BAILLIEU & BAILLIEU

[2020] FamCA 188

FAMILY COURT OF AUSTRALIA

BAILLIEU & BAILLIEU [2020] FamCA 188

FAMILY LAW – PROPERTY – Application by wife seeking an order that husband’s application for property orders be dismissed and that the property remain in the ownership of the party in whose name the property rested or with which property that party had control – Allegations of waste incurred by the husband – Add-Backs – Non disclosure by husband - Orders that husband’s further Amended Response be dismissed.

FAMILY LAW – PROPERTY – CHILD SUPPORT – Application by wife for non-periodic child support departure (the payment of private school fees and expenses) and for orders by way of security for future non-periodic child support payments, pursuant to ss 124 and 140 of the Child Support (Assessment) Act 1989 (Cth) in the event that the husband is successful in his application for an adjustment of property pursuant to s 79 of the Family Law Act 1975 (Cth) – Orders that wife’s Application for non-periodic child support pursuant to s 124 of the Child Support (Assessment) Act 1989 (Cth), together with her Application for a declaration in relation to the s 124 Application, together with her Application for security in relation to non-periodic child support be withdrawn and dismissed NOTING that such application was not determined on its merits as it was an application in the alternative.

Family Law Act 1975 (Cth)

Stanford & Stanford (2012) 247 CLR 108

APPLICANT: Mr Baillieu

RESPONDENT: Ms Baillieu

FILE NUMBER: SYC 1492 of 2018

DATE DELIVERED: 27 March 2020

PLACE DELIVERED: Hobart

PLACE HEARD: Sydney

JUDGMENT OF: Benjamin J

HEARING DATE: 28 and 29 January 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jackson

SOLICITOR FOR THE APPLICANT: McCabe Partners Lawyers

COUNSEL FOR THE RESPONDENT: Mr Campton SC

SOLICITOR FOR THE RESPONDENT: Fox & Staniland Lawyers

Orders

1. The application for relief sought by Mr Baillieu (‘the husband’) in his Response dated 11 April 2018 and any subsequent Amended or Further Amended Response be and is dismissed.

2. A consequential order that within seven (7) days from the date of this order the husband shall do all things and sign all documents to direct M Lawyers, the former solicitors of Ms Baillieu (‘the wife’), to account and pay to the wife her funds, being the balance of proceeds of sale of property C Street, Suburb D New South Wales, held in the Controlled Monies Trust Account with MM Bank.

3. The wife’s Application for non-periodic child support pursuant to s 124 of the Child Support (Assessment) Act 1989 (Cth), together with her Application for a declaration in relation to the s 124 Application, together with her Application for security in relation to non-periodic child support be withdrawn and dismissed NOTING that such application was not determined on its merits as it was an application in the alternative.

4. All other extant applications are dismissed except as to costs.

5. Any application for costs to be made in accordance with the Family Law Rules 2004 (Cth).

6. All subpoenaed documents be returned to the persons or institutions from which they emanated and all exhibits are returned to the person or persons who tendered the same.

7. Pursuant to Rule 19.50 of the Family Law Rules 2004 (Cth) it was reasonable to engage senior counsel and counsel to attend.

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

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

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC1492 of 2018

Mr Baillieu

Applicant

And

Ms Baillieu

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. In property proceedings pursuant to the provisions of the Family Law Act 1975 (Cth) (‘the Act’) each party has a duty to the Court, and to the other party, to give full and frank disclosure to the other party of all information relevant to the proceeding in a timely manner. This obligation is set in the Family Law Rules 2004 (Cth).[1]  This Rule is consistently applied in family law proceedings.

   [1] Rule 14.04

2. Mr Baillieu (‘the husband’) has persistently failed to give full and frank financial disclosure to either Ms Baillieu (‘the wife’) or to the Court.  Such disclosure as has been generally provided has been inadequate and/or was not in a timely manner.[2]

   [2] In terms of non-disclosure and/or inadequate disclosure or failure to inform by omission: see the wife’s trial affidavit, including paragraphs 476-86, 78-91, 110-126, 128-130, 131 &132, 133-149, 150, 151-159, 160, 163-168, 169-171; which evidence of the wife I have found is credible and reliable and I accept.

3. Furthermore, during the parties’ relationship and around and following separation the husband ‘embarked upon a course of conduct designed to reduce or minimise the effective worth of matrimonial assets and/or has acted recklessly, negligently or wantonly with matrimonial assets which has reduced or minimised their value.’[3]

   [3] Baker J in Kowaliw & Kowaliw (1981) 91-092 at 7644.

4. Consequent to the husband’s reckless, negligent or wanton behaviour, significant assets have been lost to the parties, including more than half a million dollars in money he secretly removed from the parties self-managed superannuation fund. Not only did the wife lose this retirement fund (including monies accumulated by her in a previous career) the husband has exposed the wife to possible civil and/or criminal sanction in her role as a director of the funds trustee and in her misplaced reliance upon the husband in being honest and open with her in his management of that fund.

5. In addition, the husband, secretly from the wife, recklessly or wantonly disposed of his business which turned over about five million dollars a year and employed twenty staff, causing the value of that business to be effectively lost.

6. Following separation he sought from the wife an advance of $75,000, accessing the funds by advance against the parties’ personal or real property.  On his own evidence, he failed to inform the wife that he had at that time purportedly sold the business; he instead convinced her that the advance was for the benefit of his business, which he asserted to the wife at that time, he continued to own.  In disposing of his business and then subsequently putting the business into the hands of a receiver and/or liquidator, without the wife’s knowledge and consent and in a secretive and cavalier manner, he exposed the wife to liabilities to the liquidators, which the wife needed to settle at considerable financial cost, and exposed her to possible civil liability. 

7. The husband’s reckless, wanton and aberrant behaviour has caused the wife to become engaged in litigation not only in the Family Court, but in a broader context.  As a consequence of this behaviour the wife has needed to resolve issues with a liquidator of a family company, and the pool of assets has been substantially reduced.

8. Senior counsel for the wife asserted that given the state of the property as it presently exists and the behaviour of the husband that the Court ought not make an order under s 79 of the Act as it could not be satisfied that it would be just and equitable to make such an order. Given the facts in this case, I can only agree with that submission and endorse the reasoning upon which is was based.

9. In this case the parties separated on 30 April 2017.  The wife commenced proceedings on 9 March 2018 seeking property orders.  Upon discovering the extent of the husband’s deceptions and emasculation of the parties’ wealth, on 15 August 2018 the wife filed a Notice of Discontinuance of her Initiating Application.  She no longer sought orders for an adjustment of property.  She sought that the husband’s application for property orders be dismissed and that the property remain in the ownership of the party in whose name the property rested or the party who had control of such property.

