Cardoso & Cardoso

[2018] FCCA 2249

FEDERAL CIRCUIT COURT OF AUSTRALIA

CARDOSO & CARDOSO & ANOR [2018] FCCA 2249

Catchwords:
FAMILY LAW – Property dispute – husband bankrupt and Trustee standing in his place – lengthy relationship in which both parties did their best – contributions accessed as equal – consideration of interests of husband’s creditors – wife having ongoing care of son with disability – wife’s earning capacity poor and substantially less than that of the husband – 15 per cent adjustment in favour of wife in respect of future needs – parties improperly applying funds from self-managed superannuation fund – whether those funds should be included in the pool given subsequent dissipation – no application to join ATO – funds not included in the pool.

Legislation:

Family Law Act 1975, ss.79, 75(2)(ha)

Cases cited:

Stanford v Stanford [2012] HCA 52

Applicant: MR CARDOSO

First Respondent:	MS CARDOSO
Second Respondent:	MR HALE AS TRUSTEE FOR BANKRUPT ESTATE OF MR CARDOSO

File Number: DGC 3334 of 2016

Judgment of: Judge Burchardt

Hearing date: 12 July 2018

Date of Last Submission: 12 July 2018

Delivered at: Melbourne

Delivered on: 27 August 2018

REPRESENTATION

The Applicant: In person

The Respondent: In person

Counsel for the Independent Children’s Lawyer: Mr Gardiner

Solicitors for the Independent Children’s Lawyer:	McCormack and Co
Counsel for the Trustee In Bankruptcy:	Mr Arnold

Solicitors for the Trustee In Bankruptcy : Logie-Smith Lanyon Lawyers

DRAFT ORDERS

1. That the Respondent pay to the Trustee (“the Trustee”) of the Bankrupt Estate of Mr Cardoso (“the Estate”) the amount of $35,875 (“the payment”) within 60 days of the date of these Orders (“the date”). 

2. That contemporaneously with the payment:

   (a)The Trustee relinquish all claims the Estate may have to the property situate and known as Property A in the State of Victoria, more particularly described as Certificate of Title Volume (“the Real Property”) and the Respondent retain the property to the exclusion of the Applicant and the Trustee; and

   (b)The Respondent indemnify the Applicant and the Trustee against all expenses of and liabilities in relation to the said property, including Mortgage held with Bank 1 and all rates, taxes and other apportionable outgoings of or with respect to the real property of whatsoever nature of kind.

3. Pending the Respondent making the payment to the Trustee:

   (a)The Respondent holds her interest in the Real Property upon trust pursuant to this agreement;

   (b)The Respondent is restrained from further encumbering the Real Property without the Applicant’s and the Trustee’s prior written consent; and

   (c)The Respondent will pay the mortgage, rates and outgoings with respect to the Real Property as and when they fall due.

4. In the event that the whole of the payment is not made by the date, the parties do all acts and things and sign all documents necessary to sell the Real Property and that the proceeds of sale be applied as follows:

   (a)Firstly, to pay costs, commissions and expenses of the sale;

   (b)Secondly, to discharge the mortgage secured over the Real Property;

   (c)Thirdly, so much of the payment as is then outstanding to the Trustee, save that in the event the proceeds of the sale shall exceed $104,784 (“the equity”) the sum exceeding the equity shall be divided 30% to the Trustee in Bankruptcy and 70% to the Respondent.

   (d)Fourthly, the balance to the Respondent.

5. Pending the sale of the Real Property pursuant to Order 4 above:

   (a)The Respondent have the sole right to occupy the real property, and that during such right of occupation she pay all instalments pursuant to the mortgage and all rates and taxes and like apportionable outgoings of the Real Property as and when they fall due;

   (b)The parties hold their respective interests in the Real Property upon trust pursuant to these Orders;

   (c)Neither party encumber the Real Property without the prior written consent of the other.

6. That liberty be reserved to any party to apply with respect to the terms and conditions of and execution of the sale.

7. That the Respondent shall retain to the exclusion of the Applicant and the Trustee her Motor Vehicle 1, registration number.

8. That the Respondent shall retain the household contents and jewellery at the Real Property.

9. Within 60 days of the date of these Orders, the parties do all such acts and things and sign all such documents required necessary to dissolve the Cardoso Family Superannuation Fund (“the Fund”) and distribute the Applicant’s and Respondent’s remaining respective member benefit entitlements, if these are any, to each of them.

