Child Support Registrar and Kanavos and Ors - [2009] FMCAfam 871

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CHILD SUPPORT REGISTRAR & KANAVOS & ORS

[2009] FMCAfam 871

CHILD SUPPORT – Credibility of witnesses – non-disclosure – secret trusts – most appropriate form of enforcement.

Family Law Rules 1984 Order 33

Federal Magistrates Court Rules 2001 r 1.05

French v French (1902) 1 IR 172
Ottaway v Norman (1972) 1 CH 698
Voges & Monaghan (1954) 94 CLR 231
Weir (1993) FLC 92-338

Applicant:

CHILD SUPPORT REGISTRAR

First Respondent:

MR KANAVOS

Second Respondent:

MS KANAVOS

Third Respondent:

[W] PTY LTD

File Number:

SYC3565 of 2007

Judgment of:

Altobelli FM

Hearing dates:

17 September 2007, 20 November 2007, 26 February 2008, 2 April 2009, 3 & 4 June 2009

Date of Last Submission:

4 June 2009

Delivered at:

Sydney

Delivered on:

20 August 2009

REPRESENTATION

Counsel for the Applicant:

Mr Quinn

Solicitors for the Applicant:

Australian Government Solicitor

Counsel for the first, second and third Respondent:

Mr Alexander

Solicitors for the first, second and third Respondent:

Graham Chegwidden Solicitors

DECLARATION

The Court makes the following declaration:
(a)That as at 2 June 2009 there is owing to the Commonwealth in respect of amounts owing under the registered maintenance liabilities of the Respondent the sum of $270,881.77 (being $170,892.47 in arrears of child support and $99,989.30 in late payment penalties).

ORDERS

That the Respondent pay to the Child Support Registrar the sum of $270,881.77.
That payment of the amounts payable in orders 2 and 3 herein be paid to the Applicant by payments as follows:
(a)by minimum instalment payment of $2,000.00 per month commencing on 7 September 2009 and being payable on or before the 7^th day of each month (being inclusive of amounts which may be paid by way of garnishment orders herein); and
(b)the whole of the remaining balance of the debt payable under these orders as a lump sum on or before 7 September 2012 (or such earlier time in accordance with order 24 hereof).

Garnishment order in respect to [W] Pty Ltd

That a garnishment order be made against [W] Pty. Ltd of the registered office at [address omitted] in the State of New South Wales ("the company"), directing that on or before 7 September at 2009 the company do all acts and things necessary to cause payments to be paid on a monthly basis directly to the Applicant as detailed below:
(a)the normal deduction rate to be deducted from the Respondent’s earnings is in the sum of 30 cents in every dollar (after tax);
(b)the amount referred to in sub-paragraph (a) hereof is to be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW.
(c)the payment shall commence on or before 7 September 2009, or as agreed with the Applicant, should the Respondent prefer these deductions to be consolidated with deductions of current child support.
(d)the protected earnings rate in relation to the Respondent’s earnings is fixed in the sum of $300.00 per week;
That until further order of the Court, the Respondent notify the Child Support Registrar at 130 George Street, Parramatta in the State of NSW, immediately (or at least within 7 days) upon either:
(a)his ceasing, or altering the terms of his employment with any person, company or entity; and /or
(b)his commencing employment with any person, company or entity, and that he advise the name and address of that employer.
That there be liberty to restore the matter to the court list upon 7 days notice in respect to compliance with these Orders.

Garnishment order in respect to customers of [W] Pty Ltd

That a garnishment order be made against customers of [W] Pty. Ltd ("the company") as specified in the attached schedule of garnishees directing that each of the said customers so specified (each described hereinafter as a " garnishee") do all acts and things necessary to cause monies which are due to be paid by them to the company, to be paid instead to the office of the Child Support Registrar in satisfaction of debts under these orders (the "garnishment payments") in accordance with the following:
(a)pay at a normal deduction rate to be deducted from monies payable to the company in the sum of 50 cents in every dollar payable (after tax);
(b)any amount payable in accordance with sub-paragraph (a) hereof is to be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW.
(c)the payment shall commence on or before 7 September 2009.
(d)the protected earnings rate in relation to payments under this order is fixed in at 50% [of each invoice transaction];
That the garnishment payments be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW and be identified by the garnishee as payable in CSA case Number [8].
That the garnishment payments be paid to the Child Support Registrar within 7 days of any payment which may be made to the company.
That the company provide to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW marked to the attention of Ms Vanessa Sacco, a copy of each invoice issued by the company to any client for work or services, conducted or of products or materials provided and that the company do so within 7 days of the issuing of any such invoice.
That until further order of the Court, the Respondent notify the Child Support Registrar at 130 George Street, Parramatta in the State of NSW, immediately (or at least within 7 days) upon his commencing employment with any person or entity, the name and address of that employer.
That a person who makes a payment in compliance with these orders is taken to have made the payment under the company’s authority or the authority of any other person concerned and is indemnified in respect of that payment.

Restraining Orders

That the Respondent and all officers of the company be restrained from engaging in business, issuing any invoices for work, service, products or materials, except under the name and payable to [W] Pty. Ltd.
That Mr Kanavos, Ms Kanavos, any person acting as agent or at their request, and any company or entity controlled by them or in which they have an interest, be restrained for a period of two years from approaching, dealing with, or engaging in any business transaction for a period of 2 years with respect to the customers of the business conducted by [W] Pty. Ltd including any customer with whom that company has had a previous dealing.
That Mr Kanavos, Ms Kanavos, any person, company or entity acting as agent or at their request and [W] Pty. Ltd. be restrained, except in the course of ordinary business, from selling or disposing of the business of [W], or selling, transferring, further encumbering, or otherwise dealing with any of the business conducted by [W] Pty. Ltd., including, the sale or transfer, or assignment of any share in the company, the sale, transfer gift or assignment of any of the assets or plant used in the business, and from removing from the principle place of business or of any storage facility (except to the principle place of business) of any tool, machinery, motor vehicle, equipment, or any stock in trade or materials.

General orders applying to the garnishment orders

That a sealed copy of these Orders be released to the Applicant expeditiously.
That a sealed copy of these orders be served on the company and any garnishee specified in the schedule hereto within 10 days of the release of sealed copy of these Order.

Orders in respect to shares of [W] Pty Ltd

That the First and Second Respondent shall within 14 days of the date of these orders do all things and cause all documents to be signed to cause all shares in the company [W] Pty. Ltd. held in the name of the Second Respondent, Ms Kanavos, ("the company shares") to be transferred to the First Respondent.
That the debt under these Orders be charged over the shares of the company [W] Pty. Ltd.

Orders under s.106A of the Family Law Act for signature of documents

That, in the event that the First Respondent or Second Respondent are in default of any request pursuant to any order herein requiring their signature, the trustee, or a Registrar of the Court, shall be empowered to sign all documents and do all things on behalf of the Respondent as may be necessary to transfer the Respondent’s interest in the property into the name of the trustee.

Liberty to apply provision as to execution and implementation of these Orders

That the Applicant be at liberty to apply herein with respect to the terms and conditions and execution of the sale and the implementation of these orders generally.
The Sheriff of NSW be appointed for seizure and sale of the Holden Commodore motor vehicle registered in the name [SS] Pty Ltd (or [SS] Pty Ltd), the details of which are to be provided to the solicitor for the Applicant within 24 hours; to be inserted in these as: Registration No. (to be advised), Engine No. (to be advised), Chassis No. (to be advised).
That the said motor vehicle be realised by the Sheriff and sold at auction for the best price obtainable and the proceeds be applied:
(a)In payment of reasonable costs of seizure and sale;
(b)In payment of the debt herein;
(c)The remainder if any to the First Respondent.
That the debt under these orders be charged over the motor vehicle.
If there is to be an application for costs such application is to be made by way of written submissions, no greater than 500 words, to be filed and served within 21 days.

Any response to an application for costs be made by way of written submissions, no greater than 500 words, to be filed and served within

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC3565 of 2007

CHILD SUPPORT REGISTRAR

Applicant

And

MR KANAVOS

First Respondent

MS KANAVOS

Second Respondent

[W] PTY LTD

Third Respondent

REASONS FOR JUDGMENT

Introduction

This case is about the collection of substantial arrears of child support. The amount outstanding is not disputed - $270,881.77 as at 2 June 2009. The applicant is the Child Support Registrar. The first respondent is the payer liable to pay child support, the second respondent is his wife, and the third respondent is a company controlled by the wife which operates a business providing income for the benefit of the first and second respondents. The matter has a long history, and the case involves potentially complex issues about the control and ownership of various corporate structures, hidden trusts, non-disclosure and credit of the respondents. Because of this complexity I intend to focus in these reasons on the disputed issues only and to minimise reference to extraneous matters except to the extent necessary to provide background and context.

Background

The proceedings commenced by Enforcement Summons filed 17 May 2007. During the course of the examination of the first respondent evidence was given that no doubt prompted the applicant to seek further orders by way of enforcement. Thus by way of amended application filed 22 May 2009 the application sought relief against all the named respondents in terms that I will discuss below.
There are certain issues not in dispute. The amount of the debt is not in dispute. This court’s jurisdiction to make the orders sought is not in dispute. Indeed much of the factual evidence is not in dispute, though the interpretation of this evidence and its consequences is a major issue for the respondents. There are certainly issues of credit and disclosure, however.
The actual orders sought by the application are contained in a document entitled Minute of Proposed Orders provided to the court on 4 June 2009. I proposed to go through each of the proposed orders with a view to identifying what precisely is in issue, and what is not.

Proposed orders and response thereto

DECLARATION
A declaration that as at 2 June 2009 there is owing to the Commonwealth in respect of amounts owing under the registered maintenance liabilities of the Respondent the sum of $270,881.77 (being $170,892.47 in arrears of child support and $99,989.30 in late payment penalties).
ORDERS
1. That the Respondent pay to the Child Support Registrar the sum of $270,881.77.