10. The wife in her Further Amended Initiating Application filed 29 November 2019 sought, as an alternative, an order that if the husband succeeded in any part of his application and there was an order that monies be paid (effectively) by the wife to the husband then the husband should be required to pay non-periodic child support, pursuant to s 124 of the Child Support (Assessment) Act 1989 (Cth), of school fees to a private school. Further, that any such non-periodic payment have a zero impact on any periodic child support that the husband may otherwise pay. She further sought, in the context of the Child Support proceeding, security for payment from monies held in a trust account.

11. Given the findings I have made in these reasons and the orders I have made, I have not proceeded to adjudicate the alternative actions.  I have, in accordance with the submissions by senior counsel on behalf of the wife, enabled those proceedings to be withdrawn and dismissed.  They have not been heard on their merits.

12. I make this situation clear as the husband indicated during the hearing that he had lodged a Departure Application with the Child Support Registrar.  Further enquiries revealed that the husband had written a letter to the Child Support Registrar on 12 January 2020 seeking a re-assessment or a departure in terms of his child support obligations.  That letter alluded to a response from the Child Support Agency with a suggestion that the husband file a Departure Application in accordance with the administrative procedures set out by the Agency.[4]  It may well be that the conflict between these parties could end up as a child support dispute in other places.

    [4] Exhibit E15.

13. In this proceeding the husband was represented by counsel and in his case outline the husband sought a declaration in relation to money the wife received on the sale of a property at Suburb D and further an order that from the proceeds of sale the sum of $350,000 be paid to him.

14. Further, the husband sought orders that each party be declared to have the sole right title and interest, presumably against each other, in property possessions etcetera in their names or control.

15. Finally, the husband sought a dismissal of the child support application.  I have accommodated that later order, although it was done on the basis set out above, that is not having made a judicial determination on the merits as to that application.  It may well be something that flows from any future child support applications or proceedings.

16. As the wife was not pursuing property orders and would only pursue orders under the Child Support (Assessment) Act 1989 (Cth) if the husband’s property application was successful, I determined at the commencement of the proceeding that the husband should be treated as the applicant and the wife to be treated as the respondent.

BACKGROUND

1. The wife is aged 48.  She works as a casual teacher.  She deposes that she earns about $1,038 per week in her business.  Earlier in the proceedings she had deposed that she was earning about $1,600 per week.

2. The wife has a capacity to earn that $1,600 per week and perhaps more, although that must be seen in the light that she has the sole parental responsibility for the parties’ children and has little chance of receiving meaningful child support from the husband, given his history in that regard since shortly after separation.

3. The parties have two children: S aged 15 (‘the elder child’) and L aged 13 (‘the younger child’) (collectively ‘the children’).  They live with the wife.  The elder child does not see the husband and the younger child spends limited time with him.

4. As such, I am satisfied that the wife has the primary care and has the physical, psychological and financial responsibility for the children.

5. There is no evidence that the wife is other than in good health, apart from the stress of these proceedings and the husband’s aberrant financial behaviour.

6. The husband is aged 49.  He was a successful businessman.  He owned his own business for a period of time and effectively that business was paying him, or the family, between $230,000 and $250,000 per year over a number of years between 2015 and 2017.  He was subsequently employed for a short period of time allegedly as an employee of a company and was paid $75,000 a year.  

7. Counsel for the husband asserted, in his final submissions, that the Court could conclude that the husband could earn $50,000 per year.  Given the evidence before me and based on the material to which I refer in these reasons, I am satisfied that the husband has the capacity to earn at least $200,000 per year as a sales facilitator and/or manager.  Given his association with a company or business set up by his sister, Ms U, (‘the husband’s sister’) it is more likely than not that the husband does operate a business and earns income which he fails to disclose. 

8. The parties met in 1996 and married in 2001.  At that time the husband was involved in the sales business and the wife worked for V Company in hospitality.

9. Before they married the parties purchased a property in Suburb X and I am satisfied that the wife contributed $40,000 from her savings to that property.  This was a contested fact however, the wife gave clear and concise evidence and I accept her reliability in that respect.

10. The husband asserted that he contributed $80,000 to that property.  Given the state of the mortgages and my reservations about his evidence, I am not convinced that he contributed that amount.  He may have put in some amount of money, however it is unclear how much.  I am satisfied that it was much less than $80,000.  Given the arithmetic around the purchase, including the amount of the then mortgage and the advance of $40,000 from the wife his contribution is likely to be less than $40,000.

11. In 2003 the parties purchased a property at Suburb T which they sold about one year later.  The parties’ elder child was born in 2004.  At the end of that year and early into 2005 the parties lived rent free at the wife’s parents’ home for about four months.

12. The parties purchased a home in Suburb D in April 2005. 

13. In April 2006 the husband set up a business in the form of a proprietary limited company (‘E Pty Ltd’). Initially it was with another person, who was later bought out. 

14. The same year the parties’ younger child was born. 

15. In 2006 the wife took a voluntary redundancy from V Company and she received payment of about $39,000.  The wife says, and I accept, that she provided $34,500 of that money to the husband, who applied it to the E Pty Ltd business.

16. In 2007 the husband had a lottery win of $63,239.  His counsel asserts this should be taken as a contribution made solely by him.  I disagree.  The parties had been married for about six years at that time and had both contributed monies to the marriage in various ways and forms.  It was a bounty from the use of matrimonial funds.

17. In 2012 the husband purchased his then business partner’s half share in E Pty Ltd.  The former partner was paid $250,000 by the husband at that time.  I am satisfied that the business had a value at that time of $500,000.

18. In the same year the husband established a family self-managed superannuation fund (‘the super fund’).  The wife, at the husband’s request, rolled over her V Company superannuation funds of about $119,539 into the super fund.  The husband rolled $169,226 from his industry fund into the super fund.

19. In 2015 the parties sold their property at Suburb D and using those proceeds the wife purchased a property in C Street.  In that year, at about the same time, the wife deposited a further $205,100 into the super fund.

20. Over the years that followed the creation of the super fund the husband illegally and improperly withdrew all of those funds from the self-managed super fund without the wife’s knowledge or consent.  The final withdrawal of the funds by the husband from that super fund took place in September 2017, shortly after separation. 

21. The husband asserted that he applied the funds to his business.  The husband provided no meaningful, independent or reliable evidence and/or documentation to show how those funds were applied and/or what use was made of those funds.

22. The husband asserted that he took these funds on the advice of his book-keeper or accountant.  Neither of those persons were called to give evidence and no documents were provided.  Given my significant concerns about the reliability of the husband’s evidence, I do not believe him nor do I accept that he had acted on such advice.  I am satisfied that his removal and expenditure or hiding of these funds was, at best, reckless or wanton.  He hid this behaviour from the wife.  She first discovered the emasculation of the super fund by accident in late 2017.

23. In 2015 the parties began completing renovations on the C Street property.  Some of this was funded out of E Pty Ltd and given that there was apparently no documentation about advances made by the husband to the business, whether from the super fund or otherwise, the liquidators of E Pty Ltd sought and obtained funds from the wife on the sale of C Street.

24. The husband asserts that in late 2016 his psychologist and family friend, Ms JO, recommended that he sell his business due to mental health concerns. The husband did not inform the wife of this recommendation nor did he adduce evidence of any professional business or legal advice about this course which he asserts he subsequently adopted.

