D and D

[2007] FamCA 1020

FAMILY COURT OF AUSTRALIA

D & D [2007] FamCA 1020

FAMILY LAW - APPEAL FROM FAMILY COURT OF AUSTRALIA – PROPERTY – VALUE OF PROPERTY – ERROR OF FACT – Not established that the trial Judge erred in having no or disproportionate regard to matters to which he did not expressly refer, nor was requested to have regard. Not established that having regard to these matters would have led to a different conclusion or render the conclusion plainly wrong. Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and anor [1983] 3 NSWLR 378, Gronow v Gronow (1979) 144 CLR 513 and De Winter v De Winter (1979) FLC ¶90-605 discussed.

FAMILY LAW - APPEAL – PROPERTY – DISCRETION – Assertion that the trial Judge erred in percentage apportionment of property not established as no error of fact or discretion by the trial Judge established.

FAMILY LAW - APPLICATION FOR LEAVE TO ADDUCE FURTHER EVIDENCE – Relief sought pursuant to s 79A Family Law Act 1975 not granted for lack of jurisdiction. Application for leave to adduce further evidence in accordance with s 93A Family Law Act 1975 not found to have merit as, if accepted, it would not render the trial Judge’s decision erroneous. CDJ v VAJ (1998) 197 CLR 172 cited.

Family Law Act 1975(Cth) Section 79A, Section 93A

Kessey v Kessey (1994) FLC ¶92-495
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Coulton v Holcombe (1986) 162 CLR 1
Banque Commerciale SA  En Liquidation v Akhil Holdings Ltd (1990) 169 CLR 279
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and anor [1983] 3 NSWLR 378 at 385-6
Gronow v Gronow (1979) 144 CLR 513
De Winter v De Winter (1979) FLC ¶90-605

CDJ v VAJ (1998) 197 CLR 172

APPELLANT: Mr D

RESPONDENT:	Ms D
RECEIVER:	Mr X
TRUSTEES IN BANKRUPTCY:	Mr Y & Mr Z

FILE NUMBER: BRF 1325 of 2002

APPEAL NUMBER: APPEAL NUMBER (COSTS): NA
NA 37
98 of
of 2005
2005

DATE DELIVERED: 31 August 2007

PLACE DELIVERED: Parramatta

JUDGMENT OF: Finn, Coleman & May JJ

HEARING DATE: 20 November 2006 and 30 July 2007

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE:

11/05/2005

8/12/2005 (COSTS)

LOWER COURT MNC: [2002] FamCA 1325

REPRESENTATION

COUNSEL FOR THE APPELLANT: C.J. O’Neill

SOLICITOR FOR THE APPELLANT: Stacks Gray Lawyers

COUNSEL FOR THE RESPONDENT:

Dr. Sayers on 20 November 2007.

Mr. Cameron on 30 July 2007.

SOLICITOR FOR THE RESPONDENT: W P Lawyers

SOLICITOR FOR RECEIVER:

Mr. Geddes
Pilgrim Geddes Solicitors

SOLICITOR FOR TRUSTEES IN

BANKRUPTCY:

Tucker & Cowan Solicitors

Orders

1. That the appeal be dismissed.

2. That the application for leave to adduce further evidence be dismissed.

3. (a)      That within 28 days of the date hereof each party be at liberty to file and         serve any written submissions in relation to:

   (i)the appeal by the husband against the order for costs made by the trial Judge; and

   (ii)any application for costs in relation to the appeal against the orders with respect to property settlement.

   (b)That each party have a further 28 days in which to file and serve any written submissions in answer to any submissions filed by the other party.

   (c)That each party have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as D & D.

FAMILY COURT OF AUSTRALIA AT BRISBANE

Appeal Number:       NA 37 of 2005 & NA 98 of 2005
File Number:             BRF 1325 of 2002 (Family Court of Australia at Brisbane)

Mr D

Appellant

And

Ms D

Respondent

And

Mr X

Receiver

And

Mr Y & Mr Z

Trustees in Bankruptcy

REASONS FOR JUDGMENT

1.By Notice of Appeal filed 3 June 2005 Mr D (“the husband”) appealed against orders made by Carmody J. in proceedings between himself and Ms D (“the wife”) on 11 May 2005. The trial Judge’s orders provided, in substance, that, on the conclusion of the administration and/or management by the husband’s trustees in bankruptcy and the receiver of real estate of the parties, the net property available for distribution of the parties be apportioned in shares of 62.5 per cent to the wife and 37.5 per cent to the husband.

2.The husband sought in lieu of the orders made by the trial Judge that the wife’s “share of the matrimonial property be reduced to 50 per cent” and that the wife “be solely responsible for the receiver’s costs out of her share of the matrimonial property”.

3.The wife resisted the husband’s appeal and sought to maintain the trial Judge’s orders.

4.By a document filed 12 October 2006 the husband’s trustees in bankruptcy recorded that they “neither consent to nor oppose the orders sought on the appeal” and, to the extent that it was necessary to do so, asked the Court to “note the operation of Section 58 of the Bankruptcy Act 1966 (Cth)”, which has the effect of vesting all of the property of the husband in the trustees.

5.The husband also appealed against orders for costs of the proceedings made by the trial Judge subsequent to the delivery of judgment in the substantive proceedings. The wife resisted that appeal.

6.Subsequent to the hearing of the appeal but prior to the delivery of judgment in the appeal, by application filed 11 May 2007 the husband sought, amongst other orders, leave to adduce further evidence in the appeal. That application was heard by the Court on 30 July 2007. Our conclusions with respect to the husband’s application of 11 May 2007, as amended by his Counsel during the course of the hearing of the application on 30 July 2007 follow our reasons for judgment in the appeal.

Background

7.The parties met in 1980, married in 1983 and separated in 2001.

8.There are two children of the marriage, who were aged 14 and 12 at the date of trial.

9.The trial Judge’s orders in proceedings pursuant to Part VII of the Family Law Act 1975 (“the Act”) provided that the children would reside with their mother and have only such contact with their father as the children initiated. No part of this appeal is concerned with those orders.

10.Both parties had re-partnered subsequent to separation.

11.The husband was an undischarged bankrupt at the time of the trial and the major asset of the parties, land at N (“the [N] property”), was under the control of a receiver appointed pursuant to an instrument entered into by the parties and a creditor.

12.The trial Judge found the gross assets of the parties to be potentially worth $800 000 or $1.6 million depending upon whether or not the N property was able to be subdivided.

13.The trial Judge found that the parties had liabilities of approximately $800 000. The net property of the parties was thus likely to be worth virtually nothing or as much as $800 000.

14.The trial Judge concluded that the wife should be entitled to 52.5 per cent and the husband 47.5 per cent of the net assets by virtue of contributions to which a 10 per cent adjustment in the wife’s favour should be made by virtue of Section 75(2) factors.

The Reasons for Judgment of the trial Judge

15.Notwithstanding that we shall need to again refer to certain of them in detail, some recounting of the trial Judge’s reasons is necessary to appreciate the challenges raised by the husband in this appeal.

16.Having recorded the competing claims, 75-85 per cent in favour of the wife as sought by her, 55-60 per cent in favour of the husband as sought by him, the trial Judge recounted relevant matters of history. These included that the parties had “cohabited for 19 years” during which both “had juggled work commitments and child care responsibilities to varying degrees” and “pooled their income and resources and shared household and living expenses” (par 70, page 21, Appeal Book Vol 1).

17.The trial Judge found that from separation until “his court ordered removal in September 2003” the husband had continued in occupation of the former matrimonial home. His Honour concluded that the wife had “been solely responsible” for the “physical, developmental and emotional needs” of the children subsequent to the parties’ separation (par 71, page 21, Appeal Book Vol 1).

18.The wife was a practicing solicitor of 25 years standing and was aged 50 at the date of trial. The husband was a 65 year old “[artisan]” (par 73, page 22, Appeal Book Vol 1). None of those matters are controversial.

19.The trial Judge referred to a series of financial transactions commencing in 1999 (par 77, page 22, Appeal Book Vol 1), the consequence of which was that, by late 2001 the parties had a secured loan in respect of which they owed approximately $495 000 (par 82, page 23, Appeal Book Vol 1). In addition, they had a private loan to a Mr P (who became the wife’s partner in 2002) the balance in respect of which had become $98 483 by 2002.

20.Pursuant to a security held by him, Mr P caused a receiver and manager to be appointed to the N property, and to a property at H B which the parties had acquired in 1983. That receivership continues with respect to the N property.

21.In about 2003 (par 89, page 24, Appeal Book Vol 1), the trial Judge found that Mr P paid out the previous $495 000 facility, utilising for that purpose approximately $350 000 provided to him by the wife’s uncle, Mr K.

22.The trial Judge recorded that the H B land owned by the parties was sold in December 2002 for $100 000 which was insufficient by $7900 to enable them to discharge the debt to Mr P. Consequently the “receivership stayed in place over the [N] property” (par 91, page 24, Appeal Book Vol 1), and the receiver took “physical control” of that property on 20 December 2003.

23.The trial Judge found that the husband was “declared bankrupt on 7 July 2004” (par 93, page 24, Appeal Book Vol 1). After referring to the likely net “available pool”, the gross value of which was potentially $804 325 or $1 604 325, the trial Judge referred to the wife’s alleged “interest in the [Z B business]” (par 116, page 28, Appeal Book Vol 1). His Honour referred to the wife’s inherence of “an apartment at [C] from her grandmother about four months before separation” finding that “she mortgaged it in 2002 as security for a $112 000 bank loan Mr [P] took out to buy into the [Z B business]” (par 116, page 28, Appeal Book Vol 1).

24.The trial Judge concluded that the wife, “at best, probably has an equitable right to a distribution of any profits” made by the M Unit Trust which operates the [Z B business] in which Mr [P] and the wife held 20 of 115 units “in partnership” (par 117, page 28 Appeal Book Vol 1).

25.Reference was made to the evidence of Mr P that “the total equity of the unit holders in the trust currently stands at minus $91 661” (par 118, page 29 Appeal Book Vol 1). His Honour found that the wife applied $110 000 generated by the sale of the C apartment in October 2002 “to clear the [Z B] debt and advance $40 000 to Mr [P]” notwithstanding which the wife did not “really regard Mr [P] as a current debtor of hers” (par 119, page 29, Appeal Book Vol 1).

26.The trial Judge thus concluded that the wife had “applied what was technically matrimonial property to her own use, albeit for Mr [P’s] benefit, in 2002” and that “her investment in the [Z B] Unit Trust is a contingent financial resource” (par 119, page 29, Appeal Book Vol 1).

27.The trial Judge also concluded that “the proceeds of the [C] apartment should properly be quarantined as the separate property or a sole contribution asset of the wife for s 79 purposes and her [Z B] interest treated as a relevant s 75(2) circumstance” (par 120, page 29 Appeal Book Vol 1).

28.Under the heading “Liabilities and alleged wastage”, the trial Judge recorded the “only undisputed matrimonial liabilities are the costs of the bankruptcy” of the husband of $20 649. (par 121, page 29 Appeal Book Vol 1).

