De Costa and Falco and Ors
[2008] FamCA 532
•14 July 2008
FAMILY COURT OF AUSTRALIA
| DE COSTA & FALCO AND ORS | [2008] FamCA 532 |
| FAMILY LAW – PROPERTY – debts to third parties FAMILY LAW – CHILD SUPPORT – claim for lump sum |
| Family Law Act 1975 (Cth) Child Support (Assessment) Act 1989 (Cth) |
| Pierce v Pierce (1999) FLC 92-844 Money and Money (1994) FLC 92-485 Bremner and Bremner (1995) FLC 92-560 Borg v Borg (1991) FLC 92-215 Lightfoot v Hampson (1996) FLC 92-663 Ivanovic v Ivanovic (1996) FLC 92-689 Johnson v Johnson (1999) FLC 98-004 |
| APPLICANT: | Ms De Costa |
| RESPONDENT: | Mr Falco |
| 2nd & 3rd RESPONDENTS: | Mr and De Costa (Snr) |
| FILE NUMBER: | MLF | 1712 | of | 2006 |
| DATE DELIVERED: | 14 July 2008 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Brown J |
| HEARING DATE: | 5, 6, 7 & 17 March 2008 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr D Brown SC |
| SOLICITOR FOR THE APPLICANT: | Pearsons |
| COUNSEL FOR THE RESPONDENTS: | Mr Testart |
| SOLICITOR FOR THE RESPONDENTS: | Nevett Ford |
Orders
That on or before 14 August 2008 the wife pay to the husband the sum of $1,972 (the B Street payment).
That upon the B Street payment the husband do all such acts and things and sign all such documents as may be required to transfer to the wife at her expense all of his right, title and interest in the real property situate at and known as B Street in the State of Victoria being the whole of the land more particularly described in Certificate of Title Volume … Folio … (the B Street property).
That pending the B Street payment:
(a)the wife have the sole right to occupy the B Street property and during such right of occupation pay all rates, taxes and like apportionable outgoings of the real property as they fall due;
(b)the parties hold their respective interests in the B Street property upon trust pursuant to these orders; and
(c)neither party encumber the B Street property without the consent in writing of the other party.
That on or before 14 August 2008 the husband advise the solicitors for the wife, in writing, whether he intends to exercise the option contained in paragraph (5) hereof.
That the husband have an option to acquire the whole of the wife’s right, title and interest in the real property situated at and known as W in the State of Victoria being the whole of the land more particularly described in Certificate of Title Volume … Folio … (the W property) upon the following terms:
(a)the option must be exercised, in writing addressed to the wife’s solicitors, and be received by them on or before 14 August 2008;
(b)on or before 15 September 2008 the husband do all things necessary, at his expense, to discharge mortgage No. …R to Westpac Banking Corporation; and
(c)on or before 15 September 2008 the husband pay the sum of $168,626 to Mr and Mrs De Costa (Snr) (the wife’s parents).
That upon payment pursuant to paragraph (5)(c) hereof, the wife’s parents do all things reasonably necessary to withdraw caveat X… filed by them on 17 January 2001 in respect of the W property and to give force and effect to this order the wife’s parents are joined as parties to these proceedings.
That if the husband exercises the option, then upon compliance by the husband with paragraphs (5)(b) and (c) hereof the wife do all such acts and things and sign all such documents as may be required to transfer to the husband, at his expense, all of her right, title and interest in the W property.
That if the husband does not exercise the option contained in paragraph (5) hereof, then the wife have an option to retain the W property, to be exercised in writing addressed to the husband’s solicitors, and to be received by them on or before 15 September 2008, on the following terms:
(a)on or before 15 October 2008 the wife pay to the husband the sum of $207,374 (the W payment);
(b)upon the W payment, the wife shall indemnify the husband and keep him indemnified against:
(i) all payments and liability pursuant to the mortgage registered over the W property;
(ii)all rates, taxes and outgoings with respect to the W property of whatsoever nature and kind;
(iii)all payments and liability for the debt of $186,826 due to the wife’s parents (to which caveat X… refers); and
(iv)all claims made by any tenant (past or current) of the W property.
That if neither party exercises an option to acquire or retain (as the case may be) the W property, it be sold altogether out of court (the sale) and the wife forthwith do all acts and things and sign all necessary documents to effect the sale of the W property and subject to agreement to the contrary between the parties, the following consequential arrangements shall apply:
(a)the listing price of the W property shall be as agreed between the parties and if there is no agreement shall be as advised by a valuer nominated by the President of the Victorian Division of the Australian Property Institute, who is also a licensed real estate agent;
(b)the W property shall be listed for sale by private treaty, on a 60 day contract, by an agent agreed to by the parties and, if there is no agreement, with the agent nominated to advise the value pursuant to the preceding sub-paragraph;
(c)in the event the W property has not been sold by 15 December 2008 the wife shall make all such arrangements and do all such acts and things necessary to procure a sale by public auction of the W property, without reserve, such auction to take place within a further period of two months, by an agent to be agreed and failing agreement, the agent nominated to advise the value pursuant to sub-paragraph (9)(a) hereof; and
(d)the wife shall have the conduct of the sale and shall keep the husband informed, in writing, of all relevant dates and events, including (but not limited to) authorising the sale of the real property, dates of inspection and the date of the auction (if any).
That upon completion of the sale of the W property the proceeds of the sale be applied as follows:
(a)first, to pay all costs, commissions and expenses of the sale and to pay any rates and taxes and like apportionable outgoings outstanding in respect of the real property;
(b)second, to discharge mortgage no. …R;
(c)third, the sum of $168,626 to the wife’s parents and, upon that payment, the wife’s parents shall do all things necessary (at their expense) to withdraw caveat no. X…;
(d)fourth, if the balance then remaining (the nett balance) exceeds $207,374 then:
(i)the sum of $207,374 to the husband;
(ii)35% of the then balance remaining to the husband, and
(iii)the balance to the wife; or
if the nett balance is less than $207,374, then the whole of the nett balance to the husband.
That if the nett balance of the sale of the W property is less than $207,374, then on the day of the settlement of the sale of the W property, the wife shall pay to the husband a sum equivalent to 65% of the difference between the nett balance and $207,374.
That pending the exercise of an option or completion of the sale of the W property (as the case may be):
(a)the wife shall retain possession and control of the W property (subject to the lawful entitlements of tenants, pursuant to lease) and pay all instalments pursuant to the mortgage, and all rates and taxes and like apportionable outgoings of the W property, as they fall due;
(b)the wife shall hold her interest in the W property upon trust pursuant to these orders; and
(c)the wife shall not encumber the W property, without the consent in writing of the husband.
That if the current lease in respect of the W property expires prior to 14 August 2008, the wife must advise the solicitors for the husband, in writing, prior to the expiry date and shall not renew the lease, or enter into any other lease (save a continuation of the existing tenancy on a month to month basis) unless the husband consents in writing.
It is declared that the husband and wife have no interest in the sum held in the Westpac Term Deposit in the name of B Pty Ltd and of that sum, $27,000 represents part payment by the parties (out of a total debt of $54,455) of a debt due to the wife’s parents.
That the funds held in trust by the Asset Confiscation Operation in the name of the parties be disbursed forthwith as follows:
(a)$27,455 to the wife’s parents (being payment of the balance of the debt due to them);
(b)$82,545 to the husband;
(c)65% of the then balance to the wife;
(d)the balance to the husband.
That unless otherwise specified in these orders:
(a)each party be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession of such party as at the date of these orders and for that purpose bank accounts are deemed to be in the possession of the person whose name appears on the bank’s record thereof; insurance policies are deemed to be in the possession of the beneficiary thereof; superannuation entitlements are deemed to be in the possession of the person who is named as the worker whose age or working future provides the conditions of the payment out of such entitlement; and the furniture in the B Street property be deemed to be in the possession of the wife; and
(b)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders.
That a party be at liberty to make an application for costs of and incidental to these proceedings by filing written submission within 28 days hereof and:
(a)the other party have a further 28 days in which to file and serve any written submission in answer to any submissions filed by the other party, and
(b)the party applying for costs have a further 28 days in which to make any written submissions in reply.
That each submission filed pursuant to paragraph (17) hereof have endorsed on the cover sheet the date on which a copy of that submission was served on the other party.
That within 24 hours of the filing of any submissions pursuant to paragraph (17) hereof, the party filing it fax a copy of it to the Associate to the Honourable Justice Brown on facsimile no. ….
That all extant applications be otherwise dismissed.
That these proceedings be removed from the list of matters awaiting finalisation.
(22) That pursuant to rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel.
IT IS NOTED that publication of this judgment under the pseudonym De Costa & Falco and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLF 1712 of 2006
| MS DE COSTA |
Applicant
And
| MR FALCO |
Respondent
And
MR AND MRS DE COSTA (SNR)
2nd & 3rd Respondents
REASONS FOR JUDGMENT
On Valentine’s Day in February 2001, on a luxurious cruiser, Mr Falco (the husband) proposed to Ms De Costa (the wife). They married in September 2001. She was 27; he was 26. Unbeknownst to the wife, the husband was a drug addict, a braggart and in awe of his older brother.
Between 1992 and 2002 the husband worked in a retail business operated by his brother. He then worked his brother’s security business. In about 2003, the husband’s brother, the husband, their father and a friend (Mr T) set up a fresh enterprise, being the cultivation, for sale, of a marijuana crop. In November 2003 the husband was badly bashed by a gang. In November 2003, a day or so after that assault, the special operations group raided the parties’ home in B Street and the four men were charged, and bailed. In April 2006 the husband’s brother and the husband were each sentenced to 21 months imprisonment, of which 15 months was suspended.
At the time of the raid, the wife was pregnant with the parties’ first child. N was born in April 2004. A second son, R, was born in November 2005. Some six months later, the husband commenced his sentence. He was released on 28 October 2006.
Between the raid and his imprisonment the husband and wife lived with the wife’s parents in M. Acquiescing (albeit reluctantly) in the wife’s ultimatum, the husband had little or no contact with his brother or other members of his family in that period.
The extent and nature of the rift can be gauged from the evidence relating to bail sureties. When the husband and his brother were charged, their mother put up a surety of $100,000 in respect of each of them. When the husband distanced himself from his brother and his family while on bail, his mother applied to be discharged from her liability as a surety in respect of the husband only. Her application was filed on 31 March 2004 and was listed for hearing on 7 April 2004. Faced with the prospect that the husband’s bail would be revoked once the surety withdrew, the wife’s parents put up a surety of $100,000 by way of security over a property they owned in P. The husband was thus able to remain on bail between April 2004 and April 2006, when he was sentenced.