25. It is significant that the husband adduced no objective evidence as to his mental health concerns.  Ms JO did not provide an affidavit.  No reports from her were tendered in evidence in the hearing before me.

26. I accept the wife’s evidence that in January 2017 the parties’ children commenced attending a private school on Sydney’s North Shore.  The wife had asked the husband (at the time the children were enrolled) whether they could afford the expense of the private school fees.  Despite the asserted advice from Ms JO, the husband assured the wife that they could afford this expense and the wife accepted and relied upon that assurance.  The children were enrolled in the private school.

27. From then until February 2018, the husband made payments, with various descriptions, to pay the children’s private school fees.  He continued to assert that the children should attend this private school at least until the commencement of 2019.

28. The wife has, with the assistance of her father, paid school fees from February 2018 to date and I am satisfied that these fees totalled about $100,000. 

29. The husband asserted that he withdrew his support for the children to attend private schools sometime in 2019.  Senior counsel for the wife called for a letter in relation to that change of the husband’s permission.  No letter was produced and I am satisfied that the husband’s position about not paying the children’s private school fees only became apparent with the filing of his trial affidavit[5] (‘the trial affidavit’) in December 2019 or during the hearing in January 2020.

    [5] Affidavit of husband filed 3 December 2019.

30. I have read and accepted the wife’s evidence in relation to the children attending a private school.[6]

    [6] Affidavit of wife filed 29 November 2019 paragraphs 110 to 121.

31. On 30 April 2017 or 1 May 2017 the parties separated under the same roof.

32. On 6 June 2017 the husband transferred his shares in E Pty Ltd to his brother, Mr B Baillieu (‘the husband’s brother’).  This was done without the wife’s knowledge or consent and was done six weeks after separation, allegedly pursuant to advice of Ms JO.

33. The husband has produced no meaningful documents in relation to that transfer.  He could not explain what the circumstances were in relation to loans or monies allegedly owed by him to his brother.   Further, the husband’s brother did not give evidence in relation to this transaction.

1. On 30 August 2017 the husband sought from the wife $75,000 as against the family home, allegedly for stock for the business.  This was a deceitful assertion by the husband in circumstances where he had allegedly sold the business.  On his evidence, he had no equity in the business and he was an employee of E Pty Ltd.

2. The husband prepared an agreement to repay the money, asserting that the $75,000 was a loan to the business and he agreed to pay back that money to the wife in full.[7]

   [7] Wife’s tender bundle (Exhibit E5) pages 502, 503, 504 and 505.

3. I am satisfied that at this stage the wife was unaware that the business had been purportedly sold and was unaware that virtually all of the monies from the super fund had been taken by the husband.  The husband deceived her in selling the business, if he had in fact done so, and misappropriating the superannuation funds.  

4. It was only in December 2017 the wife attended a bank and discovered that the super fund had a balance of $500.  Soon thereafter, on 9 March 2018, she commenced these proceedings and attempted service upon the husband, initially unsuccessfully.  At this time the husband had instructed solicitors, but they had no instruction to accept service.  I am satisfied that the husband was avoiding service whilst he continued with his course of conduct in transferring the assets of the business and having E Pty Ltd placed in the hands of liquidators.

5. In the same month the husband’s brother purportedly sold the assets of E Pty Ltd to G Pty Ltd, who commenced paying the husband a wage of $1,500 per week.  G Pty Ltd was controlled by Mr JN, who is brother of Mr JQ and the husband’s psychologist Ms JO.  Mr JQ is or was a close friend of the husband.  

6. Shortly after the sale of the assets of E Pty Ltd to G Pty Ltd, E Pty Ltd went into liquidation and P Firm were appointed as the liquidators (‘the liquidators’).  In its first letter to creditors the liquidator said they were investigating whether the assets of E Pty Ltd were sold at a fair market value.[8]

   [8] Wife’s tender bundle (Exhibit E5) pages 529 onwards.

7. It is significant to note that in its report of 19 December 2018 the liquidators considered the assets sale agreement to G Pty Ltd and they formed a view that the assets were ‘not sold at market value’.[9]  This view was seemingly reiterated in the report by the liquidators to the creditors on 9 July 2018, where it was also said:-[10]

   2. It is important to note that it is not only a current Director of [E Pty Ltd] that owes duties to [E Pty Ltd] but any persons who have acted as a Director or given instructions to a Director on how to act, may be deemed as a shadow Director.  Accordingly, a previous or Shadow Director [the husband] may also be liable (for the relevant period) for an insolvent trading claim if it is determined that [E Pty Ltd] incurred debts at the time that [E Pty Ltd] was insolvent. 

   3.In this regard [the husband] cased (sic) to be Director of [E Pty Ltd] on 16 June 2017 but remained an employee of [E Pty Ltd] and continued to be involved in the day to day management of [E Pty Ltd] including the disposal of assets and payments of creditors.  Accordingly, on this basis we believe that [the husband] may have been a shadow Director of [E Pty Ltd]. It is significant to note that the liquidators formed the view that whilst the husband ceased to be a director of [E Pty Ltd] in June 2017, he continued to be involved in the day to day management of [E Pty Ltd] including the disposal of assets and payment to creditors.  Accordingly, they were of the view that the husband may have been the shadow director of [E Pty Ltd].

   [9] Ibid at page 570.

   [10] Ibid at page 619.

8. None of the details of these transactions were made known to the wife in a timely manner.  The wife joined the receivers in the proceedings, incurred legal costs of her own, legal costs of the liquidators and was subject to a claim against her.  The liquidators had discovered an amount of $157,029 of company funds that were used for renovation work on the wife’s property.  The wife eventually settled that claim by payment of $70,000 out of part of the proceeds of sale of C Street to the liquidators.  The husband had agreed to pay an additional $15,000, which has not been paid by him.

9. The parties’ marriage was dissolved in late 2018.

10. C Street was sold for $2.8 million dollars in March 2019 and $500,000 of that sum was paid into a controlled money account.  The $70,000 was subsequently paid from that sum to the liquidators.

THE EVIDENCE

1. The wife relied upon the following documents:-

   (a)her Further Amended Application filed 29 November 2019;

   (b)her Affidavit filed 29 November 2019 (‘the wife’s trial affidavit’);

   (c)her Financial Statement filed 29 November 2019; and

   (d)an Affidavit from her father, Mr W, filed 29 November 2019.

2. In addition the wife tendered various documents to which I have, or will, allude in these reasons.

3. The husband relied upon the following documents:-

   (a)his Response to an Initiating Application filed 11 April 2018, although the orders he sought were set out in his counsel’s case outline;[11]

   (b)his Affidavit filed 3 December 2019; and

   (c)his Further Amended Financial Statement filed 3 December 2019.

   [11] Exhibit E2.

4. Significantly the husband did not file any affidavit material by his parents, as to the alleged debts to his brother, his psychologist Ms JO, his accountant or book-keeper.