29.His Honour found that the wife had “uncontroversial personal liabilities: an unquantified 2005 tax debt; credit card debts of $3,185.00; debt to partner due on 1 July 1005 of $45,000.00; and a QLS deductible of $8,032.00” (para 122, page 29, Appeal Book Vol 1).

30.Reference was made to the balance of the “[K] debt” of $675 000 which would, by November 2005 “be in the order of $690,000.00” together with “the costs of receivership (which) to 11 March 2005 total $225,196.00” (par 123, page 29, Appeal Book Vol 1).

31.His Honour thus recorded that unless the husband’s challenges to the liabilities attaching to N succeeded “the only chance of a surplus is if the land is sold by the receiver with subdivision approval”. (par 123, page 29 Appeal Book Vol 1). The husband asserted that the “[K] loan and receivership costs should either be excluded from s 79 calculations altogether or allocated wholly and solely to the wife” or, in the alternative, that “their value should be notionally offset against the wife’s contribution-based entitlement” (par 125, page 30, Appeal Book Vol 1).

32.The husband’s case was interpreted by the trial Judge as being that the wife and Mr P “were romantically involved prior to separation, perhaps as early as the year 2000, and decided to take effective control over the [N] land so that they could complete the subdivision themselves (at least to the approval stage) and transfer the equity in the property to Mr [P] and, thereby, reduce the net asset value of the parties’ property for settlement purposes” and that the “wife, Mr [P] (her de facto) and Mr [K] (her uncle) are in league with each other and hold the mortgages and loan liabilities as undisclosed resulting trustees for the wife and that the beneficial interest will somehow revert to her after the family proceedings have been finalised” (par 126, page 30, Appeal Book Vol 1).

33.The trial Judge described the alleged “scheme” to defeat the husband’s “legitimate economic interests in the matrimonial property” as involving Mr P and the wife having “acted unconscionably in a concerted effort to achieve that unlawful objective, and put their intention into effect by means of the following acts of deception:

“(1)     insinuating Mr [P] into the subdivision process in 2000, (2) establishing him as a secured creditor in 2001 via a joint loan commitment, (3) forging loan and related documents (or obtaining his own signature on them by trickery), (4) fraudulently registering mortgages over the [W] and [N] properties, (5) inflating the joint indebtedness to Mr [P] from $75,000.00 to $79,000.00 by false or unauthorised expenditures so that there would be a deficit between the net proceeds of sale of the [W] property and the outstanding balance of the loan, (6) using unpaid rates on the mortgaged properties as a pretext for activating default provisions, (7) appointing a friendly and/or incompetent receiver, (8) installing the wife’s uncle as the major unsecured creditor but retaining the registered mortgage in Mr [P’s] name, (9) unreasonably refusing to roll-over the [PC] loan and agreeing to pay penalty rate interest on the [K] loan, (10) obtaining vacant possession of the [N] property to sideline Mr. [D] and gain control of the partnership assets, and (11) failing to disclose or produce relevant documents and information in the proceedings” (par 128, page 30, Appeal Book Vol 1).

34.His Honour concluded his analysis of the formulation of the husband’s claims in the following terms:

“The husband’s allegations stated in Family Law terms is that the wife’s conduct amounted to economic fault in the sense that, quite apart from its criminal character or moral culpability, it inflicted financial losses on the marriage partnership to the tune of $300,000.00 or more and that relevant concepts of justice and equity require her to shoulder full responsibility for them. In taking this position, the husband assumes the onus of proving a link between the alleged fault and the disputed liabilities” (par 138, page 32, Appeal Book Vol 1).

35.Under the heading “The standard of proof”, the trial Judge considered authorities relevant to the issues of fact which he was required to determine, and recorded that he was “reasonably satisfied in the Briginshaw sense” that:

“(a)Ms. [D] was largely responsible for the parties’ financial affairs and partnership correspondence during the marriage because of Mr. [D’s] language and literary limitations;

(b)Ms. [D] was authorised by her husband to sign his name on partnership letters and routinely did so;

(c)on 14 October 2000, that is, more than a year before final separation, Mr [P] rented a storage facility at [A] on the [GC] for and on behalf of the wife.

(d)as at 1 March 2001, Ms. [D] honestly, but mistakenly, believed that the [H B] property was worth $40,000.00 and that at that time Lots 41 and 42 were probably worth more than $500,000.00 each;

(e)notwithstanding the primacy of her responsibility to financially support the children of the marriage, Ms. [D] could probably have found the money needed to remedy the default on the [P] loan and making up the difference between the [H B] proceeds and the balance of the [P] loan as at 23 December 2002. She had a good income, no ongoing periodic loan commitments or other hefty recurrent expenditures, access to family funds and a substantial tax refund available to her. At the very least, she could have put her hands on enough to pay her share.” (Para 151, Page 36, Appeal Book Vol 1).

36.His Honour was not “reasonably satisfied to the requisite standard” of a number of matters, which he recorded in some detail (par 152, page 37, Appeal Book Vol 1), and ultimately concluded that “the evidence put up by the husband in support of his allegations of any conspiracy, forgery, fraud and wastage falls well short of the mark. The receivership costs and accrued interest on the 2002 loan from Mr [K] will therefore be subtracted from the parties’ assets to ascertain the net value of the estate” (par 153, page 43, Appeal Book Vol 1).

37.The contribution issues considered by the trial Judge commenced with a consideration of “how much the husband brought into the marriage at commencement” (par 157, page 43, Appeal Book Vol 1). His Honour recorded the agreement that the husband contributed “the value of his half share in the house with his first wife at S worth about $94,000.00”, approximately “a third of the proceeds of the S property was used, together with $7,000.00 of the wife’s savings, to acquire Lot 42 (one of two lots comprising the [N] property) with the balance being invested in a joint account” (par 157, page 43, Appeal Book Vol 1).

38.The trial Judge found that in 1987 the parties “got the benefit of $43,000.00” when a unit acquired in the husband’s name at [BB] was sold (par 161, page 44, Appeal Book Vol 1).

39.His Honour concluded that a property at [H B] “was jointly acquired in 1988 for $35,000.00” such sum being “financed by the wife’s legal practice” (par 161, page 44, Appeal Book Vol 1).

40.Ultimately, his Honour concluded with respect to initial contributions that:-

“162.Whatever the comparative sizes of the parties’ initial contributions, they were made at the beginning of what turned out to be a marriage of long duration and their initial significance diminished over time because of the offsetting contributions of the other” (para 162, page 44, Appeal Book Vol 1).

41.The trial Judge contrasted the “clearly economically inconsistent” performance of the husband’s manufacturing business, which “ran on overdraft for most of the time and returned minimal reported profit and substantial tax losses” (par 163, page 44, Appeal Book Vol 1) with the wife’s employment as a solicitor which “provided the family with a steady and reliable stream of income, which was almost completely absorbed by home and business loan repayments” (par 164, page 44, Appeal Book Vol 1). For reasons which he detailed, the trial Judge rejected the wife’s assertion that the lack of financial success of the husband’s business should increase her contribution based entitlement (par 169, page 45, Appeal Book Vol 1).

42.Reference was made to the wife’s claim that her “mother and grandmother contributed a total of $287 000 to the household (for and on her behalf) between 1989 and the date of separation from their rental, pension, and investment income from proceeds of the sale of her mother’s unit at [E]” (par 170, page 45, Appeal Book Vol 1). The trial Judge referred to the wife’s power of attorney for her mother and grandmother and ability “to utilise their funds to meet business and domestic liabilities and supplement household income” from about 1989 to 2001 during which time the mother and grandmother “were members of the household” (par 171, page 45, Appeal Book Vol 1).

43.The wife’s grandmother died in 2001. Her mother died during the trial. His Honour concluded that the wife was “for all intents and purposes, sole beneficiary under both wills” (par 174, page 46 Appeal Book Vol 1).

44.For reasons which he gave, the trial Judge concluded that the funds provided by the wife’s grandmother and mother “will be treated as an equal contribution to property and family welfare” (par 179, page 46, Appeal Book Vol 1). We observe that such conclusion may have been somewhat generous to the husband (see Kessey v Kessey (1994) FLC ¶92-495).

45.Reference was made by the trial Judge to the “substantial direct non-financial contributions to the improvement and maintenance of the [N] property” made by both parties (par 180, page 46 Appeal Book Vol 1).

46.Contributions as homemaker and parent were also considered, his Honour concluding that “as between the two parties, the wife was probably the more available carer during the marriage. She has certainly been the sole parent in the 3.5 years since separation with minimal help, financial and otherwise, from the husband” (par 182, page 47, Appeal Book Vol 1).

47.The wife’s claim that she “receive a loading because she made her s 79(4)(a), (b) and (c) contributions in the context of a home environment, ‘made more difficult by virtue of the husband’s personality, attitude and actions’, which placed a great deal of stress and extra responsibility on her” (par 183, page 47, Appeal Book Vol 1) was rejected by the trial Judge, who concluded that “the husband’s conduct has not been shown to have made any discernible difference to the value of the wife’s contribution” (par 183, page 47, Appeal Book Vol 1).

48.Having considered a number of authorities in which evaluation of contributions were assessed, the trial Judge concluded that:

“192.While it may be that the husband did not contribute all that he could have emotionally and physically to the wealth and welfare of this marriage, he did what was required of him given the parties’ mutual expectations and personalities” (par 192, page 49, Appeal Book Vol 1).

49.He further concluded:

“193.There is nothing in the material to suggest that on a global view the direct and indirect financial contribution of the parties to the date of separation was demonstrably unequal because of the husband’s failure to shoulder his fair share of the burden” (par 193, page 49, Appeal Book Vol 1).

50.Ultimately the trial Judge concluded that contribution entitlements to the date of separation should be viewed as equal but that “the wife’s post-separation welfare contribution involving the housing and provision of all other physical and educational needs of two teenage girls caught in the middle of an acrimonious parental separation, entitles her, in my view to an extra 2.5 per cent” (par 194, page 50, Appeal Book Vol 1).

51.Turning to Section 75(2), the trial Judge had regard to the husband’s age and that of the wife, who was “much younger and has a longer working life ahead of her” (par 196, page 50, Appeal Book Vol 1). Reference was made to the re-partnering by both parties and to the wife being “in a stable relationship with Mr [P]” and having “a half interest in an established [GC] law firm” (par 197, page 50, Appeal Book Vol 1). Reference was also made to the wife’s “small employer-funded superannuation entitlement of about $20,000.00” and to the husband’s absence of any superannuation entitlement (par 198, page 50, Appeal Book Vol 1).

52.The trial Judge concluded with respect to the husband that “his age is against him and, on past performances, I think it is unlikely that he will ever be in a financial position to make any sizable child support payments in the future” although the husband was “physically fit and has the skills for gainful employment” (par 199, page 50, Appeal Book Vol 1). The husband was in receipt of unemployment benefits at the date of trial.

53.The wife was found to pay “approximately $4,500.00 per term in school fees” for the children and “an additional $1,500.00 or so on piano and tennis lessons” (par 200, page 50, Appeal Book Vol 1).

54.His Honour ultimately concluded with respect to section 75(2):

“206.Notwithstanding the disparity in the ages, incomes and overall financial (including the superannuation) position of the parties, I think that an upward adjustment of 10 per cent to the wife’s contribution based entitlement is justified to help her meet future child-care related needs” (par 206, page 51, Appeal Book Vol 1).