The respondents do not oppose the making of the Declaration. They do not oppose the making of order 1. Accordingly I make the Declaration and order 1.
2. That the Respondent pay to the Child Support Registrar the costs of the Commonwealth ALTERNATIVELY fixed in the sum of $ or / on an indemnity basis either as agreed or on a taxation and in the Family Law Act scale.
The respondents oppose the making of an order for costs. I believe this is a matter best dealt with after I have published my reasons in this matter, and make orders. I intend to deal with costs by way of written submissions not exceeding 500 words. The applicant for costs is to submit the same within 21 days. The respondent/s have 21 days to respond in the same manner.
3. That payment of the amounts payable in orders 2 and 3 herein be paid to the Applicant [1]by payments as follows:
3.1 by minimum instalment payment of $2,000.00 per month commencing upon 7 July 2009 and being payable on or before the 7^th day of each month (being inclusive of amounts which may be paid by way of garnishment orders herein); and
3.2 the whole of the remaining balance of the debt payable under these orders as a lump sum on or before 7 July 2012 (or such earlier time in accordance with order 24 hereof).
[1] Order 33, Rule 3(9)(a)
The respondent’s position here is somewhat unclear. Counsel for the respondents indicated to the Court that his clients consented to the making of order 3 in the Application filed 4 March 2009 which was in these terms:
3. That [W] Pty. Ltd. be the subject of a garnishment order to make payment of the child support debt of the First Respondent pursuant to the enforcement summons filed in the proceedings on 17 May 2007 and any costs in those proceedings.
I therefore take the respondents position to be that they agree that payment of child support should be by garnishment of the income of the company [W] Pty Ltd. However they clearly do not agree to the precise terms of the order sought by the applicant. Counsel for the respondents indicated that as an alternative to the garnishee order, the respondents would consent to a sale of the business in terms of order 4 of the Application filed 4 March 2009 which is in these terms:
4. That a trustee be appointed to sell the business conducted by [W] Pty. Ltd. to make payment of the child support debt of the First Respondent pursuant to the enforcement summons filed in the proceedings on 17 May 2007 and any costs in those proceedings.
This order was not sought by the applicant.
I continue with the orders sought on 4 June 2009.
Garnishment order in respect to [W] Pty. Ltd[2]
4. That a garnishment order be made against [W] Pty. Ltd of the registered office at [address omitted] in the State of New South Wales ("the company"), directing that on or before 7 July at 2009 the company do all acts and things necessary to cause payments to be paid upon a monthly basis directly to the Applicant as detailed below:
a) the normal deduction rate to be deducted from the Respondent’s earnings, is in the sum of 30 cents in every dollar (after tax);
b) the amount referred to in sub-paragraph a) hereof is to be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW;
c) the payment shall commence on or before 7 June at 2009, or as agreed with the Applicant, should the Respondent prefer these deductions to be consolidated with deductions of current child support;
d) the protected earnings rate in relation to the Respondent’s earnings is fixed in the sum of $300.00 per week.
[2] Order 33, Rule 3(9)(b)(i), and Rule 4
Having regard to my comments above, the respondents must be taken not to oppose in principle the making of this order even though in form it may be different to that which they consented to.
5. That until further order of the Court, the Respondent notify the Child Support Registrar at 130 George Street, Parramatta in the State of NSW, immediately (or at least within 7 days) upon either:
(a) his ceasing, or altering the terms of his employment with any person, company or entity; and /or
(b) his commencing employment with any person, company or entity, and that he advise the name and address of that employer.
Having regard to the manner in which the case for the respondents was presented, whilst they did not consent to this order, they did not oppose it either. The evidence will indicate that it is an entirely appropriate order to make and thus, absent opposition, I intend to make it.
6. That there be liberty to restore the matter to the court list upon 7 days notice in respect to compliance with these Orders.
Again there was no opposition to this order. It is an order I would normally make and I intend to do so.
Garnishment order in respect to customer's of [W] Pty. Ltd.
7. That a garnishment order be made against customers of [W] Pty. Ltd ("the company") as specified in the attached schedule of garnishees directing that each of the said customers so specified (each described hereinafter as a " garnishee") do all acts and things necessary to cause monies which are due to be paid by them to the company, to be paid instead to the office of the Child Support Registrar in satisfaction of debts under these orders (the "garnishment payments") in accordance with the following.
a) pay at a normal deduction rate to be deducted from monies payable to the company in the sum of 30 cents in every dollar payable (after tax);
b) any amount payable in accordance with sub-paragraph a) hereof is to be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW.
c) the payment shall commence on or before 7 June 2009.
d) the protected earnings rate in relation to payments under this order is fixed in at 50% [of each invoice transaction];
8. That the garnishment payments be paid to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW and be identified by the garnishee as payable in CSA case Number [8].
9. That the garnishment payments be paid to the Child Support Registrar within 7 days of any payment which may be made to the company.
10.   That the company provide to the Child Support Registrar at 130 George Street, Parramatta in the State of NSW marked to the attention of Ms Vanessa Sacco, a copy of each invoice issued by the company to any client for work or services, conducted or of products or materials provided and that the company do so within 7 days of the issuing of any such invoice.
11.  That until further order of the Court, the Respondent notify the Child Support Registrar at 130 George Street, Parramatta in the State of NSW, immediately (or at least within 7 days) upon his commencing employment with any person or entity, the name and address of that employer.
12.    That a person who makes a payment in compliance with these orders is taken to have made the payment under the company’s authority or the authority of any other person concerned and is indemnified in respect of that payment.
These orders are opposed by the respondents.
Restraining Orders
13. That the Respondent and all officers of the company be restrained from engaging in business, issuing any invoices for work, service, products or materials, except under the name and payable to [W] Pty. Ltd.
There was not express opposition to this order, but I sense this may have been an oversight on the part of counsel for the respondents. One of the factual issues in this case was whether income generated by the first respondent through his personal skills and exertion was in fact channelled through entities controlled by the second respondent and others. I will therefore assume that the respondents oppose this order.
14. That Mr Kanavos, Ms Kanavos, any person acting as agent or at their request, and any company or entity controlled by them or in which they have an interest, be restrained for a period of two years from approaching, dealing with, or engaging in any business transaction for a period of 2 years with respect to the customers of the business conducted by [W] Pty. Ltd including any customer with whom that company has had a previous dealing.

This is the same as order 6 in the Application filed 4 March 2009. Counsel for the respondents submitted that the restraint is too wide in its terms, but the first and second respondents did not oppose a restraint on them approaching or soliciting any previous customer of the third respondent for a period of 2 years. I had the benefit of very limited submissions about this. Doing the best I can, the objection to the width of the restraint appears to be the reference to “any person acting as agent or at their request, and any company or entity controlled by them or in which they have an interest”. The precise nature and terms of any restraint is therefore an issue in this case.
15. That Mr Kanavos, Ms Kanavos, any person, company or entity acting as agent or at their request and [W] Pty. Ltd. be restrained, except in the course of ordinary business, from selling or disposing of the business of [W], or selling, transferring, further encumbering, or otherwise dealing with any of the business conducted by [W] Pty. Ltd., including, the sale or transfer, or assignment of any share in the company, the sale, transfer gift or assignment of any of the assets or plant used in the business, and from removing from the principle place of business or of any storage facility (except to the principle place of business) of any tool, machinery, motor vehicle, equipment, or any stock in trade or materials.
This is an existing interim order entered into by consent. Whether or not it will be necessary in future depends on the outcome of these proceedings. As will be seen below, it is not necessarily inconsistent with the orders sought by the respondents.
General orders applying to the garnishment orders
16. That a sealed copy of these Orders be released to the Applicant expeditiously.
17. That a sealed copy of these orders be served upon the company and any garnishee specified in the schedule hereto within 10 days of the release of sealed copy of these Order.
SCHEDULE OF GARNISHEES
Names of persons to whom garnishment order applies
[C] Pty Ltd.
[N] Pty Ltd t/a [K]
[L] Pty Ltd
These are procedural matters that depend on the outcome of these proceedings.
Orders in respect to shares of [W] Pty. Ltd.
18. That the First and Second Respondent shall within 14 days of the date of these orders do all things and cause all documents to be signed to cause all shares in the company [W] Pty. Ltd. held in the name of the Second Respondent, Ms Kanavos, ("the company shares") to be transferred to the First Respondent.
The respondents consented to order 5 in the Application filed 4 March 2009 which is, in substance, the same as this proposed order.
19. That the debt under these Orders be charged over the shares of the company [W] Pty. Ltd.
There was no opposition to this, and having regard to the matters set out above, that is understandable.
Orders in respect to the estate of the First Respondent deceased mother Ms F
20. The First Respondent and Second Respondent shall within 14 days of the date of these orders do all things and sign any necessary document to cause a caveat to be registered by way of an equitable interest over the interest of the Second Respondent in the real property situated and known as Property M, comprised in Folio Identifier [1] ("the real property"), such caveat being in respect to the debt payable under these orders.
21. That the debt under these Orders be charged over the First Respondent's equitable interest in the Second Respondent's registered interest in the real property.
24. That the amount payable in order 3. hereof be paid forthwith upon the sale of the real property, or the second respondent's share of the real property.
25. That upon the expiry of three years or at any time following the death of Mr G (a one third owner of the real property) the Child Support Registrar may apply for seizure and sale of the real property, or the second respondent's share in the real property.
This was opposed by the respondents who, as will be seen below, strongly argue that there is no evidence to justify the imposition of a secret trust in relation to the estate of the first respondent’s mother. This is clearly an issue in this case.
Orders under s106A of the Family Law Act for signature of documents
22. That, in the event that the First Respondent or Second Respondent are in default of any request pursuant to any order herein requiring their signature, the trustee, or a Registrar of the Court, shall be empowered to sign all documents and do all things on behalf of the Respondent as may be necessary to transfer the Respondent’s interest in the property into the name of the trustee.
Liberty to apply provision as to execution and implementation of these Orders
23. That the Applicant be at liberty to apply herein with respect to the terms and conditions and execution of the sale and the implementation of these orders generally.
These are procedural orders in respect of which no opposition was expressed.
26. The Sheriff of NSW be appointed for seizure and sale of the Holden Commodore motor vehicle registered in the name [SS] Pty Ltd (or [SS] Pty Ltd), the details of which are to be provided to the solicitor for the Applicant within 24 hours; to be inserted in these as: Registration No. (to be advised), Engine No. (to be advised), Chassis No. (to be advised).
27. That the said motor vehicle be realised by the Sheriff and sold at auction for the best price obtainable and the proceeds be applied:
(1) In payment of reasonable costs of seizure and sale;
(2) In payment of the debt herein;
(3) The remainder if any to the First Respondent.
28. That the debt under these orders be charged over the motor vehicle.
The issue of the Commodore mother vehicle arose as a relatively minor matter during the evidence. The respondents’ counsel made no specific submissions in relation to it but I will assume that there is opposition to these orders.