In prison, the brothers immediately resumed their relationship. On learning of that, the wife terminated the marriage.
In December 2003 a restraining order was made in the County Court pursuant to the Confiscation Act1997 (Vic), freezing the husband’s dealings with three real properties and three cars. It is probable a similar order was made against the husband’s brother; no copy of that order was before the court. A subsequent variation of it, made in October 2005, dates the original order against the husband’s brother at November 2003. The orders were varied a number of times. Ultimately, the Asset Confiscation Operation (ACO) did not proceed with the confiscations. By the time the brothers were sentenced, two of the real properties had been sold and the nett proceeds became available for distribution. Pursuant to orders of this court, funds were used to pay for the preparation of a family report, $8,710.40 was paid from this source to the Australian Taxation Office in July 2007 to meet a tax liability of the husband, and the husband and wife each received $50,000 in November 2007, to be categorised by the trial judge. Some $110,000 remains available for distribution between the parties.
On 30 May 2006 the wife filed an application seeking final parenting and property orders. The following month she and the children returned to live in the former matrimonial home at S. On 19 December 2007 she filed an application for departure from assessed child support. All applications came on for trial on 5 March 2008.
On that day, final parenting orders were made, by consent. Pursuant to them the children live with the wife. Until such time as he obtains independent accommodation suitable for overnight stays, the husband is to see the children from 11.30 am to 7.30 pm on each Thursday and from 10 am to 6 pm on each Saturday. Once appropriate accommodation is arranged, overnight time is to be phased in, culminating (after six months) in the children living with him each alternate weekend, one night in each week and on special days and, once N commences school, during school holidays.
The court must determine the applications for final property orders and for departure. The evidence reveals bitterly contested historic narratives and enduring antipathy between the parties. Each advanced broad claims and allegations, supported by few hard facts, and sought to elevate alleged conversations to contractual agreements.
evidence
Findings are made on the balance of probabilities, based on the evidence and my observation of the demeanour of witnesses. In what follows, statements of fact constitute findings of fact.
The wife relied on an affidavit and financial statement sworn on 19 December 2007. She presented as naïve, angry and stressed. It is probable a more worldly woman would have been alerted early to the husband’s drug addiction and would have been suspicious of his dealings, and his absences from the home.
Some three months before the raid, the husband’s brother’s girlfriend told the wife that the brother and the husband were involved in growing drugs. Confronted with this, I am satisfied the husband denied it, and the wife accepted the denial. In his affidavit the husband alleged the wife was well aware of “the activities I was undertaking” and “enjoyed the lifestyle that we were able to afford”. I do not accept that evidence and his oral evidence was not consistent with it. I cannot say whether by swearing this the husband meant to suggest he had been profiting from drug trafficking or other illegal activities in the years prior to the involvement which led to his conviction in 2006. I am satisfied the wife was unaware of his drug habit and in the witness box he conceded he did not tell her about his drug use. She was also unaware of his lavish expenditure at brothels. She accepted at face value his boasts of owning or having an interest in an expensive cruiser and knew little or nothing of the detail of other financial ventures involving members of his family.
It is hard to equate the husband’s inference of a lavish lifestyle with income earned by him from legitimate sources, given his own evidence of his employment history and activities. According to the husband’s brother, the husband was paid, through the books, for managing the retail business until April 2002, some seven months after the marriage. In a statement made on 24 May 2004 the husband said that his brother “took money out of my employee entitlements” to pay his share of mortgage instalments on an investment property; the transactions to which he referred dated from “later in 2002” than 4 September 2002, so well after the brother gave up his retail business. From April 2002 until late 2003 the husband’s evidence was of doing little work, save delivering goods for his brother’s security business; the inference from the statement is that he was paid for this. He was using drugs daily; his repertoire included heroin, LSD, cocaine and speed. Asked where the money for this came from, he said he borrowed it from his brother, but could not remember how much. Nor could he remember what he was doing when he was not delivering goods for the security business, an incapacity he attributed to his drug use.
I am satisfied the wife did her best to tell the truth but aspects of her evidence were distorted by the lens of acrimony. I do have more confidence in her evidence than that of the husband.
The husband relied on an affidavit and financial statement sworn on 19 December 2007. On his own oral evidence I must find that the court could have no confidence in his capacity for objective recollection. His evidence was of remembering “the last year” but having trouble going back beyond that, a problem he attributed to being “a reformed drug addict”. His evidence was of moving from alcohol abuse to illicit drugs in his early teens and of having a number of convictions for using and trafficking in drugs. He agreed he was put on an intensive corrections order for trafficking around the time of the parties’ engagement; inherent in the making of such an order is the imposition of a term of imprisonment, to be served as an ICO.
Of 2003, 2004 and 2005 the husband said he could not remember much. Of 2006 he said it was all a big blur. He said he remembered the raids, and going to jail, and threats made to him, but little beyond that. Shown documents that might refresh his memory, he candidly said they did not. On vital issues, such as his claim of owing his brother significant sums in relation to legal fees and joint investments, he remembered neither how much he owed him or details of any conversations giving rise to the alleged liabilities. Pressed, he simply repeated that he was a reformed drug addict and that the figures were in his affidavit.
Of the husband, his counsel said (in final submissions) that he commenced training as a drug addict as an early teenager and his grip on reality was not as firm as the grip of someone who had not been drug addicted for many years. The evidence demanded such a concession.
At times the husband presented as if he saw himself as a bit player in Sopranos. The luxury cruiser was “like a Miami Vice boat”; he deserved the beating in November 2003 because he had been bad-mouthing his brother; he wanted an Italian sports car rather than the Lexus the parties bought after the raid; he engaged a private detective agency to follow the wife in a futile attempt to show that she and the children were not living in the former matrimonial home.
The case illustrates the problems which can arise when a party’s evidence in chief is in writing, in the form of an affidavit drawn by a lawyer. The concepts, language and figures contained in the husband’s affidavit were not concepts, language or figures he was able to reproduce. The man in the witness box presented as a simple person, with admitted significant memory problems, and little capacity for reasoning or analysis. Such little recollection as he had was selective and his responses often tangential. I have no confidence in the accuracy of his recollection or in his commitment to telling the truth.
I accept as true the wife’s evidence that in January 2008 the husband told her “fuck you and fuck your lawyer” and threatened her, saying she would not get a cent and he was keeping “the fucking house”. I also accept her evidence of threats in a similar vein made in September 2007.
Each of the parties relied on evidence from a number of family members.
The wife called her father and her brother, both of whom swore affidavits on 19 December 2007. They presented as the most direct and credible of all witnessed called. I accept their accounts of events and conversations, save where specifically found otherwise. I will refer further to aspects of the wife’s father’s evidence when determining relevant assets and liabilities, and contributions made on behalf of the parties.
The husband relied on an affidavit sworn by his father, on 19 December 2007. The affidavit related solely to money lent by him to the husband’s brother to pay legal fees in relation to the criminal proceedings. He was not required for cross examination.
The husband’s brother swore an affidavit on 19 December 2007. The impression he gave was of according little autonomy to his brother and making decisions for both of them. In the period of their estrangement, after the raid, the husband was emboldened to issue a writ in the Supreme Court against his brother, who had refused to pay him a sum allegedly due on the sale of a property in Y. The husband’s brother initially denied that his brother took him to court, and said there was a mediation. The case may well have settled after a mediation but I am confident the husband’s brother knew the difference between the issuing of legal proceedings and that mediation, and he gave the impression of being – even some years later – startled that his brother had done this. I have no doubt that the figures advanced on the husband’s behalf as liabilities due to his brother came from his brother, as did the notion of contractual liability. I am satisfied the brother’s evidence was aimed at maximising the sums to be paid to the husband and members of the husband’s family, and minimising those to be paid to the wife, and that he reconstructed events to achieve those ends.
The husband’s brother did not seek to intervene in the proceedings.
The husband’s nephew is the husband’s brother’s son. He swore an affidavit on 8 February 2008 in which he deposed to seeing the wife’s parents driving out of the driveway of the former matrimonial home in April 2006, some two to three weeks after the husband was imprisoned, with a trailer, attached to their car fully loaded with furniture. His evidence went no further than that. He was not cross examined.
The furniture and chattels in the former matrimonial home were valued and a valuation is annexed to an affidavit sworn by Mr K on 27 November 2007. Neither party sought to cross examine Mr K.
Before the court was evidence of a single expert witness, Mr H, who valued properties at B Street and W as at October 2007 and September 2001. He also valued a property at P, at November 2007. He was not required for cross examination.
In evidence, without objection, was a valuation of jewellery prepared by Mr E of E Jewellery on 24 October 2007. It was not contested as it related to the jewellery provided to him. There was a dispute as to whether the husband produced all jewellery in his possession and control.
legal principles
I propose to adopt the now well established approach to the exercise of the discretion under s 79 of the Family Law Act 1975. It is appropriate for the judge to identify the assets to be divided between the parties, identify the liabilities to be taken into consideration and then to determine the manner in which the assets ought to be divided having regard to the contributions made by or on behalf of each of the parties, as required by s 79(4)(a), (b) and (c). Then, having considered (d) to (g) of s 79(4), the court should determine what further adjustments should be made having regard to s 75(2) considerations (which are referable to the personal circumstances of the parties) and consider whether the outcome is just and equitable.
assets and liabilities
Each of the parties brought assets to the marriage and each alleged liabilities attached to those assets. Each alleged liabilities to family members for which they are jointly responsible, incurred during the marriage.
W property
The wife bought this property in 1996 with her then partner, Mr V. At that time the wife and Mr V both worked for J Company. They paid $260,000 for the property, plus acquisition costs. The wife contributed savings of between $50,000 and $55,000 and Mr V contributed about $15,500. They borrowed $215,000 from the then Bank of Melbourne. The wife and Mr V lived in the property for a few months but soon separated. The property was then rented and was negatively geared. Soon after that, the wife discovered that Mr V had embezzled significant funds from their mutual employer; it transpired that the $15,500 Mr V put into the property had been stolen.
In January 1997 J Company lodged a caveat over the property. In March or April 1998 the wife and Mr V agreed that he would transfer his interest in the property to her, subject to her refinancing the mortgage and taking sole responsibility for it. The mortgage balance had increased to approximately $230,000. The wife was unable to maintain the payments and, faced with the potential loss of the property, her parents contributed significant sums, making numerous payments between 1997 and early 2008. Most were mortgage payments and payments due to the Body Corporate, City of Melbourne and City West Water. Some payments were made to the managing agent, for maintenance work undertaken, and some were made direct to tradesmen. A capital sum of $80,000 was paid on 8 April 1998, $19,265.25 on 27 May 1998, and $10,000 on 7 June 2000. On 6 April 1998 the wife’s parents paid $15,500 to J Company, to repay the sum stolen by Mr V. The payments, totalling $217,106.98, were made through a number of companies controlled by the wife’s parents, and through a credit card in their names.