10. Any reasonable costs incurred in relation to the dissolution of the Fund, including accounting advice, are to be shared equally between the Applicant and the Respondent. 

11. In the event the Fund is not dissolved within 60 days of the date of these Orders, the Applicant and Respondent do all such acts and things and sign all such documents, including but not limited to the signing of Trustee minutes, rollover requests and related documents, that may be necessary to rollover or transfer the parties’ member benefit entitlements in the Cardoso Family Superannuation Fund to another complying superannuation fund of the parties’ respective choosing.

12. That once the parties have complied with Orders 10-12 inclusive hereof, the Applicant and Respondent do all such acts and things and sign all documents necessary to resign as Directors and/or Trustees of the Cardoso Family Superannuation Fund at the parties’ shared, equal expense.

13. That unless otherwise specified in these Orders, and save for the purposes of enforcing payment of any monies due under these or any subsequent Orders:

    (a)Each party be solely entitled to the exclusion of the other party to all other property (including choses-in-actions) in the possession of such party as the date of these Orders (the furniture, possessions, and like chattels in the Real Property being deemed to be in the possession of the Respondent;

    (b)Monies standing to the credit of the parties in any joint bank account are to be divided equally between them save as otherwise provided for herein;

    (c)Each party relinquishes to the other all and any claims they may have to any superannuation, long service leave, redundancy, retirement, retrenchment and like benefits belonging to or earned by the other save as set out above herein;

    (d)Insurance policies remain the sole property of the named owner;

    (e)Any joint tenancy either party has in any real or personal property is hereby expressly severed;

    (f)Each party shall be solely liable for and indemnify the other in respect of any liability encumbering any item that party is retaining pursuant to the Orders. 

14. That the parties shall do all acts and things and sign all documents necessary to give effect to the orders made herein.

15. That in the event that either party refuses or neglects to execute any deed or instrument required pursuant to these Orders, a Registrar of the Court be appointed pursuant to section 106A to execute such deed or instrument in the name of such party and do all acts and things to give validity to the operation of the deed or instrument.

16. That all extant property applications be otherwise dismissed.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 3334 of 2016

MR CARDOSO

Applicant

And

MS CARDOSO

First Respondent

And

MR HALE
Second Respondent

REASONS FOR JUDGMENT

Introductory

1. This is now solely a property dispute. 

2. Pursuant to parenting orders made by consent, the child of the parties’ relationship, [X] born 2003, will live with his mother and spend very limited time with his father in the presence of his brother [Y].  [Y] lives independently of the parties. 

3. The Trustee in Bankruptcy, who stands in the shoes of the bankrupt applicant father, seeks that there be an equal division of the parties’ property, save that there should be no superannuation split.  The respondent wife seeks that the parties’ property be divided in such proportions as the Court thinks proper, but in final submissions

   
   

   Ms Cardoso referred to the possibility of a 70-30 split in her favour.

4. For the reasons that follow, I have concluded that a property division of 70 per cent to the wife and 30 per cent to the Trustee in Bankruptcy is indeed just and equitable.

Agreed or uncontested facts

1. Much of the background facts in this matter is not the subject of serious dispute.  The husband was born on 1970, and the wife on 1970.  They commenced cohabitation in 1991 and married on 1999.  Their son [X] was born on 1996, and [X] was born on 2003.  [X] has a severe language disorder and attends speech therapy and requires an aide at school for some classes.  The Family Report writer noted that there was no expert Developmental Report on [X]’s diagnosis available.

2. The parties separated on a final basis in December 2015.  It appears, that the father re-partnered relatively rapidly thereafter with Ms J, who is a (occupation omitted).  The father lives with Ms J in a property owned by her.

3. The parties’ affidavit material gives considerable detail of the personal and business initiatives that the husband and wife were engaged in during the relationship.  But given the ultimate outcome, I propose to paint with a relatively broad brush.  The parties’ affidavits reveal that the sole remaining asset of any moment is the former matrimonial home at Property A.  The wife’s most recent Financial Statement filed 11 July 2018, values this property at $670,000, but I note that the Trustee’s Case Outline asserts that its value is $615,000.  There is in any event no sworn valuation.  It is common cause, that the property is encumbered by mortgage of some $565,000.