The issues

Doing the best I can to distil from the above what are the issues in this case, it seems that the real dispute is about how the debt is to be paid, rather than its amount or whether it should be paid. The respondents have indicated a willingness to either transfer the shares in the business to the applicant, or to sell the business and use the sale proceeds to pay the debt. The applicant is not interested in this. The respondents seem to agree in principle to a garnishee of the income of the business to pay the debt, as an alternative to transfer or sale of the business, though I perceive that there is a dispute about the precise terms of the garnishee. Precisely how the debt is to be enforced is an issue in this case, and that encapsulates a number of ancillary issues referred to above.
There is an issue about the estate of the late mother of the first respondent, and whether a secret trust arises in relation thereto.
It is clearly part of the applicant’s case that the first and second respondents have entered sham transactions and/or created alter egos of themselves so that the cash flow and profits of the business are seen not to be controlled by the first respondent.
It is clearly part of the applicant’s case that the evidence of the respondents and their witnesses is not to be believed, and that the respondents have not made proper disclosure to the court.
After providing some further background facts dealing with some evidentiary issues and stating the applicable law, I intend to deal with the issues in the following order:
(1)Issues about credit and disclosure;
(2)The estate and the secret trust;
(3)The most appropriate form of enforcement;
(4)Ancillary matters.

Further background

The first respondent is 51 years old. The child support liability arose out of his marriage to Ms B in 1986 which produced 3 children, [X] (22), [Y] (20) and [Z] (17). This marriage ended in 1997. Child support assessments issued. There were proceedings in the Family Court. Child support appears to have been paid until October 2000. There were proceedings initiated by the first respondent in the Local Court Family Matters in 2001 without success which were then appealed to the Family Court of Australia. In 2004 the application was dismissed by Lawrie J. In March 2003 the first and second respondents married and they now have 2 children, [A] (7) and [B] (5).
As the quantum of the debt is not in dispute it is not necessary to set out the history of assessments issued.
The business of the third respondent is basically metal fabrication associated with the manufacture, supply and installation of commercial refrigeration. The evidence will refer to a number of entities including [W] Pty Ltd, [J] Pty Ltd, [SS] Pty Ltd and [SF] Pty Ltd. The first respondent asserts that he does not control these entities though has been employed by them from time to time, and has been a director and shareholder from time to time. The applicant asserts that at all relevant times all of these entities were, or continue to be as the case may be, effectively controlled by the first respondent and were his alter ego.
During the course of these proceedings the first respondent had filed a departure application seeking to vary retrospectively the amount of child support payable, and thus Ms B was joined to the proceedings. He subsequently withdrew this application, and I intend to deal with the issue of costs arising out of that withdrawal and dismissal at the same time I deliver these reasons and make orders in this matter. I was very much assisted by the written submissions of counsel for the applicant, and I have drawn on the same extensively in these reasons, where I have found that the evidence accords with it.

Evidence and evidentiary issues

The evidence adduced by the applicants consisted of affidavits of:
a)Mr M filed 4 March 2009;
b)Mr C filed 23 January 2009.
Only Mr C was required to be cross-examined and this in fact took place. In addition oral evidence was given by Mr N on behalf of the applicant. He was cross-examined.
The evidence adduced by the respondents consisted of affidavits of:
a)John Graham Chegwidden filed 8 May 2009;
b)Mr Kanavos filed 8 May 2009;
c)Ms Kanavos filed 8 May 2009.
Each of these deponents were cross-examined.
There is an issue about the relevance of findings made be Lawrie J in the Family Court of Australia in her reasons for judgment dated 4 February 2004, and whether an issue estoppel arises. Lawrie J considered evidence up until the commencement of [W] Pty Ltd (‘[W]’) in March 2002. As counsel for the respondents concedes that the child support debt accrued after 20 October 2000, I accept the submissions of counsel for the applicant that at least for the period October 2000 to March 2002 the same facts were before Lawrie J as are before me. Her Honour’s findings are therefore relevant. The reasons for judgment of Lawrie J, and the transcript of evidence, were both in evidence before me. In his written submissions counsel for the applicant states in this regard:
Judgement of Lawrie J
22. Her Honour Lawrie J made a number of findings which are adverse to the First Respondent. For the reason that up to a point in time many of the facts are the same as those before her Honour, careful note ought with respect be taken of her Honour’s findings. In particular findings concerning the First Respondent’s business practices which bear on the present proceedings by which the First Respondent was able to masquerade as an employee of a business run and controlled by him in order to avoid paying child support. The continuation of those business practices in the operation of [W] has been confirmed by the affidavit of Mr C sworn 22 January 2009.
First Respondent’s Business Practices
23. Referring to an invoice that had been unusually issued out of order her Honour said at [20]:
“….this example sheds considerable light on the milieu and business culture in which Mr Kanavos operates. In it records can be manipulated to assist people (even when they are breaking a law about making false statements to financial institutions in the hope of getting financial advantage) and the real business transactions are happening without any reference to documentation. This is consistent with Mr Kanavos’s actions in moving the business from [SF] to [SS] and then “disposing” of [SS].”
24. In this passage her Honour described the modus operandi under which the First Respondent operated and has continued to operate post judgement. In conducting his business the First Respondent has observed little separation between himself and the various corporate structures under which he has operated. He has treated the funds of those companies as his own funds.
Alienation of Assets by the First Respondent
25. The alienation of assets was another business practice noted by her Honour at [21]. When the business [SF] was successfully sued by one of its creditors the First Respondent transferred the ‘business’ to another company, [SS] Pty Ltd when the creditor sought to recover the debt. In the present proceedings the First Respondent agreed that he [SF] had closed down simply to avoid paying a creditor.[3] Her Honour noted that the evidence given by the First Respondent was that he opened [SS] Pty Ltd “to protect my income and protect what I had so that I could continue trading”.
26. Her Honour also noted a second event at [22] an alleged sale of the business [SS] Pty Ltd to the company’s accountant Mr R. This was at a time when it had became the subject of interest to the Payee.
27. A third event referred to by her Honour at [33] was the commencement of the company [W] which the First Respondent claimed was the creation of his nephew Mr C and the former employees of [SS] Pty Ltd. The First Respondent suggested that this had occurred at the same premises. The First Respondent said he could not recall the name but thought that the name of that business was “[W]” or something similar.
28. Her Honour found at [34] that the First Respondent had continued in business as before with the assistance of Mr R[4] and his nephew Mr C who were prepared to be nominal directors. She noted that this was consistent with the Payee’s observations of the activity at the factory premises and that there was no evidence called by First Respondent from the “proprietors” of the new business.[5] Her Honour’s findings are with respect perspicacious having regard to subsequent events which are almost identical factually whereby the company [W] is now said to have been ‘sold’ to the First Respondent’s wife by Ms Kanavos for $5,000.
29. But the key findings of her Honour were:
[3] T27 L 45-46
[4] Her Honour noted at [24] and [26] that “Mr R and the husband are on friendly terms. Mr R turned to the husband when he was having some difficulty with a company of which he was a director [24]…….I think it more likely than not that that was the explanation for the husband becoming a director of [R], and I think that he and Mr R would expect that behaviour to be reciprocated. [26]”
[5] At [34]
a) that the First Respondent had failed to make a full and frank disclosure of his resources at [40];
b) that his tax returns did not accurately reflect his true income at [41];
c) that the First Respondent had deliberately set out to avoid paying periodic child support at [47]
d) that the First Respondent had the same earning capacity and that the grounds of the appeal had not been established.[6]
30. These findings are sufficient to create an issue estoppel in respect of the period her Honour considered. The principle of issue estoppel prevents the raising again of an issue of fact or law already decided as between the same parties or their privies[7] by an earlier judgment. Issue estoppel arises wherever in further litigation a state of law or fact is alleged or denied, the existence of which is a matter necessarily decided by a prior judgment or order (Port of Melbourne Authority v [A] Pty Ltd (1981) 147 CLR 589 at 597).
[6] At [35]
[7] The Online Oxford English Dictionary defines the legal meaning of privy in these following terms: Each of two or more people who are parties to and have shared interests in an action, contract, conveyance, etc.; each of two or more people having shared interests through a blood relationship (now hist.). Also: a person who is bound or has an interest under a contract or conveyance to which he or she is not a party. The Child Support Register is a privy in relation to the earlier proceedings between the First Respondent and the Payee
Counsel for the respondents made no submission in response to this. I agree that issue estoppel arises in respect of the period October 2000 to March 2002. I adopt the findings made by Lawrie J in respect of this period.