In January 2001, prior to the parties’ engagement, the wife’s parents lodged a caveat over the title to the W property. I am satisfied she and her parents acted on the basis her parents would be repaid those contributions in due course, and the caveat was filed to ensure the property could not be sold without their knowledge. The wife and her parents saw these payments as tied to the property which, albeit informally, secured the debt.
Between 1999 and 2003 the wife made a number of repayments to her parents. These total $48,480.32. The balance (of the alleged debt of $217,106.98) is $168,626.66.
The wife’s evidence of repayments between 1999 and 2003 was not challenged by the husband. It is corroborative of her evidence that payments advanced by her parents to retain the W property were loans, not gifts.
The wife and her father sought that interest be paid on the outstanding sum at 7% per annum. On their calculations (9.5 years at 7% on $155,000) an additional $103,075 is due to them. This made a total debt of $271,701.66, which they rounded down to $270,000.
The wife’s father’s evidence, which I accept, was that in order to meet the mortgage and other payments on the W property he sold industrial land, and it was on the advice of his accountant that a caveat was lodged in early 2001. He said the same accountant “gave us a figure” for interest, which was adopted; it was not clear when that figure was given. He said he did not think an interest rate was fixed until 1998, when the property was transferred into the wife’s sole name.
The wife’s evidence relating to interest was much less clear and on her account the court could not be satisfied she and her parents reached an agreement that interest at 7% (or any other figure) would accrue on all sums advanced by her parents towards this property. I am satisfied they are owed the sum claimed ($168,626.66) and that the debt should be treated as being secured by the W property.
Mr H valued the unit at the time of the parties’ marriage at $360,000. The mortgage to Westpac was then approximately $119,120. At that time the wife’s parents were owed some $157,400, (excluding interest) and had filed the caveat. If the debt then due to her parents is included, the wife’s equity in this property at the time of marriage was just over $83,000.
The property has been rented for many years. The mortgage payments have reduced as capital was repaid, and it is no longer negatively geared; a small surplus of rental income is available to the wife. The mortgage stands at approximately $104,000.
P property
The husband alleged that the wife had a beneficial interest in this property at the time of their marriage, and maintains that interest, an allegation the wife denied.
The wife’s evidence was of her parents buying the P property in mid 1999 for $230,500, with a mortgage from RAMS. All funds were contributed by them and all payments in respect of the property have been made by them. She has had nothing to do with that property, financially or in any other way. That evidence was confirmed by her father.
There is no doubt the wife asserted ownership of this property in a number of documents filed earlier in the proceedings. However, on the husband’s own case, I cannot see the basis for his assertion that the “registered proprietors hold the title upon trust for me pursuant to constructive resulting or implied trust”. He did not depose to contributing any funds for the property’s purchase, conservation or maintenance or, for example, undertaking work on the property pursuant to an agreement (express or implied) that he would acquire an interest in it. The allegation is broad and unsubstantiated. The property was valued by Mr L at $500,000. The current equity is approximately $385,000.
The wife’s evidence was that she included this property in an earlier financial statement and affidavit as she had discussed with her parents the possibility of swapping the W property with the P property. After the raid and the freezing orders, she and the husband believed they would lose the matrimonial home in B Street as a result of confiscation orders. The P property was a more suitable family home than the unit in W and, as the equities in the properties were roughly the same, a swap was considered. She and her parents reached an agreement in general terms but no documents were ever prepared or executed. The parties separated and the B Street home was not confiscated, so the wife and children were able to return to it.
The husband’s allegations in respect of this property were not put to the wife in cross examination and she was not referred to the earlier financial statement, despite the evidence in her affidavit. I accept the evidence of the wife’s father and of the wife that she has no interest in that property.
I note that the property was not included in the Schedule of Assets and Liabilities tendered by the husband at the end of the trial as part of exhibit H1. A copy of that exhibit is attached to this judgment.
Other assets the wife brought to the marriage
The wife also brought to the marriage a Ford Laser, to which she attributed a value of approximately $6,000, accrued savings of between $20,000 and $25,000, minor items of furniture and household contents and personal belongings which, she deposed, include a gold bracelet, gold necklace and at least two gold rings. She said some $16,000 of her savings was expended on the parties’ honeymoon to Egypt. There was no corroboration of any of those assets or values. I accept she owned the car, furniture and jewellery and had some savings of which $16,000 was spent on their honeymoon.
Wife’s superannuation
The wife had superannuation entitlements with WS Fund of some $11,426 when the parties married. In her financial statement she disclosed estimated superannuation with that fund of $28,000 and $3,071.62 with REST superannuation at 30 June 2007.
In his initial schedule of assets and liabilities, filed on 7 March 2008, the husband included the figure of $3,100 for the wife’s interest in the REST fund, taking her total superannuation interests to $31,100. In the document marked as Exhibit H1 on 17 March 2008 (tendered during final submissions) the wife’s interest in the REST fund is shown as $31,000, in three different schedules. That this is a typing error is borne out by the figure for total superannuation in each case, which only computes if the REST interest is $3,100.
S property
The husband’s evidence was that this property was purchased on or about 22 October 1999 by him and his mother from his brother. He said he paid his brother $270,000 for his share of the property and his mother transferred to his brother a property in the inner suburbs which she owned, that transfer constituting her half share of the consideration. Mr H valued the property at $380,000 at the time of the parties’ marriage in 2001. The wife’s evidence was that it was the husband who owned the property when they married, although it was registered in his and his mother’s name.
In his affidavit the husband deposed to discussions with his mother about transferring this property to the wife and him, after their marriage. He said his mother agreed to sell her interest for $300,000, and as he had no funds to pay her, she agreed to be paid “as and when they became available”. On about 16 July 2002 the husband and his mother transferred the property to the wife and husband as joint tenants. His evidence was that both the husband’s brother and he held a power of attorney for their mother and he (the husband) signed the transfer on his mother’s behalf; that is, he signed for himself in respect of his interest and for her in respect of her interest. On this evidence the husband owes his mother $300,000 and she has no interest in the property.
The husband claimed a debt to his mother of $300,000, which is one half of the current value of the property, being valued at $600,000 at 23 October, 2007. According to him, this is (coincidentally) the same figure he agreed to pay her in mid July 2002, some five and a half years prior to the current valuation. The husband’s brother gave no evidence referable to the price at which the property was sold.
If the husband paid $270,000 for a half share of the property in October 1999, and that was a fair market price, its value then was $540,000. The uncontested evidence of Mr H is that it had a market value of $380,000 in September 2001, less than two years later. According to the husband its value had risen to $600,000 by July 2002 (he said he bought his mother’s half interest for $300,000 then), less than a year after it was worth $380,000, an appreciation of about sixty per cent of between September 2001 and July 2002. On his case, it has not appreciated one dollar since July 2002.
Given Mr H’s uncontested evidence of the market value at September 2001 and October 2007, the husband’s evidence of the sum paid for the property in 1999 and (by inference) its value in July 2002 (giving rise to the alleged debt of $300,000) could not be found reliable.
Notwithstanding his evidence of an unsecured debt to his mother of $300,000, the husband asserted (in paragraph 42 of his affidavit) that he held his half interest in the property on trust for his mother. As with his claim of a beneficial interest in the W property, no evidence supports any such trust.
The husband’s mother did not seek to intervene in the proceedings. Nor was any evidence adduced from her in the husband’s case. The husband lives with his mother. The husband’s mother may be elderly and legally blind. She may not speak English; I note the husband’s father swore his affidavit through an interpreter. There was no evidence the husband’s mother was incapable of giving evidence. No medical evidence was called as to her state of health or capacity. A job capacity assessment report prepared in late 2006, on which the husband relied, recorded his advice that without his mother’s help, he would have no-one to talk to. No application was made for her to give evidence, for example, by telephone from her home. There was no convincing explanation as to why she did not give evidence. The husband’s allegations in respect of money due to her were not corroborated and his allegations were at odds, he asserting both a fixed debt due pursuant to a loan, and an unspecified trust.
I note, too, that in paragraph 43 of his affidavit the husband asserted that this property was “an asset owned by my mother pre-marriage”, a statement inconsistent with his evidence, a few a paragraphs earlier, of him paying his brother $270,000 for a one half, undivided share of the property almost two years before his marriage.
A reasonable inference from the failure to call the husband’s mother is that her evidence would not have assisted the husband’s case.
The evidence does not establish that the husband holds his interest in this property on trust for anyone, or that his mother has any interest in the property, or that the husband owes his mother $300,000 or any other sum pursuant to an oral loan agreement.
T Street property
In his affidavit the husband deposed that on 4 August 2000 his brother and he entered into a contract to purchase this property for $285,000. He said they borrowed approximately $256,500 from the Commonwealth Bank and his brother paid the deposit of $28,500, together with stamp duty and other associated costs totalling $13,613. The mortgage and other costs total $270,113. Their total equity in the property was small. The husband described it as an investment property which was rented, and deposed that he and his brother agreed to pay half of all costs associated with the property.
The husband deposed that on 26 February 2003 his brother paid the sum of $7,500 into the loan account; I assume by this the husband meant the mortgage account. On 24 November 2003 the husband withdrew from that account the sum of $18,000, as he and his brother were ahead in their payments. He said he agreed to reimburse his brother half the deposit monies, stamp duty and associated costs and half of the $18,000 he withdrew, together with half of the payment of $7,500, plus one half of mortgage payments made after he (the husband) stopped contributing after the raid. He “calculated” (there was no corroborating evidence) his brother paid $17,357 in mortgage instalments, and thus asserted a debt to his brother of $42,486. His evidence was of not having reimbursed his brother any of those sums. None of these transactions was corroborated by documentary evidence.
The husband deposed that the property was worth approximately $300,000 when the parties married, and the mortgage was approximately $225,000. On this account, the mortgage reduced by some $31,500 in its first year. Given the unreliability of his evidence of the value of B Street property at acquisition and in July 2002, and the lack of any corroborative evidence, I have no confidence in these figures.
The husband’s brother’s evidence was that there was a shortfall between rent and mortgage payments; he quantified it only by saying it was bigger than the “little bit of a shortfall” on the M Street property.
Cross examined, the husband was unable to confirm any of the detail I have summarised. Paragraphs 50 and 51 of the husband’s affidavit are identical with paragraphs 9 and 10 of the husband’s brother’s affidavit.