4. The husband, who was previously an active, if not perhaps wholly successful, businessman, went bankrupt on 23 September 2016.  The husband’s debts in the bankruptcy exceed $600,000.

5. The husband is presently employed as a (occupation omitted), and the wife is in Home Duties.

6. It is common cause, that at the commencement of the relationship neither of the parties had property of any significance.

The affidavits of the parties

1. To a considerable extent, what is in the parties’ affidavits that is relevant is covered in the above agreed or uncontested facts.  The husband’s first affidavit gave details of the properties the parties had owned from time to time.  They bought the Property A property in 2015 for $615,000.  I note that, since separation, the wife has paid the mortgage, which is agreed to have been $565,000.  The husband deposed that the wife was placed as the sole person on title to protect the family home, as his business was experiencing financial difficulties (paragraph 23, affidavit filed 21 October 2016).  In this affidavit he recounted his business activities during the relationship, which included operating several Business 1 businesses from time to time and two Business 2 franchises, one in Suburb K and the other in Suburb L.  The husband deposed that the Suburb K business was sold in 2016 for $200,000, which sum was insufficient to clear all liabilities, and that the Suburb L business, bought in 2010 for $450,000, was the subject of a termination of lease in 2015, thus closing the business.  Both the businesses were run in Partnership with Mr P until the latter exited the business in 2014.  The husband deposed to having almost $1 million of creditors.

2. The wife’s initial responding Affidavit, filed 30 January 2017, raised a number of asserted disclosure issues.  Inter alia she referred to the husband’s Motor Vehicle 2 valued at $50,000.  She further deposed to a complete absence of understanding of the Cardoso Family Superannuation Fund.  She did, however, depose to the husband taking $75,000 from the self-managed super fund, albeit that she deposed to being highly confused by this.

3. She further deposed to a mortgage offset account, in the sum of some $180,000, placed in an Bank 1 savings account in her name to pay the mortgage and payments to day to day living expenses.

4. The husband’s Affidavit filed 16 April 2018, relevantly, confirms that his Motor Vehicle 2 had been surrendered in January 2018, and there was still a debt outstanding in respect of it.  I note that at paragraph 43 he deposed:

   “… I pursued property orders through the court only as a means to protect the assets, because I had received advice that court orders awarded in favour of the Respondent would be honoured by any trustee in bankruptcy.”

5. In his amended Financial Statement, filed also on 16 April 2018, the husband discloses Superannuation in the sum of $2,302, Income in the sum of $1,200 per week and Rent to Ms J of $180.

6. The wife’s amended Financial Statement filed 11 July 2018 shows Income of $184.05 per week and Expenditure estimated at $1,996.  In this Statement, she estimates the value of her property at just under $733,000, but asserts a mortgage in the sum of $565,000.  In the amended Financial Statement, she estimates the value of the former matrimonial home at $670,000, with funds in the Bank 1 offset account of $7,000, cash in her Cheque Account of $5,400.  She also asserts Cash at Hand - $9,500.  Her Superannuation is an estimate of $9,000 and she discloses debts.  She has paid $15,000 towards her legal expense and owes a further $15,000, even though she is presently self-represented.

7. Further substantial Affidavit material was filed by the wife up to and including the trial.  I have obviously had careful regard to the matters that the wife has raised, but it is fair to say that substantial parts of the material relate either to parenting issues, or to the wife’s continuing assertions as to non-disclosure by the husband.  Those matters will be traversed when I deal with what was said at Court.

8. It should be finally noted under this heading that the wife sought to file a further Affidavit on 23 July 2018, after judgment had been reserved.  I declined to receive this document.  In Kimber v Owners Strata Plan No. 48216 (No 2) [2018] FCAFC 58, the Full Court of the Federal Court said at [12]:

   “We endorse the conclusion reached by Allsop P (as the Chief Justice of this Court then was), Giles JA and Tobias AJA in Bale v Mills (2011) 81 NSWLR 498; NSWCA 226 at [61] that after judgment is reserved, sending submissions to the Court without leave is wrong, and the Court may (and generally will) ignore what has been sent.”