Applicable law

This Court’s powers are found in Order 33 of the former Family Law Rules 1984 which apply by virtue of rules 1.05(2) and (3) of the Federal Magistrates Court Rules 2001. Order 33 provides, where relevant
Interpretation
1. In this Order, "prescribed personal property", in relation to a person, means-
(a) wearing apparel, bed, bedding and kitchen furniture (including stove, oven and refrigerator, but not including a washing machine or an automatic dishwasher); and
(b) ordinary tools of trade, plant and equipment, and professional instruments and reference books, not exceeding in the aggregate $1000.00 in value.
Enforcement of maintenance, costs, fines, recognizances, the recovery of money and orders under section 109
2.
(1) This rule applies to-
(a) an order that a party to a marriage pay maintenance or other money for the benefit of the other party to the marriage or of a child of the marriage and an order referred to in section 109 of the Act;
(b) a maintenance agreement that has been registered, or is deemed to have been registered, in a court and has not-
(i) been set aside; or
(ii) otherwise ceased to be in force;
(c) an overseas maintenance order or agreement that, under the Regulations, is enforceable in Australia;
(d) an order under the Act or the repealed Act for the payment of costs;
(e) an order made in the exercise of jurisdiction conferred by the Act, the Regulations or these Rules that a person pay a fine or forfeit a recognizance;
(f) an order under sub-section 82 (7) of the Act for the recovery of moneys; and
(g) an order under section 117A for the payment of reparations, and this rule (other than sub-rule (4)) applies in relation to an agreement referred to in paragraph (b) or (c) as if it were an order of the court in which it is registered or deemed to be registered.
(2) Where a court by an order referred to in paragraph 1 (e) imposes a fine, the fine shall, unless the court otherwise orders, be payable forthwith into the filing registry.
(3) Where in or in relation to proceedings a court orders the forfeiture of a recognizance, the money forfeited shall, unless the court otherwise orders, be payable forthwith into the filing registry.
(4) Where the person ordered to pay maintenance or other money, or a fine, by an order to which this Rule applies is not present or represented by counsel or solicitor in court when the order is made, a sealed copy of the order shall be served on that person in accordance with Order 18, paragraph 5 (1) (a), (b), (c) or (d) by-
(a) in case of a fine imposed by a court-the Marshal, an officer of the court, or a person appointed by the Registrar; and
(b) in any other case-by a representative or agent of the person for whose benefit the order was made.
(5) An order to which this rule applies may be enforced by one or more of the following means:
(a) garnishment;
(b) seizure and sale of personal property;
(c) sequestration of estate;
(d) sale of real property.
(6) Where a person ordered to pay maintenance or other money for the benefit of a party or child fails or refuses to make the payment, proceedings for the enforcement of the payment may be taken by the party or child for whose benefit the order was made or on behalf of that party or child by a person entitled to do so under the Act or Regulations.
(7) Where proceedings for the enforcement of the payment of maintenance or other money payable under an order for the benefit of a party or child are taken on behalf of that party or child by a person entitled to do so under the Act or Regulations, that maintenance or other money may, unless the court otherwise orders, be paid to that person, and the receipt of that person for any maintenance or other money so paid shall be sufficient discharge of the liability of the person required under the order to pay that maintenance or other money.
(8) Where a person ordered to pay a fine under an order to which this rule applies fails or refuses to do so, proceedings for the enforcement of the payment of that fine may be taken by a Registrar, the Marshal or an officer of the Attorney-General's Department, but not by a party.
(9) Where a court has ordered that a recognizance be forfeited, proceedings for the enforcement of that forfeiture may be taken by the Marshal, an officer of a police force, or by an officer of the Attorney-General's Department designated by the Secretary to that Department, but not by a party.
(10) Where, immediately before the date of commencement of the Act, an order that a party to a marriage pay maintenance or other money for the benefit of the other party to the marriage or of a child of the marriage was registered in a court that has jurisdiction under the Act, that order may be enforced in accordance with this order.
(11) An application for the enforcement of an order under this rule shall state whether any other decree is in force for the enforcement of the order and whether any other proceedings for the enforcement of the order are pending and, if any such proceedings are pending (being proceedings taken by a person referred to in sub-rule (7)), the name of that person.
(12) Where an application for the enforcement of an order under this Order names a person referred to in sub-rule (7) as the person who has taken other proceedings that are pending for the enforcement of the order, the Registrar shall enquire of the person so named as to the present position with regard to those proceedings and shall file with the court papers relating to the application a memorandum containing any information ascertained as a result of that enquiry.
Summary procedures on refusal or failure to comply with certain orders
3. (1) Where a person is alleged to have refused or failed to comply with an order or agreement to which rule 2 applies, the person entitled to money payable under the order or agreement, or a person entitled to take proceedings for the purpose of enforcing the payment of those moneys or the forfeiture of a recognizance may apply to a Registrar for the issue, of-
(a) a notice in accordance with Form 45; or
(b) a summons in accordance with Form 46.
(2) Upon receipt of an application for the issue of a notice under paragraph (1) (a), the Registrar shall issue the notice.
(3) Upon receipt of an application for the issue of a summons under paragraph (1) (b) the Registrar may issue such a summons if-
(a) in the case of an order or agreement referred to in paragraph 2 (1) (a), (b) or (c), the Registrar is satisfied that the person liable to make payments thereunder has refused or failed to do so in respect of a period of not less than 2 weeks; and
(b) in the case of an order referred to in paragraph 2 (1) (d), (e), (f) or (g) the Registrar is satisfied that the person against whom the order was made has refused or failed to comply with the order.
(4) A summons under this rule for the enforcement of an order of a kind referred to in paragraph 2 (1) (e) may be issued by the Registrar of the court that imposed the relevant fine or ordered the forfeiture of the relevant recognizance and not otherwise.
(5) A summons under this rule, shall be served on the person to whom it is addressed in a manner referred to in Order 18, paragraph 5 (1) (a), (b) or (c).
(6) A person served with a summons under this rule shall not, without reasonable excuse-
(a) fail to attend as required by the summons and then on such days and at such times as the court may direct;
(b) refuse or fail to be sworn;
(c) refuse or fail to answer a question on any matter relating to the refusal or failure to comply with the relevant order or agreement; or
(d) refuse or fail to produce a document that is required to be produced by the summons.
Penalty: $500.00.
(7) Where a person fails to attend before a court as required by a summons under this rule duly served on that person, or on such days and at such times as the court directs, the court may issue a warrant directing that the person be taken into custody and brought before the court.
(8) The Registrar of the court that issues a warrant under sub-rule (7) shall cause to be attached to the warrant-
(a) a sealed copy of the order in relation to which the warrant is issued; or
(b) a copy of that order certified by the Registrar to be a true copy of the sealed copy in the custody of the Registrar.
(9) Where a person attends before, or is brought before, a court, the court may, on being satisfied that the person has refused or failed to comply with an order or agreement to which rule 2 applies, make such of the following orders as it thinks fit:
(a) an order for the payment of the arrears and any other unpaid portion of the moneys payable under the first-mentioned order or agreement;
(b) a garnishment order under rule 4;
(c) an order under rule 5 for the seizure and sale of personal property belonging to the person;
(d) an order under rule 6 that the estate of the person be sequestrated;
(e) an order under rule 7 for the sale of an interest in real property belonging to the person;
(f) such orders as it thinks necessary to enable enforcement of its orders or to prevent the dissipation of property or the wasting of assets.
Garnishment
4. (1) In this rule, unless the contrary intention appears-
"applicant" means a person or authority instituting proceedings under sub-rule (2);
"garnishee" means a person (including a corporation, the Commonwealth, a State or Territory or an authority or institution constituted by or under a law of the Commonwealth, or of a State or Territory) from whom the applicant claims that money is due or accruing to the respondent;
"respondent" means the person who has refused or failed to comply with an order of the Court or agreement specified in rule 2.
(2) In matters to which rule 2 applies, a party to the proceedings that resulted in the making of the order or a party to a relevant agreement, the Registrar or other authority or person entitled to take proceedings for enforcement, may apply to the court for a garnishment order.
(3) An application for a garnishment order may be made ex parte.
(4) The following moneys may be the subject of a garnishment order:
(a) a sum standing to the credit of the respondent in a bank, building society, co-operative housing society or similar society, credit union, credit society or investment fund or corporation, that is payable to the respondent on call or on notice;
(b) the earnings of the respondent (being wages or salary and fees, bonus, commission, overtime pay or other emoluments payable in addition to or in lieu of wages or salary), a pension, annuity, moneys payable in lieu of leave, or retirement benefit due or accruing to the respondent;
(c) any debt or other sum of money due or accruing to the respondent.
(5) Where the application for a garnishment order is made by a person other than the Registrar, it shall be verified by affidavit.
(6) An affidavit in support of an application for a garnishment order shall state-
(a) particulars of the moneys payable by the respondent;
(b) efforts made by the applicant or any other person to obtain payment of those moneys;
(c) details of any relevant information furnished by the respondent in response to a notice under paragraph 3 (1) (a) or obtained in an examination pursuant to a summons issued under paragraph 3 (1) (b);
(d) particulars of the moneys referred to in sub-rule (4) in respect of which application is made for garnishment; and
(e) the order sought against the garnishee.
(7) The court shall, in respect of an application for a garnishment order-
(a) make the order sought or such other appropriate order on the application as it thinks fit; or
(b) dismiss the application.
(8) Prior to the making of an order under sub-rule (7), the court may, in proceedings on an application for a garnishment order-
(a) adjourn the proceedings and require the garnishee and the respondent or either of them to be served with a copy of the application;
(b) give directions as to service and the further hearing of the proceedings; and
(c) make such other order as it thinks necessary to prevent the moneys that are the subject of the application from disappearing or being dissipated.
(9) Where the court makes a garnishment order attaching the earnings of the respondent, it shall-
(a) specify the periodic amount to be deducted from the respondent's earnings in satisfaction of the moneys payable, that is to say, the "normal deduction rate";
(b) specify an amount fixed by the court as the amount below which the respondent's earnings shall not be reduced by compliance with the order, that is to say, the "protected earnings rate";
(c) specify the person to whom, the place at which and the manner in which payment of amounts to be paid by the garnishee under the order is to be made;
(d) specify the amount that the garnishee may deduct from the normal deduction rate referred to in paragraph (a) for administrative expenses; and
(e) specify the date from which the payments shall commence.
(10) A sealed copy of an order under sub-rule (7) shall be served on the garnishee and on the respondent in accordance with Order 18, paragraph 5 (1) (a), (b) or (c).
(11) A garnishee who has been served with a garnishment order-
(a) may apply to the court disputing his liability to make payments under the order; or
(b) shall comply with the order.
(12) If the garnishee applies to the court disputing the order, the garnishee shall file an affidavit setting out the facts and circumstances upon which the order is disputed, and serve a copy of the affidavit on the applicant and the respondent in accordance with Order 18, rule 5.
(13) On the hearing of an application by a garnishee disputing the liability of the garnishee to make payments under a garnishment order, the court-
(a) may proceed with the hearing and determination of the dispute notwithstanding that the respondent has not been served with the application; and
(b) shall hear and determine the matter in dispute and make such order, including an order as to costs, as it thinks fit.
(14) Where a person complies with an order under paragraph (7) (a), his compliance with the order shall be a valid discharge of the indebtedness of the person to the respondent to the extent of the amount paid under the order.
(15) The court may, on application or of its own motion, vary or discharge an order under paragraph (7) (a) upon such conditions as it thinks fit.
(16) Where an order is varied or discharged under sub-rule (15), the court shall make such orders as to service of the order as varied or the order for discharge on the garnishee and other persons as it thinks fit.
(17) The provisions of sub-rule (11) apply, insofar as they are applicable, to an order that has been varied under sub-rule (15).
(18) An amount standing to the credit of a respondent in an account in a bank, building society, co-operative housing society or similar society, credit union or credit society, or investment fund or corporation, that is payable to the respondent on call or on notice shall, subject to sub-rule (19), for the purposes of this rule, be a debt due to the respondent notwithstanding that any condition relating to the account or a demand or notice for payment under the account is unsatisfied.
(19) Where an amount referred to in sub-rule (18) is made the subject of an order under this rule then, unless the court otherwise orders, the first-mentioned order only operates to require payment of the said amount when any necessary period of notice has expired, but service on the garnishee of the order for payment of the said amount shall be deemed to be the giving of that notice.
(20) A garnishee shall not, without reasonable excuse-
(a) fail to comply with an order made under sub-rule (7), (13) or (15); or
(b) dismiss a respondent from or injure a respondent in respect of employment, or alter the respondent's position to the prejudice of the respondent, by reason of an order made under this rule.
Penalty: $500.00.
(21) A conviction under sub-rule (20) does not limit, restrict or otherwise affect any obligation that the garnishee may have in relation to the respondent or any right or remedy that the respondent may have against the garnishee under any other law of the Commonwealth or of a State or Territory.
(22) A pension, annuity or allowance that is protected from garnishment or encumbrance under any law shall not be subject to an order under this rule.
(23) Where an order under this rule is in force and the respondent ceases to be employed by the garnishee, the respondent and the garnishee shall, within 21 days after the respondent ceases to be so employed, each give notice to the court-
(a) notifying that the respondent has ceased employment with the garnishee; and
(b) specifying the date on which the employment ceased, and, if the respondent has a new employer, the respondent shall, in the notice given under this sub-rule, specify-
(c) the name and address of that employer and the place of the respondent's employment by that employer; and
(d) the amount of the respondent's earnings from employment with that employer.
Penalty: $500.00.
(24) Where the Court receives a notice under sub-rule (23), it shall notify the applicant in writing and, if no written objection is received from the applicant or the respondent within a reasonable time, it may, of its own motion, issue a fresh order in appropriate terms naming the new employer as garnishee.
Seizure and sale of personal property
5. (1) In matters to which rule 2 applies, the Registrar or other authority or person entitled to take proceedings for enforcement may apply to the court for an order for seizure of personal property belonging to a person who has failed or refused to comply with an order of the court or an agreement specified in that rule.
(2) An application under sub-rule (1) may be made ex parte.
(3) An affidavit in support of an application for seizure of property under sub-rule (1) shall state-
(a) particulars of the moneys not paid by the person against whom the order is sought;
(b) efforts made by the applicant and any other person to obtain payment of the moneys;
(c) details of any relevant information furnished by the respondent in response to a notice under paragraph 3 (1) (a) or obtained in an examination under paragraph 3 (1) (b); and
(d) details of personal property owned or believed to be owned by the person against whom the order is sought.
(4) Where application is made under this rule by a Registrar or other public authority, verification thereof by affidavit is not required.
(5) Where an application is made under sub-rule (1), the court may order-
(a) a Marshal of the court; or
(b) any other officer of the court or some other person (such officer or person being an officer or person who is willing and able to execute the order), to seize and realize some or all of the personal property, not being prescribed personal property, of the person named in the order.
(6) An order made under sub-rule (5) shall specify the amount owing by the person named in the order and may include such further amount to cover the expenses of obtaining and executing the orders as the court thinks fit.
(7) If the person named in the order pays to the Marshal, officer of the court or other person specified in the order or into the registry of the court where the order was made the total of the amounts specified under sub-rule (6), the order shall be deemed to have been complied with and no further steps shall be taken under it.
(8) Where it appears to the Marshal, officer or other person specified in the order that the property ordered to be seized in accordance with sub-rule (5) is substantially greater in value than the amounts specified under sub-rule (6), the Marshal, officer or other person shall first seize and realize so much of the property as appears to be sufficient.
(9) The Marshal, officer or other person specified in the order shall seize or realize the property-
(a) in such order as seems to the Marshal, officer or other person best for the speedy execution of the order without undue expense;
(b) subject to paragraph (a), in such order as the person named in the order may request; and
(c) subject to paragraphs (a) and (b), in such order as appears to the Marshal, officer or other person best for minimizing hardship to the person named in the order and any other person affected.
(10) The Marshal, officer or other person specified in the order shall, in relation to all property seized by the Marshal, officer or other person-
(a) put the property up for sale as quickly as is consistent with due regard to the interests of the parties and to the desirability of a beneficial realization of the property;
(b) put the property up for sale at the place where it seems best for a beneficial realization of the property;
(c) advertise the sale in such manner as appears to be adequate; and
(d) sell the property by auction or private treaty.
(11) The Marshal, officer or other person specified in the order shall pay the proceeds of sale into the registry of the court where the order was made, whereupon the Registrar shall apply the proceeds so paid-
(a) firstly, in or towards the discharge of the amount specified under sub-rule (6) for the expenses of obtaining and executing the order or, if no such amount is so specified or the amount specified is found to have been too great or too small, then in or towards the discharge of such sum as the Registrar may fix as the proper expenses of obtaining and executing the order; and
(b) secondly, in or towards the discharge of the amount specified in the order under that sub-rule as the amount owing by the person named in the order.
(12) The Registrar shall-
(a) if the Registrar considers that the person named in the order may have a continuing financial obligation to a party or to a child of the marriage-retain the balance to be dealt with in accordance with the further order of the court; or
(b) in any other case-pay the balance, if any, to the person named in the order.
(13) Where the Registrar retains money under paragraph (12) (a), the Registrar shall report that fact to the court, whereupon the court, having regard to any continuing financial obligation that the person named in the order may have to a party or to a child of the marriage, may make such orders as to the further disposition of the moneys as it thinks fit.
(14) Where the court makes an order under sub-rule (13), it may make such further orders as to service of the order and other matters related thereto as it thinks fit.