55.The overall division of assets favouring the wife by 62.5 per cent to the husband’s 37.5 per cent was considered just and equitable by the trial Judge.

The Grounds of Appeal

56.A number of the grounds appearing in the Amended Notice of Appeal were not pursued before this Court. In substance, only Grounds 2 and 3 of the Amended Notice of Appeal were pursued with respect to the substantive appeal. The costs appeal, by agreement between Counsel, will be dealt with by way of further written submissions after the Court has given judgment in the substantive appeal.

57.It is convenient to consider the two grounds which were agitated before this Court in the order in which they were argued by Counsel for the husband. Ground 3 of the Amended Notice of Appeal provided:

“The learned trial Judge failed to take into account relevant material and failed to give adequate weight to material that he did take into account”.

58.Although not entirely apparent from the wording of the ground itself, the thrust of this challenge was that the trial Judge erroneously found the liabilities of the parties to be as asserted by the wife, thereby substantially reducing the notional net value of the assets of the parties, whatever the value of the N property ultimately proved to be.

59.The nature of this challenge, and the way it was developed, and resisted, render it appropriate, and probably necessary, to refer extensively to the submissions advanced in support of and in opposition to the ground. As will be seen, very considerable detail permeates the submissions on behalf of the husband and wife. To omit or significantly paraphrase those submissions is to risk failing to do justice to them.

60.Counsel for the husband referred to the trial Judge’s listing of “eleven matters that the husband had said constituted part of a complicated scheme to defeat his legitimate economic interest in the matrimonial property”. The husband’s contention was that the trial Judge did not “in fact, consider these eleven points” (par 1.2, Synopsis of Appellant’s Argument).

61.It was submitted that the trial Judge had (in pars 140-150 of his Reasons) failed to adopt “the correct test”, in that the husband had been obliged “to show that there was a reasonable probability (to the appropriate standard of proof having regard to the nature of the allegation) that the respondent (wife) had engaged in the conduct alleged, and that the conduct was embarked upon with the purpose of defeating his legitimate claim to a share of the matrimonial property” (par 1.4, Synopsis of Appellant’s Argument).

62.Reference was made to paragraph 151 of the trial Judge’s Judgment wherein His Honour recorded the matters of which he was “reasonably satisfied in the Briginshaw sense” (par 151, page 36, Appeal Book Vol 1). We have earlier referred to those findings. The husband’s contention was that the matters referred to in subparagraphs (c), (d) and (e) “were important components of the conspiracy” but that the trial Judge had “failed to attribute to them the significance they deserved, as he should have done had he considered them in the light of the complete sequence of events” (par 1.5, Synopsis of Appellant’s Argument).

63.The submission on behalf of the husband that:

“1.6     In other words, matters that by themselves may not have great significance, assume that significance when seen as part of the overall pattern of conduct. By selecting only some small pieces of the overall picture, and ignoring other and more substantial components, His Honour was able to persuade himself that there was no conspiracy to defraud the appellant of his rightful entitlement” (Para 1.6, Synopsis of Appellant’s Argument);

encapsulates the challenge embodied in this ground.

64.A number of submissions followed with respect to “what needs to be proved to establish a conspiracy” (pars 1.7 & 1.8, Synopsis of Appellant’s Argument). As was sensibly conceded by Counsel for the husband during the course of oral submissions before us, the question of whether or not a “conspiracy” was proved was ultimately not the essential issue before the trial Judge. The question was rather whether on all of the evidence of what occurred, the wife had deliberately, wantonly, recklessly or negligently caused, permitted or allowed the assets of the parties to be reduced as a result of the financial “arrangements”, as they could be described, with Mr P upon which the husband relied before the trial Judge.

65.As will be seen, for the purpose of this appeal, exploring the trial Judge’s reasons with respect to these matters in the broader context is a more productive exercise than an examination of whether, in strict legal theory, a “conspiracy”, or some other “arrangement” known to the law could have been found on the evidence. If the “arrangements” had the effect for which the husband contended, whether or not they constituted a “conspiracy” at law was not critical, and the husband was entitled to succeed on one, or more, of the challenges he raised with respect to the parties’ liabilities.

66.It was submitted that “the documentary evidence in support of the allegations” of the husband “are contained within the two Volumes of appendices that are attached to the appellant’s affidavit sworn on 7 February 2005” (par 1.9, Synopsis of Appellant’s Argument). Those two Volumes were submitted by Counsel to have provided “incontrovertible evidence” in the face of which the trial Judge’s findings at paragraph 152 (a), (b), (c) and (e) had been made.

67.A “chronology of key events” was provided by way of pre-amble to the ground. Accurately summarising that chronology is not an easy or productive task. We thus incorporate the chronology relied upon by the husband in full in these reasons.

68.The “Chronology of Key Events” asserted (paragraphs 2.13, 2.16 and 2.18 deliberately omitted):

2.1 In October 2000 the respondent and Mr [P] (“[P]”) commenced a relationship that went beyond that of [professional colleagues]. Aspects of that relationship included, but were not limited to, the joint renting of a storage facility in [A]; entry into various business arrangements including the undisclosed interest in the [Z B] and the means by which that deal was financed; travel to Melbourne to attend the respondent mother’s funeral; and the provision of misleading evidence to the [T] Court in support of [P’s] then on-going matrimonial property settlement. All of these activities were conducted without the knowledge of the appellant.

2.2 In March 2001 the respondent and [P] enter an arrangement whereby [P] advanced $75,000 to the appellant and respondent to finance the subdivision of the [N] property then held in two titles in a joint tenancy by the appellant and the respondent. Although the appellant’s signature appears on these and other documents he denied signing same. The expert evidence of Mr [M] was that the signatures were in fact most likely that of the appellant. …

2.3 The $75,000 advance by [P] was secured over the [W] property that the appellant and respondent owned. If that property was indeed worth only $40,000 as the respondent allegedly believed and which His Honour found was an honest but mistaken belief (paragraph 151 (d)), then it was insufficient to secure the [P] loan.

2.4 The appellant consistently, and as it turned out correctly, believed that the [W] property was worth $100,000. Given his state of belief, that His Honour effectively ignored, the appellant would have no reason to agree to mortgages being taken over the two titles of the [N] property jointly owned by the appellant and the respondent. As each of those properties was valued at a minimum of $500,000, even on the respondent’s case, there was only a shortfall between the loan and the [W] property of $35,000. …

2.5 All of the documentation for the mortgages over the [N] properties was prepared by the respondent. Those documents were never submitted to [Mr M] for analysis.

2.6 There was a problem with the registration of the new mortgages as the names on the mortgage documents (the appellant and the respondent) did not exactly match the names on the titles. The problem was resolved by the respondent submitting to the Land Titles Office the appellant’s certificate of citizenship and other documents. In an affidavit sworn in the course of the pre-trial proceedings [43 affidavit sworn 11 June 2002] die respondent had denied all knowledge of the appellant’s citizenship papers.

2.8 Notwithstanding the potential significance of this sequence of events, none of it was referred to by the Honourable Judge in his findings as to whether or not there was a conspiracy between the respondent and [P].

2.9 In September 2001 the respondent and [P] enter an agreement to invest in the [Z B business]. The money for this investment came from the [B] Bank. It was secured against a property in Victoria registered in the respondent’s name. In her financial statement the respondent refers to the liability to the bank but fails to disclose the ownership of the property against which it is secured. None of these transactions are disclosed to the appellant. Again, the learned trial Judge fails to discuss these transactions as proof of any on-going arrangements between the respondent and [P] that the appellant says were part of the conspiracy.

2.10 In October 2001 the respondent agreed to the rollover of the [PC] loan that had earlier been taken out, largely to pay for the debts of the respondent’s failed law partnership. Interest payments on the loan were capitalised which had the effect of freeing the respondent’s income. Later that same month she moved out of the matrimonial home and into premises paid for by [P]. …

2.11 Throughout 2001 and into 2002 [P] was paying invoices associated with the [N] sub-division. On the evidence of Mr [A], the consultant engaged for the sub-division, the invoices were sent to [P’s] [T] address. They were addressed to the respondent and [P]. The appellant did not see copies of these invoices until much later.

2.12 Although the loan had been entered into for the purposes of financing the [N] sub-division, [P] made payments outside the terms of the loan. There was a dispute as to whether the appellant was aware of these payments, but it was not disputed that there was no document recording any variation in the terms of the loan to authorise such payments. …

2.14 From February 2002 the respondent and P were co-habiting in a de facto relationship on the evidence of Mr [K]. This is only three months after the appellant and the respondent separated.

2.15 In May 2002 the $75,000 loan facility was exhausted. Despite this, [P] continues to make payments on [A] invoices and interest continues to accumulate. There is no evidence that the appellant was aware of the actual financial situation.

2.17 In that month, (September 2002) [P] negotiated with [PC] (“[PC]”) to take over the [PC] loan two months before it was due for renewal. In this he was aided and abetted by the respondent in a number of ways, including but not limited to her arranging for a close relative to provide the finance for the takeover of the mortgage; writing to Mrs [P’s] solicitors on behalf of [P], and preparing the documents that enabled [P] to finance the mortgage takeover. None of these events were within the knowledge of the appellant although he was directly affected by each and every action.

2.19Also in September 2002, the respondent indicated to the appellant that she would not agree to the rollover of the [PC] loan, knowing that he did not have sufficient income to make alternative arrangements. [P] issued a demand for payment of the rates on the [W] and [N] properties, default of which would trigger provisions in the loan document. He also demanded accelerated repayment of the loan.

2.20 The respondent had by this time also severed the joint tenancy over the [N] properties with the appellant. This done without his knowledge. By making them tenants in common it was impossible for the appellant to refinance the [PC] loan. …

2.21 At about this same time the [W] property was placed on the market and received an offer to purchase of $100,000.

2.22 In October 2002 [P] appointed [Mr R] to be the receiver manager of the mortgage now said to be in default. [Mr R’s] only qualification for the job seemed to be his longstanding personal friendship with [P].

2.23 In November 2002 [Mr R] then writes a letter in which he suggests there may, be small surplus on the sale of the [W] property. If this were to eventuate then the [P] loan could be repaid and could not be transferred to the [N] mortgage that [P] now held thanks in part to the efforts of the respondent.

2.24 As a result of this letter [P] produced a series of previously unknown invoices. He was unable to satisfactorily explain these when questioned. [P] also claimed extra interest. [R] failed to investigate or query any of these claims.

2.25In December 2002 [Mr R] then writes another letter. There is now a small deficit on the sale of the [W] land. The surplus of November becomes a deficit in December, and the difference is wholly attributable to the hitherto unknown invoices that [P] produced and an increase in [Mr R’s] estimated costs of the receivership from $3000 to $5000. There is a deficit of $7000, and failure to pay this would result in the mortgage being transferred to the two [N] properties each valued at more than $500,000.

2.26 [Mr R] was unable to explain this increase when questioned at trial. Despite being ordered by the Court to do so he has failed to ever produce an itemised account of his costs.

2.27 During this same month (December 2002) the respondent signed tax returns for the previous four years with the accountant [Mr G]. The tax returns were in respect of the business partnership between the appellant and the respondent. The partnership had ceased trading but had retained its GST registration so that development costs for [N] could be claimed for tax purposes.