5. Despite being the sole director and shareholder of E Pty Ltd until at least June 2017 the husband disclosed no meaningful financial records of that corporation.

6. During the course of cross-examination of each of the parties they were taken to previous financial statements and affidavits filed by them and I have had regard to those documents insofar as they were the subject of the cross-examination.

7. Each of the parties filed a case outline.  I have previously referred to that of the husband, the wife’s case outline was tendered in evidence.[12]

   [12] Exhibit E1.

THE HUSBAND

1. In his Financial Statement filed 11 April 2018 the husband asserted that he worked for G Pty Ltd and that he had worked for that company for twelve years and one month.  This was the company set up by Mr JN and normally one would anticipate this was simply an oversight.  I accept that the husband worked for and or controlled E Pty Ltd and G Pty Limited for about 12 years.

2. This affidavit was filed at a time when significant transactions were going on.  I am not satisfied that this was an oversight.  I am satisfied, on balance, that this was part of the husband’s deception in terms of the various transactions which he was undertaking without the wife’s knowledge or consent.

3. When cross-examined about E Pty Ltd the husband agreed that he was essentially the sole director of that company for about five years prior to separation and that his brother worked for him.  The husband’s brother had no experience in running companies.  The husband conceded that Mr JN’s brother, Mr JQ, had been a very close friend of his and that his sister Ms JO was his psychologist.

4. He said Ms JO had treated him for ten years, although as discussed elsewhere none of the J Family filed any affidavits in these proceedings.

5. The husband was taken to his affidavit in relation to earlier interim proceedings and the property at Suburb X.  He asserted that the property was his property and had a net profit of about $300,000 which he sought to assert was wholly contributed by him.  This was false evidence by the husband.

6. In this respect the husband had failed to make full and frank disclosure to Her Honour Justice Rees at the interim hearing in May 2018 given that the property was purchased in joint names with the wife, that it was subject to a substantial mortgage and that the wife paid significant monies towards the acquisition of this property.

7. From the wife’s documents it was clear that Suburb X was purchased in joint names for $432,500 and stamp duty of some significant amount was paid.  The amount secured to purchase the property was a loan of some $420,000.[13]

   [13] Exhibit E5 wife’s tender bundle pages 3 to 14.

8. The husband’s answers in relation to the $80,000 which he asserted that he contributed were equivocal and I formed the view that he was not being frank in those answers.  He eventually accepted that the wife paid in about $40,000.

9. The husband was cross-examined in relation to the income of the business as set out in his trial affidavit.  The joint income of the husband and wife in 2015 was about $239,000, in 2016 it was $329,000 and in 2017 it was about $247,000.  I accept that it was a highly profitable business and that the husband had, with his sales skills, a capacity to earn between $230,000 to $250,000 per year.

10. The husband asserted that he borrowed monies from his parents to assist with the business.  There was no evidence of loan due by E Pty Ltd to the husband’s parents in the various liquidator’s reports and there was no evidence in these proceedings provided by the husband’s parents.

11. There are no documents recording those loans.  I am not satisfied that loans were made and if made I am not satisfied that they were not repaid.  As such, I do not intend to treat any loans alleged by the husband from his parents as liabilities, except the sum lent for legal costs.

12. The husband was cross-examined in relation to the production of the financial statements by E Pty Ltd.  He acknowledged that he prevaricated in relation to the answers and was unable to answer questions in respect to how the monies from the superannuation fund were treated.

13. It is significant that in his affidavit filed 11 April 2018[14] the husband acknowledged that he took the money from the super fund and did not tell the wife, and said that it should be taken into account in the adjustment of property as between he and the wife on final hearing.  The husband was questioned about how this could be taken into account.  He prevaricated, obfuscated and gave no clear answer.

    [14] Paragraph 20.

14. The husband was cross-examined in relation to the sale of the business to his brother.  He did not produce evidence from his brother or documentary evidence as to the money outstanding.  Significantly the husband asserted that there was some $200,000 due to his brother, but seemed to have little regard to the more than $500,000 due to the super fund.

15. The husband asserted, disingenuously, that the transfer of the business would not change the parties’ financial circumstances.  That was wholly untrue.[15]

    [15] Husband’s trial affidavit paragraph 41.

16. He asserted that the business was unprofitable and yet he asserted that it was making significant profits in terms of wages paid to himself and his wife.  He produced none of the business records or the documents to support any of those assertions.

17. The husband’s evidence in relation to the $75,000 which the husband said he persuaded the wife to give them from their savings was perverse.  There was no reason, if his evidence was true, for him to pay $75,000 to his brother.  Yet he went to the wife and asserted it was for the business.  He asserted that there ought to be a draw down and the wife, perhaps naively, agreed.

18. The husband employed no business brokers and did not seek the advice of his accountants in relation to the sale of the business.  It seems to have been done without documentation apart from a share transfer with no consideration marked on it.  No steps were taken in relation to protecting the parties in respect of loans clearly made by them.  No steps were taken in relation to the securing of the $75,000 loan to E Pty Ltd.

19. The transaction has all of the hallmarks of a sham and the husband has produced no documents in support of the factual assertions which he makes.

20. It is indicative of the husband being a ‘shadow director’ of E Pty Ltd that he deposes in his trial affidavit[16] that he had a meeting with Mr R of P Firm.  This is more indicative of someone running the business rather than not running the business.  The husband’s answers to questions in relation to this meeting were far from satisfactory.  He prevaricated and I am satisfied that he fabricated much of his evidence. He is not a witness of the truth. 

    [16] Ibid paragraph 51.

21. All of the machinations in relation to the sale of the business to the husband’s brother, the sale of the assets to G Pty Ltd and the winding up of E Pty Ltd were done absent to the knowledge of the wife.  The husband would not concede that this was in any way improper.

22. The husband said he had no recollection of the sale of the business being regarded as likely undervalued or of him being a shadow director.  I do not believe him.

23. The husband was cross-examined in relation to credit cards and their reduction at the end of each month.  He would not concede that they were reduced to nil and would not concede they were business credit cards.  Given that his evidence was contrary to the documents I am not satisfied that the husband was frank in his evidence in relation to those credit cards.[17]

    [17] Exhibits E8, E9, E10 and E11.

24. In July 2018 the husband’s sister set up a business called NN Company.[18]  The husband conceded that he had business cards which he used for that business with his personal mobile telephone number attached to it.  Further, he conceded that on a ‘Google’ search of that business his telephone number came up as a representative. 

    [18] Exhibit E7.

25. The husband has said he has not applied for any jobs since his employment was terminated in mid-2018 and that he was looking to start another business, but had earned no income.  He denied that he was involved in this company in any meaningful way apart from assisting his brother and his sister Ms U. I am satisfied that such assertion is fabricated.

26. The husband was required to produce his telephone records.  He did not produce the records.  The excuse provided by the husband was that this was because the telephone was a pre-paid telephone.  I do not believe him that it is not possible to obtain details of his telephone use, which number he seems to have been using for some time.  He obfuscated in his answers, and he dissembled in this regard in an endeavour to exclude evidence, which was likely contrary to his interests.   

