii) a person who is a party to a marriage with a party to the subject de facto relationship; or
(iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or
(iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii);
Not relevant.
(q) any child support under the Child Support (Assessment) Act 1989 that a party to the subject de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the subject de facto relationship;
I was told there is no Child Support assessment. I expect the Applicant will be assessed for Child Support in the future. The Applicant detailed non-agency payments made by him in this affidavit, including paying for hobbies for the children. This in my view is not the most appropriate style of payment. Regular Child Support payments would contribute to the essentials of food and clothing, which must be a priority.
(r)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
Monies sent to the paternal grandparents in Country UU
In cross-examination, the Applicant conceded he sent monies to his parents in Country UU for their support. He said the Respondent was aware he was doing this. He initially said on average it was up to $1,000 per month and then subsequently said…“it was $700-1,000 per month, if you just multiply that with the relationship.” I then asked him to advise me how much he had forwarded over time to his parents indicating that it was estimated to be $90,000, and he agreed with that estimate. I asked him further questions about the notice to the Respondent about these monies he forwarded and he said he assumed she knew of it but that they never had a detailed discussion. He said they just did not talk about it.
I earlier referred to the case of Kowaliw & Kowaliw (1981) FLC 97-092. It has application to these facts in relation to a test that is detailed by Justice Baker at page 76,644 as follows:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances, (a) where one of the parties has embarked upon a course of conduct designed to reduce or minimize the effective value or worth of matrimonial assets; or (b) where one of the parties has acted recklessly, negligently, or wantonly with matrimonial assets, the overall effect of which has reduced or minimized their value.”
While I acknowledge that adding back to the pool of assets”…is an exception, not the rule”… (see Challen (2007) FamCA 1292), but it is clear from the evidence that whilst the Respondent knew of the monies being sent overseas, she was not regularly consulted about the amounts sent. Given the total quantum of monies forwarded, in my view it was reckless or negligent to forward such a large sum over time without the informed consent of the Respondent to the amount of monies sent. Further, this was not a proper priority in the use of funds that otherwise could have been available to the benefit of the parties or their children. Effectively this was property disposed of by him for the benefit of his extended family, and for the emotional benefit of the Applicant.
In all the circumstances, I agree with the document filed by the Respondent on 3 December 2018 titled ‘Argument of Respondent Wife’ where at page 2 she has it as add-back (but in the sum of $185,829.24) which in my view is overstated and on the evidence, should be fixed at $90,000.
Business H, C Street, Suburb D
The wife’s attempt at misleading the court over the ownership of this business meant there was no expert valuation of this particular business. However, I note that at paragraphs 54 and 55 of her affidavit filed 10 October, 2017 she says the following “…The Suburb B business has not been valued but my opinion is that it is of similar value to the Suburb F studio...” She went on to say that the Suburb F studio is based on operating 9 rooms where the C Street, Suburb D studio can only operate on 7 rooms and she said that the A Street, Suburb B studio was worth less, simply due to its lower capacity. However, in my view the number of rooms is less relevant to how often they are used to generate income, and I cannot put any weight on this last comment by the Respondent. Whilst noting her concession about value, I also note that the liquidator Mr FF said in cross-examination … “in its heyday it might have been (worth) $100,000…”
As I have said earlier, I accept the evidence of Mr T regarding the valuation of the Suburb F business at $94,297 and the comments by the Respondent in her above mentioned affidavit. The Full Court in Weir v Weir (1993) FLC 92-338 said at p. 79, 593:
"This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti [1986] FamCA 15; (1986) FLC 91-759 , and Mezzacappa and Mezzacappa [1987] FamCA 20; (1987) FLC 91-853 . It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”Therefore, in my view “substantial justice” (see Weir) would be done if the court took the view the two outlets had a similar value, in all the circumstances of this most unusual case.
The Respondent will retain this business subject to her Supreme Court litigation with Ms P over its ownership. In my assessment of the evidence, this is the best outcome that can be achieved in this very messy factual dispute where very limited reliable evidence that has been available to the court in relation to this C Street, Suburb D business.
Ms Gaspar's Business, J Street, Suburb F, the Gaspar and MM Family Trusts and related companies
In relation to the business she established at J Street, Suburb F post-separation, the respondent agreed in cross-examination that she had fitted it out as a studio spending somewhere in the region to $40,000-50,000 borrowed against …“the matrimonial home.” She also said that she had paid the rent on that shop which totalled somewhere in the region of $50,000.
She told the court she stopped operating this business in March, 2018 when she transferred it to her son for no payment but apparently he subsequently gave her $10,000. However, she could not transfer the lease to him.
It appears that she has spent a substantial sum in an attempt to challenge or offsets the Applicant’s operation of the parties’ other business in Suburb F. This waste of money is a negative contribution that offsets her greater initial financial contribution to the relationship and her contribution as homemaker and parent.
(s)the terms of any Part VIIIAB financial agreement that is binding on either or both of the parties to the subject de facto relationship;
Not relevant.