I cannot say what equity the husband and his brother had in this property when the parties married, some thirteen months after the property was purchased, but it was probably small.
The husband and his brother were restrained from dealing with this property by the County Court orders of November and December, 2003. A subsequent order, made on 5 April 2005, provided for its sale and the payment of the nett balance to the ACO.
On 25 July 2005, prior to the parties’ separation, the property was sold for $426,000 and a nett figure of $179,240.03 returned to the ACO.
M Street property
The husband deposed that on 1 June 1999 his brother and he bought this property for $266,000. He deposed they borrowed $224,000 from the Commonwealth Bank of Australia and his brother paid the deposit of approximately $42,935. Again, it was purchased as an investment property and rented. The husband’s brother paid the stamp duty and other fees of $14,217. The husband deposed that it was agreed he would reimburse his brother for half of those fees, as well as half of the deposit monies. Again, their real equity was not large.
The husband then deposed that in 2001 his brother paid $800 to S Company, a company that refurbishes houses prior to their sale. The position of that statement in his affidavit suggests the payment related to the M Street property. He deposed that on 24 November 2003 he withdrew $13,000 from the home loan account on the understanding he would reimburse his brother for half of the money. In addition, the husband’s brother paid $21,537 in mortgage payments after the husband stopped making payments, and the husband agreed to reimburse him for half of that amount. He calculated that he owed his brother $35,545 in relation to this property. Again, no corroborative documentation was produced.
The husband deposed that the property was valued at over $300,000 at the time of marriage with a mortgage of approximately $215,000 or $220,000. On the higher figure the mortgage had only reduced by $4,000 in the intervening two years. For the reasons discussed when considering the T Street property, I have no confidence in his figures.
Again, paragraphs 48 and 49 of the husband’s affidavit are identical with paragraph 7 and 8 of his brother’s affidavit. Again, the husband could give no coherent, detailed evidence about the transaction or the alleged agreement with his brother.
I cannot say what equity the brothers had in the property at September 2001 but it is unlikely it was very large. It was almost certainly higher than the equity in T Street.
The husband’s brother’s evidence was that mortgage payments were almost met by the rent; there was “a little bit of a shortfall”. The claim for mortgage payments was not offset by rental received. As with the T Street property, no taxation or banking records or corroborative evidence was adduced.
The County Court orders of November and December 2003 restrained the husband and the husband’s brother from disposing or in any way dealing with this property, too. The husband’s evidence was that from the date of the order he made no contribution towards the mortgages or other costs of those properties as the wife believed they would be lost to the ACO and there was no point in throwing good money after bad. In 2004 they began to default on the instalments.
In 2005 the husband’s brother and the husband applied to the County Court to vary the restraining orders and the orders of 5 April 2005 permitted the sale of this property too. The orders required the balance (after discharge of mortgage and costs of sale) to be returned to the ACO. On about 25 July 2005, prior to the parties’ separation, the M Street property was sold for $457,000, and a nett figure of $214,699.96 was returned to the ACO.
The husband candidly agreed that in terms of his claims in respect of these two properties his brother told him what he was owed, and he (the husband) believed him. It is probable the accounts in his affidavit are simply a reiteration of the husband’s brother’s claims. He never asked his brother what he did with the rent from these properties. On the evidence, the brother’s claim was for the gross mortgage payments, without allowance for rental he received for the property, prior to or after the raid. Neither the husband’s brother nor the husband adduced any corroborative documents in relation to these properties.
On 18 April 2006, a solicitor acting for the husband wrote to the Confiscation Section of the Office of Public Prosecutions seeking a return of “my client’s share of the proceeds of sale of [M Street] and [T Street]”. It was the husband’s case that these investment properties were joint ventures between him and his brother; that was the basis for his claim that his brother be reimbursed one half of alleged debts relating to them. However, on 28 July 2006 Mike Wardell, the solicitor who acted for the husband’s brother in the criminal proceedings, wrote to the ACO, enclosing a letter of authority from the husband dated 25 July 2006. In that letter the husband authorised the release of all funds held in trust with the ACO following the sale of the M Street and T Street properties to the husband’s brother alone. In the release the husband stated he did this:
“With the knowledge and understanding that I had an interest in the said properties but no entitlement to the proceeds of their sale”.
Mr Wardell also sent to the ACO a letter of authority signed by the husband’s brother, dated 10 July 2006, in which the husband’s brother authorised the release of all funds in respect of those two properties, and another property at H Street, to him alone.
These documents were annexed to the wife’s affidavit and were not the subject of challenge. The husband and his brother were in prison at the time the authorities were signed in July 2006. The wife had terminated the marriage and had initiated proceedings on 30 May 2006. A reasonable inference is that this was an attempt by the brothers to remove the potential for her to claim an entitlement to a share in the husband’s interest in these funds.
Learning of these signed authorities, the wife issued proceedings to prevent the whole of the funds being paid to the husband’s brother. One half of the proceeds of the sales was paid to the husband’s brother and orders provided for the balance to be retained, pending determination of these proceedings. It was then that orders were made which allowed funds to be released to pay Mr HD (the psychologist who prepared the family report in these proceedings), the ATO (for the husband’s tax), and $50,000 to each of the parties.
When the wife swore her affidavit the balance remaining in the ACO trust account was $109,045.02. Both parties used a figure of $110,000 in their calculations.
Y property
The husband deposed to the acquisition of an interest in this property and its eventual disposition in his affidavit at paragraphs 86 to 88. He said that in 2002 he invested approximately $60,000 in a vacant block, purchased by his nephew; he said nothing of the source of that sum. He said his brother (his nephew’s father) and a friend of his brother, Mr T (a co-accused in the drug trial) also invested money in the block of land in Y. In his affidavit he deposed that in 2005, his nephew wanted to sell the property. A dispute arose between the husband and the other parties as to the sum the husband should receive. He engaged solicitors to act on his behalf and the dispute was resolved by agreement in July 2005. Pursuant to that agreement he was to receive the sum of $60,000 from the sale of the property; after legal fees were paid he received a nett figure of $53,103.68.
This account is rather different to the husband’s oral account, and the account he gave in a statement made on or about 24 May 2004. The statement was tendered by the wife and was not significantly challenged; the husband agreed he made the statement, then said it was unsigned, then said he couldn’t remember. The husband’s brother said nothing of this property in his affidavit but was cross examined about it.
According to these accounts, in September 2002 the husband lent his brother $70,000, (or, according to his statement, $72,000). This was to assist the husband’s brother in the purchase of a factory in H Street. Later in 2002, the husband’s brother told the husband that he wanted to build a house on a block of land which had been purchased in the name of his son, the nephew, at Y. In the statement, the husband said that the nephew was a front for his father (the husband’s brother) and did not put any money into the purchase, and that the property was bought in the nephew’s name so he could obtain the first home buyers $14,000 government grant. On this version, the husband’s brother told the husband that instead of re-paying the $70,000 (or $72,000) to him, the husband would become a one third owner of the Y property; the husband’s brother would retain a one third interest and the other third would be held by Mr T, the builder who was to construct a house on the property (and who joined the brothers in drug cultivation). Although in his oral evidence the husband was confused about this transaction (for example, he said he “didn’t know about a one-third interest”, but was “going to get my money back” and referred in the statement to his brother taking money from his employment earnings to pay his share of mortgage payments), he was clear that he had lent his brother $70,000 and that he expected to be repaid from the proceeds of the eventual sale of the Y property.
It was in November 2003 that the husband, his brother, the brothers’ father and Mr T were charged with cultivating and trafficking in marijuana. It is probable the husband then discovered that his brother proposed selling the property to Mr T. By then, a house had been built on the land but no-one was living in it. The statement suggests that Mr T was to buy the property at a figure of $240,000 whereas the husband believed (based on a kerbside valuation) that it was worth at least $450,000. The husband sought to be repaid his share, or the debt. When his brother refused, the husband issued a writ in the Supreme Court seeking his entitlement. At that time the husband was estranged from his brother and his family.
The writ was not before the Court. I cannot say how the claim was pleaded, or what remedies were sought. It is probable the matter went to a court ordered mediation and, in due course settled, the defendants agreeing to pay the husband $60,000. The husband produced terms of settlement dated 16 May 2005; the writ was No. … of 2004 so must have been issued the previous year. The plaintiff was the husband; the defendants were the husband’s brother, his son the husband’s nephew and Mr T. Of the $60,000, the husband received the $53,103.86 referred to in his affidavit.
The husband deposed that the wife’s parents agreed to invest the money through B Pty Ltd and, on 27 July 2005, invested the sum of $55,000 in a Westpac Bank term deposit for a period of four months. He said nothing of the source of the difference between the sum received and $55,000. It is probable the term deposit was renewed a number of times.
The husband alleged that the wife withdrew $20,000 of this sum in or around September 2006, $6,016.15 on 24 January 2007 and $25,000 on 30 June 2007. One page of the B Pty Ltd annual general ledger for the financial year to 30 June 2007 was annexed to his affidavit. That page alone does not establish that which the husband sought to have it establish; the reference to $25,000 (against the date of 30 June 2007) does not mean the sum was debited that day as the page is a summary (not a running account) for the year ending 30 June 2007. The husband initially sought that $51,000 be notionally returned to the pool, being the admitted two withdrawals totalling about $26,000, plus the $25,000 referred to in the ledger entry.
The husband’s oral evidence confused rather than clarified this issue.
The wife’s evidence was that the balance of the settlement sum (from the Supreme Court proceedings) was paid into her parents’ company account to avoid those funds being retained pursuant to any further confiscation orders. Her parents added $2,000 to the $53,000 received by the husband and deposited the sum of $55,000 into a Westpac Bank term deposit.
The wife conceded that on 19 September 2006, at her request, her parents withdrew $20,000 from the term deposit and gave it to her to meet various bills and expenses including her legal costs and disbursements, and some $6,700 of work done on the former matrimonial home, some of which was necessary to fix damage which occurred during the raid. On 24 January 2007, again at her request, her parents withdrew a further $6,000 which she used to meet legal costs and disbursements in relation to the proceedings in this court. She said nothing of the alleged withdrawal of $25,000.
The wife’s husband confirmed the wife’s account of adding $2,000 to round the settlement figure up to $55,000 and drawing a total of $26,000 against that account to pay to the wife, for bills and expenses in relation to her home in B Street and her legal costs and disbursements. On the wife’s father’s evidence there is approximately $29,000 remaining in the Westpac deposit, which includes the $2,000 he put in to round up the original figure. Of the balance remaining, $27,000 will be included in the pool. From the funds taken by the wife, $19,300 will be notionally returned to the pool as it is probable it went towards funding these proceedings. The balance of the $26,000 withdrawn ($6,700) was used to fund work on the B Street property and is thus subsumed in the valuation of it. I note that in his final submissions (and in exhibit H1) counsel for the husband sought the notional inclusion of $26,000 only; there was no claim in respect of the $25,000 referred to in the ledger.