2.28 These documents were signed by the respondent on 23 December 2002, the same day that [P] issued his formal demands in respect of the $7,000 shortfall on his loan. The amount due under the tax refund was $46,000, half of which should have gone to the appellant. It was clearly enough to pay the [P] shortfall and avoid the receivership, the mortgage transfer and all of the financial grief that has flowed since.

69.Against the background of the “chronology” it was further submitted on behalf of the husband that the “most likely explanation” of the husband’s signature on various documents “was that the papers were put before the appellant by the respondent and he signed them without reading them” (par 2.2, Synopsis of Appellant’s Argument). Reliance was placed upon the trial Judge’s finding (par 151 (a), page 36, Appeal Book Vol 1) that the wife “controlled the financial arrangements because of the appellant’s limited grasp of written English” (par 2.2, Synopsis of Appellant’s Argument) in support of this contention. It was submitted that the wife’s admission in evidence “that she placed documents before the appellant that he signed without reading” (par 2.2, Synopsis of Appellant’s Argument) also supported this contention.

70.Counsel for the husband asserted that, “as some of the signed documents resulted in events that were clearly contrary to the interests of the Appellant it is further submitted that he was unlikely to have knowingly signed some of the key documents” (par 2.2, Synopsis of Appellant’s Argument), whilst “in other cases it is likely that the respondent (wife) signed his name, as she admitted doing, and as His Honour found as a fact (paragraph 151 (b)” (par 2.2, Synopsis of Appellant’s Argument).

71.The husband complained that the trial Judge “effectively ignored” the evidence that the husband’s belief (subsequently shown to have been well founded) that the H B property was worth $100 000, as opposed to the wife’s mistaken belief that it was worth only $40 000, which evidence supported the inference that the husband “would have no reason to agree to mortgages being taken over the two titles of the [N] property jointly owned” by himself and the wife (Para 2.4, Synopsis of Appellant’s Argument).

72.It was thus submitted that “as each of those properties was valued at a minimum of $500,000.00, even on the respondent’s case and as there was only a shortfall between the loan and the [W] property of $35,000.00”, it “made no sense for the appellant to encumber and therefore risk both [N] titles for a mere $35,000.00” (par 2.4, Synopsis of Appellant’s Argument).

73.Reliance was placed upon the fact that the documentation for the N mortgages was prepared by the wife and was never submitted to the handwriting expert for analysis (par 2.5, Synopsis of Appellant’s Argument).

74.Further, it was submitted on behalf of the husband that notwithstanding its “potential significance” the trial Judge failed to refer in his findings to events surrounding the registration of the new mortgages on the N properties (pars 2.6 & 2.7, Synopsis of Appellant’s Argument).

75.It was further asserted on behalf of the husband that the trial Judge failed to “discuss” transactions which occurred in September 2001 at which time the wife and Mr P entered into an agreement to invest in the Z B business, the money for which was provided by B Bank on the security of a property in Victoria registered in the wife’s name (par 2.9, Synopsis of Appellant’s Argument).

76.It was submitted, erroneously in the light of the evidence to which Counsel for the wife referred the Court (page 182 Appeal Book Vol 1, Page 184 Vol 4 659), that the wife in her financial statements had referred to the liability to the bank but failed to disclose the ownership of the property against which that liability was secured. The trial Judge was asserted to have erred in failing to “discuss these transactions as proof of any on-going arrangements between the respondent and [P] that the appellant says were part of the conspiracy” (par 2.9, Synopsis of Appellant’s Argument).

77.On behalf of the husband it was also submitted that the trial Judge’s conclusion (par 152 (a), page 37, Appeal Book Vol 1) that “he was not satisfied” that the wife and Mr [P] had commenced an “intimate” relationship prior to final separation had been “to focus on an irrelevant element” (par 2.10, Synopsis of Appellant’s Argument), it being asserted that the nature of their relationship did not “affect the question of whether or not they made plans to deleteriously affect the appellant’s interest” (par 2.10, Synopsis of Appellant’s Argument).

78.The trial Judge was submitted to have “ignored the significance” of Mr P paying invoices addressed to himself and the wife with respect to the N subdivision “throughout 2001 and into 2002, such invoices having been sent to Mr [P’s] [T] address” (par 2.1, Synopsis of Appellant’s Argument).

79.It was further submitted that:

“2.12 Although the loan had been entered into for the purposes of financing the [N] sub-division, [P] made payments outside the terms of the loan. There was a dispute as to whether the appellant was aware of these payments, but it was not disputed that there was no document recording any variation in the terms of the loan to authorise such payments. Indeed, on [P’s] evidence, there is a remarkable absence of any sort of record keeping and proper documentation”.

The husband complained that the trial Judge “failed to find any significance in this sequence of events” (par 2.13, Synopsis of Appellant’s Argument).

80.Considerable reliance was placed upon the trial Judge having “ignored” a “number of key developments” in September 2002 (par 2.16, Synopsis of Appellant’s Argument). It was submitted in that context that the trial Judge had failed to consider the events surrounding the re-financing of the PC mortgage “two months before it was due for renewal” and the wife’s “arranging for close relative (Mr [K]) to provide the finance for the takeover of the mortgage” (par 2.17, Synopsis of Appellant’s Argument) in relation to the transaction, none of which was asserted to have been “within the knowledge of the appellant although he was directly affected by each and every action” (par 2.17, Synopsis of Appellant’s Argument).

81.Further, it was submitted that the trial Judge failed to have regard to the wife having:

“2.19      … indicated to the appellant that she would not agree to the rollover of the [PC] loan, knowing that he did not have sufficient income to make alternative arrangements. [P] issued a demand for payment of the rates on the [W] and [N] properties, default of which would trigger provisions in the loan document. He also demanded accelerated repayment of the loan” (par 2.19, Synopsis of Appellant’s Argument).

Nor, it was submitted, did the trial Judge have regard to the wife having:

“2.20 …by this time also severed the joint tenancy over the [N] properties with the appellant. This done without his knowledge. By making them tenants in common it was impossible for the appellant to refinance the [PC] loan. The appellant submits that respondent’s refusal to allow the rollover was because of her knowledge of the intentions of [P]” (par 2.20, Synopsis of Appellants Argument).

82.Significant reliance was placed upon the fact that, on 23 December 2002, “the same day that [P] issued his formal demands in respect of the $7,000 shortfall on his loan” remaining after the sale of the H B property for $100 000, there was “due under the tax refund” some $46 000, “half of which should have gone to the appellant” (par 2.28, Synopsis of Appellant’s Argument). It was submitted that such entitlement was “clearly enough to pay the [P] shortfall and avoid the receivership, the mortgage transfer and all of the financial grief that has flowed since” (par 2.20, Synopsis of Appellant’s Argument).

83.Reference was made to the trial Judge’s conclusion with respect to that issue, which was that the wife “could probably have found the money needed to remedy the default on the [P] loan and making up the difference between the [H B] proceeds and the balance of the [P] loan as at 23 December 2002” (par 151(e), page 36, Appeal Book Vol 1). Such “difference” was $7 000. Counsel for the husband took issue with the conclusion of the trial Judge that, “according to his evidence” so could the husband “if he had wanted to”, and to his conclusion that “this couple, both unreasonably, refused or failed to take the steps needed to protect their assets from the clutches of circling creditors.  There seemed to be a mutual attitude that the one would not unless the other did also” (par 151 (e), page 37, Appeal Book Vol 1).

84.On behalf of the husband it was submitted that:

“2.30With respect, this is an extraordinary conclusion to have reached. There was no evidence that the appellant could have obtained access to $7,000 other than through the refinancing of the [PC] mortgage which had been blocked by the respondent’s other actions. He did not know of the existence of the tax refund because neither the respondent nor the accountant had told him. The evidence was incontrovertible that the appellant had only discovered the existence of the money and the arrangements between the respondent and [Mr G] when the subpoenaed documents finally became available shortly before trial” (par 2.30, Synopsis of Appellant’s Argument).

85.This complaint was amplified in the submission that:

“2.32 It is further an extraordinary conclusion for His Honour to have reached when one of the central features of this part of the process was that the appellant was denied knowledge of the existence of the tax refund. If the appellant had knowledge of his entitlement to $23,000 (more than three times the claimed shortfall) the whole series of events between early 2001 and December 2002 set out above would have collapsed, because the object of those events which was the removal of the appellant from the scene and the rapid and continuing depletion of any equity he might have in the [N] properties, would not have happened” (par 2.32, Synopsis of Appellant’s Argument).

86.The complaint is perhaps best summarised in the submission that:

“2.33 For His Honour to say that the respondent “could have put her hands on enough” is to completely miss the point. She had no intention of doing so, and equally importantly, everything else she had done was to ensure as far as possible that the appellant could not do so either” (par 2.33, Synopsis of Appellant’s Argument).

87.So far as the impact of the wife’s actions was concerned, it was submitted that:

“2.34      From one perspective, many of these actions also appear to disadvantage the respondent. The penalty interest on the loan diminishes the equity in the property when it is eventually sub-divided and sold (which four years after separation has still not happened). However, the real beneficiary of these arrangements is [P], as the mortgagee. He lives with the respondent, as does [K] the divorced and childless vehicle for the original taking-over of the [PC] mortgage” (par 2.34, Synopsis of Appellant’s Argument).

88.In summary it was thus asserted that the trial Judge:

“2.35…. had before him a detailed sequence of events,”

that:

“2.36… an objective and fair minded appraisal of this Voluminous evidence can only lead to one inference: that the respondent and Mr [P] acted in concert from at least early 2001 until [P] successfully transferred the mortgage on the [W] property to the [N] properties in December 2002.”

and that:

“2.38      For His Honour to conclude that “the evidence falls well short of the mark” [paragraph 153] of establishing a conspiracy was only possible because (a) he failed to consider a large number of relevant acts and supporting documents; and (b) used a false basis for deciding at what point a conspiracy had been proved” (pars 2.35, 2.36 and 2.38, Synopsis of Appellant’s Argument).

89.Although not expressly so formulated, it is evident that the challenge embodied in this ground potentially involves two contentions. They are that the trial Judge had erred in failing to find that the wife had deliberately procured “arrangements” with respect to N which had the effect of reducing the net assets of the parties or, if justified in being not satisfied that such actions were so intended, had erred in failing to find that, particularly by her failure to “put her hands on enough to pay her share” of the $7000 shortfall after the H B property was sold (par 151(e), page 36, Appeal Book Vol 1), the wife had caused or allowed the parties to suffer loss which should have been visited upon her to the exclusion of the husband.

90.In a document headed “Schedule B” Counsel for the wife listed “objectionable annexures ‘cured’ in cross-examination” and “objectionable annexures ‘not cured’” by that process. The Schedule was provided, as Counsel for the wife’s submissions make clear, to rebut the suggestion on behalf of the husband that there were two Volumes of “incontrovertible evidence” which should have led the trial Judge to conclude as his Counsel submitted to the trial Judge and to this Court.