27. The extent of the notice to produce was contained in Exhibit E8 and I am satisfied there was no adequate response to that notice nor was there any legitimate excuse for that failure to disclose.  

28. The husband has significant expertise in the sales industry over many years.  He has made no meaningful endeavours to obtain employment and pays child support at a minimal rate.  There is some evidence that he is engaged in this business in his sister’s name.  He was cross-examined as to the priorities of liabilities as between children and other debts.  He refused to answer those questions.

29. The husband denied that he took significant items of furniture and yet his own documents describe the division of furniture and furnishings.[19]

    [19] Exhibit E4 pages 159 to 161.

30. What do I make of the husband’s evidence? 

31. He prevaricated, he obfuscated and at times his answers were simply dishonest.  Examples of that were in his letter to the Child Support Agency[20] where he asserted falsely the circumstances of the winding up of and the liquidation of E Pty Ltd.  The husband asserts that he is a victim of domestic violence, although no evidence of that was adduced in these proceedings.  In a letter tendered as Exhibit E15 the husband said that he cannot work because he is on a mental health plan.  That is different to the evidence which he asserts to this Court; he asserts that he is seeking court orders in relation to his sons which is just untrue.

    [20] Exhibit E15.

32. The husband’s evidence in his affidavit was self-serving and wholly unreliable.  He is not a witness of honesty.

THE WIFE

1. The wife gave evidence in terms of her trial affidavit, which was well set out. She filed an updated statement of her financial circumstances.  She was cross-examined in relation to her employment as a teacher and she conceded that she had been earning a larger income in preceding years.  However, she said that given the present needs of the children she is now working at a level which she can manage at this stage.  In cross-examination it seemed that the wife was being criticised for not working longer hours.  I am satisfied the wife is doing the best she could in the most difficult of circumstances that she found herself.  She has the capacity to increase her income, but that will depend on the needs of the children and the need for caring for and parenting them over the next few years.

2. She said that it is possible that she could earn more in the future. The wife is qualified as a teacher and I am satisfied she can earn a modest income of up to $75,000 or so per year.

3. In her trial affidavit and oral evidence the wife provided a chronology of the parties’ relationship and financial history.  Much of this was supported by documentation, such as that relating to acquisition, mortgage and sale of real property.  Consequently, I am satisfied that this is an accurate account, including the acquisition and sale of property.

4. I am satisfied that the wife received her redundancy payment of about $39,000 and applied about $34,500 of that sum to the husband’s business.

5. I accept the wife’s evidence in relation to the provision of monies from her parents, the second hand motor vehicle and a cheque for $50,000.  I accept her evidence of the gift that she received from her grandmother’s estate.  I also accept that the family received financial assistance from the wife’s parents, including a loan which turned into a gift of $10,000 in 2012, as set out in her trial affidavit and in her oral evidence.  Much of this was supported by the evidence of her father, which I am satisfied was likewise reliable.  

6. I accept that the parties lived rent free in the wife’s parents’ home for a period of about four months.

7. I accept that the wife had no knowledge of the withdrawal of the super funds until late 2018.  It must have come as a terrible surprise for her.

8. It seems uncontroversial that the husband does not see the elder child at all and only sees the younger child two or three times per month.  This means the wife has carried most of the responsibility for the care of the children since separation and will continue with that responsibility into the future.  I have had regard to this in respect of contributions as to the past and other factors into the future. 

9. The wife gave evidence that she needed to borrow monies from her father to assist her in surviving following the breakdown of the marriage.  To that end she entered into a loan agreement with her father.[21]  That loan agreement provided for an interest rate of over 8 per cent.  The wife was cross-examined in relation to that and there was some confusion as to whether this was the general loan or the housing loan.  It was clear it was in relation to the general loan.

   [21] Exhibit E5 the wife’s tender bundle page 520 onwards.

10. The wife was cross-examined in relation to the proceeds of sale of the C Street property.  The wife’s affidavit sets out in detail how that money was borrowed and spent, including bank statements and other records.[22]  Perversely the husband refused the wife’s request to change the loan from a principle and interest loan to an interest loan to reduce the impact on her financially.  This meant that the wife needed greater levels of support from her father, which was provided.  I have had regard to this in terms of the wife’s financial contributions. 

    [22] Wife’s trial affidavit paragraphs 118 to 126.

11. I had made an order in March 2019 in relation to the proceeds of sale.  I directed that $500,000 be retained in a trust account.  I gave permission for the balance to be paid to the wife.  This enabled the re-payment of the $312,881 loan to the wife’s parents, $70,000 was paid to the liquidator and some funds were paid to the wife.  I am satisfied with the reliability of her explanation as to the application for those funds.

1. The wife has a mortgage and another loan from her parents which I am satisfied represents money genuinely advanced to her.

2. There was some argument as to furniture and I have dealt with that elsewhere.

3. For the purpose of this hearing I have treated the piano, jewellery and artwork as having a value of $19,500.

4. The wife gave evidence clearly and frankly, and made concessions against interest such as those relating to her income earning capacity.  She was not in any way impeached in terms of her evidence.  She was an impressive witness who, on my assessment of her, was endeavouring to be truthful and factual.  I have treated her evidence as being cogent and reliable. 

THE WIFE’S FATHER

1. The wife’s father gave evidence in accordance with his affidavit filed

   
   

   29 November 2019.  His evidence included the following:-

   (a)He advanced $311,881.51 to the wife, including mortgage repayments of $127,904.  There is no issue that this was paid and there is no issue that had this not had been paid there would have been a greater payment out on the proceeds of sale of the house.  I accept that these were legitimate and reasonable borrowing by the wife from her father;

   (b)He paid private school fees and household expenses of $100,000.  The wife was cross-examined as to her household expenses.  It was established though cross-examination that in 2018 and 2019 the wife had paid or her father had paid about $100,000 in school fees, which she could ill afford given her income;

   (c)He paid legal fees in the sum of $71,007.24.  I accept that this amount was paid towards legal fees.

   (d)He real estate agent’s fees in the sum of $10,039.87.  I accept that if this had not been paid by the wife’s father it would have been taken out of the proceeds of sale in any event; and

   (e)He paid for tradesmen in the sum of $2,930.40.  

2. There was no serious challenge to the existence of those payments.

3. In relation to the add-back of legal fees, I will deal with this later in these reasons. However, I am satisfied that it was a legitimate loan which was paid back and I also accept the evidence of the wife’s father that he did not charge interest.

4. With the disposal of E Pty Ltd, the loss of the super fund and the husband being unemployed and providing virtually no realistic child support, it was eventually necessary to sell the home.  The wife needed a home for herself and the two children and her father was generous enough to lend her significant funds, which enabled the wife and children to manage their financial lives from shortly after separation until the hearing of this proceeding.  It was a significant contribution.