9. These remarks in the circumstances of this case, seem to me to apply to the further Affidavit that the respondent sought to file.  The Respondent made no application to file further material, nor did she foreshadow during the hearing that she would seek in any way to file such further material.  To permit her, in effect, to re‑open her case at this stage creates obvious and fundamental difficulties of fairness to the Trustee, and it was plainly inappropriate for the Court to receive the further material.

What was said at Court (taken from my notes)

1. Counsel for the Trustee opened his case with a traverse of the property pool.  The Property A property has a mortgage of some $550,000 and there is less than $200,000 in equity.  It was bought in 2015 after the sale of a property at Property B and an offset account was established with a value of $180,000 from the proceeds of the Property B property.  That is now reduced to $19,000.

2. In 2011, $75,000 was removed from the parties’ Self‑managed Super Fund, which was applied to a property in Property C bought in the wife’s name.  The Property C property was sold with net proceeds of $110,000.  This was applied to the wife’s offset account on 23 March 2016.  It was submitted that the Fund is non‑compliant and the Australian Tax Office will either chase the wife for $110,000 or deem the $110,000 as income and raise tax upon it accordingly.

3. Counsel submitted that the offset account was set up with a total of $300,000, of which $188,942.91 was deposited on 24 April 2015 and the further $111,207.83 on 23 March 2016.  The latter was from the sale of Property C property and reflected the Self‑managed Superannuation default referred to.  The further $188,000 was funds from the Property B property.  Property B was bought in 2005 in joint names.  The property in Property A was bought in 2015 in the wife’s sole name, it was submitted, to protect assets.

4. The husband’s creditors were set out in the Affidavit of the Trustee and amount in total to some $620,000.  Counsel pointed to the fact that both the wife and husband had income in the Business 1 and Business 2 businesses between 2011 to 2015 in an aggregate sum of over $530,000.  Counsel submitted that this was money, essentially, taken out of the businesses while the debts were run up.

5. The husband was called and adopted his Affidavits as true and correct.

6. Under cross‑examination by the wife, the husband’s recollection of some of his business dealings was by no means entirely clear.  Given that some of these matters took place more than 10 years ago, this was not surprising.  The husband was, in some instances, quite unable to work out what the wife was referring to in her questions.  He did, however, assert on more than one occasion that the wife had been involved in the business activities that he had undertaken.

7. He denied squirrelling any money away from the sale of the Property B property for $830,000.  The husband was firm in his assertions that he had provided all the documentation he had asked to provide.  When taxed with his failure to attend the Conciliation Conference, he said that he did not understand he should attend.  He said he had been to every Court hearing otherwise.  This evidence was given with conviction and I accept it.

8. The husband said that there was angst in the marriage.  The wife was not happy to have him use money for the business.  He said he had not hid anything from the wife and this caused real angst in the marriage. 

9. The husband confirmed that he had surrendered his Motor Vehicle 2 and it was then auctioned by the finance company.  He was a full-time (occupation omitted) for 18 months.  The car would not have had great value and the debt was added to his bankruptcy debts. 

10. The husband said that the wife had no interest in his Business 2 business and could not remember whether he had told her about Mr P or not.

11. When asked about payments to Ms J, he said that he owed money in back rent and had cleared the payments he had made with his Trustee at the time.  He had not agreed to pay school fees.  He left the matrimonial home with just a suitcase.  He denied having control of the wife’s email address.

12. The husband said he had every intention to build on the land at Property C.  He said he may have been deluded, but his financial situation only dawned on him gradually.

13. When asked about the $110,000 allegedly owed to the Superannuation Fund, the husband said he did not know either.  Industry funds were placed into the Self-managed Super Fund and there was $75,000 taken from it.  He did not know about the $110,000.  All the $75,000, or the vast bulk of it, went to buy a property.  The wife did not know that $75,000 was put to property.  The whole purpose of the Superannuation Fund was to buy the block of land.

14. The husband confirmed that he paid rent of $180 per week to

    
    

    Ms J, and contributes to her bills.  He no longer owns a car, and uses Ms J’s.  The husband convincingly denied having anything to do with the ongoing Business 2 business in Suburb L.  Accounts fluctuated wildly, but expenses were greater than income.  He had cashed in his frequent flyer points for travel credit and fuel cards.  They no longer existed.