91.It was submitted by Counsel for the wife in relation to the two Volumes of annexures provided by the husband that the husband “is in error when it is stated:

a.The Wife did not challenge the two Volumes of annexures supplied with one of the Husband’s affidavits relied on at trial; and

b.In light of the supposed lack of challenge, the annexures now represent “incontrovertible evidence” for the conspiracy alleged by the Husband” (par 7, Page 3, Respondent Wife’s Summary of Argument).

92.It was then submitted that:

“8. The Wife did hand up at trial a written List of Objections and, in particular, challenged the Husband for annexing to his affidavit a number of documents that were not properly admissible in that way (see Appeal Books, Vol. 10 pp. 1790/45, 1791/40, 1794/5-15 & 30-45). It was proposed that the questionable documents either be put and adopted, or challenged by the Wife, in the course of the various cross-examinations. This approach was endorsed by the Husband (see Appeal Books, Vol. 10 p. 1796/15). For this honourable Court’s convenience, the relevant parts of the Wife’s List of Objections are attached hereto as Schedule A” (Para 8, Page 3, Wife’s Summary of Argument)

93.Further, it was submitted that:

“9.In the course of the trial, the Husband failed to ask a single witness to adopt as their own document (and then tender) any of the documents identified in the Wife’s List of Objections as inadmissible by way of annexure to the Husband’s affidavit. In the result, the proposed course of action which would have dealt with this problem in the Husband’s evidence was not pursued. For this honourable Court’s convenience, the Wife has prepared a list (attached hereto as Schedule B) of the documents that were referred to in the course of the trial and notes that the list does not completely correspond with all the documents identified as objectionable. In virtually all cases, what happened was that a witness was asked about and themselves confirmed many (but not always all) of the details in the subject documents. Importantly, in virtually all cases the document was neither adopted by nor tendered through the witness” (par 9, page 3, Wife’s Summary of Argument).

94.It was thus submitted that:

“10. Accordingly, it follows that far from being “incontrovertible” (par 1.9), “(un)contested or (not) discredited” (par 2.35, 2.36) the information contained in the objectionable annexures to the Husband’s affidavit were only ever in evidence to the extent to which the various witnesses confirmed some (not always all) of the details in those documents which were shown them” (par 10, page 3 & 4, Wife’s Summary of Argument).

95.Whilst we do not believe that this appeal turns decisively or even significantly on who is correct, or more correct on this issue, we incline to the view that the position is more accurately stated by Counsel for the wife, than by Counsel for the husband. On any view, it is not correct to suggest that the evidence was “incontrovertible” in the sense suggested by Counsel for the husband.

96.Counsel for the wife submitted that the statement by the trial Judge that the husband “believes that the wife, Mr [P] (her de facto) and Mr [K] (her uncle) are in league with each other and hold the mortgages and loan liabilities as undisclosed resulting trustees for the wife and that the beneficial interest will somehow revert to her after the family proceedings have been finalised” (par 126, page 30, Appeal Book Vol 1) accurately expressed the essential issue which his Honour was required to determine.

97.It was submitted on behalf of the wife that a number of passages in the transcript supported the trial Judge’s analysis of the elements of the husband’s case. We refer to a number of those passages below.

98.At Volume 12, Page 2134, Lines 10-30 the following appears in the cross examination of the wife:

“That was the intention; that is the intention all along was to sub divide these blocks and then sell them.

Years later and in the meantime ---?---Well, I really don’t know whether we ever turned our mind to the fact that there were going to be all sorts of difficulties with the sub division and all that.

We will come to that in a moment but when you entered into this debt of $75,000 to Mr [P] it was secured in the first instance against a property that you believed and recorded your belief in your solicitor’s letter was worth only $40,000?---Yes, I didn’t think it was worth what it was, in fact, sold for.

No, so at that time you knew that if Mr [P] was ever going to be paid he couldn’t be paid from [H B]. He had to be paid from the proceeds of [N] in some way, didn’t he?—Yes.

And in order to pay Mr [P] you are going to have to sell the [N] property?---Sell some blocks off the plan I think is what my husband intended to do.

But first of all you needed sub division approval?---Yes.”

99.At Volume 12, Page 2153, Line 10 the following appears in the cross examination of the wife:

“But you were not interested, were you, really, because it was your contention with Mr [P] to keep the [N] properties and to basically exercise any equity that Mr. [D] might have in the property from it, wasn’t it?---No, not at all. That is just totally ridiculous and wrong.”

100.At Volume 12, Page 2156, Line 40 the following appears:

“You never turned your mind to it, Mrs. [D], because you never had any intention of borrowing from any other source?---That is not true.

101.At Volume 13, Page 2452-2456 the following appears during the course of final submissions to the trial Judge:

“Mrs. [D], as a solicitor, at that stage a solicitor of some 20 years experience, would have known that you do not enter into that kind of commitment without some knowledge of the ratio between the indebtedness being incurred and the value of the property being secured. She didn’t do so, and we say she didn’t do so for deliberate reasons, because she wanted to proceed on the basis that it was worth, and she believed it was only worth $40,000.

HIS HONOUR: And securing a $75,000 loan, that put her in a good position, didn’t it?

MR O’NEILL: Well, it put her in a position of at the outset, on the face of it, a greater debt than the property - - -

HIS HONOUR: That’s the mortgagee’s problem, not the mortgagor’s, isn’t it?

MR ONEILL: Yes, indeed. But if you accept what we say was the end 15 intention, which was to create a default - - -

HIS HONOUR: That’s right. So that’s where I was.

MR O’NEILL: You needed to have that. It was technical in default - - -

HIS HONOUR: No, you didn’t need to have that. You needed to have not only a default, but a shortfall in the proceeds.

MR O’NEILL: That was to come later.

HIS HONOUR: Yes, but you were betting on having it.

MR O’NEILL: They were betting on having it.

HIS HONOUR: Yes, because if the proceeds of [H B] paid out any indebtedness - - -

MR O’NEILL: The money transferred over to [N]. In effect, you need to understand events the end of that following year in that context.

We’ll come to that, because there are a series of steps that are taken in order to facilitate what ultimately did, in fact happen. We say it is not by chance, it is part of the pattern which has been undergone.

In terms of the forgery, it is open, of course, for your Honour to find that Mr [M’s], albeit qualified opinion, he did make some caveats. He couldn’t be unequivocally sure about the signatures, and he was working from photocopied documents and so on and so forth, but what is important - it is open to your Honour to find that Mr [M] is a witness who has reached an opinion that the Court would accept - that they were, in fact, Mr [D’s] signatures on those documents, notwithstanding - - -

HIS HONOUR: So what?

MR O’NEILL: Well - - -

HIS HONOUR: Where do you go if I make the finding that; yes, it is Mr [D’s]?

MR O’NEILL: We don’t rely upon the suggestion that the signatures which appear to be Mr [D’s] were, in fact, signed by Mrs [D] or Mr [P] or some other party. Mr [M’s] definition of “forgery” is categories of forgery.

HIS HONOUR: I’m familiar with them. You say it could be one of those ones where it was either slipped under his nose without him knowing or he did it and he has genuinely forgotten about it and doesn’t think it was his?

MR O’NEILL: Yes, and I think the former of those two is the more likely, on the evidence. It is unlikely, with respect, that he would forget. This is a man who was putting an enormous amount of effort into that development of the property. He was working on - - -

HIS HONOUR: He was limited by literacy and language.

MR O’NEILL: Yes.

HIS HONOUR: And habit, with the past with his wife doing all the paperwork.

MR O’NEILL: And Mrs [D’s] own evidence on the point when she was cross-examined about the motor vehicle transfer, which, again, on the face of it, there is no obvious reason for that transfer to occur two months before she leaves the house other than to give herself a vehicle to take with her, she said - I’m sure, given the chance again she wouldn’t make this concession - it was part of a bundle of papers that she put under his nose, and he probably signed it He would have signed it, he probably didn’t even read it

That, I thought, was, in my submission, was a telling insight to the way, in fact, that the household operated. Mrs [D] was the solicitor, she did all the paperwork From time to time she shoved a bundle of documents under [Mr D’s] nose, said, “You need to sign here, here, here and there”, he trusted her. He had no reason not to at that stage. He did so. That would come within one of Mr [M’s] categories of forgeries. Not a forgery in the sense that someone else did it, but his signature was obtained by a form of deception or trickery.

HIS HONOUR: A trick. You don’t even have to go that far, do you? It doesn’t have to be by trickery, it’s just that he signed something he didn’t realise what he was signing, like affidavits.

MR O’NEILL: The person who put the document under his nose and asked him to sign it certainly knew its significance. In that sense, I do go that far, because we say that Mrs [D] was in a position to know what she was asking her husband to sign and what the implications and significance of that was.

HIS HONOUR: All right, so you don’t have to - you say it is a civil conspiracy, and that is going to attract your higher standard of proof.

MR O’NEILL: I accept that.

HIS HONOUR: But each individual step in it, you say you don’t have to prove, such as the forgery. You don’t necessarily have to prove forgery.

MR O’NEILL: No.

HIS HONOUR: I understand that. But you say it’s a forgery?

MR O’NEILL: Mr [D] gave unequivocal evidence that he did not sign that document. He may be mistaken in that belief but it was, nonetheless, an honest belief the way in which one reconciles the honest but mistaken belief is in terms of Mr [M’s] categories. Anyway, they can be reconciled.

It was important, we say, from the point of view of the intention of Mrs [D] and Mr [P] to have mortgages also over the [N] properties because they anticipated there was going to be a shortfall because they thought the property was worth $40,000. They knew that $75,000 was the amount specified in the documents. Therefore, an important part of this process was to secure mortgages over [N]. A problem arose there because, on one of the properties - I can never which is lot 41 or 42, that doesn’t much matter - the names on the title were that of simply [R D] and [J D], whereas the names on the mortgage and loan documents were their full names. The documents that are being exhibited clearly show that was rejected by the Lands Titles Office and Mrs [D] then completed a form 14 and a form 20, which she sent off to Mr [P’s] solicitor’s enclosing the relevant documentation. Mr [D] doesn’t have a birth certificate. His citizenship certificate is the document that stands in lieu of his birth certificate as proof of who he is and what his nationality is and so on.

That was never disclosed by Mrs [D]. That is one of many things that was never disclosed by Mrs [D]. Mr [D], in other affidavits, had accused Mrs [D] of removing his citizenship certificate. She swore an affidavit saying that she knew nothing about where it was, and yet prior to her swearing that affidavit, she had sent off a certified copy of that citizenship certificate, along with her marriage certificate, a copy of which she’d obtained one month before she sent off the form 20 application. She sent it off to the solicitor’s acting for Mr [P] in order to effect the transfer of the mortgage.

That document, which, again, is allegedly signed by Mr [D], was never sent to Mr [M] for examination. Had it not been for the assiduous efforts of my instructing solicitor in pursuing third party discovery of relevant documentation, we would never have known that such a transaction had, in fact, occurred.

HIS HONOUR: So, do you have to prove forgery of the registration forms?

MR O’NEILL: You don’t have to prove forgery - - -

HIS HONOUR: Same type, just put under his nose?

MR O’NEILL: Same type, put under his nose.

HIS HONOUR: Did you put any of this to Mrs [D]?

MR O’NEILL: Yes, absolutely, your Honour.

HIS HONOUR: That she just put it under his nose?

