Delaney and Delaney

FEDERAL CIRCUIT COURT OF AUSTRALIA

DELANEY & DELANEY

[2019] FCCA 283

Catchwords:
FAMILY LAW – Parenting dispute after lengthy relationship – major dispute over husband’s alleged dissipation of assets – consideration of weight to be given to husband’s initial contribution – both sides tardy and incomplete discovery – husband’s overall contribution greater than that of wife – parties living beyond their means – adding back of amounts found to be wasted – 65 % division in favour of husband just and equitable with both parties to retain their superannuation.

Legislation:

Family Law Act 1975, s.75(2)

Cases cited:

Stanford v Stanford [2012] HCA 52

Applicant:

MR DELANEY

Respondent:

MS DELANEY

File Number:

DGC 2631 of 2014

Judgment of:

Judge Burchardt

Hearing dates:

26, 27, 28 and 29 November 2018

Date of Last Submission:

7 December 2018

Delivered at:

Dandenong

Delivered on:

18 February 2019

REPRESENTATION

Counsel for the Applicant:

Mr Salamanca

Solicitors for the Applicant:

Taussig Cherrie Fildes

The Respondent:

In person

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 2631 of 2014

MR DELANEY

Applicant

And

MS DELANEY

Respondent

REASONS FOR JUDGMENT

Introductory

This is a property dispute between two parties who have been litigating since 2014. On 8 March 2018, the Full Court of the Family Court allowed an appeal from property orders made by Judge Small on 2 June 2017. It was noted in the Court’s orders that ground 1 of the amended Notice of Appeal had been made out. That ground went to an allegation that her Honour Judge Small had erred in finding that an adjustment of 20 per cent of the divisible assets of the parties was justified, owing to the husband’s expenditure of funds totalling over $1 million.
At the hearing before myself on remittal, I was informed only that ground 1 of the Notice of Appeal had been conceded. In the circumstances, and given the generalised nature of the guidance given by the Full Court, understandable of course in the circumstances, I informed the parties that the matter would be conducted as a rehearing de novo. I explained that I would hear and determine the case on the materials put before me. I did not propose, and indeed have not, read the judgment of Judge Small. Further, I did not admit into evidence the transcript of the proceeding before Judge Small as it was instantly apparent that the case would be quite long enough without it. Cross-examination about differences between the evidence now given and that given in the earlier proceeding as recorded in the transcript would not have assisted the Court.
Both sides have in effect, however, sought to place before the Court all the material they had earlier filed. The matter was complicated by the wife’s self-representation. She filed three affidavits with numerous annexures (including unnecessary further copies of all the parties’ earlier affidavit materials and Financial Statements) on the day of the trial, having endeavoured to file them the preceding Friday. The husband also filed an Expert Witness Statement of an accountant on the Friday before the trial. For reasons already given, I ruled that affidavit inadmissible.
Following some discussion, I adjourned the matter on the Monday and permitted the husband to file a responding affidavit to the late filed affidavits of the wife.
With a procedural history like this, and voluminous materials properly before the Court, this judgment will seek to determine the controversy on a somewhat broad brush basis.
One of the things that becomes dispiritingly obvious when one reads, as of course I have, the parties’ affidavit material is that almost from the start these materials tended to be prolix and over-detailed. No allegation, no matter how trifling the subject, was not afforded a detailed response. This attempt to conduct a trial by micro-analysis of the parties’ histories is, in my view, inappropriate.
The primary matter of disagreement at this stage is what the Court should make of the husband’s expenditure post-separation.
The wife seeks that the entirety of the pool as it now stands be vested in her. The husband seeks a fifty-fifty division of the current assets, with no adjustment in respect of his past expenditure.
For the reasons that follow, I think that the property pool should be divided 65/35 in favour of the husband, with $200,000 of the husband’s (wasted) expenditure added back to the pool. Additionally, there should be an equalisation of superannuation.

Agreed or uncontested relevant facts

Surprisingly, given the intensity of the dispute, a considerable amount of issues are not the subject of any significant material disagreement.
The husband was born on … 1960 and the wife was born on … 1969. They appear to have met in 1991, but commenced cohabitation in 1993.
At the commencement of the relationship, the husband already owned two properties. One, at Suburb A, was bought in 1989 by the husband and a further property at Suburb B, was bought in 1985. I will return to these properties in due course.
The parties married on … 1995 and their children followed in due course. [X] was born on … 2001, [Y] was born on … 2002, [Z] was born on … 2004 and [W] was born on … 2006.
Although there is a question as to whether the parties lived together but separated briefly under one roof, it seems reasonably clear that separation took place on 14 July 2014, at which time the wife took out an Intervention Order against the husband.
I note that the Intervention Order initially taken out on 16 July 2014 was extended on 29 September 2014 to prohibit the husband from attending the wife’s place of work and/or the children’s school.
The husband and the wife were both employed at the commencement of the relationship and the wife continued to work until the birth of their first child. Thereafter, she has worked but little until relatively recently. She already possessed a degree, and has since obtained qualifications, which has enabled her to find employment.
The husband, as is common cause, largely took over the management of the household in around about 2007 or 2008. There is a dispute as to whether this was because the wife wanted him to or not. Nonetheless, much of the general household duties, such as cleaning, cooking and the like were then taken over by the husband.
The husband worked two jobs for at least the period 2012 to 2014. He has deposed to an earlier period of having several jobs, but this did not achieve great emphasis in the final hearing. The husband lost both his jobs by no later than November 2014 and his prior income

of approximately $250,000 per annum was significantly reduced. From then until 2016, the husband was largely (with the exception of some short three months or so of employment in 2015) unemployed. He had difficulty in obtaining employment owing to his age and he diverted much of his energies to the development of a business called Business. He has expended substantial amounts of money in this regard.
Following a six day hearing before Judge Small in late 2016, her Honour gave judgment in June 2017, as earlier indicated. The judgment provided a spend time regime for the children which has not been strictly adhered to for various reasons. It will be appropriate to return to the present parenting orders in due course. The husband is employed by Employer and earns approximately $70,000 per annum. The wife’s most recent Financial Statement discloses income of $1,617 per week, together with $180 per week garnered as a health professional and family tax benefits of $209. I will return to that aspect of the matter also.
The wife has lived in the former matrimonial home at Property C, since separation and the husband, pursuant to Court order, paid the mortgage until judgment in 2017. There is a dispute between the parties as to what happened thereafter.
The husband’s father died post-separation and, in the ultimate, he received $313,000 by way of distribution from the estate.