The evidence of the wife and of her father was that her parents paid $10,845 towards the legal costs and disbursements of the Supreme Court proceedings brought by the husband against his brother, his nephew and Mr T. They sought that her parents be reimbursed that $10,845 from the balance of $29,000 in the Westpac term deposit, plus interest. On this analysis, only some $15,000 of the sum remaining in the Westpac deposit would be included in the pool.
At the time the husband launched the Supreme Court proceedings he was living with the wife’s parents. I accept the wife’s father’s evidence that the husband agreed to repay the $10,845 advanced to run that litigation. I am not satisfied that the agreement provided for the payment of interest, either at a specific rate or at all. Interest may have been envisaged but the evidence does not establish a binding agreement to pay it.
L property
The husband made no mention of this property in his affidavit but the wife’s evidence was of him being registered as a joint owner with his mother on 12 June 1997, subject to a mortgage to the Commonwealth Bank. In November 1999 the husband transferred his interest in that property to his mother for consideration (on the face of the transfer, dated 10 November 1999) of $85,000. The wife was unable to say what the husband did with the money, if he got it. He alleged he had some $33,000 in the Commonwealth Bank at the time of the parties’ marriage, and it is possible that was its source, if it existed. In any event, this transaction pre-dated the parties’ marriage and, on the wife’s case, the husband did not have an interest in this property when they married.
The husband’s mother still lives in that property and the husband has lived there since his release from prison.
LS Street
The wife listed this as an asset owned by the husband at the time they married, albeit encumbered. The husband said nothing of it in the detailed list of assets he brought to the marriage contained in his affidavit. The husband’s brother’s evidence confirmed that of the wife, which was that proceeds of the sale of the LS Street property were the source of the husband’s subsequent investment in the Y property, albeit via the H Street factory.
Other assets the husband brought to the marriage
The husband deposed that at the time of marriage he also owned the following assets:
· Savings of $33,000 in the Commonwealth Bank of Australia
· A four-wheel drive valued at approximately $60,000
· Furnishings and household effects in the B Street property worth approximately $30,000
· 1993 Ford vehicle valued at approximately $5,000
· Jewellery valued at approximately $3,000
· Mitsubishi motor vehicle valued at approximately $20,000, and
· Half share in a caravan and caravan site worth approximately $7,000 to $8,000.
As with the wife, there was no corroborative evidence of any of these assets or their asserted values.
The wife conceded he owned three motor vehicles (the Ford, the Mitsubishi and a Nissan; she did not concede the four wheel drive), some personal belongings and savings and some shareholdings, the details of which she did not know. She said nothing of these assets’ value.
I take the husband’s evidence of the value of the furnishings with a grain of salt. The evidence is of the husband acquiring a four wheel drive during the marriage and I am not satisfied this car was owned when they married; I do accept he had three cars, as described by the wife. I am also satisfied he had some furnishings, jewellery, the caravan and site, and some savings.
Mitsubishi vehicle
The husband sold the Mitsubishi vehicle for $13,750, pursuant to an order of this court. His evidence was of spending a total of $6,482 to put the car in a saleable condition, and netting $7,625.80 and he produced documentation confirming this. The order of 5 July 2007 which allowed the sale of the Mitsubishi provided that the husband be permitted to sell it “for the sole purpose of applying the sale proceeds thereof towards the purchase of a motor vehicle more suited to transporting the children”. One would have envisaged at that time that the car bought for this purpose would be an asset disclosed at trial. There is no evidence he used the sale proceeds for this purpose and the only car recorded in his financial statement sworn on 20 December 2007, some five months after the order, is the 1993 Ford he brought to the marriage.
The husband disclosed $7,000 in a bank account, which may include the balance of the $7,625 received. The wife did not seek the notional inclusion of any additional sum in the pool.
Contents of B Street property
Mr K’s valuation of furniture and household contents in the B Street property, dated 28 October 2007, is for $8,230.
The husband deposed in his affidavit that the wife did not make available a number of items for valuation, ranging from a coffee machine to mounted moose and goats heads. The wife denied this. I accept her evidence.
The wife’s evidence was that when she visited the former matrimonial home with the husband just prior to his sentence she discovered that a good deal of furniture and household contents were missing. Her evidence was that the husband broke down and told her he had been selling their belongings to fund his drug addiction and to pay for prostitutes. The husband denied this. I accept her evidence.
In her financial statement the wife estimated the household contents to have a value of $9,000 and used this figure in the schedule of property, liabilities and resources in the case summary filed 4 March 2008. In his financial statement the husband estimated his fifty per cent share at $10,000. I am not satisfied the husband has established that relevant furniture and contents were not produced for valuation and I adopt the figure of $9,000 in the pool.
Caravan and site
The husband sold the caravan and site on 31 January 2004 for, he deposed, $9,600.00. Although he deposed to owning the caravan and site with his brother, in equal shares, the sale agreement (on which he relied) commences: “I, [the husband], owner of the caravan on Lot […] do hereby transfer my ownership of the caravan and my usage of the above site to [Mr JC] …”. The purchaser’s bank cheque was made payable to the wife, and the evidence of both was that this sum was used to pay legal expenses of the husband in the criminal proceedings.
The husband alleged he owed his brother half this sum. There is no mention of this in the brother’s affidavit, in which he details numerous sums allegedly due to him. The evidence does not establish that the husband’s brother is entitled to any part of the sale proceeds.
Husband’s superannuation
The husband deposed to superannuation entitlements with AA Fund of approximately $24,000 at marriage. In his financial statement he deposed that this entitlement was $44,824 and I am satisfied that was the figure at 30 June 2007.
The luxury cruiser
In her affidavit the wife alleged the husband owned a Cruiser boat when the parties married. She said he and the husband’s brother purchased the boat from Mr GO before the marriage, for a sum in excess of $300,000, and that the husband proposed to her on the boat on Valentine’s Day 2001. Her evidence was that during the marriage the husband told her “and everybody else” that he and his brother owned the boat together. It was moored at … Marina (the mooring alone cost $10,000 per annum); the husband had the keys to the mooring and boat and used it whenever he wanted, which was often. The parties entertained on the boat and used it frequently. I accept the wife’s evidence that her 28th birthday party was on the boat, and I accept her father and brother’s evidence about the boat. The husband obtained a licence to operate the boat and undertook an approved training course through the marine training services.
The wife’s evidence was of seeing that boat for the last time a month or two before the raid in November 2003. She said the husband told her that his brother then made an arrangement with the previous owner (Mr GO) and paid him to assert that although the husband’s brother and the husband had agreed to purchase the boat, they had not paid for it, and it was thus still the property of Mr GO. This was done at a time when it was believed the ACO would take all the assets of the parties and the husband’s brother. Her evidence was that as a result of these lies, the boat was taken from the marina; she said the husband told her it was taken to … and moored there. She has not seen it since.
The boat is not named as an asset on the restraining order made against the husband on 4 December 2003 but it is probable it was included as an asset in the order naming the husband’s brother as the respondent.
A good deal of evidence went to the question of the boat. Eventually, the husband conceded that he had boasted to the wife, her parents, her brother and numerous other people that he owned or had an interest in the boat. He said he was young and stupid, and a drug addict to boot. His oral evidence about the boat’s ownership and his use of it was confused and inconsistent. According to him, it was his brother who paid the marina fees and for all costs associated with running the boat, which were not inconsiderable; he said the husband’s brother gave him the money to do this, including the mooring fees and money for fuel, which cost $800 a tank. He agreed he had untrammelled use of the boat and used it far more than the brother.
The husband’s brother’s oral evidence was that the boat was available for use by him and the husband from about 1999. He agreed that he spoke of it as belonging to him. He said he did not know how the husband spoke of it. His evidence was that he had intended to buy the boat and that the GOs “were the owners until I was going to purchase it, but it didn’t happen”. The husband’s brother said he last saw the boat in late 2003 and he could not say where it is, who is using it or what it could be worth. He denied it was still available for his use, despite his concession that for four years Mr GO gave him and the husband sole use and possession of the boat, without any payment, and his evidence that Mr GO remains a close friend.
I accept the evidence of the wife’s brother of a request that an estimate of the boat’s sale value be obtained when he attended a boat show.
Re-examined, the husband spoke of an intention to swap the M Street property for the boat. He said his brother told him that was his intention but he (the husband) did not want to enter that enterprise with his brother, as he wanted to receive half the equity in M Street in cash. He said he knew no figures or details in relation to the proposed sale, or suggested swap. As the brothers were joint owners of M Street, the proposed swap would, on its face, make them joint owners of the boat.
The husband’s evidence was that Mr GO successfully applied to the County Court to have the boat excluded from the restraining order on the basis that he (Mr GO), not the husband’s brother (who was the registered owner), was the beneficial owner of the boat. He annexed a letter from Mr GO’s solicitors, Randles Cooper & Co, to Mr GO, dated 19 October 2005, enclosing a copy of a County Court order of 4 October 2005 and a bill of costs, and confirming that the boat had been excluded from the restraining order. The letter notes the enclosures (“Enc.” below the signature) but does not note that a copy of it was provided to any other person and I cannot say how it came into the husband’s possession. The order itself, made on 4 October 2005, was made by consent and simply provides that the cabin cruiser be excluded from the operation of the restraining order.
Mr GO was not called by the husband. Generally, it would not be incumbent on a party who denies ownership of an asset in these circumstances to call evidence to prove he or she does not own it; it is the wife who carries the burden of proving it to be a relevant asset. However, this case is different. The wife’s evidence, corroborated by evidence (eventually) of the husband was of the husband asserting ownership (either sole or jointly with his brother) of the boat, over a long period, to many people. He told numerous people that this was the case. He dealt with the boat as if it were an asset in which he had the interest then claimed. The onus of proving the boat, or an interest in it, to be a relevant matrimonial asset remains with the wife. However, once she proves possession, untrammelled use and frequent declarations of ownership, and registration in the name of the husband’s brother, the court is entitled to find it more probable than not that the husband had an interest in the boat with his brother. In those circumstances, the husband’s failure to call a witness or witnesses who could prove otherwise (very simply, according to him) gives rise to an inference that that evidence would not have helped his case.