5. The interest rate on the housing loan was 5 per cent reducible to 3 per cent.  I am satisfied that the loan arrangements are as set out by the wife and her father.

6. The wife’s father deposed about a number of pre-separation gifts and loans which were invariably gifts.  He gave evidence of the payment by him towards legal fees, mortgage repayments, school fees, household expenses, real estate fees and tradesmen.  He was not in any significant way challenged in cross-examination.

7. He lent the wife some $311,881 which was repaid to him as he needed it for his ongoing financial support.  He did not charge the wife interest.  He also lent the wife money in terms of purchasing the Suburb AA apartment in the sum of about $1,394,000.  He made it clear this money needs to be repaid to him and he expects his daughter to do so. 

8. The wife’s father was an impressive witness; he was careful, thoughtful and was, in many respects, a breath of fresh air in the Court.

9. I accept his evidence as being reliable.

THE LAW RELATING TO PROPERTY

1. The approach of the High Court in Stanford & Stanford (2012) 247 CLR 108 is that the Court, having determined the legal and equitable interests of the parties, needs to consider whether there ought to be property orders at all given the parties’ particular circumstances.

2. The High Court said under s 79(2) of the Act:-[23]

   … a court shall not make a property settlement order unless it is satisfied that it is “just and equitable” to do so.

   [23] (2012) 247 CLR 108 at page 112.

3. The High Court said in Stanford:-[24]

   It will be recalled that s  provides that ‘[t]he 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’. Section  prescribes matters that must be taken into account in considering what order (if any) should be made under the section. The requirements of the two sub-sections are not to be conflated. In every case in which a property settlement order under s  is sought, it is necessary to satisfy the court that, in all the circumstances, it is just and equitable to make the order.

   [24] Ibid at pages 120 to 121.

4. The High Court then enunciated the three fundamental propositions:-

   First, it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to common law and equitable principles, the existing legal and equitable interests of the parties in the property. So much follows from the test of s. itself, which refers to ‘altering the interests of the parties to the marriage in the property’ (emphasis added). The question posed by s. us thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order.

   Second, although s. confers a broad power on a court exercising jurisdiction under the Act to make a property settlement order, it is not a power that is to be exercised according to an unguided judicial discretion.

   …

   Because the power to make a property settlement order is not to be exercised in an unprincipled fashion, whether it is ‘just and equitable’ to make the order is not to be answered by assuming that the parties’ rights to or interests in martial property are or should be different from those that then exist. All the more is that so when it is recognised that s of the Act must be applied keeping in mind that ‘[c]ommunity of ownership arising from marriage has no place in the common law’ [Hepworth v Hepworth[1963] HCA 49]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be ‘decided according to the same scheme of legal titles and equitable principles as given the rights of any two persons who are not spouses’ [R v Watson; Ex parte Armstrong[1976] HCA 39]. The question presented by s  is whether those rights and interests should be altered.

   Third, whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s . The power to make a property settlement order must be exercised ‘in accordance with legal principles, including the principles which the Act itself lays down’ [R v Watson; Ex parte Armstrong[1976] HCA 39]. To conclude that making an order is ‘just and equitable’ only because of and by reference to various matters in s , without a separate consideration of s , would be to conflate the statutory requirements and ignore the principles laid down by the Act.

5. I am satisfied that it is appropriate for me to consider an order for the adjustment of property as between these parties, having regard to the comments of the High Court in Stanford & Stanford (supra) and given the circumstances of these parties, their relationship, their contributions as I have addressed them in these reasons, and the way their property, including superannuation, is distributed at the present time.  Given the comments that follow in these reasons, I am satisfied that it may have been appropriate for the Court to exercise jurisdiction and exercise its power to make adjustment of property as between the parties but having regard to the broader principles I am satisfied that it would not be just and equitable to make and property order as sought by the husband or otherwise. 

THE PROPERTY POOL

1. The pool of property is made up as follows:-

Monies held in Controlled Money Account (agreed)	$433,000.00
Wife’s apartment at Suburb AA (agreed)	$1,330,000.00
Husband’s funds in ANZ Bank account (agreed)	$60.00
Funds in husband’s Westpac Bank account (agreed)	$13.00
Wife’s BB bank account (agreed)	$154,630.00
Wife’s V Company shares (agreed)	$9,923.00
Wife’s CC Company shares (agreed)	$7,644.00
Wife’s motor vehicle 1 (agreed)	$3,000.00
Husband’s motor vehicle 2 (agreed)	$700.00
Wife’s contents (determined)	$5,000.00
Husband’s contents (agreed)	$4,000.00
Wife’s pianos, jewellery and art work (determined)	$19,500.00
TOTAL PROPERTY	$1,967,470.00

1. The parties have the following agreed and disputed liabilities.

Husband’s Latitude personal loan of $23,000 - to be ignored	0.00
Husband’s Westpac Visa of $12,713 – to be ignored	0.00
Husband’s Westpac MasterCard $9,592 – to be ignored	0.00
Husband’s Westpac Earth Black $59,296 – to be ignored	0.00
Husband’s ANZ Visa $4,863 – to be ignored	0.00
Husband’s CBA MasterCard $5,000 – to be ignored	0.00
Husband’s ATO liability - agreed	0.00
Husband’s alleged liability to DD Pty Ltd Landlord - District Court claim regarding personal guarantee $50,000 – to be ignored	0.00
Husband’s alleged liability EE Pty Ltd - Local Court claim regarding personal guarantee - agreed	0.00
Husband’s alleged loans from his parents for school fees $10,000 – not established	0.00
Husband’s recent alleged loans from parents $50,000 – established	$50,000.00
Debt of husband to GG Lawyers costs $55,000 – to be ignored	0.00
FF Bank Leasing Guarantee $16,000 – to be ignored	0.00
Suburb AA Mortgage between wife and her parents	$1,391,417.00
Total	$1,441,417.00

1. In addition the husband has a superannuation entitlement of $1,700.  Given this modest sum, I had regard to it as part of the non-superannuation property.

2. In relation to the furniture and furnishings, I refer to earlier comments made in these proceedings and to the evidence of the division of property referred to in the husband’s documents being a letter from the wife’s former solicitor.  There was no credible evidence of the value of the wife’s furniture being $30,000 and it was not clear whether that was on the basis upon which the husband came to that figure.  Accordingly, I accept the wife’s assertion against interest that the value of the furniture was $5,000. The wife conceded the value of the pianos, jewellery and artwork at $19,500, I accept that assertion.

ADD-BACKS

1. Normally there would be an add-back or some adjustment in relation to the $516,345 taken from the super fund by the husband.  If I had decided to adjust property I would have added that sum back, given the evidence, the findings and the husband’s material non-disclosure.  Similarly, I would have added back the $75,000 agreed to be paid back by the husband being the August 2017 loan. 

2. The husband seeks an add-back in terms of the monies paid to the wife’s parents from the proceeds of sale being that referred to earlier.  I am satisfied that those monies were properly used in the day to day expenses of the wife.  The only difference is the question of legal costs.  