The parties’ affidavits

Against this admittedly broad brush background, I will deal briefly with the parties’ affidavits. I record at this point only some of the matters which strike me as being of perhaps particular significance. I have, of course, had regard to the affidavit material as a whole.
In his very first affidavit filed 29 August 2014, the husband deposed that he had bought the Property A property in 1989 and had paid the property off by 1996. He deposed to buying Property B in approximately 1985 and that it was paid off by 1996.
He further deposed that the Property C property was bought in 2010 for $300,000, but placed in the wife’s name alone. He deposed that extensive renovations to the matrimonial home were performed over a period of time. The affidavit also complained of the wife’s (as he put it) overactive social life and I note that he deposed at paragraph 11:
“My wife also has an unrealistic and impractical expectation of financial matters. Purchasing without agreement expensive furniture, holidays and presents. Her conduct in this area has caused significant debt and great hardship and stress for me to keep the household functioning in a financial way. Every second year she undertakes on her own, an expensive overseas holiday for a period of 3 weeks at great expense.”
He went on to complain of a forthcoming extended trip to the Country 1.
The wife’s responding affidavit filed 29 October 2014 deposed to separation under one roof in April 2014. She deposed to allege verbal abuse and assaults by the husband. At paragraph 35, the wife deposed:
“The husband continued to pay the expenses associated with the home, and gave me an “allowance”. That allowance however, was to be spent in such a way that I considered the Husband to be financial abusive.”
She then referred to an email sent to her on 3 September 2014, which is annexed as D5 to the affidavit. The terms of that email speak for themselves, but I note, inter alia, the husband said:
“I would expect as I am paying or bills and mortgage that food shopping of $300 a week would be fair and reasonable. In any case there is not enough to give you anymore, as we are very much living on borrowings. I will pay the kids activity as they come up but this will be subject to review as they come up.”
I would interpolate and say that while the husband clearly put the wife on notice that their financial position was not good, I think the wife is correct to describe this as financially controlling.
The wife’s affidavit confirmed the husband’s general running of the household and indeed detailed at paragraph 57 the children’s difficulty with adjusting to change when they were living with her alone.
At paragraph 68, having deposed to a visit to the Country 1 in 2008 and its beneficial effects, the wife asserted:
“When I returned from my trip I told him that I would do the writing course, that I would need regular weekends away, and ideally an overseas trip every two years.”
She also complained at paragraph 70 that the husband had put spy software on her computer.
Relevantly also, the wife asserted ownership of shares in the sum of $24,046 and a student loan of $40,000. She deposed that the mortgage as at 1 January 2014 on the matrimonial home was $198,956 and that the husband had withdrawn $500,000 on the mortgage of the matrimonial home on 4 March 2014.
The wife deposed that they had taken in students and she had undertaken ironing work to improve their financial position. She deposed to the husband working two jobs in 2011 to 2012.
The wife deposed that the rental properties were not paid off until 1999 and that she had managed the parties’ finances. She deposed that Property C was tenanted until 2002. She went on to depose that she had sold a tranche of shares (paragraph 102) to fund the Country 1 trip that was due at the end of the year. She also deposed to her continuing involvement with the children’s’ schooling and other extracurricular activities, even though she conceded that the husband did the cooking and laundry.
Much of the parties’ subsequent affidavit material, in my view, contains overly detailed consideration and criticism about each other’s conduct.
The husband’s affidavit filed 24 November 2015, at which time his amended application was seeking the 55/45 division of the property pool in the wife’s favour, deposed to the wife’s studies. At paragraph 18, he admitted calling the wife a bitch, although he maintained that he was also the subject of insult.
At paragraph 23, the husband admitted that the wife maintained finances up until December 2008. He said that thereafter he became more involved.
At paragraph 45, he went into greater detail about the two rental properties. He deposed that he had bought the Property B property for $57,000 in 1984, with a mortgage of $45,600. He estimated that this was reduced to approximately $30,000 by 1994 when cohabitation commenced. He deposed that the Property A property was bought in 1989 for $99,000 with a mortgage of $79,200. He estimated this was down to $45,000 by 1994.
He further deposed that in 2010, when the matrimonial home was bought, not only was the purchased price committed, but approximately $260,000 was applied to renovations.
In his affidavit filed 7 October 2016, the husband deposed that his business had no value. He confirmed receipt of an inheritance in about … 2016 of $313,000. He deposed that he had commenced work with Employer on … 2016 at a salary of $78,000. He also deposed to having a bank cheque in his possession for $57,000. This had been intended for fees for university and equipment for his business.
He deposed that he paid all school fees from the NAB mortgage account against the rental properties, the balance of which was then $550,067.
The wife’s affidavit filed 10 May 2017, together with an Application in a Case disclosed that [Y] had been living with the father since January 2017.
In his affidavit filed 31 October 2018, the husband deposed that [X] now lives with her parents as she wishes and spends equal time with them. [Y] lives with his father and the time with [Z] and [W] is shared. He deposed to paying school fees in the total of $4,853 per month, but that [W]’s will increase by some $1028 a month in 2019. He gave various values to the properties to which I shall return and estimates of Capital Gains Tax payable on the two rental properties. He estimated his expenditure on his business as some $120,000.
The husband further deposed that on 4 June 2014, he withdrew $500,000 from the mortgage on the matrimonial home and transferred it to his NAB investment account. He further deposed that on 3 March 2015, he withdrew $220,000 from his superannuation fund and applied it towards reduction of the NAB loan (with a smaller amount paid off to a credit card).
He further deposed that he withdrew $58,585 from his ANZ Bank account (no date has been given) and retained it in a bank cheque, which he deposited into the NAB offset account on 17 November 2016.
The husband further confirmed that he had transferred his inheritance on 6 October 2016 to a designated CBA account, but has since spent substantial amounts of money on living expenses and legal fees.
The only other affidavit that is necessary now to refer to is that of a Mr D filed on 14 October 2016. He provided a joint valuation, including a historical valuation, of the Property A and Property B properties. He valued the Property A property as at 21 January 1995 as at $75,000 and Property B as at 21 January 1995 at $100,000.
It will be readily apparent that the above is all a very broad brush and selective recitation. Much of the parties’ materials is grossly over-detailed and repetitive and, indeed in the case of the wife’s more recent materials, contains various objectionable materials, unsurprisingly given her self-representation. Much of what the parties had to say is recorded in the agreed or uncontroversial matters set out earlier. In my view, it is now time to turn to what was actually said at Court.