The wife produced a puerile but insulting unsigned letter delivered to the B Street property in July 2004, when the husband cut ties with his brother and his brother’s associates. Her evidence was that its author was Mr F GO, the brother of Mr GO, who sold the boat to the husband’s brother and the husband. The husband did not dispute her account and his counsel relied on this evidence to explain why Mr GO was not called by the husband. There is no mention of the anonymous author’s brother in the three pages of childish invective and the explanation was not persuasive.
In their letter of 19 October 2005, Mr GO’s solicitors state:
“So far as the legal ownership of the boat is concerned, if any transfer documents need to be signed for that to be returned to you for either sale or insurance purposes, please telephone the writer and I will contact [the husband’s brother] to have any necessary forms executed by him.”
The clear inference is that the husband’s brother was then registered as the owner of the boat, rather than Mr GO. That inference is supported by the husband’s brother’s own evidence, whose explanation for his registration as owner was improbable. The County Court order does not establish beneficial ownership of the boat; it simply establishes that, by consent, the boat was no longer subject to the restraining order. It is consistent with the wife’s evidence of the husband’s brother cobbling a story together with Mr GO to delude the ACO into accepting that the husband’s brother had no interest in the boat and it is more probable than not that the re-transfer to Mr GO was a sham.
The wife sought that the boat be notionally added into the asset pool, at a figure of $300,000. I do not find it appropriate to do that. I do, however, find it probable the husband had an interest in it at marriage and take into account, when assessing the husband’s general financial circumstances, that it is probable he obtained or will obtain some financial benefit from the transfer to Mr GO.
Lexus
At the time the husband was charged in 2003 he owned a four wheel drive which he had either purchased from his brother, or been given by his brother as a contra in respect of some other debt. His evidence was that it was registered in the name of B Pty Ltd. The parties decided to trade that car in for a Lexus, which they did in about January 2004. They needed $5,000 to make up the difference between the $40,000 they received for the trade-in and the cost of the Lexus. The wife’s parents paid $2,755 and the wife put the balance of $2,000 on her credit card. Her parents then paid off that credit card debt. Accordingly, her parents contributed a total of $4,755 towards the Lexus. I accept they made that contribution.
At the request of the husband, the Lexus was registered in the name of the wife’s father’s company. That probably had something to do with apprehension about confiscations of assets. The husband drove the car prior to being sentenced. It is now driven by the wife. She pays for its petrol and her father’s company has been paying registration, insurance, service and maintenance. According to the wife’s father, the Lexus has a current market value of about $15,000.
I am not satisfied the evidence establishes an agreement between the husband and wife, and the wife’s parents, to repay the sum put towards the car.
In her financial statement the wife estimated the Lexus’ value at $15,000 “including parents’ contribution of $4, 775”. The husband estimated its value at $19,500, which is the approximate total of $15,000 plus $4,775. It is probable the wife’s figure of $15,000 is the equity she saw as left after payment of $4,775 by her parents include the asset at $19,500.
Centrelink Debt
Between the raid in November 2003 and the imprisonment of the husband in April 2006 the parties and children lived, save for brief periods, with the wife’s parents at their M home. Their only income was the surplus of rental over outgoings in respect of the W unit, owned by the wife. They received no government benefits and relied on financial support from her parents. Neither she nor the husband were in paid employment.
The wife’s evidence was of commencing to receive Centrelink benefits in about June 2006, a couple of months after the husband was sentenced. About a year later, in mid 2007, the wife provided Centrelink with details relating to the W unit and it was ascertained that she had been overpaid. On 1 August 2007 she was advised that she owed Centrelink $15,524.75. She repaid $2,000 within a month and a further $1,000 was paid by the retention of her family tax benefits. The balance of $12,132.50 was paid by her on 16 November 2007 using a tax refund received by her, together with $10,000 provided by her parents.
I do not doubt that the wife’s parents lent the wife $10,000 to discharge the Centrelink debt. The debt arose after the parties separated and there is no evidence the husband was ever a party to an agreement to repay it. I am not satisfied it should be treated as a matrimonial debt.
Legal Costs of Criminal Proceedings
It was the husband’s submission that he owes his brother $116,000, being a one half share of legal fees incurred by the husband’s brother in the criminal proceedings. His evidence in relation to this is contained in paragraphs 57 to 59 of his affidavit.
In that affidavit the husband deposed that Mike Wardell acted for his brother in relation to the criminal charges. The key evidence against the husband’s brother and the husband was contained in telephone intercepts obtained under a warrant pursuant to the Telecommunications (Interceptions) Act 1979. A preliminary trial issue was the admissibility of those intercepts and Mr Wardell sought to subpoena the affidavits sworn to support the obtaining of the intercept warrant. He was unsuccessful before the trial judge but succeeded in the Supreme Court.
Other evidence suggests that after he was charged the husband feared he would be imprisoned (on conviction) for around twelve years. After the successful Supreme Court appeal, the Crown negotiated with Mr Wardell and, in due course, the husband and his brother pleaded guilty to agreed offences and the County Court orders relating to confiscation were wholly set aside.
The husband deposed that it was agreed between his brother and him that he would pay half of Mr Wardell’s fees (which, he said, totalled approximately $232,000) because it was the husband’s brother’s application to the Supreme Court which, albeit indirectly, resulted in the restraining orders being set aside and assets becoming available to him.
It is clear that the husband retained his own lawyers in the criminal proceedings, of which he said nothing in his affidavit. Cross examined, he said that he employed Mr Wardell at the start but due to a potential conflict of interest (as he and his brother were arguing) he had to retain other solicitors. In the witness box he said he “supposed” that he agreed with his brother that he would pay half of Mr Wardell’s fees in 2003; later, he said he was sure he agreed then to pay half the fees. It is possible there may have been an agreement for the brothers to share Mr Wardell’s fees when it was anticipated he would act for both, but that was for a brief period only. The husband’s own evidence is that the agreement to pay half of Mr Wardell’s fees arose from the successful bid, on Mr Wardell’s advice, to challenge the warrant, which led to a plea deal and the discharge of restraining orders.
In the witness box the husband said he had no idea of the fees owed or paid to Mr Wadell and that he should pay half because “I shouldn’t have walked away from my family”. Ultimately he moved to saying that he owed his brother the money because “we wouldn’t be here fighting about these assets if not for him”.
The husband’s brother dealt with the question of these fees in paragraphs 3 to 5 of his affidavit. Again, they are in identical terms to the relevant paragraphs in the husband’s affidavit.
Cross examined, the husband’s brother said that he and the husband engaged Mr Wardell on the day of the raid in 2003. Asked when the agreement to share his fees was made the husband’s brother said it was “when we started, about three months before the raid.” It transpired that by this the husband’s brother meant that they went into what he called the enterprise (being the cultivation of marijuana, for sale) on the basis that, “like any business, there are costs and profits and you go halves”. He said “it was as general as that”. This is not consistent with the agreement to which he deposed in paragraph 5 of his affidavit, which is clearly referable to, and made as a result of, the successful Supreme Court application.
The husband’s brother’s costs were never quantified beyond “approximately $232,000”. The evidence of the husband’s father was of lending the husband’s brother $40,000 for legal fees in December 2004 and another $100,000 in January 2006. He did not lend the money to the husband’s brother and the husband; his evidence is of loans to the husband’s brother alone.
It is beyond doubt that the husband incurred very significant legal costs of his own after the brothers were charged, but there was no evidence that the husband’s brother saw it as part of the “sharing of costs” that he contribute one half of those costs. Only when it was put to him, did he say: “you could look at it that way” and, yes, he could pay half of the husband’s costs, too.
The husband’s brother’s evidence was that when the brothers were in jail and starting talking, after an estrangement of some two and a half years, he “ran through the whole thing”, the “thing” being the case, and the figures. He said this was in about April 2006 and that there was some discussion about the debt then.
The brothers were not in a position to make an agreement relating to payment of legal fees in the period between Mr Wardell ceasing to act for the husband, and their plea and sentence, as there were no dealings between them; they neither met, nor spoke. The husband attributed that to the wife’s parents having “control of my mind”; he alleged they drove him away from his family. Wherever the responsibility lay, the husband conceded he was not in a position to have any discussions with his brother during that period and that they did not talk, even when both were at court.
The husband’s brother’s easy assumption that, in all business ventures, the parties bear the costs and profits equally was not borne out by his own behaviour. He sought that the husband pay one half of his legal expenses of the criminal proceedings but, until pressed in the court room, had not considered that he should pay half of his brother’s costs of those proceedings. He endeavoured to receive the whole of the nett proceeds of the investment properties in M Street and T Street, and almost got away with it. Only after a writ was issued did the husband receive his share of their investment in the Y property. In these dealings, a more accurate assessment of the husband’s brother’s position was that the husband should share the costs of the enterprises, and the husband’s brother alone take the profits.
The evidence does not establish a binding agreement that the husband pay one half of Mr Wardell’s fees and disbursements, whatever they were. I cannot say if Mr Wardell has been paid in full, by the husband’s brother. There was no evidence from Mr Wardell, and no account was in evidence.
For her part, the wife claimed that her parents contributed $43,610 towards the legal costs and disbursements of the criminal proceedings against the husband, by payments to a number of legal practitioners, including Mr Wardell. Her evidence was of her parents making the following payments:
· Pryles & Defteros $3,000
· Calus & Kenny, and Joe Katz of counsel $15,000
· Brendan Wilkinson $20,700
· F C G Legal Pty Ltd $1,500
· M G Wardell $3,410
The wife’s father set out the sums paid by him and his wife towards the husband’s criminal proceedings in paragraph 6, of his affidavit, as follows:
· 20 February 2004 to Pryles & Defteros $3,000
· 3 November 2004 to Calus & Kenny $15,000
· 27 July 2005 $10,700
· January 2006 to Brendan Wilkinson $10,000
· 1 April 2005 FCJ Legal $1,500
· 10 April 2006 M G Wardell $3,410
The wife brought the W unit to the marriage, encumbered by both a registered mortgage and an interest (noted by a caveat) arising from parental loans. The remaining equity in that property is only some $207,374, representing about 18% of the total asset pool.
Each of the parties brought cash and other assets to the marriage. I cannot quantify the value of these with confidence but do have more confidence in the wife’s truthfulness than I have in the husband.
In terms of income during the marriage, the wife made the more sustained and consistent contribution, remaining in paid employment until September 2003.
As previously found, the wife made a very substantial contribution as mother and home maker during the marriage, after the raid, throughout the period the husband was in Prison, and in the period from his release to date.
It is possible that the husband’s brother gave the husband money to buy drugs and pay prostitutes when the parties were together but that was not a contribution that accrued to the family’s benefit.