3. The husband asserted that there was money expended by the wife from the proceeds of sale of $195,000.  I am not satisfied that this is an accurate figure and even if it was the wife has been caring for and supporting the children and maintaining homes for them with virtually no support from the husband over a number of years.  The wife’s situation was exacerbated by the husband’s mendacity, that he was deceitful about his misappropriation of funds from the super fund, his disposal of E Pty Ltd and its assets, his waste and the loan of $75,000.  She needed competent advice and legal representation and as such the wife has needed to expend money on legal costs.  In that regard the wife asserts that she spent about $151,000 in legal costs and has another $20,000 to pay.

4. Much of that $151,000 has been expended tracking down what the husband has done with items such as the super funds, the sale of the business, the disposal of the assets of the business and the winding up of the E Pty Ltd.

5. I am not satisfied that in all of the circumstances of this case there ought to be any add-back with regard to that sum.  Similarly, the husband seems to want an add-back in relation to the $70,000 payable by the wife to the liquidator.  I cannot understand the nature of this argument.  This was money that arose as a result of the husband’s reckless, negligent or wanton dealing with the business and the super funds.  I will not be adding that sum back.

CREDIT CARDS AND LOANS

1. The husband claims liabilities for the Latitude personal loan of $23,000, the Westpac credit card of $12,713, the Westpac MasterCard of $9,592, the Westpac Earth Black Card of $59,296 and the husband’s ANZ Visa of $4,863 and his CBA MasterCard of $5,000.

2. The wife does not accept that the credit cards are personal credit cards or for personal expenses.  The credit card statements for those credit cards previously provided by the husband appear to be for business expenses and have previously been paid by E Pty Ltd.  The wife disputes the quantum and characterisation of the debts.  She contends that they should be excluded from the balance sheet.

3. Most of these accounts were paid out during 2017 and it would appear to me to be post separation expenditure. 

4. The onus was on the husband to establish these liabilities, and he failed to do so.  Given the concerns I have of the husband’s reliability and disclosure, given the concerns about payment out to family and friends to which I have earlier alluded, I would not have allowed any of those liabilities claimed by the husband.  The husband’s evidence in relation to the credit cards was significantly impeached in the cross-examination by senior counsel for the wife.  How they were incurred and for what purpose remains opaque.

5. The husband claims there were loans from his parents for the children’s school fees and recent loans of some $60,000.  I accept the existence of the loan from his parents of the $50,000.  Otherwise, for the reasons I have articulated earlier, that is, that the evidence supporting these assertions was not provided by his parents, there was no reliable documentary evidence of these loans.  The only assertion is the evidence of the husband, and I have serious concerns about the reliability of that evidence.  The onus was on the husband to establish these liabilities, and he failed to do so.  I am not satisfied that they exist, and if they do exist, I am not satisfied that they are accurate.  I will not consider those loans as liabilities. 

6. The husband incurred legal costs with GG Lawyers in litigation and claims.  The onus was on the husband to establish these liabilities, and he failed to do so.

7. I do not accept that he has a liability to EE Pty Ltd, as both he and the wife assert it is nil.

8. Most of these debts, if they exist, arise out of his reckless, negligent or wanton behaviour.  In his rush to get out of the business and hide it from the wife, the husband caused himself enormous problems.

9. Given the circumstances outlined in these reasons and given the evidence I am not satisfied that I should have regard to those figures.  I make similar comments in relation to the FF Bank Leasing Guarantee liability to the husband in relation to the $16,000 he claims. 

10. I accept that the wife was entitled to pay the Latitude loan of $26,700 out of the proceeds of sale of the C Street property.

11. The husband has arrears of child support of some $17,000.  I have given that no credit in terms of the property settlement submissions.

WASTE

1. The issue addressed by senior counsel for the wife is that the behaviour of the husband has been so disingenuous and dishonest, his approach in gutting the super funds, paying thousands of dollars to relatives and close friends in the shadow of separation or after separation, disposing of the business without the wife’s knowledge and consent, if in fact he did dispose of the business, or the transfer of the business assets to G Pty Ltd and the winding up of E Pty Ltd, are so egregious that undertaking a normal property adjustment under the Act is rendered almost impossible. I agree with this submission.

2. I also accept what Senior counsel for the wife set out the history of the waste when in his case outline submitting:-[25]

   [25] Exhibit E1 paragraphs 11 to 41.

   11.[E Pty Ltd] was incorporated on 26 April 2006. It operated a business known as “[E Business]” at commercial premises in [Suburb HH] and online. [E Pty Ltd] and the enterprise it conducted were initially held and owned equally by the husband and [Mr F]. In 2012, the husband acquired [Mr F’s] interests by way of a vendor finance payment of $250,000.

   12.From 2012, and until the separation of the parties on 1 May 2017, and at all other material times, the husband was the sole shareholder and director of [E Pty Ltd].

   13.The [super fund] was established in 2013. The member entitlements of the husband and the wife in the fund were generated to a combined value of $522,580 from:

   (a)an amount of $288,766 initially contributed by the parties on 25 March 2013 from their respective industry funds;

   (b)a further $205,100 which was paid into the [super fund] on 22 May 2015 following the sale of JJ Street;

   (c)further sums totalling in excess of $30,000.[26]

   [26] Bank Statements for Westpac Account No.s …02 (working account) Statement No.s 1, 11, 12, 14, 15, 16 and 22 and …81 (savings account) Statement No.s 10, 11, 12, 19 and 20.

   14.That the husband caused the [super fund] to loan to [E Pty Ltd] all of the parties member entitlements, such that a total of $524,000 was unlawfully withdrawn by the husband from the [super fund] – absent the wife’s knowledge or consent. ^[27]

   [27] (a) Reasons for Judgment of Rees J 8 May 2018 at paragraph 10 “the Husband acknowledged that he was not entitled at law to utilise the superannuation as he did”, (b) para 20 of the Husband’s Affidavit of 10 April 2018.

   15.The husband conceded this to be an “incorrect action”- and that “this must be taken into account with appropriate adjustments in the finalisation of the property and financial matters between myself and the wife” (H#20).[28]

   [28] Reasons for Judgment of Rees J dated 8 May 2018 at paras 14 and 54 and Husband’s Affidavit 10 April 2018 at #18; H# 39 – “it was wrong”

   16.The husband concedes that these funds cannot be recovered.

   17.That the husband, without the wife’s knowledge or consent, transferred his shareholding in [E Pty Ltd] to his brother on 6 June 2017.

   18.In the absence of the wife’s knowledge as to his disposal to his brother of his shareholding in [E Pty Ltd], the husband acknowledged that he:

   (a)misled the wife into providing an additional $75,000 from the facility secured by mortgage on the property at [C Street, Suburb D] on or about 29/30 August 2017 (H#45,46; W#135-138); and

   (b)advanced those monies to [E Pty Ltd].