15. The costs of running (business) are very high and his income for the year, after expenses, was $17,000.

The submissions and evidence of the wife

1. In opening, the wife confirmed that she relied upon the Affidavits she had filed.  She said she was excluded from the businesses, although she had tried to be involved.  She was brushed off.  Group Certificates created in 2017 wrongly suggested that she was involved in the businesses.  So there was a lot of deception.  She told them not to proceed with the Business 2 business, which was bought without her knowledge.  She did not want to be responsible for what the husband had done.  Then the husband went bankrupt in September 2016, and he made his application to this Court in October 2016.  The wife sought the orders in her Response.

2. Having adopted her amended Financial Statement filed 11 July 2018, the wife was cross-examined.  She confirmed that the parties married on 1999.  They bought a property in Property B in 2001, and built on it, and moved in in 2002.  This was then sold, and another property in Property B was bought, both were in joint names.  The property at Property C was to build a property.  She was not told it was bought with money from the Super Fund.  She has read the husband’s Affidavit filed in October 2016 that says this was bought from superannuation.  The husband had asked at separation for the wife to repay this sum, and she asked for proof, which he did not provide.  A superannuation document in 2011 was witnessed by someone she had not seen.  The husband used to give her documents to sign with his handover them.  The motor vehicle finance was not her debt, in the sum of $45,000.  She had not signed documentation.  Only Mr P and Mr Cardoso could sign.  She did not sign anything for the Bank 1.  The husband had told her that there was no money owing to Business 1 in 2014 when he got out.  The wife had signed the Home Loan application from the Bank 2.  That debt was paid out.  She paid a $7,000 debt to School C out of the Overdraft Account.  Property B was sold for more than $320,000 but she saw none of it.

3. When taken to the payment of $188,000 on 24 April 2015, the wife confirmed that this money was paid into an offset account for her.  The husband set the account up through a broker.  She wanted the loan and the offset account in her name.  She had not wanted this but he did and that was what happened.  She saw this the day the Property A property settled.  The husband told her he should have done this from the start.  She trusted him.  They had been together for 25 years.  When they separated the husband told her that she got the house and he got the businesses.  She did not realise in 2015 that this was for asset protection.  She said she did not receive any income from the businesses which were wholly controlled by the husband.  She did not recall signing tax returns.  He let years go by and she nagged him.  She got her own accountant to get the tax returns.  He earned much the same in 2011 to 2015 and she was shocked to see the totals exceeded $500,000.  She did not know where the money went.  She thought the husband had a dodgy accountant.  She was an employee for two years and did not know that the husband had detailed her as a Manager.

4. The wife did not recall going to see solicitors to sign mortgages in relation to the Property B property.  The husband filled in the forms and made her sign them.  He did not show her every page.  The wife confirmed that they did not separate until the end of 2015.  The balance of her offset account is now about $7,000.  The mortgage repayment is $2,200 per month and she has three months left.  After that she will not be able to pay the mortgage and the bank will take the home.

5. When asked about the $111,000 on 23 March 2016, the wife said this was from the home of Property C.  There was no proof that the $875,000 was paid towards that property.  She knew that the Australian Taxation Office (“ATO”) is responsible for Self-Managed Superannuation Funds.  When taken to page 14 of exhibit C-12, which showed debits of $60,000 on 27 July 2015, the wife said that the bank had said it was better to go to different branches.  $60,000 was withdrawn in two days, a lot of it in cash.  She had a safe for it.  She first thought it was to finish renovations but then applied $10,000 for school fees.  The wife’s evidence about this particular matter was, in my view, waffly and unconvincing.

6. The wife said she had been looking for work since separation.  She has not been a (occupation omitted) for years and would have to study, and indeed plans to.  She worked for the husband from 1997 to 2006 and he did not give her a reference. 

7. The wife said the joint valuation for the property was $670,000 with a home loan of $565,216.  She had a credit card debt of $5,000.  She has cash of $9,500 and has a cheque for $5,400 Family Tax Benefit.  She never had anything to do with the superannuation fund and does not know anything about it.  She worked hard until 2006 and then did home duties, although she continued to provide assistance to the husband.

The Submissions of the Parties

1. Counsel relied upon the Case Outline filed by the Trustee. He confirmed that no superannuation orders were sought but noted that the family home would have to be sold and that a caveat had been lodged on it by the Trustee. Counsel conceded that the Trustee cannot expect to get more than the husband would do under s.79 of the Family Law Act 1975 (“the Act”), although he pointed to s.75(2)(ha), which makes relevant “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”.