Matrimonial funds went towards the husband’s criminal proceedings, through the sale of the caravan and site, and cash. The debts to the wife’s parents have reduced the pool.
The wife’s parents made a contribution towards the Lexus motor vehicle, which forms part of the pool, and which I have not found to be a matrimonial debt. They made a very considerable contribution by supporting the parties and their children in practical and financial ways after the raid, and maintained that support after the husband was imprisoned, and to date. The parties and children lived with them, save for a few weeks, from the raid in November 2003 until the husband was imprisoned in April 2006. That was a very considerable contribution.
I have found that monies lent to pay legal fees were advanced as loans, but the wife’s parents supported the family by providing accommodation, food and all other necessities. They continued to support the wife and children after the husband was imprisoned. After the wife received Centrelink benefits, it was they who assisted in repaying overpaid sums.
The wife’s evidence was that some $11,426 of her superannuation entitlements had accrued when the parties married. She has not contributed to superannuation for some years. Her current interest had a value of $31,100 at 30 June 2007, just over a year after the parties separated. I cannot say what her superannuation entitlements were at the time the parties separated soon after the husband was imprisoned, but it is unlikely they were significantly less than they are now.
The husband’s evidence was of superannuation entitlements with AA fund of approximately $24,000 when the parties married in September 2001. Annexure O to his trial affidavit is an annual superannuation statement to 30 June 2007, which shows his entitlement at $37,743.95 at 30 June 2006, soon after his imprisonment, and $44,824.29 at 30 June 2007. As he has not been in paid work it is reasonable to assume he has not made superannuation payments. The fund increased by $7,080.34 in the 2007 year, an increase of 18%. It increased by roughly the same percentage in the 2006 year and by about 15% in the 2005 year. Figures for earlier years are not shown in the superannuation statements save that the interest is shown at $27,565.89 at 30 June 2004. If the husband’s figure of $24,000 at marriage on 1 September 2001 is correct, the rate of growth was very much slower in the years between 2001 and 2004, it appreciating just under 15% in that whole period, which includes the only time the husband was in sustained employment.
In the absence of corroborative evidence and having regard to the unreliability of the husband’s evidence of financial dealings, the court could not be confident he had superannuation of $24,000 at marriage. It is probable he did bring more superannuation to the marriage than did the wife.
It is possible that both parents superannuation entitlements may have been adversely affected since 30 June 2007 by the decline in the share market but the court cannot speculate about that.
In final submissions it was put by counsel for the husband that the court should start with a finding of equal contributions but that submission was made in the context of a case in which it was alleged the husband owed his mother and his brother just over half a million dollars. I do not take that to be a concession which should apply if those debts were not proved.
Taking into account contributions of all kinds, and giving weight to both financial and non-financial contributions, I find that contributions to non-superannuation assets should be assessed as made 65% by the husband and 35% by the wife.
Contributions to the superannuation assets should be assessed as equal during the marriage. As the husband brought more to the marriage, I find an overall contribution by him of 55% to the superannuation assets.
SECTION 79(4)(d) to (g)
I turn to the matters referred to in s 79(4)(d) to g).
(d)the effect of any proposed order upon the earning capacity of either party to the marriage:
There is no evidence that orders will affect the earning capacity of either party.
(e)the matters referred to in sub-section 75(2) so far as they are relevant:
(a)the age and state of health of each of the parties:
The wife is 34. She has experienced back problems for some time and shortly prior to the trial an MRI revealed prolapsed C6 and C7 discs. She underwent a laminectomy on 3 February 2008 and was in a neck brace during the trial. Her evidence was that she was “going well”.
The husband is 33. Since January 2007, he has been in a personal support program, a DEWR initiative. His case manager is Ms BN and a report dated 16 November 2007 is attached to his affidavit. Ms BN said that:
“The program is designed to enable and support participants with issues pertaining to employment and access to the community and enables those participants to integrate into the community and eventually become part of the workforce”.
Ms BN wrote that while the husband has “progressed well psychologically and emotionally” since his commencement in the program, he has not improved sufficiently to obtain and retain employment. She wrote:
“Dealing with the breakdown of his marriage, loss of his family due to the issues that have occurred at that time and other circumstances such as being in jail for six months have culminated in severe depression and anxiety which went untreated for some time. These issues have led to a loss of confidence, self esteem and paranoia which has exacerbated [the husband] to lose trust in many people and feeling completely alone and betrayed.
However, since working with [the husband] he has managed to change his way of life and his way of thinking into a positive and he has long term goals that he is currently working on. [The husband] is very hopeful that once his court case is over with that he will be able to return to his life and everything that he has missed out on where he will be able to be a full time father to his children and eventually obtain appropriate employment. [The husband] is very positive at present and has a strong support network from his family as well as his counsellors, which has greatly contributed to his progress”.
Ms BN revealed no qualifications and the court must wonder at her capacity to assess the husband’s psychological progress. It is probable she picked up those terms from a very brief doctor’s certificate, from Dr NA (also annexed to the husband’s affidavit), which noted that the husband was unfit for work from 24 October 2006 to 24 November 2006 as a result of “anxiety with depression. Has just come out of jail. Has paranoid idea”. No more recent medical evidence was available.
The husband also annexed a job capacity assessment report, prepared after a referral on 15 November 2006. He was assessed on 21 November 2006, again on the basis of Dr NA’s medical certificate. The report noted his account of an incident in jail which resulted in him being segregated, his distress at having no contact with his two children and his difficulty in trusting people. It recorded his advice that he had only worked with his brother in a retail business and was unable to return to that work, that jail impacted on work options, that he did not know what work he could do and that he did not believe he was able to independently job seek.
The reporter noted that a period of “rehabilitation to integrate back into society” was necessary, and trauma counselling would be necessary before he could return to work. With appropriate support to adjust to society, medical intervention and counselling he “may be able to build capacity to get back into work 30+ hours per week within the next 24 months.”
On that evidence, and given Ms BN’s evidence, he may be “back into work” by November 2008.
The husband’s evidence is that he is no longer using drugs and that is supported by drug screens in late 2006 and in 2007. He said he has distanced himself from his former friends and associates in an attempt to remain drug free; based on the husband’s evidence, the court can find that although the husband’s brother was content to grow and sell drugs, he was not himself a drug user.
It is unfortunate that recent medical evidence was not before the court. I accept the husband was diagnosed with depression at some stage. I can say little about his progress, save that he deposed in his affidavit that he was “hopeful of obtaining employment in the not too distant future”, which suggests he sees the psychological barriers to employment as temporary.
(b)the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment:
The wife left school at the end of year 12, taking a job at J Company on the sales staff. By the time of the parties’ marriage she was working for a retail shop, a position she left shortly before the raid in 2003. She has no formal qualifications and significant parenting responsibilities.
The wife presently receives $420 gross per week rent for the W unit from which comes mortgage repayments of $202.38 and other outgoings of $59.50. Her parents have been paying the rates and unit levies but they must be repaid. She receives a family tax benefit of $156 per week and child support of $6 per week.
As the wife is a joint proprietor of the B Street property and sole proprietor of the W unit she has not been eligible for additional Centrelink payments. She and the children have been effectively supported by her family for years. While the wife’s parents have provided significant financial support to her, it is not their primary responsibility and it does not mean that she is not entitled to a just and equitable share in the matrimonial assets.
When the wife’s condition has stabilised (post operatively) she may be in the position to undertake some paid work however her focus has been on the children, who have experienced significant disruption, and have still not settled into a routine of spending overnight time with their father. Her income is likely to be modest.
The husband left school at about 16 and worked for his brother in the retail business for a decade, demonstrating a capacity for steady employment. Save for occasional work in his brother’s security business, he has not been in paid employment for some years. On his evidence, his drug addiction interfered with his capacity for paid work albeit not, apparently, with his capacity to join the enterprise cultivating and selling drugs.
I have little confidence in the husband’s evidence of his financial position. He deposed to receiving a sickness benefit of $212 per week but to no expenses paid for him by others, despite living in a home he says is owned by his mother and getting financial assistance from his brother. He said he “goes and sees [his brother] and gives him a hand every now and then” in the security business. Asked whether he was paid by his brother he said “why should he? He supports me like a brother”. He did not particularise that support. He said he sees his brother most days but some days just stays in bed, as he can’t “get his head around things” because he is depressed. Notwithstanding that, he has formed a relationship with Ms NI, with whom he hopes to live in the B Street property once the case is concluded.
According to the husband his brother paid for the seven days of surveillance on the wife in 2007 and has “helped him out” with legal fees relating to the case. The financial affairs of the husband and his brother are so entangled, and I have so little confidence in their truthfulness, that it is impossible to find the basis on which money passes between them, whether “handouts” from the husband’s brother might more accurately be described as wages, or whether transactions between them relate to continuing financial ventures of which the court knows nothing.
As found earlier, it is more probable than not that some financial benefit accrued or will accrue to the husband as a result of the sham transaction involving the boat’s re-transfer to Mr GO.
It is probable the husband will undertake some form of work in the future, either through his brother or third parties. There is no reason to believe he will not be involved in further financial ventures with his brother. The court could not be confident all income coming his way would be revealed; his antipathy to the wife and his determination to reduce her entitlements will make that very unlikely. I cannot find that he is likely to earn a high or steady wage but can find that he anticipates employment in “the not too distant future” and that he may have access to funds which cannot be easily traced.
(c) whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
The wife retains the major responsibility for care of the children.
(d)commitments of each of the parties that are necessary to enable the party to support:
(i)himself or herself; and
(ii)a child or another person that the party has a duty to maintain;
Each of the parties has the responsibility to support him or herself. The brunt of the cost of supporting the children will fall to the wife. It is improbable the husband will voluntarily provide financial assistance; it is probable he will pay nothing more than he is assessed to pay by the Child Support Agency and will be keen to minimise that, as he was keen to minimise the wife’s claim in these proceedings by exaggerating the value of an asset (S property) brought to the marriage and conspiring with his brother to assert he had no interest in the funds in trust with the ACO. The wife will have the burden of providing accommodation, education and all of the children’s health and personal needs.
(e)the responsibility of either party to support any other person;
There is no evidence either party has any such responsibility.
(f)subject to subsection (3) the eligibility of either party for a pension, allowance or benefit under –
(i)any law of the Commonwealth, of a State or Territory or of another country; or
(ii)any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
I have referred to the parties’ superannuation interests and the pensions or allowances for which each is presently eligible. The wife’s eligibility for Centrelink benefits may change once property orders are made, but that is speculative.
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
It is not uncommon for the standard of living of parties to change after they separate. What is important is that the change not be borne disproportionately by one party, or by the children.