The case for the husband

What follows is taken from my notes.
As earlier indicated, the first day was largely taken up with arguments about the admissibility or otherwise of various documents the wife was seeking to put before the Court, including schedules of self-serving materials that I refused to entertain. On the second day, and notwithstanding continuing complaints about alleged failure on the wife’s part to make proper disclosure, the matter proceeded. Counsel’s extensive opening traversed the facts of the case in some detail. I note that it was put that [X] was spending equal time until about one month before trial, but had now remained with the father. [Y] had rarely been with his mother for over a year and [Z] was with the father about 70 per cent of the time. [W] was spending approximately equal time.
Counsel laid emphasis upon the mother’s allegedly forceful personality and her very subjective view of the world.
Counsel indicated that his client wanted the investment properties sold. Bearing in mind the provision of the Contract of Sale by the wife, however, it was conceded that the Property B property was more probably than otherwise exempt from Capital Gains Tax. Counsel indicated that he sought an equal division of the property, including an equalisation of the superannuation.
The husband was called and adopted his various affidavits and Financial Statements as true and correct. He explained that he was trying to get his business off the ground.
Under cross-examination by the wife, who was of course self-represented, the husband conceded that his auditory processing difficulties did not impair his capacity to answer questions. He said that he loved his children and he loved his wife. He just wanted a just outcome for all. There had been a period of upset with the wife, but this was well past and he was looking to the future. His main focus is the children. He tries to earn as much as he can for them.
The husband denied family violence on his part. He denied denigrating the wife to her friends and family. It was a very long relationship but is over. He said “I hope you do well. You’re important in the children’s lives.”
The husband said there was no family violence by him towards the wife and he had not stalked her. He did, however, admit hacking into her phone account and he hacked into her email in 2010. He said there were no physical altercations between them, but he had defended himself on occasions. He denied denigrating the wife to the children and he denied entry into the matrimonial home when she was not there. He denied delivering food to the children at the home or that the children sometimes take food back.
In February 2014, he was earning $240,000 per year. He lost his job and was out of work for one and a half years. He did not want to take the children out of school. He tried to start his own business with limited success. His income vanished. He did his best for the children. He denied that he was trying to punish the wife. He had never thought that if he could not have the matrimonial home, the wife should not either. He had never thought that he would let the wife have nothing and have nothing himself. He denied squandering assets. Debts have gone up, as have interest rates. He did not think remorse was helpful. He was trying to push on. He was training himself to be optimistic. He would always try to help the wife if he could.
When it was put to him that he was trying to ensure that the asset pool was entirely spent, he denied this and said he was just seeking a just and equitable outcome.
The husband admitted that [Y] had not really been home since the judgment of Judge Small. He said he tries to get [Y] to go back and encourages him, but he is his own man. [Y] is different from the others.