MR O’NEILL: The only time she admitted doing it, she actually volunteered it, in a sense, was in relation to the motor vehicle transfer.

HIS HONOUR: Yes, but when you were questioning her, you were promoting the forgery theory, you weren’t promoting the alternative theory.

You questioned her - you actually put it directly to her that she was the forger.

You didn’t say she was a tricker, you said she was a forger.

MR. O’NEILL: She was unequivocal in her replies that [Mr D] had signed those documents.

HIS HONOUR: That’s right. You put it to her that she did.

MR O’NEILL: Yes, and she denied it.

HIS HONOUR: Yes.

MR O’NEILL: What I am saying to you now, your Honour, is that those were not exhaustive possibilities and she has admitted the possibility that I’m now advancing to you as the most likely explanation of how one can reconcile a finding by you that Mr [M] is correct and they are Mr [D’s] signatures with what actually happened.

HIS HONOUR: Shouldn’t you, though, have put it to her that she tricked her husband rather than forged his signature?

MR O’NEILL: I put it to her in general terms that she was in the habit of putting documents to him for him to sign and she said, “He always reads the documents”. That manifestly is not the case because she contradicted herself later on when she cited the example of the - - -

HIS HONOUR: You never really had an alternative case until just now. It’s only become an alternative case recently. In all your material and Mr [D’s] material it is either forged or the product of a trick.

MR O’NEILL: What Mr [D] actually said in his affidavit, he made a complaint to the police. The complaint was that the signatures were not authentic. Yes, I don’t, with respect, I’m not, with respect, bound by an initial stance I may have taken. I’m entitled, I believe, to put to you a case that I think is founded upon the evidence as it has emerged over the course of the trial. That is the classic scientific method, to pose an hypothesis and as the facts emerged, one modifies the hypothesis, one doesn’t modify the facts.

HIS HONOUR: Except that this alternative hypothesis has always been open. It is not affected by the evidence. Certainly since [Mr M’s] affidavits have been available the hypothesis has been open.

MR O’NEILL: Yes. If your Honour was to find I could have put that more clearly to Mrs [D], that in the light of the stance that she took and in the light of her concession regarding the vehicle transfer, I thought I had established sufficient for my purposes.

HIS HONOUR: Well, you say that they merely came undone because the [H B] was worth more than they thought it was, and the husband got a $100,000 contract on it, and they had to come up with another way of increasing the indebtedness to the point that there would be a shortfall, a new shortfall.

MR O’NEILL: Yes.

HIS HONOUR: They did that - you don’t have to go through it all. If I’m stating to you what I understand to be your case, and I’m right, then I’m with you, okay?

MR O’NEILL:  All right.

HIS HONOUR: It’s only if I’m wrong that you really need to correct me.

MR O’NEILL: Yes.

HIS HONOUR: That is what you say. They did this by inflating, retrospectively inflating, the bills - they brought into account things that hadn’t previously been brought into account, is that right?

MR O’NEILL: Yes, they did. There were steps before that which were also, in my submission, important. Bearing in mind that in May of 2002, Mr [P] had advised that the money - advised Mrs [D], Mr [D] never saw that invoice with the handwritten note on it - that the money was exhausted and that he wouldn’t proceed without the written authority of both of them. There has never been any document ever produced to show that there was written authority from both of them, and yet [P] continued to accrue - - -

HIS HONOUR: Why would he write the letter? What did that add to the conspiracy?”

102.At Volume 13, Page 2458-2463 the following appears:

“HIS HONOUR: So it’s not part of the conspiracy, it was an agreed arrangement of mutual benefit.

MR O’NEILL: On one construction. Another construction was that it gave Mrs [D] the opportunity to leave the marriage. The arrangements were going to be put in place in that 12 months of rolled over loan, [PC], which was coming in with the [P] mortgage.

HIS HONOUR: Put it in funds?

MR O’NEILL: Put it in funds. And, also, help set the stage for what was to come the following year. [P] then makes payments to Mr [A], and it is significant in that list of documents and the letter that Mr [A] wrote to Mr [D] when he finally found out some of what was going on in August of 2002 he went to see Mr [A] and was provided with a list of invoices. The invoices are all addressed to [Mrs D] and [Mr P] in [T]. There was no way Mr [D] would have known of those unless he was shown them by his wife, which he clearly wasn’t. The payments were made, the source being recorded by Mr [A], as [Mrs D] and [Mr P].

There was also, to ensure, we say, the shortfall, payment of $20,000 in round figures, to [RJ] Lawyers in settlement of the [AG] debt. That is clearly outside the terms of the loan document. There is no document in existence that we were able to discover - and it certainly has not been referred to by the applicant - to record the fact there was any agreement to make that payment outside the terms of the loan. That, of itself represents nearly a quarter of the total indebtedness to Mr [P].

In February 2002, before the loan facility was exhausted but at a time when Mrs [D] would have known that the loan was in default because of outstanding rates on [H B] $20,000 paid into her firm’s trust account, and she applies to the Court for specific orders on expenditure of that money, and the Court really made orders, although not equalling the $20,000 by any means. There is no mention in Mrs [D’s] application to the Court or the orders made by the Court of money to be applied to outstanding rates. That, one would have thought was a rather more important debt for her to meet or to part meet from that money which was matrimonial money because it was paid out in an insurance settlement of the matrimonial property, than paying Mr [P] some of his legal fees, which is one of- - -

HIS HONOUR: So it was a deliberate strategy to ensure default?

MR. O’NEILL: Absolutely. But when she had the opportunity - and we say this is the first real opportunity, she actually had some ready cash that was, in a sense, a windfall, at a time when the mortgage was in default, although no demand had yet been made, to actually pay the [H B] rates, which would have meant that it wasn’t in default and, as it turned out, when the settlement figures were produced, that was about 90 per cent of the shortfall that was claimed to be there.

In May, as we said, the loan facility was exhausted. [Mrs D] knew this because she had received that invoice with [Mr P’s] handwritten notes on it, even if we can’t prove that she had a conversation with him about that point, it is an irresistible inference in our submission that she certainly knew then that there was a problem because the money had been exhausted, interest was continuing to accrue, the rates were outstanding, and she took no steps at all to ameliorate the potentially parlous position that the family was being placed in.

HIS HONOUR: But you say in your paragraph 21 that - - -

MR O’NEILL This is where [P] writes the note to [Mrs D] saying that the loan facility was exhausted, and if he was to go on accruing more costs he wants both their signatures.

HIS HONOUR: Yes. You say [Mrs D] knows this and believes that [H B] is worth only $40,000?

MR O’NEIL: Yes.

HIS HONOUR: If she believed that in May 2002, how did she know that she needed to create a false shortfall in the previous months through the [AG], and the non-payment of rates, for that matter?

MR O’NEILL: Belts and braces. The idea clearly was to produce a shortfall. They didn’t know what the shortfall would be. They thought it would probably be within the vicinity of $20,000 or $30,000. The difference between what she perceived the value of [H B] to be - - -

HIS HONOUR: Yes, I know. But why then would she need to have an even bigger shortfall? Surely that was big enough?

MR O’NEILL: Well ---

HIS HONOUR: Why did she fabricate the shortfall before May 2002 rather than after when she found out what it was really worth?

MR O’NEILL: In my submission? By May 2002, they thought they had achieved their objective.

HIS HONOUR: Yes.

MR O’NEILL: So it was just a question of then waiting. Because, remember, your Honour, the [PC] loan facility was still in place, which is why September 2002 is such a crucial date to us, because [Mr D] approaches [PC], establishes that they are willing to roll the facility over, he signs his agreement to that rollover and it then goes to [Mrs D] and she refuses. Now there is only one reason why she would refuse the rollover, because she wanted the shortfall which she thought was now in place to enable the mortgagee’s interest to transfer from [H B] to the two [N] properties. She’d ensured, through the myth that we’ve already discussed, that there were two [N] properties that were affected, and not just the one, although one, clearly being worth at least $500,000, was many times what any possible shortfall could be over [H B].

HIS HONOUR: Hang on, at this point in time when she refuses the rollover in 2002, she’s got to know that [P] will lend the money and he’s going to have it to replace - -

MR ONEILL: They have until November to put those arrangements in place. In September they think that [H B] is going to be in a shortfall situation, that the mortgage is, therefore, going to transfer over

HIS HONOUR: So he’s got to be the priority mortgagee by that time, otherwise it doesn’t work?

MR ONEILL: Absolutely. What he does, he then does a number of things in that September-October period. He issues a demand, first of all, for the payment of the rates, and they are not paid, notwithstanding Mrs [D’s] acquisitions says to that money that we referred to earlier on. He issues a demand for accelerated payment of the mortgage, which is now standing at some - I forget the exact figure - $70,000-something, $79,000, so it is over the $75,000 - and he starts to negotiate with [PC] to take over the loan because it is going to fall due in November and he knows, because [Mrs D] has refused to sign the rollover that it is going to go into default in November, so he approaches, first of all, his wife, for $175,000 and gets turned down. In effect, he raises that money through the superannuation fund represented by L Lawyers. That loan is secured by the S who are friends of [Mrs D’s], against their unit, and the is that the interest on the loan is going to be paid by [Mr K] [Mrs D’s] uncle, who is living with her and [Mr P], and has done since February 2002, together on the [GC].

The balance required to purchase it, he goes to [Mr K], who stumps up $340,000. There is a single document that [P] produces that he acknowledged yesterday that he had written which records that he’s borrowed the money, that it is going to be repaid when the property is sold and, in had the meantime, [Mr K] will get 13.2 per cent interest, which is the penalty letter interest rate that would have applied if and when the [PC] mortgages defaulted. The actual mortgage rate was 9.2 per cent. So [Mr K] was being promised the default interest rate where it was possible to have refinanced with [PC] at 4 percentage points lower rate of interest.

HIS HONOUR: He’s giving them $340,000 payment on the never-never or whenever.

MR O’NEILL: They thought that, again - - -

HIS HONOUR: 13 per cent on that basis isn’t bad, is it?

MR O’NEILL: Well, sixth months, they thought. That is what [P] said in his letter seeking the money, “We expect this to be wrapped up in six months”. That was their anticipation, early 2003; they had been out of there. They had had their money and they had been gone. [Mr K] would get his money back, he’d get his interest for that particular period.

HIS HONOUR: So you say it wasn’t a good business deal so it must have been part of the conspiracy?

MR O’NEILL It all happens at the same time and it doesn’t happen by coincidence.

HIS HONOUR: No, it’s all part of the scheme?

MR O’NEILL: Yes. If [Mrs D] wasn’t part of the scheme, as Mr [D] posed perhaps rhetorically at the end of his evidence and under cross-examination today, he couldn’t understand why she did nothing to oppose what was happening. On the face of it, she’d lost [H B], or was going to lose [H B]; she stood in danger of losing the [N] properties and so on and so forth. On the face of it, it was contrary to her interests to, until you understood that she was in cahoots with [P] on this matter.

[Mr D] was unaware of any of this process that was going on with [P] and [PC], the [Ks], the [Ss], the whole shebang was totally excluded from him and was only found out through the subpoena process of third party documentation. Because [Mrs D] didn’t disclose any of these arrangements when she sought and obtained an injunction preventing [Mr D] from refinancing the [PC] loan in April - sorry, September 2003.