(h)the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
There is no evidence either party intends undertaking a course of education or training.
(ha)the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and
No creditor sought to be joined in these proceedings and the court has determined a number of claims relating to alleged debts. Orders made will accommodate debts found to be matrimonial liabilities.
(j)the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
(k)the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
Not relevant.
(l)the need to protect a party who wishes to continue that party’s role as a parent;
This is an important consideration, having regard to the evidence of the wife’s commitment to the children since their births and her view of the importance of continuing to focus on their wellbeing and development.
(m)if either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
The father is not cohabiting with Ms NI although his evidence was of an intention to do so in the future. He said she lives with her parents. There was no evidence of her financial circumstances; the husband said she works in sales, on the phone.
The mother has not repartnered.
(na)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, or is to provide, or might be liable to provide in the future, for a child of the marriage; and
The husband presently pays some $6 per week by way of child support. It is unlikely real details of any money paid to the husband by his brother in any capacity, will be provided to the Agency, given their attitude to the wife and her entitlements. The court could not operate on the basis that the wife will ever receive any meaningful child support from the husband.
The wife brought an application for departure from administratively assessed child support, which was filed on 19 December 2007. She sought that the husband pay capitalised child support at a rate to be determined by the court. For reasons set out later in this judgment, that application will be dismissed.
I take account of the parenting orders made on 5 March 2008, as required by s 79(4)(f), and account of the order of 14 August 2006 which deferred payment by the husband to the wife of costs of $500 until determination of the property proceedings. The provisions of s 79(4)(g) have been considered as part of s 75(2)(na).
conclusion
The division of assets advanced by the husband in H1 (tendered during final submissions) was posited on the wife receiving 65% of the asset pool, as submitted by him. That included almost half a million dollars in liabilities which the court has not found to be matrimonial liabilities. His counsel put the wife’s entitlement in the range of sixty to seventy percent, “assuming the husband won’t be paying child support”.
Counsel for the wife submitted she should receive 75% of the assets and placed the range between seventy and eighty percent. He sought that she keep the W and B Street properties, plus some $60,000 to $70,000 in cash.
Such a division would give the wife a little over 88% of the pool as found. Personal assets in her hands (notionally and in fact, including superannuation) represent $155,015 of the pool. If one adds the equity in the two real properties ($207,374 plus $600,000) and another $60,000, she would receive assets of $1,022,389. On that basis, the husband would retain assets in his hands (notionally and in fact, including superannuation) of $112,824 and (after matrimonial debts were paid) received $22,545 in cash, a total of $135,369, being a little under 12% of the pool.
I am not satisfied such a distribution would be just and equitable.
Rather, I find that a just and equitable result requires the wife to receive by way of adjustment an additional 30% of the non-superannuation asset pool and 20% of the superannuation pool, taking her entitlement to 65% across all assets. Sixty five percent of $1,157,758 is $752,543. Personal assets in her hands represent $155,015. If the B Street property is added to that figure, she would receive $755,015, some $2,472 more than her entitlement.
On that basis, the husband would be entitled to receive $405,215, of which he already has $112,824. To that would be added the equity in the W property ($207,374) and the cash available after payment of found matrimonial debts ($137,000 less $54,455, being $82,545). If he is then paid $2,472 by the wife, to compensate for the overpayment to her, he would receive his entitlement of $405,215.
Each of the parties sought to retain the B Street property. The wife and children are living in that property and I find it reasonable she (and the children) retain that benefit.
It was never part of the husband’s case that he retain the W unit; on his own evidence he would not be able to pay the wife’s parents the sum due to them in respect of that property ($168,626) but he may well have access to funds which he was not prepared to acknowledge. He could be given an opportunity to take that property, on repaying the wife’s parents, refinancing the mortgage and taking the found equity of $207,374 as part of his entitlement. That would enable him to keep one piece of real estate, albeit not the one he preferred.
Counsel for the wife submitted that if the court did not find that the wife should retain both pieces of real estate, she should be given a chance to buy the husband out of the W unit. I am satisfied he should have first option to do that; only if he does not exercise it will she be given an opportunity to keep that property on paying the husband $207,374 and indemnifying him absolutely in respect of the mortgage and the debt due to her parents.
If neither party is in a position to keep that property, it will be sold. The mortgage and sum due to the wife’s parents will be repaid. If the balance remaining is $207,374 or more the husband will receive $207,341, plus 35% of the excess. The wife will receive 65% of the excess.
If the nett balance is less than $207,374 the husband will take the balance and (as her entitlement has been calculated on the current equity) the wife will have to repay the husband 65% of the shortfall between the actual balance and $207,374.
In all the circumstances of this case I am satisfied such an outcome is just and equitable.
COSTS
An order requiring the husband to pay $500 costs to the wife was stayed until the determination of the competing applications. That sum will come from the $2,472 the wife is to pay the husband; he will receive $1,972 of that sum.
Orders will provide for the filing of submissions in the event a party presses a costs application.
departure application
In her application the wife relied (by inference) on s 117(2)(c) of the Child Support (Assessment) Act 1989. It was submitted that, in the special circumstances of the case, the provisions of the Act relating to administrative assessment would result in an unjust and inequitable determination of a level of financial support to be provided by the husband. Of the grounds set out in her application, those marked (iii) and (iv) (which repeat the contents of s 117(2)(c)(iii) and (iv) of the Child Support (Assessment) Act 1989 could not be relevant.
However sceptical I am of the husband’s evidence of his financial position, I could not find that he has an income which would warrant an increase in the periodic child support assessed. Similarly, his earning capacity, as found, could not be said to warrant such an order. I cannot quantify the financial resources that might be available to him, whether through benefits received when the boat was transferred to Mr GO, or otherwise.
I can take account of the property that will be available to him on the determination of the property proceedings between the parties. Pursuant to those orders, he will have property to the value of $405,213, of which $292,391 ($207,374 plus $82,545, plus $2,472) may be available in cash, or realisable as cash, in addition to the $7,000 he has now. The husband will need to acquire accommodation and these funds could provide the nest egg to do that.
No specific submissions of counsel for the wife went to her departure application. The application was not abandoned but neither was it pressed. This was probably because her case for final property orders placed significant weight on the relevance of s 75(2)(na) and s 79(4)(g), and it was her submission the court should find the husband would pay little by way of child support.
The primary purpose of child support is to ensure that carers of children receive regular periodic support to meet their day to day needs. The preference for periodic support is explicitly stated in s 68K(5) of the Family Law Act 1975 and the scheme of the Child Support (Assessment) Act 1989 is such that the preference for periodic support is an underlying presumption of the legislation.
Section 122 of the Child Support (Assessment) Act 1989 allows for orders for child support to be made otherwise than in the form of periodic amounts paid to the carer. In Borg v Borg (1991) FLC 92-215 at 78,451 Kay J held that the purpose of Division 5 (in which s 122 sits) is to enable the court to provide for child support other than by way of periodic payment and gave as examples direct payments such as school fees, or the provision of property or lump sum payments.
Division 5 is designed to provide alternative methods of providing child support only if the circumstances of the case are such that a periodic assessment fails to meet the objectives of the Act. The additional particular objects set out in s 121 repeat the additional particular objects of Division 4 (which relates to orders for departure from administrative assessment); the aims of the divisions, in that sense, are identical.
The court should first determine any application under Division 4 of the Act, before considering an application under Division 5.
Section 124(1) is as follows:
(1) Where:
(a) a custodian entitled to child support or a liable parent makes an application to a court under section 123; and
(b) the court is satisfied that it would be:
(i) just and equitable as regards the child, the carer entitled to child support and the liable parent; and
(ii) otherwise proper;
to make an order that the liable parent provide child support for the child otherwise than in the form of periodic amounts paid to the carer entitled to child support;
the court may make the order.
(2) In determining the application, the court must have regard to:
(a)the administrative assessment in force in relation to the child, the carer entitled to child support and the liable parent; and
(aa) any determination in force under Part 6A (departure determinations) in relation to the child, the carer entitled to child support and the liable parent; and
(b) any order in force under Division 4 (departure orders) in relation to the child, the carer entitled to child support and the liable parent; and
(c) whether the carer entitled to child support is in receipt of an income tested pension, allowance or benefit or, if the carer entitled to child support is not in receipt of such a pension, allowance or benefit, whether the circumstances of the carer are such that, taking into account the effect of the order proposed to be made by the court, the carer would be unable to support himself or herself without an income tested pension, allowance or benefit; and
(d) the effect that the making by the carer entitled to child support of an application under section 128 (Pensioners entitled to apply to have assessed child support not reduced by more than 25%) would have on the order proposed to be made by the court (and any statement included in the order under section 125).
There is some judicial disagreement as to whether the provisions of Division 5 provide an independent source of power to make orders for child support otherwise than in the form of periodic payments, or whether the Division limits the power to the substitution of non-periodic support for assessed periodic support. In Lightfoot v Hampson (1996) FLC 92-663 the majority (Finn, Fogarty and Purvis JJ) held that Division 5 is essentially a substitution provision and not an independent source of power to make child support orders. Kay J dissented from that interpretation. In the same year, a differently constituted Full Court (Nicholson CJ Baker and Rowlands JJ) expressed reservations about the correctness of the majority decision in Lightfoot v Hampson, in Ivanovic v Ivanovic (1996) FLC 92-689.
The liable parent succeeded in Lightfoot v Hampson and a new trial was ordered. In that second trial the issue did not arise as the carer failed to obtain an order departing from the administrative assessment. The carer appealed, an appeal determined by Nicholson CJ, Finn and Tolcon JJ in Hampson v Lightfoot (1997) FLC 92-775. In a joint judgment the Full Court concluded that, on the facts before it, it did not need to consider the correctness of Lightfoot v Hampson or Ivanovic v Ivanovic. In Hampson v Lightfoot the Full Court made orders which initially increased the periodic rate of child support under s 117 and then substituted a lump sum under s 123, implementing the process approved by the majority in Lightfoot v Hampson.
In Johnson v Johnson (1999) FLC 98-004 another Full Court (Nicholson CJ, Finn and Moore JJ) also proceeded on the basis that the lump sum should be in substitution for periodic support and first increased the periodic rate pursuant to s 117.
Although the wife referred to a lump sum in her application for departure no submission was made referable to it, or to relevant authorities.
I take into account the assets which will be available to the husband as a result of determination of the property proceedings. As found, he will need to acquire accommodation and is entitled to a reasonable sum to re-establish himself. I am not satisfied that there are special circumstances which would warrant a departure on the basis of property in his hands.
I certify that the preceding two hundred and twenty six (226) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Brown.
Associate:
Date: 14 July 2008
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Property Law
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