When asked why [X] was not with the wife, the husband said that his parenting style was different. [X] was upset but he was not going to drag it out of her. I found the husband’s answers to the questions about [X] prevaricatory and unhelpful.
The husband denied that he was working to get all of the children to live with him fulltime. The wife had not breached Court orders about the children spending time. [Y] had passed all of his final exams and his standards at school was improved. [Z] was a mood thing. The fact that he was off school on the day of the trial was okay. The children would not say there was conflict between the parents. He said that he praises her.
When asked why he had withdrawn $500,000 after separation, the husband said the wife was never at home. He thought she was seeing other men. He had concerns over a long term relationship with someone else. He said that he needed to act to protect the assets of the family. He had told the wife that he had removed this money in August 2014.
When asked about his legal costs, the husband said a ballpark figure was $250,000 and this was paid out of the inheritance, income and drawdowns on the loan. He said that there was a conversation about the wife’s legal fees. He was not sure. He might have said that he would pay her legal fees (which I understand to have been $130,000). The Intervention Order was before he had made application to the Court. He had not seen the children. This was his motivation in filing his proceeding.
He had told the wife that his business needed to be a success because of their financial position. He had told her about a trial and she had wished him luck.
The husband was cross-examined about who paid the mortgage from the date of the judgment in June 2017 until September 2017, when the last payment was made. He said that this came from his offset account, … which is where the direct debit was set up. It was probably that account.
When it was put to him that there were accounts he had not disclosed, he was adamant in his denials.
When it was put to him that he had ceased paying the mortgage after the orders made by Judge Small in June 2017, he said that he made one additional payment in September. He stopped paying the utilities on the property after June 2017. He had thought he was up to date but was not sure. There was a lot of income into the account over the last four and a half years.
He had set up an ANZ account when he started work with Employer. He transferred moneys across. He spent moneys on the family and business. He was attempting to get a loan. He accepted that he might have had $56,000 in this account, all from post-separation earnings. He started his job in March 2016 and most of the withdrawal was in late 2016. He had lived on the redraw from the mortgages. This was only a short period and all of the funds were applied to the family. He now has a company car, fully paid and maintained. He has his own car which he uses for towing his boat. He keeps the registration up to date.
The husband conceded that the wife was not aware he had cashed in his superannuation in 2015. This had been revealed later, through the discovery process. The amount involved was $220,000. $19,000 was paid on his credit card and the rest of the funds were transferred to the … account. The husband had paid $32,000 for a pilot plan for his business and spent, to January, $17,000 per month on average. He paid the two mortgages, the household expenses and school fees. He had also applied $22,000 to the wife’s credit card.
When pressed, the husband said his expenses were some $16,000 to $17,000 per month. Interest increases the debt. When it was put to him that between August 2014 and September 2016 he had spent $225,000 on his credit card, he said this was bills, utilities, school fees and stuff for the business. There was some entertainment and children’s expenses. He had personal expenditure in there as well. School fees were $3,000 a month plus extras. There were rates and utilities on the properties, as well as rent, and additionally, he had to rent premises himself. His rent was $1,690 per month. The rates were about $6,000 a year. Property B’s rates were $3,500 and the other properties were more. He paid gas and water and all of the children had phones in his name. He had spent money on himself. He had paid for sex. He bought a TattsLotto ticket for $50 each week and spent about $50 on alcohol. He bought the children’s’ clothing in slabs. He had bought their phones through a plan and the data usage was huge. It now costs about $1,000 per month.
The husband conceded that the wife worked for between 18 months and two years after her honours degree. When it was put to him that only the honours degree had been the subject of fulltime study, the husband said he thought the wife was not working. She had only undertaken one year of her degree when they met. Then there were two years fulltime plus honours.
The husband conceded that the wife stayed at home and looked after the children when they were young. He could not recall what he intended to do with the Property A property when they first met. He said it was a joint decision to buy. The husband’s evidence about the motivation for the purchase of the matrimonial home was vague and prevaricating.
The husband conceded the Property C property was rented for a while, probably for tax purposes. He did not remember. They moved to Property C after [X] was born, but before [Y]. They needed the room. He denied asserting that the wife had not assisted in renovations in the rental properties.
The husband did not concede the wife’s valuation at page 11 of her affidavit filed on 26 November 2018 as to the value of the properties at the time of separation. He said all property values went up. He said the wife had done a lot of work in the front of the Property C property. His household contents were not valued, but were all pretty cheap.
He is receiving rent from three tenants, two in one dwelling and one in the other. He receives about $2,200 all up, which goes into the offset account. He used this to cover the mortgages. The interest rate has later increased and is now 5.4 per cent. It was four point something. This was because the properties were not owner occupied.
He was asked about his bank cheque for $57,000. He kept this for three months. It was intended for his business. It was also intended to be applied to his fees for a qualification at the University in the sum of $32,000. It was possibly also to buy a filter from Country 2. He never spent the money because he got the job. He abandoned his studies and decided to rebuild his filter. The $57,000 was from the ANZ account. The husband could not explain the Commonwealth Bank cheque in March 2016 and could not recall keeping the bank cheque from March until October 2016. He cashed his cheque after the trial to pay legal fees.
When it was put to him that there were orders that he apply the $57,000 to the NAB mortgage, the husband said he appealed the judgment. He said he thought he had a month during which time he did not have to comply with the Court’s orders. The husband was questioned as to how long it took to pay off the rental mortgages. If I understood his answer correctly, he thought these were paid off by 1999.
The husband said he still pays school fees of approximately $4,000 per month. He pays for all activities and the like for the children.
The husband said that he had no recollection of debts at the start of the relationship. He had paid off a personal loan from 1984 to 1985 for the first property. The maximum credit available in 1993 was $3,000.
The husband obtained a job which had a large commission structure with a base salary of $37,000. He had paid off the rental properties while the wife was working before the children were born. The wife managed the finances.
The husband confirmed that he paid $300 per week Child Support. He said this was an average. He had stopped this when the wife obtained employment. She had her shares available to her.
The husband said he had drawn down the mortgage after he had lost his job. He could not say how much was drawn down before November 2011.
When questioned about his superannuation withdrawal, he said this went from $255,000 down to $220,000 (the reduction, as I understood it, being caused by tax). The husband said he used what he thought was reasonable. It was not something that he had done lightly. Of his $313,000 inheritance, he has $120,000 left. When asked where the balance had gone, he said a lot was on legal fees. He referred again to the school fees of $4,000 per month. He said that he had normal living expenses and tries to be frugal. He said that it was not his intention to litigate until there was nothing left.
In re-examination, the husband confirmed that his account, …, is the mortgage for Property B. He had taken $500,000 out in June 2014. His NAB … account is the mortgage for the investment properties. The … account is his workhouse account. He puts his income from employment into it. He puts his income from the business into it.
The drawdown was on the mortgage … account. His inheritance in 2016 was placed into CBA account … . He tried to keep it separate and he took money from this account.
He needed a Smart account, …, to withdraw from the …. Then moneys went into the … account to pay legal fees and living expenses. Some business expenses were big items. The … account was funds from the … account. That was his original credit card, which became ….
Account number … was used for his pay from Employer. His pay still goes in today, but is generally still transferred to …. The bank cheque in August 2016 went to ….
The husband was questioned about the extent of his legal costs, but his answers were as he, as I think, put it himself, a guesstimate. Legal costs post-April 2016 have largely been paid from his inheritance. He tendered as exhibit A1 a comprehensive set of his bank records.
The husband conceded he has spent approximately $7,000 between late 2013 and October 2016 on escorts. His weekly entertainment personal expenditure is about $200. Alcohol at $50, the TattsLotto ticket of $50 and the occasional dinner every two to three weeks. Everything else is for the family.
After the wife got a job in April 2016, he stopped paying $330 a week to her. His last payment on the mortgage was in September 2017. He conceded that the wife paid one month in the June to September 2017 period. He paid the utilities on the two rental properties after judgment, but not the matrimonial home.
The husband clarified what had happened to his $220,000 worth of superannuation. He had spent $14,000 on his NAB credit card, …, and transferred $190,000 to the … NAB account. There was no tax. He spent the balance on the family, business and legal fees.