2. Counsel submitted the parties’ contributions were equal.  Although the wife had essentially been at home from 2006 onwards, she had contributed significant home duties.  She and the husband had been paid $200,000 per annum between 2011 and 2015, and this was approximately the amount of money that the husband had gone bankrupt for.  The wife signed documents without asking.  The 2015 property purchase in the wife’s name and the offset account were clearly for asset protection.  A fair settlement would be an equal division of the extant funds.

3. The wife in final submissions indicated that Child Support was now being paid at about $27 per week, this having commenced on 1 July 2018.  She has [X] to provide for alone.  The Business 2 business was entered into without her consent.  It was not sold but rather they were evicted.  She had not sold cars; they were repossessed.  The husband’s partner owns her own home.  He will be entitled to 50 per cent of that in the event of the breakdown of the relationship.  He has a good lifestyle and a free car.  As earlier indicated, the wife referred to a possible 70/30 split. 

Stanford v Stanford [2012] HCA 52

1. The Court’s first task is to ascertain the legal and equitable interests of the parties and to determine whether a property division is appropriate.  In this case, both parties seek it and it is plainly desirable that it occur. 

The Credit of the Parties

1. The husband was, in my view, generally a good witness.  He was clearly trying to tell the truth as he saw it and while his memory was not perfect I accept that he was a witness whose evidence may generally be accepted.

2. The wife was at times, as earlier indicated, unconvincing as a witness.  She was very much concerned to paint herself as having been kept in the dark and being the subject of deception on the husband’s part.  Given the relative sophistication of her cross-examination, and the very detailed assertions she made as to non-disclosure, the wife impressed me as a person of greater abilities than she sought to project.

The Property Pool

1. The property pool, as I find, relevantly consists of:

   The former matrimonial home, $670,000;

   The wife’s Cash at Hand, $9,500; and

   The wife’s cheque account, $5,400 (Family Tax Benefit).

   Liabilities:

   The mortgage, $565,216; and

   The wife’s credit card debt, $5,300.

   Superannuation:

   The wife’s estimated superannuation, $9,000; and

   The husband’s Superannuation, including Super Fund A, $2,302. 

2. I do not propose to include in the pool the wife’s car.  Although it undoubtedly would have a value, and one could, on one view, take the estimate in her most recent Financial Statement of $29,000 as a concession against interest, the fact is that this is the vehicle in which she transports herself and [X].  She is not going to sell it.  It has no realisable value in that sense.

3. Furthermore, I do not propose to include any value for the household items which, once again, will either not be sold and/or have no realisable value.  Likewise, the wife’s jewellery, which has not been the subject of any significant mention whatever in the currency of the proceeding.

The Contributions of the Parties

1. This was, on any view of the matter, a lengthy relationship of some 25 years.  The parties had nothing at the beginning and, most unfortunately, they have but little now left.  I have no doubt that in a broad general way it would be proper to find the parties’ contributions as equal.  The husband worked hard, albeit comparatively unsuccessfully, and the wife either worked and/or looked after the home.

2. The area of imprecision in all this, of course, is the question of the extent to which the wife, as it were, contributed to the husband’s bankruptcy.  He painted a picture in which the wife was heavily involved in all aspects of their commercial dealings, and she sought to paint a picture of no involvement whatever and, indeed, deceit on the husband’s part. 

3. As is so often the way, I think the truth lies somewhere the parties’ competing assertions.  On the one hand, it is clear that the husband was the dominant figure in the parties’ commercial dealings.  On the other hand, however, the wife did not know as little as she asserts.  She says, just by way of illustration, that she advised against the purchase of the Business 2.  She obviously knew enough to give that advice, even though she said it was entered into without her knowledge.

4. What I do accept, however, is that the wife did not receive any benefit from the business commensurate with the figures shown in the tax returns for the years 2011 to 2015.  This has all the appearance of the sort of creative accounting that one so often sees in small businesses. 

5. It is certainly the case that the wife has lived in something of a fool’s paradise.  The moneys placed into the offset account have simply been whittled down to nothing (I am not going to include any of the remaining $7,000 because it will be gone by the time this judgment is delivered).