(t) the terms of any financial agreement that is binding on a party to the subject de facto relationship.
Not relevant.
Section 90SM(4)(f) any other order made under this Act affecting a party to the de facto relationship or a child of the de facto relationship;
Not relevant.
Section 90SM(4)(g) any child support under the Child Support (Assessment) Act 1989 that a party to the de facto relationship has provided, is to provide, or might be liable to provide in the future, for a child of the de facto relationship.
See (q) above.
Just and equitable conclusion
On the 29 August, 2016 there was an interim hearing in this matter. Counsel for the Applicant complained that amongst other matters, the Respondent was not providing full and proper disclosure of all documents under her control or in her possession. In response to this claim, the then Counsel for the Respondent said as follows… “I concede the issue of discovery is not perfect. My client and I spoke and I have set her straight, but what she understands what they have provided in compliance with Your Honour’s orders for discovery would not be sufficient. That I can indicate to Your Honour, my client has a comprehensive understanding now as to her obligations.”
An example of her lack of disclosure and frankness was when she was cross-examined during the trial about her BAS statement for the quarter ended 30 March, 2016, when she said that was with the liquidator, but when the documents produced by the liquidator were inspected, they were not present. She said that she did not keep copies of any of these documents. She said she did not know she had to produce documents and she was not asked to produce any particular documents.
Her reply was she did not know she had to produce those documents, flew in the face of the assurance from her Counsel made to this court on 29 August 2016, over 2 years before the trial.
In her confessional affidavit filed 22 May, 2019 at paragraph 26 the Respondent says the following,…“I would like to tell The Honourable Court that I am really sorry for not disclosing the right documents for my final court hearing and placing false information into an affidavit.” There is no doubt in my mind that the Respondent has not been complying with the duty to provide a full and frank disclosure of all financial records and documents.
In my view, the cases of Oriolo (1985) FLC 91653 and Briese (1986) FLC 91-713 apply to this situation. The Respondent intentionally told lies and created such an opaque image of her financial circumstances that it led to the court not being fully and properly informed about the financial history and current circumstances of the Respondent. Further, when one reads the cases of Weir (1993) FLC 92-338, Mezzacappa (1987) FLC 91-853 and Chang v Su (2002) FLC 93-117 they establish that I should have no sympathy for the Respondent or her behaviour, noting however I must follow the criteria in the Family Law Act 1975 particularly section 90SM and section 90SF(3).
In Chang v Su (2002) FLC 93-117 their Honours Justice Kay and Justice Dawe said the following:
“67. The 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, is well settled (see Stein v Stein [1986] FamCA 27; (1986) FLC 91-779; 11 Fam LR 353; Mezzacappa v Mezzacappa [1987] FamCA 20; (1987) FLC 91-853; 11 Fam LR 957; Black and Kellner (1992) FLC 92-287; 15 Fam LR 343 and Weir v Weir (1993) FLC 92-338; 16 Fam LR 154).
68. In Black and Kellner (supra) the appellant had submitted that, absent findings as to the extent of his wealth, the order made by the trial Judge was plainly unjust. The key finding of the trial Judge was:
“...the failure on the part of the [husband] to disclose his financial position to the court and his attempts to conceal this matter from the court, which has left the court in the position of not knowing what the [husband’s] financial position is, except that he deliberately underestimated it.”
69. Chief Justice Nicholson (with whom Ellis and Cohen JJ agreed), said in dismissing the appeal:
“As senior counsel for the wife pointed out, the first step in proceedings for a property settlement is for the court to ascertain the wealth of the parties and in this regard it is of interest to note the remarks of the Full Court in the case of Giunti and Giunti [1986] FamCA 15; (1986) FLC 91-759, particularly at 75,555 where the court commented:
‘It is obviously desirable as a general principle that the court should first of all identify the pool of assets available and evaluate it. If each party complies with his or her obligation to make a full and substantive disclosure of their financial affairs- see Briese and Briese; (1986) FLC 91-713, affirmed by the Full Court in Oriolo v Oriolo (1985) FLC 91-653, there is no problem, although there may be disputes as to valuation.
However if, as here, one party fails to fulfil that obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the making of an order against him or her which otherwise justice and equity would require? It would be simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would attract sanctions but by obfuscation and evasion.’
The Full Court in Oriolo and Oriolo, supra, referred with approval to the remarks of Smithers J in Briese and Briese, and it is perhaps worth reiterating a portion of his Honour's statement at 75,181 where he said, after referring to the decision of the House of Lords in Livesey v Jenkins [1984] UKHL 3; (1985) All ER 106:
‘... I believe that the conclusion of the House of Lords in the case of Livesey v Jenkins... is apposite, namely that in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. In that case it was made clear that full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of discretion. This is quite different from common law litigation between strangers, in which such a general duty does not exist, and obligations would only exist in so far as statute or court rules required.
In my view it is fundamental to the whole operation of the Family Law Act in financial cases that there is an obligation of the nature to which I have referred’.”