The submissions and evidence of the wife

In her opening, the wife said that she was seeking the totality of the property pool. She was not being vexatious. The husband has funds secreted away. He has secret accounts like the … account and has not given a full account of his expenses. The business is more successful than he says. The husband says he has eight to 11 clients, but lies and under-exaggerates. She needs to be a director of the business to find out what the true position is.
The wife complained that the husband had perjured himself on numerous occasions in the trial. Leaving the husband had created rancour. She had done nothing wrong and wanted the litigation stopped.
I have to say that some of the wife’s opening was difficult to follow and constituted what could only be described as something of an emotion-laden rant.
The wife said that the drawdowns created new debts. She said the husband had an extravagant lifestyle and she did not know how much was hidden. The husband had $220,000 of superannuation in 2015. He had the $500,000 he had drawn down. He had spent $200,000 of his inheritance and he had a bank cheque and savings of $93,000. She complained that the husband wants her homeless while he lived in the family home with the children.
The wife adopted her affidavits and Financial Statements as true and correct. Under cross-examination, the wife confirmed that she had read the husband’s materials and understood them. She confirmed that the husband paid the mortgage, rates and utilities until the judgment in 2017. There was $861 overdue on the rates and a few hundred dollars on gas and electricity. The husband had not made the mortgage payments between July and September 2017.
The wife was cross-examined about her shares. She had had some shares, but did not recall how many. A reference in one of her Financial Statements was a mistake. She had sold her shares prior to her 2014 Financial Statement. She sold them to pay for her trip to the Country 1, which lasted for seven weeks between December 2014 and January 2015.
The sale of the shares had engendered about $20,000, but she could not say when they were sold.
The wife also had shares. She had 313, but has them no longer. She sold them as a parcel in May 2016. She went on a trip on her own to Country 2 to visit a sick friend. She had spent about $10,000. She sold a second tranche in June 2017 for about $20,000. She had some shares that she had sold previously, but had no idea how many. The shares are in joint names and are not sold, because the husband put a stop on them. She conceded that she had not made a full disclosure in relation to her shares.
The wife said she had not brought her tax returns for the 2014 to 2015 years with her to Court. She did not have them. She did not recall reading the husband’s Financial Statements. He had not provided information about the business. When asked about the mortgage on the family home, the wife said she recalled that there was payment of a huge amount of debt that was not negatively geared. The payments were on negatively geared properties.
The wife recalled an email in November 2013. She recalled the husband saying that they were living on borrowings. She confirmed that she thought the husband was financially abusive. She did not concede that he had to draw on capital. She conceded that the husband was ordered by the Court in November 2014 to pay the mortgage and associated costs on the family home. He had paid until mid-2017. She said she was not aware that she could have brought a Contravention Application in the light of the husband’s draw down in breach of the Court’s orders. She said she was not aware that she could.
The wife said she had a 2008 trip by herself to the Country 1. She conceded that travel was important to her. She had lived her lifestyle until separation. She had overseas trips in 2008, 2010, 2012, 2014 and 2016. She did not have regular interstate trips by herself. She had not had 12 interstate trips after 2008. She took the children to Queensland last year in September and took them to Region 4 a couple of years ago. She had visited a friend in the Region 4 in about 2012. In 2016, she had been to Region 5 by herself. She went to Country 3 in January 2017. She conceded that the payment of the mortgage and the related matters was a considerable assistance. She conceded telling the children to ask their father for assistance, because she could not afford the extras herself. She conceded that from 2006 onwards, the husband cooked the meals. He took over the household duties. She gave up eventually and had to take it back again after separation.
The wife could not recall how many years the husband worked two jobs, but conceded he had done so for a time. She said she did not know that the husband was earning $240,000 to $250,000 a year when he lost his job in 2014. She conceded that the extensions to the Property C home had taken time. The husband’s salary had been applied to this for some 10 years. She denied that in 2010, the parties had borrowed $260,000 for renovations. She said that the renovations were paid out of the husband’s earnings.
When it was put to her that the property was bought in 2001 to 2002 and that there was $260,000 borrowed for extensions, she agreed. When it was put to her that the loan was paid out by 2010, she said there was a further loan from Bank to buy the caravan and for renovations. They went on a family cruise. The original loan was not paid off by 2010. Some of the loan was applied to renovations. It took a long time to finish the house. They moved the loan to Bank and applied $80,000 for a line of credit.
When asked about tax returns between 2008 to 2013, the wife conceded that she had probably not reached the tax threshold. She did file tax returns because she had share dividends. She had encouraged the husband to study and to start his own business.
The wife commenced full time work in term 4 of 2017. She did not tell the husband. She did not tell the husband about her private clients in her business. She did not tell the husband about her Airbnb business. There are no records of the Airbnb business. The income is paid into her bank account. There is one room for Airbnb which is, in fact, her bedroom. She had bought new linen. She had not calculated what she had obtained. She had the room listed from September 2017 until July 2018. She had then taken it off, because there were no bookings since March. She had charged $120 per night and about eight people in all had come. One stayed for four nights, but most were one to two. She makes $180 per week in private clients in her business and has had a fair few in the last four to six months. There was one client last year, towards the end of the year. She has notes. It is a very casual matter.
When asked as to whether Centrelink were aware of her earnings, the wife exercised her entitlement not to answer on the basis of possible self-incrimination after being warned. When it was put to her that she has no documentation that she owes her solicitors $130,000, she said that she could email her monthly account from her phone. She had consulted with another lawyer once. She has not paid any bills to Trapski Family Law.
The wife conceded she might have sold shares in 2014.
The wife was pressed about the values she allotted to the properties in her trial affidavit. She said she kept track of values. She was not a valuer or a real estate agent. She said capital appreciation has continued. She said the sworn valuations were too low.
The wife said she had studied before 1993. She went back to university the year they got together. She did one year of studies and dropped out, but went back part time in 1992 and continued until 1995. She did full-time honours in 1996. She was studying in April 2014 in a course of study. She had no idea how much HECS debt she had before 1993. Her first year was before HECS. Her 2015 HECS fee was for the whole year and she got a statement over the phone from the ATO. She did not recall receiving any ATO documents about HECS. She did not recall her HECS debt being $37,000 in her earlier Financial Statement. She said she had asked for a letter the preceding Wednesday.
The wife thought she earned $80,000 per annum. There is some money for HECS or HELP. She is awaiting a tax return. How much she has to repay will depend upon her earnings. She said the husband has a lot to answer for. She had reported him to the Federal Police (in respect of perjury). She said that she had agonised over this, but I should say straight away that I do not agree. The wife denied making a threat to tell the husband’s employer about his prior work history. She admitted she told [Y] that “dad has done something wrong several years ago and will go to hell.”
Cross-examination concluded at the end of Wednesday afternoon. In re-examination, the wife had much to say and it was necessary to remind her that this was not an opportunity for final submissions.