The duty of disclosure on all parties to proceedings in this court is set out in a number of well known cases.
A significant issue in this matter was the alleged non-disclosure of the respondents. Attempting to deal with non-disclosure often puts the other party to considerable difficulty with regards to investigating their financial affairs. The Full Court in Weir (1993) FLC 92-338 at 79,593–4 made the following statement regarding the duty to disclose and the Court’s powers where non-disclosure has been found:
This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti (1986) FLC 91-759, and Mezzacappa and Mezzacappa (1987) 11 Fam LR 957; (1987) FLC 91-853. It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature…
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s 75(2) factors.
The law about secret trusts is set out in a number of cases.
In the High Court’s decision of Voges & Monaghan (1954) 94 CLR 231 the judgment of Fullagar and Kitto JJ cited the following passage from French v French (1902) 1 IR 172 as to the nature of secret trusts:
A passage in the judgment of Lord Davey in French v French (1902) 1 IR 172 contains probably as clear an exposition of the principle as is to be found in the books. "It is now well established," his Lordship said, "and has been settled since the time of Lord Hardwicke, that if a testator communicates in his lifetime to a proposed devisee or legatee that he has left him his property, and expresses a wish that the property should be disposed of in a particular manner, and the legatee or devisee by acquiescence, or even by silence, accepts that communication, and the testator dies without any repudiation, a trust is fastened upon his conscience, as it is said, and he cannot afterwards either appropriate the property to his own use or dispose of it otherwise than in accordance with the wishes which were thus communicated to him, and which he has accepted. My Lords, it is said that this jurisdiction is based upon fraud, and so it is, because if you once get to this, that it is a trust which is imposed upon the conscience of the legatee, then if the legatee betrays the confidence in reliance upon which the bequest was made to him, then it is what I should think everybody would consider a fraud, though I take the liberty to say that the moral turpitude of any particular case must vary infinitely according to the circumstances of the particular case. My Lords, the basis of it is of course that the testator has died, leaving the property by his will in a particular manner on the faith and in reliance upon an express or implied promise by the legatee to fulfil his wishes, and your Lordships will at once see that it makes no difference whatever whether the will be made before the communication to the legatee or afterwards, because, as was said, I think, by Turner VC. in one of the cases which were cited, the presumption is that the testator would have revoked his will and made another disposition if he had not relied upon the promise, express or implied, made by the legatee to fulfil his wishes" (1902) 1 IR, at p 230.
In the same High Court judgment Dixon CJ (dissenting) said the following about the standard of proof:
As Viscount Sumner said in Blackwell v Blackwell (1929) AC 318:
“The necessary elements, on which the question turns, are intention, communication, and acquiescence. The testator intends his absolute gift to be employed as he and not as the donee desires; he tells the proposed donee of this intention and, either by express promise or be the tacit promise, which is signified by acquiescence, the proposed donee encourages him to bequeath the money in the faith that his intentions will be carried out” (1929) AC, at p334.
But all these elements must be established to the reasonable satisfaction of the court. The evidence may be circumstantial or it may consist in admissions by the legatee upon whom it is sought to fix the trust, and the admissions may be express or by conduct or the proof may consist in both admissions and circumstantial evidence. When the issue is contested it will seldom include direct evidence of what passed between the testator and the legatee. But, in particular, the evidence must prove satisfactorily that the trust was ascertained and what it was.
The elements of a secret trust are usefully summarised by Brightman J in Ottaway v Norman (1972) 1 CH 698 at 711:
The essential elements which must be proved to exist are: (i) the intention of the testator to subject the primary donee to an obligation in favour of the secondary donee; (ii) communication of the intention to the primary donee; and (iii) the acceptance of that obligation by the primary donee either expressly or by acquiescence.