What I can discover from the evidence is that on commencing cohabitation it appears that the Respondent made a greater financial contribution and subsequently a greater contribution as primary carer and home-maker but these were eroded by her subsequent negative contributions. Both the Applicant and Respondent worked hard in their respective businesses. The Applicant initially as a customer service representative and then subsequently in the business in Suburb F. The Respondent brought into the relationship a humble business that operated from her residence. This grew into a significant shop front business known as “Business H.”
It appears that by 2016, the year the parties separated, both businesses were financially successful. The Respondent in her affidavit filed 10 October, 2017 alleges that the Suburb F business generated cash receipts from 29 January, 2016 to June, 2016 of around $51,000 and Eftpos receipts from 29 January, 2016 to 29 August, 2016 of $128,649. The evidence from the experts is that the turnover for the C Street, Suburb D and Suburb F business branches was around $749,000 in 2016/2017.
Ironically and sadly, the Respondent post-separation appears to have made every effort to undermine those businesses including;
a)Without notice liquidating the company operating the C Street, Suburb D business;
b)Pretending to sell the C Street, Suburb D business to her then friend Ms P;
c)Clearly wasting significant monies of around $100,000 by leasing premises at J Street, Suburb F, and setting up separate competitive structure with the intent, (I infer from all the evidence), to undermine the husbands operation at E Street, Suburb F; and
d)Without notice selling the realty she brought into the relationship at Suburb M leaving a net balance $60,590 after sale costs and discharge of mortgage. Given her poor credibility, misleading the court and lack of complete discovery I am not satisfied these monies were used as she suggested. In any event, on any view she retained those funds and used them for her benefit either directly or indirectly. I will treat this as an addback, (see Kowaliw (1981) FLC 91-092 above).
In all the circumstances of this opaque fog that this lady has created, it is my assessment of the best evidence available, that the divisible pool of assets is made up as follows;
a)Net proceeds from the sale of C Street, Suburb D - $60,590;
b)A Street, Suburb B - $785,000;
c)Business H, C Street, Suburb D - $94,000E;
d)Business H Pty Ltd, Suburb F - $94,297; and
e)Monies that the Applicant sent to his parents overseas - $90,000E.
which totals $1,123,887 less the mortgage over the parties’ home of $529,000, which then leaves $594,887 net.
I have excluded the other liabilities personal to them that they will continue to be solely responsible for, given this approach in the Applicant’s and the Respondent’s Outlines of Case, and the evidence at the trial.
When considering all the facts peculiar to this most unusual case, I have formed the view that the contributions both positive and negative in all forms by both parties are ultimately very similar during cohabitation and post-separation. Initially I was considering that perhaps the Respondent made greater contributions than the Applicant, particularly as homemaker or parent and with the assets she brought into the relationship, but on further reflection I believe she offset those contributions by her negative post-separation waste of funds on trying to establish a business to compete with the Applicant at J Street, Suburb F. She also made it more difficult to assess the section 90SM(4) factors with her lying to the court and not providing full disclosure, which caused me to doubt the reliability of her evidence.
When I then turn to section 90SF(3), I find these factors are also of similar weight or importance save for the serious responsibility of the primary carer, (in this case the Respondent), to provide care and accommodation for the two children of the relationship. Therefore, in all the circumstances there should be an adjustment in the primary carer’s favour of 10% providing a 55/45 division. In my assessment, the payment of $280,000 sought by the Applicant did not satisfy sub-sections 90SM(3) and (4) of the Act.
Given the net pool of $594,887 the Applicant’s share of 45% is $267,700. He will retain the E Street, Suburb F business valued at $94,297 and be responsible for the $90,000 addback, he is to be paid a further $83,400 in rounded figures. The Respondent will retain $256,000 equity in the Suburb B home and business of $94,000(c) with the $60,590 Suburb M addback, totalling $410,590 less the $83,400 payment, leaving a net of $327,190 in rounded figures.
Finally, I cannot ignore page 5 of the indicative valuation report by the Respondent’s agent Mr EE where he referred to ...“possible taxation and accounting compliance breaches. These breaches suggest that there are undisclosed income amounts and over claimed expense amounts…The observed possible compliance breaches are as follows:
· BAS’s not reconciling with financial information provided (mainly Financial Statements)
· Alleged undisclosed sales/cash income (as noted by Forensic Report of Mr U dated 22 September 2017)
· Possible avoidance of GST & Income Tax Obligations by using Trustee company of Trust for invoicing and banking of business income, along with possible “double dipping” expenses (claiming expenses in both entities when only one is conducting business activity)
· Owners Drawings/Loan account has not been examined but shows there is activity which could suggest further cash being drawn from out of the business…”
Therefore, given it is in the public interest to investigate this and a possible breach or breaches of the laws of Australia, I am requesting that a copy of my judgment be forwarded to the relevant officials at the Attorney-General’s Office and the Australian Taxation Office for further investigation and an officer of those bodies may have access to the parties material filed in this court for that purpose, if so required.
I certify that the preceding one hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of Judge Curtain
Date: 26 September 2019
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