   19.The Court is directed to paragraph 10 of the husband’s affidavit dated 16 October 2018 stating that the husband’s brother “asked (him) to pay back some of the money paid by [E Pty Ltd] for renovations to the [C Street] Street property so he can buy stock”; and to H# 45 of his trial affidavit – the husband providing $75,000 to an enterprise that he had 12 months prior thereto unilaterally and covertly disposed of to his brother!

   20.That the wife’s Initiating Application was filed on Friday 9 March 2018.

   21.On the same day, [30 days prior to the liquidation of [E Pty Ltd] [Mr G] met with the husband and [Mr JN], a longstanding family friend of the husband, at the offices of [P Firm] of which [Mr G] and [Mr S] are directors.

   22.The Liquidators further met with the husband on:

   (a)2 July 2019;

   (b)8 July 2019;

   (c)10 July 2019;and

   (d)11 July 2019.

   23.On 9 March 2018, [Mr R] exchanged emails with [Mr S] (See Annexure A to Circular to Creditors of 23/4/18).

   24.On Monday 12 March 2018, [Mr R] exchanged further emails with [the husband’s brother] (Annexure A to Circular to Creditors of 23/4/18).

   25.On Tuesday 13 March 2018, [G Pty Ltd] was incorporated. [Mr JN], the husband’s long-time friend, is named as the sole director.

   26.On Friday 16 March 2018, the [E Pty Ltd] entered into an Asset Sale Agreement pursuant to which the [E Pty Ltd] (at this time yet to enter into liquidation) transfers its trading assets of the [Mr JN] enterprise being [G Pty Ltd] for $19,102.

   27.On 19 March [Mr R] met with [Mr S].

   28.On Friday 23 March 2018, the husband was eventually served with the wife’s Initiating Application. McCabe solicitors filed a Notice of Address for Service.

   29.On 30 March 2018, Baillieu Family Super P/L, the trustee of the [the super fund] was deregistered.

   30.On 8 April 2018, completion of the sale by [E Pty Ltd] (still yet to go into liquidation) of the business to [G Pty Ltd] was effected.

   31.On Monday 9 April 2018:

   (a)the wife’s Initiating Application came before the Family Court for the first time. The husband was ordered to file his answering documents, and was warned that the wife’s application would otherwise proceed on an undefended basis; and

   (b)[Mr R] rang the husband and [Mr A], following which [Mr A], in the presence of the husband, passed a special resolution that the [E Pty Ltd] be wound up in a voluntary liquidation and that [Mr R] and [Mr S] be appointed as liquidators; and

   (c)[E Pty Ltd] went into liquidation.

   32.In a Report to Creditors dated 19 December 2018, [the liquidators] advised creditors that, in their view, the sale of the business [E Pty Ltd] was at undervalue, and that they would be investigating that on behalf of the creditors.

   33.On 10 April 2018, the husband by way of his solicitors disclosed that [E Pty Ltd] was to go into voluntary liquidation – W#160, 161.  This was the day before the matter was listed for an interim hearing in the Family Court - W#162.

   34.The husband’s covert conduct and disclosure failures triggered the wife to attempt to preserve the property of the parties. By way of the wife “in the dark” filing an amended initiating application on 3 May 2018 (W#164) and the matter coming before Justice Rees on 13 May 2018.

   35.The cascading impact or domino effect of his disclosure failures surrounding the predisposition of the sale of the business enterprises prior to the liquidation to his friend (Mr JN’s) wife’s enterprise – the true value of this predisposition is not the subject of evidence in these proceedings – coupled with the cost and expense of defending the claim bought by the liquidators against the husband and the wife. 

   36.In addition to the wife incurring costs in defending the liquidators cross-claim bought in the section 79 proceedings, the wife was required to pay $70,000 from the proceeds of sale of her property at [Suburb D] (the husband contributed $15,000 from his resources[29]) to satisfy the liquidators equitable claim and its claim for costs.  All of these costs were incurred due to the husband’s conduct.

   [29] At the hearing this sum was yet to be paid.

   It is contended, subject to the evidence, that the husband’s disposal of his shares to his brother, and thereafter the disposal of the trading assets of [E Pty Ltd] to [G Pty Ltd] ([Mr JN] and his wife’s entity) was anything but an “arm’s length transaction facilitated by accountants and liquidators” as asserted by his solicitors on his behalf.

   37.T\it (sic) is submitted that both the wife and the Court were robbed of any ability to assess the true value of the business enterprise transferred to [[G Pty Ltd] on 8 April 2018 – the day prior to [E Pty Ltd] going into liquidation.  She and the Court were effectively prevented from making meaningful enquiry, having regard to the husband’s secretive conduct, as to whether [E Pty Ltd] had paid monies to improve the [Suburb D] property or whether [E Pty Ltd] had loaned monies to the husband who had thereafter used some of those funds to improve the property – pivoting the integrity of the liquidators claims against the parties.

   38.The Full Court in Whiterod v Taylor[30] referred to and approved Omacini[31] where it identified three classes of cases as appropriate to notionally add back into the pool of assets, that which the Full Court said “no longer existed”.  These three cases were:-

   2.2.1where the parties have expended money on legal fees (DJM and JLM (1998) FLC 92-816;

   2.2.2where there had been a premature distribution of matrimonial assets (Townsend (1995) FLC 92-569, and

   2.2.3“Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets…..” or “where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets….. which has reduced or minimised their value” per Baker J in Kowaliw (1981) 91-092 at 76,644.

   39.The wife contends that the husband’s conduct identified above falls squarely into the category of waste. Without going further, the value of the waste by way of the conduct identified above is not less than $599,000 – in the range of the current value of the wife’s remaining property.

   40.The concessions made by the husband before Justice Rees and contained in his trial affidavit (H#39 and 46) amount to a concession as to the notional addback of the funds wasted by the husband to the balance sheet.  In the event that such concessions are not maintained at trial, an onus falls on the husband to establish to the requisite degree from the evidence as to why the Court ought permit those concessions to be withdrawn. 

   41.In the event that the waste of the husband is not notionally added back to the pool of property available for adjustment between the parties, quantification of that addback becomes an overwhelming consideration by way of section 75(2) in the wife’s favour.

   [30] (2006) FLC 93-266.

   [31] (2005) FLC 93-218.

1. It would seem to me to be inequitable and unjust to make property orders in this case which would vest any of the remaining property in the husband.

2. Given the husband’s conduct I am satisfied that his application for property orders should be dismissed, subject to any costs applications.

3. I could have achieved and I would have achieved the same result had I have dealt with it and undertaken a property adjustment. If I had added back the superannuation and the $75,000 whether, as an add-back as property, a contribution aspect or an s 75(2) aspect. However, it seems to me clear authority from the High Court in Stanford (supra) and a clear interpretation of the Act that if parties engage in such conduct then they, by their own actions, disentitle themselves from further access to property accumulated during the marriage.

4. Accordingly, I will so order.

I certify that the preceding one hundred and ninety eight (198) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 27 March 2020.

Associate:     

Date:  27 March 2020