Credit, disclosure and findings

This matter was heard over a period of 6 days (17 September 2007,

20 November 2007
, 26 February 2008, 2 April 2009, 3 and 4 June 2009 with many more hearing dates being vacated) and I had ample opportunity to form a view about the credit of each of the witnesses who gave evidence in court. For the reasons that I set out below I do not accept the evidence of Mr Kanavos and Ms Kanavos in relation to financial matters and to the operation of the business. I accept the evidence of Mr C, Mr N and Graham Chegwidden. I accept the evidence of Mr Kanavos and Ms Kanavos about other matters, particularly insofar as their evidence may be corroborated by documents or the evidence of other witnesses. I have grave reservations, however, about any financial documents that have been prepared on the instructions of, or based on source materials prepared or supplied by, Mr Kanavos and/or Ms Kanavos. I provide the following reasons:
(1)Both Mr Kanavos and Ms Kanavos were both argumentative and evasive in cross-examination. Both tended to provide irrelevant or unresponsive answers. Both provided inconsistent evidence, particularly about the operation of the business and about finances. Mr Kanavos was often flippant in his manner in the witness box and was prone to the occasional emotional outburst in which he complained about what he perceived to be his persecution by the applicant even though at all relevant times he conceded that some child support was owing, and in the end did not dispute the debt at all. Quite frankly, and succinctly stated, they were both unimpressive witnesses whose testimony lacked credibility, even putting aside the documents that demonstrated the inconsistencies in their evidence.
(2)Mr C, a nephew of Mr Kanavos, was called as a witness for the applicant. He swore an affidavit on 27 January 2009. The high point of his evidence was when he deposed to a conversation with Mr Kanavos, his uncle, in which the latter said to him, in effect, that he needed Mr C’s help because his first wife had taken everything, he would put Mr C as a director, pay him wages, provide business for him to undertake, but he just had to do what he, Mr Kanavos, told him to do. I accept this evidence in preference to the evidence on this issue by Mr Kanavos and Ms Kanavos. Mr C was thoroughly and forcefully cross-examined by counsel for the respondents. Regrettably for the respondents all this achieved was (i) to demonstrate the capacity of the respondents to produce and use in cross-examination documents that had repeatedly been sought by the applicants but not provided, and (ii) to demonstrate just how little Mr C in fact knew about the operations of the business thus confirming the impression that he was, for all practical purposes, the puppet for Mr Kanavos.
(3)Mr N, a brother of Mr Kanavos, gave evidence about his knowledge as to his mother’s will and changes made to it. He too was thoroughly cross-examined. I accept his evidence in preference to any conflicting evidence of Mr Kanavos, though I note that at the end of the day nothing turns on this.
(4)Graham Chegwidden, the solicitor acting on the estate of the deceased mother of the first respondent also gave evidence. There was little challenge to this evidence and I accept the same.
(5)In relation to Ms Kanavos’s involvement in [W] counsel for the applicant submitted:
Ms Kanavos
32. Ms Kanavos also fulfilled the role of nominal director while the real controller of the business was the First Respondent. She gave evidence that she had been a director of [W] since 2004 and had bought that company off Mr C for the sum of $5,000[8] although no documentary evidence of this sale has been adduced by the First Respondent. Ms Kanavos initially described her duties in general terms as, marketing and “trying to sell the product”[9], and payment of bills. In answer to questions from the First Respondent she said that she was paid $1600 per month but only if the company had the money[10]. Exhibit A2 which was a financial statement completed by the First Respondent in May 2008 stated that Ms Kanavos’s income was $200 per week. She said that she was in charge of keeping the business records, although other evidence showed that the First Respondent was also involved in record keeping[11] (see below). Beyond this it may be inferred by the Court that the business of [W] was operated by the First Respondent. There is ample evidence to support that conclusion.
[8] T7 L 26
[9] T7 L29
[10] T20 L28. The First Respondent also asserted that Ms Kanavos earned an average $400 per week
[11] See below in the section entitled “The First Respondent did the Paperwork”
Lack of Knowledge of Ms Kanavos about the Company’s Business Affairs
63. When asked what was the hourly rate she paid her husband Ms Kanavos at first seemed not to know but thought it was $20 or $25[12] and then suggested that the company did not produce that much and that they were getting what the company made[13]. Ms Kanavos said that her own rate was $20 per hour and that Mr Kanavos had the task of recording how many hours per week she worked.[14] At this point the witness seemed not to know how this was calculated and said she was confused and that she had not “received any legal advice about this”[15]. This evidence had the hallmarks of testimony from a person who had little involvement in the business activities of [W] notwithstanding the fact she maintained it was her company. In reality [W] and her role as director and owner was merely a carapace for ensuring that child support payable by the First Respondent would not be collectable.
[12] T12 L37-45
[13] T12 L 45-48
[14] T13 L 24
[15] T13 L 34

Ms Kanavos claimed that she was struggling and that the company did not make profits – “its more debts than profits”[16]. Nevertheless she had been able to draw wages of $1600 per month for September, October and November 2007[17].
[16] T13 L 44
[17] T14 L1-13
I agree that counsel’s submissions adequately reflect the evidence. I am also satisfied that for all practical purposes Ms Kanavos was also the puppet of the first respondent and really had no interest in [W] or the other entities.
(6)In relation to the role of Mr Kanavos in [W]:
(a)Ms Kanavos confirmed that it was the First Respondent who did the quotes,[18] visited customers, manufactured the products including [omitted][19] and assisted with the paperwork of the business. [20] She did not have any experience or training in [omitted]. As at April 2007 she did not use the machines or [omitted] in making the products.[21]
[18] T7 L 39
[19] T34 L 16-18
[20] T12 L1-6
[21] T10 L 31-34
(b)She later claimed to be learning about ‘[omitted]”[22] from the First Respondent and that after April 2007 she had started to learn something about the production side of the business. This coincided with a period during which the First Respondent underwent an operation and was unable to work for a period of three months. It was not insignificant that during this period no new work could be obtained by the company as the First Respondent was not able to get about and give quotes as he could not drive.[23] Notwithstanding there was no new work coming into the company during this period there was said to have been a backlog of work which was being completed.[24] In August 2007 the First Respondent had started to do heavier work and commenced going out and getting quotes.[25] Clearly the First Respondent occupied a very central role in the business, he was the business. In the proceedings before Lawrie J the accountant Mr R responding to questions in cross examination by the First Respondent said as follows[26]:
[22] T 8 L3 - apparently a process where [omitted]
[23] T11 L 5. Also confirmed by the First Respondent who said that he had suddenly fallen ill in April 2007 and that in the period April, May and June this year, he had not gone out to solicit work – see T32 L19-20.
[24] T11 L 17
[25] T11 L 31-43
[26] Transcript before Lawrie J T158 L16-24
Let me put to you, was the company more important to you or me working for you more important?---Well you are the [occupation omitted] man. You're the one who has got all the knowledge and company - or any business in that area wouldn't have anything. It's the people that count, the knowledge and the data you've got in your head that can manufacture [omitted] very successfully.
So if I continue to work for you and somebody offered you what you paid for it you would sell the business - would you sell the business?---I'd want to retain you.
(c)
Further evidence of this is found in the testimony of

Ms Kanavos. She said that prior to April 2007 she employed the First Respondent and one worker in the business, but it was the First Respondent who told the other worker how to go about the job.[27] Even during a period when he was off work recovering from an operation he had come in to check up on problems with production,[28] and by doing so demonstrated a level of interest in the business that stood at odds with his assertion that he was a mere employee on an average wage of $600 per week.[29]
[27] T10 L 18-19
[28] T33 L 5-10
[29] T36 L19
(d)The First Respondent in cross examination agreed that his skill lay in the manufacturing side and his skill level had built up as a result of being in the business for 20 years.[30] In relation to [W] he was doing the [omitted] side and made things on the shop floor.[31] It was put to the First Respondent that it was primarily his experience and skill from the years in the business that allows [W] to keep functioning as a business. Somewhat surprisingly, given the central role the First Respondent had in relation to the business he claimed that the business could “function without me”,[32] yet he agreed that his wife definitely did not have sufficient experience to keep the company going[33]. Nevertheless he was sure that the skill and experience of the other employee was sufficient although “maybe not to the same extent”[34]. The First Respondent’s suggestion as to the limited role he had should not be accepted and was clearly put forward to support his contention that he was only an employee of [W].
[30] T27 L 25-38
[31] T30 L6-9
[32] T35 L49
[33] T36 L5
[34] T36 L10
(e)It is to be noted that the First Respondent was able to work flexible hours, a privilege normally only available to persons who work for themselves or own their own business rather than persons who are employees. Ms Kanavos claimed that before the First Respondent’s operation in April 2007 the First Respondent would go in for a few hours each day (around 20-25 hours[35]) but as at November 2007[36] he had started to work 40 hours.[37]
[35] T10 L3
[36] There was an inconsistency in the evidence of Ms Kanavos – she said at T11 L 47 that the First Respondent had been back full time since August 2007
[37] T9 L 48
(f)The First Respondent gave evidence that since returning to work in August 2007 after his operation he had increased his working hours and in the last month (Oct/Nov 2007) was working 40-55 hours per week working Monday to Friday and sometimes Saturday.[38] He said in the last month he was working between 8, 10 and 12 hours per day,[39] but then said “sometimes six, sometimes four”.[40] When asked what he was doing he said “paperwork, getting it all ready, sizing jobs, doing a bit of work on the floor.”[41]
[38] T33 L15-16
[39] T33 L40
[40] T33 L42-43
[41] T33 L45-46
(g)The First Respondent said that there was another employee on the floor and also two contractors.[42] He suggested that it was his call or his wife’s call as to when they were needed[43]. The First Respondent said that the contractors rendered invoices according to the job and the hours worked.[44]
[42] T33 L48-T34 L1
[43] T34 L5
[44] T35 L10
(h)On the completion of the evidence in chief of Ms Kanavos, she was then cross examined by the First Respondent.[45] The cross examination was revealing in relation to the First Respondent in that by the questions asked it disclosed the detailed knowledge and ardour the First Respondent had in relation to the financial affairs of the company.[46] This contrasted with other occasions when the First Respondent appeared to be attempting to give the impression that he knew very little about the affairs of the company. Indeed this had been an observation of Lawrie J in her judgement at [14].[47]
[45] T19-T22
[46] T20 – see for example questions as to the payment of wages, the amount owed to the ATO
[47] “The husband impressed me as very intelligent and astute. His evidence impressed me as an attempt to appear not very intelligent or astute”
(i)One example of this in the First Respondent’s evidence was his claim that he did not know when the company [W] had started or how long it had traded under that name[48]. Although he confirmed that the company was sold to his wife by his nephew for $5,000[49] he said he had no idea when his nephew Mr C became a director of the company[50]. If the testimony of Mr C is accepted the Court must conclude that this evidence was false.
[48] T 24 L 42-49
[49] T 25 L5-14
[50] T25 L 18
(j)The First Respondent was questioned about a previous company [SS] of which he had been a director. He claimed not to know when that company started trading under that name or when a Mr R had been appointed as a director[51] but thought it might have been a couple of years after the company commenced trading[52].
[51] T25 L 41-44
[52] T25 L 49
(k)The First Respondent also claimed not to know when [SS] had ceased trading. The First Respondent was asked how many current customers [W] had as at November 2007 and he said initially that he did not know.[53] He then said that there was one major one being [L] in Canberra.[54] When further pressed the First Respondent said that there was another one or two.[55]
[53] T31 L 38-39
[54] T31 L 41
[55] T31 L43-44
(7)I find that Mr Kanavos was, because of the matters referred to above, able to masquerade as a mere employee of [W]:
(a)Under the arrangement described above the First Respondent was able to masquerade as a mere employee on an average weekly wage of $600 net when in fact he was a recipient of funds extracted from the earnings of the company and other benefits provided by the company at its expense.
(b)
The First Respondent had the almost exclusive use of a motor vehicle leased by the company. Ms Kanavos gave evidence that [W] leased a Mitsubishi Triton which was usually parked outside her house. That vehicle was used only by the First Respondent as Ms Kanavos said that she did not drive it.[56] Ms Kanavos said she had her own car.[57] The First Respondent said that he would not be surprised (when it was put to him) to know that the insurance was in his name and the company. He agreed that it was normally garaged outside of his unit and that he drove the vehicle to work and that he drove it 90% of the time.[58] While
[56] T9 L26-34
[57] T10 L 11
[58] T35 L 35-38