Remember I put to her a series of things that were relevant, in our submission, that the Court have been advised about, but she didn’t think it appropriate the Court should know such matters, because she knows, as a solicitor, that affidavits filed in support of an interlocutory application are not the subject of cross-examination. The Court is going to deal with the matters as they appear on their face and rely upon the integrity of the parties swearing the affidavit to provide them with all relevant information. She manifestly did not, in our submission.

In October 2002 [Mr R] is teed up to take over as receiver/manager. His sole qualification for that job appears to have been his 20-year friendship with [P]. He had no previous experience as a receiver. He doesn’t even do receivership work. I quoted to him what his firm’s web site describes him as and he agreed that that is what he does. He has never done one before, he has never done one since, and he has never been involved in a subdivision before. We say he’s got the gall to come into this Court with a (indistinct) $30,000-something when, on Mr [A’s] evidence there wasn’t a great deal to be done.

4.4On 20 April 2006 (two months before the appeal was heard) [P] Development Pty Ltd purchased the mortgage held by [P] for a consideration of $1 dollar. This information was not disclosed to either the appellant or the Court. It was done without the knowledge or consent of [K].

4.5On 29 June 2006 the respondent was appointed a director of [P] Developments Pty Ltd. As director of the company which held the mortgages and being the de facto partner of the company’s sole shareholder ([P]) her position viz z viz an interest in the [N] properties was strengthened against that of the appellant. This information was not disclosed to the appellant or to the Court.

4.7The money from [IC] was received on 22 June 2006, six weeks before the hearing of the appeal. On the same day the respondent in her capacity as a director of [P] Developments signed a consent to [IC’s] mortgage having priority over that of [P] Developments. Notwithstanding the alleged position of [K] quoted in paragraph 3.9 above, [K] appears not to have been consulted about this development.

4.11Immediately upon receiving this payment from [MW], [R] resigned. He then joined the respondent as a partner. They practice [at …] as [D and R] Solicitors. The respondent submits that this arrangement should have been disclosed to the Court.

4.12On 7 July 2006 [P] was adjudicated bankrupt on the basis of a debtor’s petition. His capacity to act in any role with [P] Developments Ltd thereby became severely circumscribed. As the director and secretary of [P] Developments as well as the de facto partner of [P], the respondent effectively became the mortgagee in possession of the [N] properties. Her claim at trial about [K’s] role is therefore simply untrue in the light of these developments.

5.1On 24 April 2007 the two [N] properties were sold for $1.4million. Settlement took place on 24 May 2007. In accordance with the Deed of Priority [IC] received $644,463.54. This is an astonishingly high amount, especially in light of the fact that $100,000 of the initial borrowings was returned on 16 January 2007 (paragraph 22 of [Mr X’s] affidavit sworn 19 July 2007).

5.2A further $716,283.84 from the sale proceeds were allocated to [P] Developments Ltd ([Mr X] supra at paragraph 16). This however is an incomplete picture.

5.3According to an affidavit sworn by [Mr K] (attached to the affidavit of [Mr MM] filed in support of this application) on 18 June 2007 in District Court proceedings he advanced the sum of $340,000 to [P] in the expectation of [P] and the respondent at that time was that the [N] properties would receive development approval and be sold. As noted above, [K] was never consulted about the various manoeuvrings involving the mortgages.

5.10The respondent’s affidavit does disclose (for the first time) that [P] Developments Ltd is the Trustee of the [P] discretionary Trust. She says that she has been a beneficiary of the trust since its creation (paragraph 15). It is not known when this trust was created, but the respondent’s interest has never been previously disclosed. Her role as a beneficiary and effective controller of the trust is information that should have been available to the trial Judge and the Court on appeal. It is clearly relevant to any expectation she might have had to benefit from the various manoeuvrings that were engaged in for the purpose, the appellant alleges, of depriving him of his rightful entitlements.

5.14The whole of the balance of the sale price has been swallowed by repayment of the [IC] mortgage (46 percent), estate agent’s commission (2.75%) and [P] Developments (11.1%) excluding the [K] component. The respondent’s affidavit makes no mention of the funds received from the sale by [P] Developments saying only that capital is still owing on a borrowing of $170,000 (paragraph 12).

5.15Of the $642,769 borrowed by [R] from [IC], $458,754 or 71.4% were applied to his fees and those of his firm. (Submissions of Counsel for the Applicant, page 4, pars 4.4, 4.5, 4.7, 4.11, 4.12, 5.1, 5.2, 5.3, 5.10, 5.14, 5.15)

230.It is instructive to have regard to the trial Judge’s conclusions with respect to the P loan.  His Honour was not “reasonably satisfied to the requisite standard” that:

152(b) The [P] loan and associated mortgage documents were forged or obtained and registered by deception as part of an ongoing conspiracy between Mr [P] and Ms. [D]. It is not contested that the parties received the benefit of nearly $76,000.00 advanced by Mr [P] between 2000 and 2002. Most payments were made to [A] Developments or sub-contractors used for subdivision works on Lot 41. The parties were fully extended at the time and having difficulty meeting the monthly mortgage instalments on the [PC] loan. But for the [P] loan, the subdivision project would have probably ground to a halt.

Mr. [D] certainly does not suggest that he had access to any alternative source of funds during that period but does deny having any personal knowledge of or making any direct claim against the [P] loan facility.

However, his conduct before January 2003, when the allegations of forgery and fraud were first aired, is inconsistent with the asserted ignorance of the [P] loan.

Mr. [D] must have been aware of the subdivision works and the progress of the development approval application in 2001 - 2002, but says he never thought about whether or how relevant accounts were being paid. He did not seem to raise an eyebrow when he (as he probably did) received Ex, 18 from [A] Developments.

The solicitors acting on behalf of the husband refer to the loan in correspondence dated 19 December 2001 and seek particulars without specifically denying any knowledge of its existence.

The Form 17 Mr. [D] filed in 2002 also mentions the [P] mortgage.

In October 2002, the husband offered to “buy out” the mortgage (Ex. 21), with no hint of a dispute as to its validity.

Thus, to the extent that it is necessary to do so, I accept the veracity of par 153 of the wife’s main affidavit in relation to the circumstances of the [P] loan and the security documents and find that the parties jointly approached Mr [P] for the loan.

The husband seems to want to have it both ways in relation to the forgery allegation. He did not even raise the allegation either in legal correspondence or filed material until after the [H B] property was sold. Since then, he has consistently denied the genuineness of his signature on the loan and registered security documents.

In his affidavit and oral evidence, the husband points the accusing finger directly at the wife. And the accusation was unequivocally and repeatedly put to her in cross-examination. However, in his final address, Mr. O’Neill floated trickery as an alternative explanation to forgery without even having put it to the wife in cross-examination. He suggested that his client may have been misled by Ms. [D] into signing the forms unwittingly or without realising their true character (just as he alleges (and she denies) happened in relation to the transfer of the motor vehicle registration form in September 2001).

The wife swears that there was no forgery or any other form of deceit involved.

The handwriting expert, Mr. [M] prepared two reports in which he expresses the opinion that all the disputed signatures were written by the one and same writer, do not show any signs of forgery, and have the characteristics of genuine signatures. Mr. [M] confirmed his opinion in the witness-box and said that he “completely” believes that the husband was the author of the disputed signatures.

Ms. [H], a law clerk employed in the wife’s legal firm, was the attesting justice of the peace. She says that she never witnesses documents unless they were signed in her presence. Evidence of tendency, habit or system has always been received to prove the probability that a person acted in the same way as they normally do on the occasion in question. I infer from Ms. [H’s] evidence that she followed her regular practice when attesting the disputed documents and that, therefore, the signatures purporting to be the husband’s are in fact his and that they were not obtained by deceptive means.

I also found the evidence of the wife and Mr. [M] on the point to be reliable and credible. I prefer theirs to Mr. [D’s]. (Appeal Book, Set 2, Vol 1, par 152(b), pages 37, 38 & 39)

231.Of most obvious immediate relevance are his Honour’s finding, which has not been controversial in the appeal, that “but for the [P] loan, the subdivision project would probably have ground to a halt”, his Honour’s acceptance of the substance of the wife’s allegations “in relation to the circumstances of the [P] loan and the security documents”, his finding that the “parties jointly approached Mr [P] for the loan”, and his preference for the evidence of the wife and her witnesses generally to the evidence of the husband in relation to the loan.

232.So far as the acquisition by P Developments Pty Limited of the mortgage held by P for a consideration of $1 is concerned (paragraph 4.4) nothing to which we have been referred advances the present application. Whether the transaction was disclosed to the husband or the Court, it has not been shown that the transaction in any material way impugns the substance of the findings of fact of the trial Judge. The transaction clearly occurred after the completion of the trial. We do not perceive the wife or P to have been under any obligation to disclose the transaction to the Court in the circumstances. To the extent that the wife failed to disclose the transaction, she accepted the risk, the materialisation of which has not been established, that if it materially altered the facts of the case, that evidence might have an impact on appeal. Alternatively, which has not been established, the evidence might support a section 79A application.

233.So far as the wife having become the sole director of P Developments Pty Limited on 29 June 2006 is concerned (paragraph 4.5), we do not understand in what way that transaction “strengthened” the interest of the wife in the N properties against those of the husband. The trial Judge accepted that the wife and Mr P were living in a de facto relationship, and had been for some time. Nothing to which we have been referred establishes that, as a director, the wife became entitled to the assets of the company. Nor has it been established that the wife thereby gained anything which she did not already have. Nothing emerging from this complaint advances the present application.

234.It was asserted on behalf of the husband that (paragraph 4.7) the wife “in her capacity as a director of [P] Developments signed a consent to [IC] Mortgage having priority over that of [P] Developments”. That course of conduct is hard to reconcile with suggestions that the wife’s position was liable to be improved by virtue of her having become a director of P Developments. On the husband’s case, signing the consent was likely to have materially adversely affected the wife’s interests.

235.So far as the complaint (paragraph 4.11) that upon Mr. D’s firm receiving payment for his services as receiver, Mr. D “joined the respondent as a partner” in a legal practice at …, which was not disclosed to the Court, is concerned, whilst that circumstance might, and undoubtedly did in the mind of the husband, excite suspicion, nothing to which we have been referred advances the present complaint. In what way that development could render erroneous the trial Judge’s preference for the wife and Mr P’s version of events over that of the husband has not been suggested. Possibly, although it is difficult to see how, if there is more to that development than has been indicated to us, that might support a section 79A application.

236.So far as the P Discretionary Trust is concerned, there is no evidence before this Court that such trust has any significant assets or value. What interest if any the wife has in the trust is not known. Nothing to which we have been referred establishes the probability, which has not been established or suggested, that the wife has a significant interest in the Trust, or the potential to acquire such interest as a beneficiary of the Trust. Those matters may enliven a section 79A application, but such evidence as there is before this Court would not warrant appellate intervention.

237.So far as the complaint (paragraph 5.13) that the wife “has” a vested interest in delaying as long as possible the repayment of the [K] loan” is concerned, nothing to which this Court has been referred establishes such to be the case. Indeed, on the submissions on behalf of the husband, it is apparent that the realisation of the N property and disbursement of the proceeds resulting from such sale were in the hands of others over whom it is not suggested that the wife had legal or actual control. This is ultimately a submission rather than a matter involving further evidence. Similar observations apply to a complaint with respect to the fate of the proceeds of sale of the N property (paragraph 4.14).