The wife said her Centrelink debt will be adjusted when her tax return is filed. The Federal Police complaints are very old and they are not about retribution. She fears a further trial. Her shares have been spent. They were spent on the trip arranged prior to the Country 1 and Country 2, on which the husband was to accompany the respondent. She had spent $10,000 of her shares on airfares in April and $20,000 were sold after separation, but before legal advice. These were applied to the trip to the Country 1 and Country 2.
The shares were sold in a tranche of $10,000 in May 2016 to enable her to visit a friend in Country 3. $20,000 was sold in June 2017 after judgment. They were applied to the mortgage from June to November and to improve the property. The wife’s superannuation with Super Fund is now $157,274.
The wife said she had worked full time while undertaking her studies. She had worked as a casual for 18 months. She saved up for a car and looked after the children, even though he did the cooking. The debt was $600,000 in 2010.

Some brief observations about the credit of the witnesses

It should be noted that a number of other witnesses who were on affidavit were not called in this proceeding. Their evidence essentially went to children’s matters.
Initially, the husband impressed me as a good witness. Some of his answers seemed to me to be sincere and direct. But as time went on, my impression altered significantly. I have referred to certain prevaricatory and self-serving answers already. His answers seemed to me to express a pitiless lack of charity towards the wife. In circumstances where she wants him to receive nothing at all out of the pool, this is perhaps understandable.
The husband’s answers about his failure to comply with Court orders, and his failure to abide by the orders that he subsequently appealed were, in my view, utterly unbelievable and unsatisfactory.
The wife, by way of contrast, presented with somewhat dull affect. Like the husband, she struck me as being a relatively poor historian. She was, on occasions, visibly reluctant to answer questions which, it seemed to me, she perceived to be against her interest. Her anger towards the husband was self-evident at every turn.

Stanford v Stanford

The Court’s first task is to ascertain the legal and equitable interests of the parties and determine if a property adjustment is just and equitable. Clearly, the parties’ approach to their financial situation is now totally different to what it was when they were together and both parties seek that there be a property adjustment. It is plain that there should be one.

The pool

The following items appear to me to be not the subject of dispute:
·Property C: $1,600,000;
·Mortgage as at 3.11.2018: $846,615
·Property A: $540,000;
·Property B: $480,000;
·NAB loan against the two properties as at 23.11.2018: $594,603;
·Estimated Capital Gains Tax on sale of Property A if sold for valuation: $105,280;
·Shares (jointly owned): $24,000 (rounded off);
·Caravan: $30,000;
·Husband’s boat: $6,000.
·Superannuation:
(a)Husband’s superannuation: $22,600 (rounded off)
(b)Wife’s superannuation: $157,270.
I have not included the parties’ bank accounts as there is no evidence before me to suggest that it is more probable than otherwise that these are debts of the relationship which, after all, concluded in 2014.
Likewise, I have not included any value to the husband’s business. There is no valuation. The evidence suggests that it may have some sort of future, but at best, this is uncertain.
I have not included the parties’ two cars, although that of the husband is older. At present, he has a company car, which is part of his employment package in the position he has been in now for some time. More to the point, these vehicles simply move the parties from A to B and it is, in my opinion, erroneous to treat these as a hard asset capable of realisation in a meaningful way, because if they are sold, the parties will simply have to buy another one.
Likewise, although the wife has put an estimate of chattels of $20,000, and the husband likewise has conceded some chattels, the fact is that these are white goods and second hand. It is put that the wife retained the majority of the chattels on separation, and all that means is that they are now four years old. While I appreciate that the wife has allotted a value in her Financial Statement of $20,000 for chattels, once again, it is a wholly unrealisable and unrealistic figure.
I have also not included in the property pool the remaining $100,000 or so of the husband’s inheritance. It is a wholly post-separation asset. Some vague evidence in the parties’ affidavits does not satisfy me at all that any care that the wife may have given to the husband’s father during his lifetime (and it was the subject of strong dispute in the affidavits) would in any way justify her being entitled to any of it.