6. In a sense, both these parties have contributed significantly to the ultimately very unfortunate financial circumstances in which they now find themselves.  In my view, the husband’s, as he himself described it, deluded failure to appreciate his financial position until it was too late, and the wife’s failure to confront the reality that the offset account was an ultimately disappearing asset, square one another off. 

7. Taken overall, the parties’ contributions to the ultimate outcome should be taken as equal.

The Future Needs matters

1. It needs to be borne in mind that the inter‑relationship of the parties’ future financial needs with the interests of creditors is by no means an easy balancing act.  (See Broun v Fowler, Australian Family Law and Practice Commentary at 40-025, where the matter is discussed in detail).

2. Here, the husband is bankrupt.  He earns about $60,000 a year, according to his most recent Financial Statement, and pays modest rent and a contribution to utilities with his new partner.  Both he and the partner are in full‑time employment and, given that his current relationship has inured now for several years, the husband’s future financial circumstances seem relatively rosy.

3. By way of contrast, the circumstances of the wife are dire.  She will be left with whatever emerges from this judgment and the inevitable sale of the home, (and it will be small on any view), no superannuation of any moment and the ongoing care of [X], whom I accept will continue to live with her and who will require special assistance from his mother given his difficulties (albeit that these are scarcely known with precision).  I accept that it is many years since she worked as a (occupation omitted), that she has not got any kind of recent reference from an employer, and that given her general skillset it will be difficult for her to obtain any employment, let alone well-remunerated employment), in the future.

4. Neither side has deposed to any particular health difficulties that are likely to beset them.

5. I do not propose to make any superannuation splitting orders.  In my view, the husband’s superannuation is extremely limited and that of the wife is both small and only an estimate.  I do not propose to include these amounts in the pool in these circumstances.

6. In all these circumstances, and bearing in mind the wife’s continuing care of [X] and markedly inferior future work prospects and an extremely limited income of only minimal Family Tax Benefits, I think an adjustment of some 20 per cent in the favour of the wife under Future Needs headings is appropriate.

7. In making this finding I do have regard to the interests of the unsecured creditors of the husband’s bankrupt estate.  Nonetheless, this is one of those cases in which the wife’s financial circumstances are likely to be so dire that an order of some 30 per cent in favour of the husband’s creditors, which is effectively what it is, is, in my view, a just and equitable apportionment.

What about the Moneys Taken from the Super Fund?

1. Counsel has submitted that the Court needs to determine what should occur about this.  He submitted it was possible for the Court to refer the matter to other competent authorities.  In the particular circumstances of this case, unusual as they are, I propose to simply leave that misconduct, so to speak, where it lies.  I accept that the $75,000 was initially taken from the Self-Managed Super Fund to buy the land at Property C, as the husband has indicated.  In this particular instance, I accept that the wife received benefit from it in the sum ultimately of $111,000, but I accept that she did not know anything about the Self-Managed Superannuation Fund.  Indeed, on the husband’s evidence, the fund was only ever created to buy the land.

2. The fact is that that money is gone.  It found its way into the offset account and has been dissipated.  The wife may, as counsel for the Trustee submits, yet face further difficulty in relation to it.  She may be assessed to pay tax on it or the ATO may seek that the funds be placed back into the Super Fund.

3. In circumstances where, in my view, a 70/30 split would be appropriate as between the husband and the wife in any event, any order requiring her to repay that money to the Superannuation Fund would, in my view, be grossly unfair.  It would take almost all the money she gets out of the property settlement and then divide it equally between her and the husband, whose creditors would retain the other remaining funds.

4. The ATO has not been joined as a party to this proceeding and no one has sought that it be so.  In the circumstances, I propose, as I say, simply to leave that matter as it stands.  Subject I would hope to proper consideration of these reasons for judgment, the position to be adopted by the ATO remains a matter for them.  While the dealing with the Superannuation Funds moneys was plainly inappropriate and at best poorly considered, the fact is that the money has gone and there is no benefit attaching to it.

Conclusion

1. In my view, taking a step back and looking at the matter overall, bearing in mind not only the parties’ competing contributions, but their future needs and having regard to the interests of the creditors, it is appropriate that there be a property division of 30 per cent in favour of the bankrupt estate and 70 per cent to the wife.

2. I have drawn orders to reflect these conclusions but will give the parties an opportunity to be heard before making them final.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.

Date: 27 August 2018