238.To the extent that the wife may have had an obligation to disclose the events complained of in the post trial period, which has not been established, the absence of any evidence establishing that those matters were material to relevant findings of fact of the trial Judge or the conclusions drawn by him in reliance upon them, the complaints are not made out. As such, the evidence in relation to them cannot satisfy the requirements for admission as further evidence.

239.A number of complaints with respect to events involving Mr K were raised in support of the application to adduce further evidence. These seem to fall into two broad categories, the first apparently being the improbability of the K loan being as the trial Judge concluded that it was, and the second being the impact on his Honour’s conclusions of the wife potentially being the sole beneficiary of Mr K’s estate in the event of his death.

240.It is instructive to have regard to the trial Judge’s conclusions with respect to the indebtedness to Mr K. His Honour was “not reasonably satisfied to the requisite standard”:

152(e)That the wife’s refusal to roll-over the [PC] loan in 2002 was unreasonable or part of an ongoing conspiracy which resulted in avoidable financial loss.

There is no doubt the closeness of the relationship between the wife and Mr [P] and Mr [K]. Mr [K] is her uncle and resides with her. He is separated from his wife and is survived only by Ms. [D] and three other nieces. He has no existing will and his estate, as things currently stand, would ordinarily be distributed under the intestacy rules if he was to die today. He advanced $350,000.00 to Mr [P] to enable him to buy out the [PC] loan in 2002. His interest entitlement is deferred until after the sale of the [N] property. Both the principal loan and accrued interest are unsecured, except indirectly under the mortgage held in Mr [P’s] name.

Again, apart from the husband’s conjecture, there is no ground for supposing that the wife and not Mr [K] provided the loan monies. She has satisfactorily accounted for the [C] unit proceeds and does not appear to have had access to any other funds at the material time. I believe the testimony of Mr [K] and the wife on this point.

The evidence does not support the inference that Mr [P] and Mr [K] are in cahoots or acting as secret trustees for the wife. Mr [K] may be naïve and perhaps more accommodating than most but he clearly trusts Ms. [D] and Mr [P]. Some people regard a hand-shake as more binding than documentation. Mr [K] strikes me as one of them.

Thus, the [K] loan has not been shown to be anything other than a genuine arms-length commercial transaction.

According to Dr. [S’s] calculations, the roll-over cost of the [PC] loan in 2002 was $560,000.00, including pre-paid interest for a year at 9.5 per cent, but excluding $11,000.00 in brokerage fees. Assuming those terms continued, and that the husband was no more successful than the receiver in obtaining subdivision approval, the [PC] loan would have had to have been rolled over again in 2003, 2004 and 2005. Assuming the same terms as 2002, the cost of rolling over, with brokerage fees, would have been $778,802.00 by November 2005. The projected balance of the [K] loan as at the same date, in comparison, is $691,020.00. On this analysis, the parties will actually be $87,000.00 in front by the end of this year.

The husband contests the accuracy of Dr. [S’s] figures and claims that the correct roll-over costs at 9.2 per pent are : (2002) $495,000, (2003) $540,540, (2004) $590,290 and (2005) $644,574.

However, it is unnecessary for me to resolve whether the parties are financially worse off now than they would have been if they had kept rolling over the [PC] loan because I am not satisfied that the evidence discloses that the overall indebtedness of the parties was increased by the wife’s refusal to roll-over the [PC] loan in 2002 and, even if it did, there are no grounds for holding her accountable for them without proof that (a) her refusal was designed to injure the husband’s financial interests or (b) she was economically reckless or inept or (c) she did not have sound and genuine commercial reasons for preferring the terms of the [K] loan over those of the PC roll-over deal. (Appeal Book Set 2, Vol 1, page 41, par 152(e))

241.Of most immediate significance is his Honour’s finding that “apart from the husband’s conjecture, there is no ground for supposing that the wife and not Mr [K] provided the loan monies” which in turn Mr P lent to the parties, his acceptance of “the testimony of Mr [K] and the wife” in relation to the source of funds advanced by Mr K to Mr P, and his rejection of suggestions “that Mr [P] and Mr [K] are in cahoots or acting as secret trustees for the wife”.

242.At trial, in final submissions, Counsel for the husband referred to Mr P having gone to the wife’s uncle, Mr K, “who stumps up $340,000”. The fact of Mr K having provided $340 000 was not then suggested to be controversial, as Counsel for the husband’s subsequent response to the trial Judge’s suggestion that “No-one’s denying it” (Mr K’s debt) confirms. Counsel’s reply “At the moment” (Appeal Book Vol 13 page 2469) makes that clear.

243.Whilst it is clear from Counsel’s submissions that 13.2 per cent default interest payable on the K mortgage was submitted to have been pursuant to the conspiracy between the wife and Mr P, it was not submitted in any passage to which we have been referred, or located for ourselves, that Mr K was part of the conspiracy although, consistent with Counsel for the husband’s submissions, his involvement was submitted to have been a consequence of the alleged conspiracy involving the wife and Mr P.

244.As is apparent from Counsel’s outline of submissions, reliance for this complaint is placed upon documents which are annexures to Mr. MM’s affidavit filed in the District Court in apparently unrelated proceedings between the wife as plaintiff and Mr K as defendant.

245.As with earlier complaints, rather than attempt to summarise or paraphrase, it is preferable to set out the complaints precisely. The relevant complaints are: -

5.3According to an affidavit sworn by [Mr K] (attached to the affidavit of [Mr MM] filed in support of this application) on 18 June 2007 in District Court proceedings he advanced the sum of $340,000 to [P] in the expectation of [P] and the respondent at that time was that the [N] properties would receive development approval and be sold. As noted above, [K] was never consulted about the various manoeuvrings involving the mortgages.

5.4[K] further deposes (paragraph 18) that he inquired through 2003 and 2004 as to when his money would be returned. It was only in mid 2004 that he discovered (apparently for the first time) that subdivision approval was being sought or the [N] properties before they were to be sold.

5.5[K] continued through 2005 and early 2006 to press for the recovery of his money. In July 2006 he was forced to obtain the services of a solicitor to help him recover his money. It was at this time that he discovered that N had a further mortgage over it that had been given priority over the one that he thought protected his interest (paragraph 19). This chronology by [K] is to be compared with the respondent’s latest affidavit, particularly paragraphs 5, 11 and 13. The explanation offered by the respondent simply makes no sense.

5.6According to [K] it took a further ten months of negotiations via his solicitor before he was repaid. [K] appears to have received payment of $560,688.73 directly from [Mr X]. According to [Mr X’s] affidavit (paragraph 30) this payment was in accordance with the directions of [P] Developments Ltd.

5.7As [P] was bankrupt by this stage it appears prima facie to be a preference exercised to the benefit of [K] over [P’s] other creditors. It is not known in [P’s] trustee in bankruptcy is aware of this transaction.

5.8As the respondent was the sole director of [P] Developments Ltd it is to be presumed that she was instrumental in directing that [K] be paid in this way. Her affidavit is silent on this point.

5.9The respondent’s affidavit is similarly silent on the circumstances of her estrangement from [K]. According to [K’s] affidavit he was ordered to leave the premises they shared in September 2006. When he refused he was denied meals and was confined to his room. The respondent and [P] then vacated the premises, arranging for the electricity to be cut off. [K] had no pension at this stage and no means of supporting or looking after himself (paragraph 27(i)).

5.10The respondent’s affidavit does disclose (for the first time) that [P] Developments Ltd is the Trustee of the [P] Discretionary Trust. She says that she has been a beneficiary of the trust since its creation (paragraph 15). It is not known when this trust was created, but the respondent’s interest has never been previously disclosed. Her role as a beneficiary and effective controller of the trust is information that should have been available to the trial Judge and the Court on appeal. It is clearly relevant to any expectation she might have had to benefit from the various manoeuvrings that were engaged in for the purpose, the appellant alleges, of depriving him of his rightful entitlements.

5.11Prior to the estrangement of [K] from the respondent it is also a reasonable inference that she would expect to benefit from [K’s] estate. According to the evidence at trial he had not made a Will. The precise state of his estate’s dispositions has now been clarified.

5.12According to the respondent’s affidavit of 29 May 2007 filed in the District Court in proceeding where she is suing [K] for $78,194, she is the only living blood relative of [K]. Were he to die interstate the respondent would be the sole beneficiary of his estate pursuant to section 37 Succession Act (Qld) 1981. (Submissions of Counsel for the Applicant, pages 5 & 6, pars 5.3, 5.4, 5.5, 5.6, 5.7, 5.8, 5.9, 5.10, 5.11, 5.12)

246.Inferentially, other than to demonstrate inconsistencies between the evidence of the wife in the two sets of proceedings, it is difficult to know what significance is ultimately sought to be attached to the dispute in the District Court between the wife and Mr K. On one view, it not being suggested that the proceedings are a sham, it might be argued that the fact of the proceedings, and the allegations and counter allegations made by the wife and Mr K in the proceedings re-enforce the trial Judge’s conclusion that the K advance to Mr P was, despite its unusual attributes, effectively an arm’s length transaction.

247.However curious, the revelations in the affidavits in the District Court proceedings would not, if accepted, render erroneous any relevant conclusion of the trial Judge. The submissions on behalf of the husband do not engage with that difficulty. It is to be remembered that the trial Judge’s finding that, but for the P advance the N property would have been lost has not been successfully challenged in the appeal.

248.It does not seem to be suggested, and if it is, has not been successfully suggested, that Mr P had funds of the magnitude provided by Mr K. Put simply, someone had to provide the funds to avoid the loss of N to which the trial Judge referred. However interesting the matters raised on behalf of the husband in this application may be, they do not in our view have the effect needed to justify their receipt into evidence in the appeal.

249.So far as the allegations that prior to her “estrangement” from Mr K the wife would have reasonably been expected to benefit from Mr K’s estate (paragraph 5.11) is concerned, nothing to which we have referred establishes that the trial Judge’s conclusions were erroneous. Notwithstanding the evidence at trial, the effect of which was that there were other potential beneficiaries of Mr K’s estate.  It should be noted that Mr K is alive. It is reasonable, but unnecessary, to assume that since the “estrangement” Mr K would be unlikely to execute a will pursuant to which the wife would benefit (see paragraph 5.12).

250.Without suggesting that the wife’s inheritance of substantial funds from Mr K’s estate would necessarily enliven section 79A of the Act, in our view the potential significance of that possibility relates to the section rather than to this application. Such significance as that topic has, or might have, however does not lie in the current appeal to this Court.

Conclusion

251.No ground of appeal in relation to the trial Judge’s substantive orders having been made out and the application for leave to adduce further evidence having failed, the appeal should be dismissed.

252.It was agreed that the costs submissions be made in relation to the trial Judge’s costs order, and with respect to the costs of the appeal, once judgment in the substantive appeal was delivered. The Court’s orders will provide for such submissions to be made.

I certify that the preceding two hundred and fifty-two (252) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate: 

Date:  31 August 2007