Contribution

It is clear that the husband possessed the Property A and the Property B properties at the commencement of cohabitation. There seems no reason to doubt that the Property B property was bought in 1985 (the husband became the registered owner on 10 October 1985) and that it was bought for $57,000. It has been valued as at 21 January 1995 at $100,000 and appreciation of this amount accords with common sense, given generally rising house prices.
The Property A property was bought in 1989 for $90,000 and has been valued at $75,000 as at 21 January 1995. The husband’s recollection of the purchase price seems likely to be inaccurate.
What the properties were bought for, how much the mortgages on them were originally and as at the date of cohabitation, in my view, is neither possible nor necessary to determine. On any view of the matter, the husband owned two properties that he had owned for quite some time and in respect of which there must have been at least some decent measure of equity.
I do not accept the wife’s evidence that the husband was in financial difficulties at the commencement of the relationship. A man who has been able to amass sufficient funds to buy two investment properties is not doing that badly. The husband’s evidence about his having paid off a personal loan associated with the purchase of one of the properties was given with conviction and I accept it.
Nonetheless, with cohabitation commencing in 1993, as I find, it is clear that the wife and the husband both applied themselves to the building up of assets. True it is that the wife completed her studies in the 1990s. I accept her evidence that she studied part time, apart from her honours degree for one year. I accept that she worked during her studies.
The wife continued to work until the birth of the first child in 2001, but thereafter failed to work for a very considerable period of time.
I accept that the husband took over the running of the household in large part at some point which cannot be denoted precisely, but appears to have been somewhere between 2006 and 2008. It follows that the wife was performing these duties beforehand. Furthermore, as the wife points out, she bore the father four children in a relatively short space of time. His criticisms of her capacity as a housewife must be seen against that context.
There matters stood, it would seem, until about 2008. The wife went overseas and returned invigorated and effectively presented a set of demands to the husband. She denoted the lifestyle she wished to lead and she lived it. There is no question that the husband acquiesced in her demands. Each of these parties has described the other as domineering, but it would be more accurate, in my view, to say that they are both strong willed. The fact is, however, that the wife did not work for a number of years while pursuing further studies. She had, while not perhaps excessively self-indulgent, certainly wholly self-beneficial, sole trips overseas every other year. She was not, for whatever reason, doing substantial proportions of the housework. The husband was plainly making the major contribution, not just in terms of his earning, up to almost a quarter of a million dollars until 2014, but in every other facet of the parties’ lives, save that I accept the wife had more to do with the children’s general activities.
After separation, the husband paid the wife $300 a week or thereabouts for a period of time. This was plainly done in an extremely controlling way. The email in which he sets out his demands for an accountability of expenditure and what he is prepared to agree or not agree is in one sense understandable as he was providing the money. But as I find, it is part of a controlling tendency on the husband’s part.
I have no doubt that the husband has, on occasions, as the wife asserts, expressed an intention to litigate until there is nothing left. The wife has made this easy for him, however, by the extravagant nature of her proposals to resolve the case. She is, after all, seeking at this point 100 per cent of the pool.
On any view of the matter, this was a lengthy relationship during the bulk of which both sides did their best. It was their joint activities that led to the savings that enabled the purchase of the Property C property and its renovation. It does not, in my view, matter whether the funds for the renovations were provided out of the husband’s wages from time to time or borrowed as a separate loan. The fact is that by early 2014, the parties’ mortgage on the Property C property was very significantly reduced. This made sense, as the mortgage on the investment properties was undoubtedly negatively geared. The mortgage account with Bank was just over $200,000 in March 2014, but was increased in a way that is no wise clear to me to some $300,000 by June 2014, following which on 4 June 2014 it was increased by the $500,000.
I will deal with the husband’s expenditure of the various lump sums to which so much reference has been made separately. Leaving aside that question, I would give the husband some credit for his initial contribution. Nonetheless, the initial contribution in 1993 needs to be seen against the fact that the relationship subsisted for over 20 years. During the latter part of the relationship from about 2006 to 2008 through until 2014, it must be said that the wife was not really pulling her weight.
In all of the circumstances, I would assess the husband’s contribution as 60 per cent and the wife’s as 40 per cent. As I have said, while the possession of the two investment properties was undoubtedly to an extent a springboard, the matrimonial home was bought six years after the parties got together and must have reflected their joint endeavours, at least to an extent in the intervening period. Much of their present wealth, such as it is, has accrued since 1999 because of the increase in value in all three properties.
It should be noted that at the commencement of 2014, the NAB overdraft was some $628,000. Given the relatively modest amounts originally borrowed, it is plain that this figure had just gone up and up. This is so despite the fact that the husband was, it would seem, throughout at least the immediate preceding years, in receipt of a very substantial salary and earnings. I find that the style of life to which the wife and the husband aspired caused them to live beyond their means on an ongoing basis. No other explanation of their very considerable indebtedness in 2014 makes sense. They owed, between the two mortgages, something of the order of $800,000 at the commencement of the 2014 year. That is a surprisingly high set of borrowings in respect of two properties which had already been owned for the better part of 25 years and a further property which had been in their possession for over 10 years. No conclusion is available, other than that the husband and wife lived extravagantly. Furthermore, the wife’s insistence upon her particular lifestyle, self-indulgent as I think it was in the circumstances, to an extent contributed to this.