Ms Kanavos thought that the vehicle had cost around $17,000-18,000, the value of the vehicle benefit was less important than the fact that the First Respondent had free use of the company’s property.
(c)The First Respondent by pretending he was a mere employee maintained the charade that he was unable to meet his child support obligations while having full and free access to the funds of [W].
(8)I find that Mr Kanavos was clearly responsible for the administration of the business:
(a)The First Respondent confirmed that since his wife took over the company he had been involved in the paperwork[59].
[59] T 34 L 21-22
(b)Ms Kanavos said the company’s tax returns were prepared by an accountant on the basis of information she provided according to the records of the company. Ms Kanavos confirmed that the First Respondent prepared the records.[60] It might also be inferred that the First Respondent also maintained the records. The First Respondent also prepared wage records and payslips for the company.[61] In relation to the other employee, Ms Kanavos said that he was paid weekly by cheque and that the First Respondent was in charge of that.[62] It was also her husband who told her how much that employee was to be paid[63]. During the three months the First Respondent was off work after his operation he had helped Ms Kanavos with the paperwork.[64]
[60] T12 L25
[61] T12 L29-30
[62] T15 L1
[63] T15 L 13-14
[64] T11 L 3
(c)The First Respondent gave evidence that when the time came to put in tax returns he and his wife jointly provided the information to the accountant and that his wife did the BAS[65]. The Applicant then changed this evidence presumably to distance himself from this activity and said that it was his wife who gave the information to the accountant.[66]
[65] T34 L 27-28
[66] T34 L34
(9)The first and second respondents’ evidence about their income was inconsistent and misleading:
(a)The First Respondent has suggested that he cannot afford to pay child support and seeks to depart from the relevant child support assessments. Ms Kanavos confirmed that the First Respondent was paid $600 per week and that she signed the cheques[67]. As to the amount of the cheque which was to be drawn for wages Ms Kanavos said she obtained this from the computer and that it was the First Respondent who put that information into the computer.[68]
[67] T14 L19-31
[68] T14 L 40
(b)The First Respondent said that his take home pay for the last couple of months ranged from $300-$900 per week but that the average was $400 per week. He agreed that he worked up to 12 hours per day although not every week[69].
[69] T36 L24
(c)The wages that were paid to the First Respondent were on any view suspiciously low having regard to the extensive experience the First Respondent had in the manufacture of [omitted] products and the hours he worked. It is relevant to refer to the important finding made by her Honour Lawrie J at [41] that the First Respondent’s tax returns do not accurately reflect his income and that the First Respondent had deliberately set out to avoid paying periodic child support at [47].
(d)The First Respondent’s tax returns disclosed the following details:
Income Table of Mr Kanavos

Year

Gross Salary and Wage Income

Gross[70] Weekly salary

Other Income

Total Gross Income

Occupation

2003

12,143

233

12,143

2004

10,306

198

10,306

2005

9,028

173

9,028

2006

8715

167

8,715

2007

16,455

316

1,034

17,489

Manager

2008

22,860

439

1033

23,893

Manager

[70] This column is an extrapolation from the gross annual salary

(e)The amounts in the table above are considerably less and inconsistent with the asserted average amount of $600 per week gross the Applicant had said he was paid. The amounts in the tax returns are so minimal as to raise real questions as to why a person with the experience Mr Kanavos obviously had would tolerate and accept income of this level, unless those amounts were fictional and engineered to avoid his child support responsibilities. This inference is clearly open having regard to the large amounts of cash which on his own account was transferred out of [W] by Mr Kanavos to his wife’s credit card and bank accounts.
(f)The tax returns of Ms Kanavos also show derisory amounts of income:

Income Table of Ms Kanavos

Year

Gross Salary and Wage Income

Gross Weekly salary

Other income

Total Gross Income

Occupation

2003

10,200

196.15

4600

14,800

Sales Representative

2004

2160

41.53

3326

5,486

Sales Representative

2005

2,400

46.15

Nil

2,400

Sales Representative

2006

26,600

511.53

750

27,350

Sales Representative

2007

21,175

407.21

710

21,885

Managing Director

2008

2,425

46.63

1350

3,775

Co Director

(g)
The combined gross income of the First Respondent and

Ms Kanavos as illustrated by the following table was insufficient to support the level of expenditure disclosed on the credit card statements.

Table of Combined Income of Mr Kanavos and Ms Kanavos

Year

Gross Salary and Wage Income

Gross Weekly Salary

Total Gross Income

Average Weekly Income

2003

22,343

429

26,943

518

2004

12,466

239

15,792

303

2005

11,428

219

11,428

219

2006

35,315

679

36,065

693

2007

37,630

723

39,374

757

2008

25,285

486

27,668

532

(h)On any view, accepting for the sake of the argument that the figures in the tax returns were correct, after taking into account the amount of rent which they paid each year (around $400 per week x 52 = $20,800) and with the added expenses of two children they could not have survived. In the 2006 year of income there had been expenditure of $5,800 on jewellery alone (see page 232 of Exhibit A5) and clearly the First Respondent had not disclosed his true level of income to the Court or the recourse he had to the very significant funds which were generated by the business of [W].
(i)
The derisory amounts which the First Respondent and

Ms Kanavos had returned in their tax returns were belied by the numerous and large sums of money which were transferred from the business account of [W] to personal and credit card accounts held by Ms Kanavos.
(j)The First Respondent had access to the business account of [W] by way of the internet and ATM’s. He had undertaken these transactions personally. The credit cards were used to pay numerous personal expenses for the First Respondent and his wife at a level of extravagance which could not be reconciled in any way with the expenditure which the First Respondent had set out in Exhibit A2.
(k)The First Respondent suggested perhaps unwittingly that these amounts were either “director’s loans or wages”. As to the proposition that they constituted directors loans, unless these were paid back by the end of the financial year in which they were made, such loans constituted assessable income of both the First Respondent and Ms Kanavos as deemed dividends paid by a private company under Division 7A of Part III of the Income Tax Assessment Act1936 (see 109D or 109F).
(l)The First Respondent’s characterisation of these amounts as loans in the absence of verifiable business records was a mere label which he erroneously thought would avail him to mitigate the obvious conclusion that very significant amounts were being extracted from [W] by this device.
(m)The same observations apply to the suggestion that the amounts constituted wages. According to their own tax returns very minimal amounts were paid by way of wages to the First Respondent and Ms Kanavos.

(10)The first respondent was less than frank in his evidence about the changes in the business and the company [W]:
(a)ASIC company records show that the company [W] commenced on 26 March 2002, Mr C being its sole director and shareholder. He ceased as director and shareholder in April 2004 and was replaced by the First Respondent’s wife Ms Kanavos. Prior to this time the First Respondent had been a director of [SS] Pty Ltd and a company [SF] Pty Ltd which had preceded [SS] Pty Ltd. The various changes in business structures are set out in the table below:

[W] Pty Ltd

[SS] Ptd Ltd

[SF] Pty Ltd

Start Date

26/3/02

27/11/97

17/3/88

Company Status

registered

de-registered – 21/4/06

de-registered – 9/6/02

Directors

Ms Kanavos – from 3/4/04 to present

Mr C 26/3/02- 13/4/06

Mr Kanavos – from 27/11/97 to 5/4/02

Mr R 5/4/02 – 21/4/06

Mr Kanavos – from 17/3/88 to 9/6/02

Mr R 28/1/00 – 10/12/00

Shareholders

Ms Kanavos – from 13/4/04 to present.