The husband’s expenditures

It is clear that the husband withdrew $500,000 from the Property C mortgage with the Bank on 4 June 2014. It was initially transferred into his workhouse, …, account and then effectively all of it (less $5,000) was transferred to the NAB mortgage account on the investment properties. The husband has drawn down on a continuing basis on those moneys.
The balance as at 4 September 2018 is $979.
Again, the husband drew down $220,000 from his superannuation in March 2015. That, likewise, was paid into the NAB … account ($190,000 of it).
Given that the NAB … account now accounts for $602,688.46 debit as at 6 July 2018, it is clear that the net position for the parties is that they are now indebted by $846,590 on the Bank account as at 1 November 2018 (page 31, exhibit A1) and $598,051 (exhibit A1, page 53). The total indebtedness is therefore a little shy of $1,450,000.
It is clear, and indeed this was made express in counsel’s closing submissions for the husband, that funds have been mingled here and there from time to time. Additionally, the husband has spent some $200,000 or more on legal costs and expenses, such that there is now about $120,000 left of his inheritance.
The position of the wife is that there should be, as it were, a dollar for dollar adjustment to these figures. The husband’s position is that all of the money that he has spent, subject only perhaps to his expenses on escorts which are put as being relatively modest, is properly attributed to the general welfare of the family. It is submitted there should be nothing added back (to the extent that add-backs may be permissible, in any event).
I am not an accountant and it is beyond me to trawl through the various bank statements to create a reconciliation. I have, of course, ruled inadmissible an attempted reconciliation by the accountant for the husband.
The husband’s evidence was that he was averaging an expenditure of $16,000 to $17,000 a month. He said he was paying $4,000 a month on the children’s school fees and ancillary costs. He was paying the mortgage and he was paying his own rent of some $1,700 a month.
It should be noted that the interest charged on the home mortgage, which was running at about $1,200 a month up until June 2014, immediately jumped to over $3,000 with the increased amounts. The direct debit payments, which I accept were made by the husband, amounted to some $3,000 plus per month. Thinking the matter through, the rent and mortgage payments would appear to have come to some $5,000 a month. The payments on the children come to $4,000 a month. The amounts left over on the husband’s figures would come to some $7,000 or $8,000 a month. Given that he was paying the wife $300 a week until she gained employment, and even allowing for payment of rates and utilities, it is obvious that the husband spent very substantial funds on himself. I note that the husband described his general living as frugal. In my view, and taking a conservative estimate, he was spending $4,000 a month on whatever fancy suited him from June 2014 through to trial. Once again, accepting that these figures are necessarily, to an extent, somewhat elastic, it is obvious that the husband’s wastage ran at about $50,000 a year or some $200,000 over the period with which we are concerned.
In making this finding, I accept that the husband would have spent sums on his legal expenses until his inheritance came into play, but I also accept that the bulk of his legal expenses were paid out of his inheritance thereafter.
There are various ways in which the Court might deal with this $200,000 wastage. In the ultimate, each case must be assessed appropriately according to its own facts. Grossly excessive expenditure such as that of the husband in this case might perhaps be assessed under s 75(2)(o) of the Family Law Act 1975 (“the Act”). In my view, however, given the particular circumstances, I think the $200,000 that I find the husband wasted should be, added back into the pool and apportioned wholly to the husband.
The Full Court in Vass v Vass [2015] FamCAFC 51, at [138] stated the position in relation to notional add back of property which is no longer in existence but which one party has had the use of
“There is no error committed per se in adjusting the parties’ actual property interests by a calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan & Bevan (2013) FLC 93-545 – or, more particularly, the decision of the High Court in Stanford & Stanford (2012) 247 CLR 108 – is authority for any necessary contrary solution.”
Although it puts the matter shortly, I should make it clear I do not accept the wife’s assertion that the husband has concealed large amounts of money in undisclosed bank accounts.
Both parties are, as best I understand it, in unexceptionable health. The wife has a job paying some $80,000 per annum and has private tuition income as well. It seems probable that any statutory benefits she receives will be extinguished when she lodges her 2017 tax return.
The husband earns about $70,000 a year, but has a car fully paid for as part of his employment. In real terms, their incomes are approximately even, although the wife presumably accrues slightly more superannuation.
The husband is nine years older than the wife and has less time to re-establish himself. It also seems probable that he will have the fulltime care of [Y] for the foreseeable future. The position of the other children is less clear. I do not find that the husband is actively seeking to have the children live with him so as to dispossess the wife. It seems clear the children are, to an extent, voting with their feet. In view of the wife’s hateful conduct towards the father (“he will go to hell”, referring him to the Federal Police and the like) it seems entirely probable that the children are in fact being driven to live with the father by the unrelenting criticism that the mother, as I find, offers to the children of him.
Thus it is likely that, foreseeing the future as best one can, the father will have the care of at least two of the children for some time. Of course, their ages mean that they will relatively soon cease to be a financial burden. Those living predominantly with the wife will be longer.
Taking all of these matters together, the parties’ future needs should be assessed as a weighting five per cent in favour of the husband.

Superannuation

There is no doubt that the wife’s superannuation, (and the remaining superannuation of the husband) was accumulated during the relationship. Ordinarily, an equalisation might be thought appropriate. These are two particular matters that militate against such an outcome in this case. First, the husband has dissipated most of his superannuation. Second, and more importantly, the husband, as earlier indicated, sought an equal division of current assets. If the parties retain their extant superannuation, the ultimate result will be very close to equal. In all these circumstances, I think that such an outcome will be just and equitable.

Conclusion

This has been a difficult case rendered difficult both by the over attention to detail of the parties’ materials and a lack of direct evidence in any helpful way, admissible way, of some of the things the Court most would like to know. Discovery has been incomplete by the wife. Both sides have been, as I find, deliberately tardy with the filing of their materials. It was a very difficult case to control.
I am nonetheless quite satisfied that a division of the property as I find it, bearing in mind the way I have approached the husband’s wastage, with a 65/35 split in the husband’s favour, and each side retaining their superannuation, is indeed just and equitable.

The nett result of this decision is that the husband should receive 65% of $1,333,502 (the nett pool of $1,133,502 plus the $200.000) i.e. $866,776, comprised of:
Caravan  $30,000;
Boat  $6,000;
Half Shares       $12,000;
Add-back  $200,000;
Cash  $618,776.
The wife receives 35% of $1,333,502 i.e. $466,725, comprised of:
Half Shares$12,000;
Cash$454,725.
Additionally, the husband will retain $22,600 superannuation and the wife $157,270.
I will hear from the parties as to the form of orders to be made to give effect to my conclusions.

I certify that the preceding one hundred and sixty-three (163) paragraphs are a true copy of the reasons for judgment of Judge Burchardt

Date: 18 February 2019

[2019] FCCA 283

18 February 2019

Key Legal Topics

Areas of Law

Civil Procedure

Administrative Law

Legal Concepts

Judicial Review

Jurisdiction

Standing

Procedural Fairness

Natural Justice

Abuse of Process