Mr C from 26/3/02 to 13/4/04 (ceased in AR for 2002)

Mr Kanavos – from 27/11/97 to 5/4/02 (per AR for 2001)

Mr Kanavos – from 17/3/88 to 9/6/02 (per AR for 1999)

(b)Both [SS] Pty Ltd and [W] shared the same principal place of business on the ASIC records, Property M. [SS] Pty Ltd operated from that address from 18 December 2001 until it was de-registered on 21 April 2004. [W] commenced operation at that address on 13 April 2004 and the circumstances suggest that there was merely a continuation of the same business in the guise of [W].
(c)The First Respondent maintained that he had sold [SS] to Mr R but had not received any consideration, Mr R apparently agreeing to pay off the debts of the company which he said were approximately $50,000[71].
(d)The First Respondent said that the business of [SS] was similar to the business of [W][72]. The First Respondent was asked about the company [SF] Pty Ltd which was in operation prior to [SS] and was a company which had also supplied [omitted] equipment. [SF] was a company he had started with his first wife. He had been involved he said in the manufacturing side. The First Respondent agreed that the skill he had, had built up over the years and that he had been doing work of this type since 1988[73]. The First Respondent said [SF] had stopped trading when he had divorced and that it had closed down in order to avoid paying a creditor[74].
(e)The First Respondent suggested he was not involved when [W] first commenced trading and that his nephew Mr C was a director[75]. He could not say when he had first become involved[76] but when that occurred he had been engaged in the [omitted] side. He said he thought that there were two or three employees and Mr C had been a director who were engaged in similar work[77]. In the light of the recent affidavit of Mr C sworn 22 January 2009 this evidence was patently false.
(f)The effect of the evidence of Mr C was that he had been appointed as a director to shield the First Respondent from his obligation to pay child support. According to Mr C it was the First Respondent who controlled [W] and made the managerial decision as of that company.
(g)The First Respondent said that [W] came to be transferred to his wife because Mr C had wanted to do [occupation omitted] and wanted out[78]. He claimed that Mr C had initially approached him to buy the company but he had declined because he had had “enough of being in business.” The First Respondent confirmed that at the time Mr C had wanted out, the company had in fact also been doing [omitted] and this was still the case.[79] He said that Mr C had then approached his wife to buy the company and that he had discussed that proposal with his wife. He said that Mr C had wanted more than $5,000 at the time[80]. Again the affidavit of Mr C directly contradicts this testimony in particular the suggestion that the company was sold for $5,000 to Ms Kanavos.
(h)Notwithstanding the specific details that the First Respondent had provided about Mr C selling [W] to his wife for $5,000 the First Respondent in a later affidavit said he was mistaken about this detail and that no consideration was paid by his wife for the acquisition of company. This was a surprising admission but one no doubt compelled by the forthright testimony of Mr C.
(i)When asked why he had “enough of being in business” the First Respondent said he was under certain medication which he did not want to discuss[81], although he then expanded on this and said his health was “okay” but “it was my mind that wasn’t.”[82]
(j)The First Respondent was asked why he did not go and get a job for wages given the fact that he had had enough of being in business. He said that the major reason why he did not do this was he had to look after his brother Mr G[83]. Yet it was later confirmed by the First Respondent in cross examination that Mr G had a wife and two children in the 40’s. It is to be inferred that in the absence of evidence to the contrary they were in a position to provide that care. The First Respondent suggested that he spent 2-4 hours a day looking after his brother Mr G who had a hereditary disease “ataxiaso”.[84] It was suggested to the First Respondent that the reason why he did not do this was because his wages would be garnisheed. The First Respondent did not really respond to this proposition, other than to suggest that the Applicant could garnishee his wages if it wanted or take the business [85]. The First Respondent has on a number of occasions offered the business to the Payee and it is revealing that he considers that it is his business to so offer.[86]
(k)The First Respondent was asked about the company [J] Pty Ltd and said “[J] was initially formed because we don’t think [W] can continue…”[87]. Ms Kanavos gave evidence that she was a director [J] Pty Ltd. She said that [J] was a company involved in marketing and which sometimes supported the work of [W] Pty Ltd.
(l)[J] was essentially a dormant company which had no turnover in the two years prior to November 2007 and did not do anything.[88] It is to be inferred that this company is waiting in the wings in the event that the current company [W] finds itself in difficulty.
[71] T26 L 1-18
[72] T26 L 26
[73] T27 L 32-35
[74] T27 L 40-46
[75] T 29 L33-42
[76] T30 L 4
[77] T30 L7-14
[78] T 30 L 23-27
[79] T31 L17-18
[80] T31 L 24
[81] T31L1-4
[82] T31 L7-8
[83] T37 L36-40
[84] T33 L31-37
[85] T37 L42
[86] See Transcript of proceedings before Lawrie J at T 100 L33-44
[87] T32 L39-41. Some words of the First Respondent’s answer were indistinct to the Court reporter but the sense is tolerably clear
[88] T19 446 to T20 L1

The totality of the evidence leads me to not only make the conclusions about credit referred to above, but also to conclude that all of the companies that feature in this case were merely convenient entities for the first respondent to use to structure his affairs and cash flow with a view to protecting himself, and his new family, from the claims of creditors of the business and personal creditors such as the Child Support Registrar. I reach this conclusion notwithstanding the emphatic submissions on behalf of the respondents to the effect that whilst there may be some anomalies in the accounts, viewed objectively there was no fabrication in relation to income and expenses. I simply cannot accept this submission. The voluminous financial material produced by the respondents late in this litigation when it suited their purpose, but not earlier when it was required by the applicant, creates an almost irresistible inference of non-disclosure as well as fabrication of evidence to justify blatant anomalies. I cannot accept anything other than the first respondent’s desire, demonstrated capacity and willingness to do almost anything to sacrifice the interests of third parties such as the applicant as part of his zealous pursuit of his own interests. Quite frankly the Court has no idea whatsoever what is the true extent of the financial circumstances of the first respondent. He has chosen not to disclose the same. Accordingly I am entitled to take a robust approach in dealing with his evidence, and the matters before the court. I am certainly comfortable in making the findings I have referred to above but I cannot help but feel there remain undisclosed assets and resources controlled by the first respondent that he has not placed before the Court.

The mother’s estate and the secret trust

Mr Kanavos is executor of his late mother’s will which was dated

16 August 2001
, but he is not a beneficiary of the same. Ms Kanavos is a beneficiary. She deposes to first meeting the late Ms Kanavos in 1999 and to seeing her frequently between then and the date of death on

24 April 2007
. She asserts that she was not aware of the contents of the will, and that she was a beneficiary, until after she died. She deposes to not having discussed the contents of the will with her husband before the death of the testatrix. Mr Chegwidden administered the estate which consisted of some cash, a bond in a nursing home, and a property at [M]. He estimated liquid assets were about $70,000. Ms Kanavos was a one-third beneficiary. There was a dispute between the beneficiaries that was resolved at mediation which meant that Ms Kanavos received no cash but retains a one-third interest in the property at [M]. There is a suggestion in the evidence that it was Mr Kanavos who took his late mother to her solicitor in [M] in order to change her will in August 2001, to exclude him as a beneficiary, but to include his wife. I cannot make findings about this, on the evidence before me.
The applicant asserts that:
77. The Applicant seeks to establish that an interest in the administered estate of the First Respondent's mother is secretly held in trust for him by the nominated beneficiary in the will Ms Kanavos. In order to establish a secret trust three things must be proved on the balance of probability:
a) an intention on the part of the First Respondent's mother to subject the primary donee (Ms Kanavos) to an obligation in favour of the First Respondent;
b) communication of that intention to Ms Kanavos;
c) the acceptance of that obligation by Ms Kanavos either expressly or by acquiescence.
[see Ottaway v Norman [1972] 1 Ch 698 at 711]
I accept this as an accurate summary of the law. In effect counsel for the applicant conceded that any evidence in support of the existence of a secret trust was circumstantial, given the absence of any admissions by Ms Kanavos. Counsel submits that there is enough circumstantial evidence to find that there is a secret trust, and this is in the form of the evidence given by the first and second respondents. Counsel’s written submissions in this regard are at paragraphs 77 to 88 of his outline document. Despite his valiant efforts in this regard, I do not accept that the evidence to which he refers, taken at its highest, would satisfy me of any of the 3 elements which need to be established. This is the case even though I have made adverse credit findings against the first and second respondents. I think counsel for the respondents is in fact correct in asserting the evidence is just not there and that it was not even put to Ms Kanavos that she had the relevant knowledge which is an essential component of establishing a secret trust. Whilst I have my suspicions about the circumstances in which Ms Kanavos came to be beneficiary of the estate, there is no evidence to justify the imposition of a secret trust.

Most appropriate form of enforcement

My findings on the evidence leave very little scope for confidence in the respondents and the extent to which they will cooperate with the applicants in the enforcement of the debt. The most appropriate form of enforcement is the one that maximises the opportunities for the applicant to secure payment of the debt or part of it. The garnishment orders in relation to [W] and its customers seem quite appropriate under the circumstances. The proposed orders in relation to the shares also seem appropriate. I acknowledge that there is some potential overlap in the orders sought by the applicant, but it is possible that it will not seek to invoke orders, and the powers they confer, simultaneously. Having regard to the findings I have made I do not believe that the restraints imposed on the respondents are unreasonable. Mr Kanavos in particular seems to have a demonstrated ability to morph himself into various different corporate entities which are substantially controlled by him, though in form are at arm’s length. The obvious difficulty for the applicant is that to maximise opportunities for collection it is actually dependent on the respondents for their cooperation, and this is certainly not a matter that can be assumed.
However the claim against the estate has failed, and no orders can be made in relation to the second respondent’s interest in the estate.

Ancillary matters

During the evidence of the second respondent, she deposed to having at home a Commodore motor vehicle which is registered in the name of [SS] Pty Ltd. I am satisfied from the evidence overall that his company is the alter ego of the first respondent. The applicant seeks orders for the seizure and sale of this motor vehicle and under the circumstances I believe that this is appropriate.

I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate: Anthony Thompson

Date: 19 August 2009

Year	Gross Salary and Wage Income	Gross[70] Weekly salary	Other Income	Total Gross Income	Occupation
2003	12,143	233	12,143
2004	10,306	198	10,306
2005	9,028	173	9,028
2006	8715	167	8,715
2007	16,455	316	1,034	17,489	Manager
2008	22,860	439	1033	23,893	Manager

Year	Gross Salary and Wage Income	Gross Weekly salary	Other income	Total Gross Income	Occupation
2003	10,200	196.15	4600	14,800	Sales Representative
2004	2160	41.53	3326	5,486	Sales Representative
2005	2,400	46.15	Nil	2,400	Sales Representative
2006	26,600	511.53	750	27,350	Sales Representative
2007	21,175	407.21	710	21,885	Managing Director
2008	2,425	46.63	1350	3,775	Co Director

[W] Pty Ltd	[SS] Ptd Ltd	[SF] Pty Ltd
Start Date	26/3/02	27/11/97	17/3/88
Company Status	registered	de-registered – 21/4/06	de-registered – 9/6/02
Directors	Ms Kanavos – from 3/4/04 to present Mr C 26/3/02- 13/4/06	Mr Kanavos – from 27/11/97 to 5/4/02 Mr R 5/4/02 – 21/4/06	Mr Kanavos – from 17/3/88 to 9/6/02 Mr R 28/1/00 – 10/12/00
Shareholders	Ms Kanavos – from 13/4/04 to present. Mr C from 26/3/02 to 13/4/04 (ceased in AR for 2002)	Mr Kanavos – from 27/11/97 to 5/4/02 (per AR for 2001)	Mr Kanavos – from 17/3/88 to 9/6/02 (per AR for 1999)