Delarue and Delarue

[2013] FCCA 1317

FEDERAL CIRCUIT COURT OF AUSTRALIA

DELARUE & DELARUE [2013] FCCA 1317

Catchwords:
FAMILY LAW – Property application – husband’s conduct fraudulent, dishonest and oppressive – husband not a credible witness – modest asset pool – husband’s conduct caused the wife unnecessary and burdensome legal costs – husband to pay costs of wife.

Legislation:  
Family Law Act 1975 (Cth), ss.75(2), 106A, 117

Applicant: MR DELARUE

Respondent: MS DELARUE

File Number: MLC 1630 of 2010

Judgment of: Judge Hartnett

Hearing dates: 4, 5 and 6 September 2013

Delivered at: Melbourne

Delivered on: 29 November 2013

REPRESENTATION

The Applicant: In person

Counsel for the Respondent: Mr Crozier-Durham

Solicitors for the Respondent: Le Brun Glezakos Lawyers

THE COURT DECLARES THAT:

1. Pursuant to s.78 of the Family Law Act 1975 (Cth) the Respondent wife is entitled to absolute ownership and possession of the real property situate at and known as Property L in the State of Victoria, and being the land more particularly described in Certificate of Title volume (omitted), folio (omitted).

THE COURT ORDERS THAT:

1. The wife do all acts and things and sign all documents necessary to transfer to the Applicant husband at the expense of the husband, any interest she may have in the (business omitted) Pty Ltd (‘(business omitted)’), Delarue Pty Ltd (‘Delarue’) or any other corporate entity operated by the husband and the wife, in which she had or has any interest and (if necessary) the wife resign as a director or office holder of (business omitted) or other entity.

2. The husband indemnify the wife and keep her indemnified in respect of any liability she may have arising out of the operation of the (business omitted) Pty Ltd, Delarue or any other corporate entity referred to in order 2 herein, including but not limited to any taxation liability (whether on account of income or capital gain) save that the wife is responsible for a payment of $1,628 to (omitted) Accounting Services Pty Ltd.

3. Unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent orders:-

   (a)each party be solely entitled to the exclusion of the other to all other property in the possession of such party as at the date of these Orders, including real property, motor vehicles, bank accounts, furniture, personal possessions and like chattels;

   (b)each party forego any claims they may have to any superannuation benefits belonging to or earned by the other;

   (c)insurance policies remain the sole property of the owner named therein;

   (d)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; and

   (e)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

4. The husband pay the wife’s costs of 17 March 2011 (reserved), 13 February 2012 (reserved), 5 March 2012 (fixed in the sum of $7,500 and reserved), 20 April 2012 (reserved) and 27 September 2012 (fixed in the sum of $1,700 and reserved).  The total sum of such costs is determined to be in the sum of $15,560.  Such costs’ payment will be offset by a costs order owing by the wife to the husband pursuant to Orders made on 10 November 2010 in the sum of $2,200.  That earlier costs order against the wife is hereby discharged and the payment required to be made by the husband to the wife in respect of costs and pursuant to this Order is in the total sum of $13,360.

THE COURT ORDERS BY CONSENT THAT:

1. The wife transfer her interest in (omitted) Pty Ltd and in (omitted) Pty Ltd to the husband at the expense of the husband.

THE COURT ORDERS THAT:

1. Otherwise all extant applications be dismissed and the proceedings removed from the list of cases.

2. Pursuant to r.21.15 of the Federal Circuit Court Rules 2001 (Cth), the Court certifies that it was reasonable for the parties to employ an advocate.

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

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 1630 of 2010

MR DELARUE

Applicant

And

MS DELARUE

Respondent

REASONS FOR JUDGMENT

1. These proceedings have had a very lengthy history.  They were commenced by the Applicant husband on 11 May 2010.  The final hearing was scheduled on two earlier occasions and adjourned at the request of one or both parties.  The husband failed to provide discovery and was not timely in his production of documents.  The length of time that has elapsed since the parties’ separation in 1996 also made the conduct of the proceedings difficult.  The husband changed solicitors, engaging three different law firms before appearing as a litigant in person prior to and during the running of the trial.  The Respondent wife’s solicitors were required to make various interlocutory applications due to the husband’s failure to produce necessary and relevant documentation.  The matter finally proceeded to trial in early September 2013.

2. The husband relied upon his Initiating Application filed 11 May 2010.  The orders which he sought were as set out therein and are as follows:-

   “1. That the proceeds of sale held after the sale of the former matrimonial home and payments of the debts of the former business be divided equally between the parties.

   2. The parties retain the assets in their possession.”

3. The husband relied upon a Financial Statement sworn by him on 17 July 2013 and an Affidavit of evidence-in-chief sworn by him on 17 July 2013.  In addition, he relied upon an earlier Affidavit sworn by him on 2 April 2012.  The wife relied upon Affidavits sworn by her on 10 June 2010, 5 November 2010 and 22 July 2013.  She relied upon a Financial Statement sworn by her on 29 February 2012.  The wife also relied upon affidavits sworn by the parties’ children X sworn 24 February 2011 and 9 July 2013; Y sworn 8 March 2011 and 10 July 2013; and Z sworn 29 February 2011 and 16 June 2013. The wife further relied on a Case Summary document filed by her on 4 September 2013 which updated her earlier document filed 22 July 2013. The wife sought orders from the Court in the terms which the Court shall make for the reasons set out herein.

4. The husband and wife each cross-examined the other, and the husband called his current de facto partner, Ms D, to give oral evidence during the running of the matter.  He did so because it was indicated to him from the bench that the absence of any evidence from her might lead the wife’s Counsel to argue that the Court should make a finding that her testimony would not have assisted him.  Likewise, the husband led oral testimony from the wife’s daughter from her first marriage, Ms M, and both Ms D and D were cross-examined by Counsel for the wife. The husband elected not to cross-examine the parties’ three adult children and in opening abandoned his claim to the (omitted) Bank shares that were held by them, before being sold by them, to raise monies to advance a loan to their mother as referred to hereafter.

5. Statements of fact in these reasons are findings of fact on the balance of probabilities.

History

1. The husband was born on (omitted) 1942 and he is aged 71 years.  He is retired and in reasonable health, although a diabetic.  The husband did make a claim that his health was affected by a diagnosis of prostate cancer in 2010, but he provided no medical or other probative evidence to support his claim nor to elaborate upon how it was, his health was impacted upon. The wife was born on (omitted) 1953 and she is aged 60 years. The wife’s health is not overly good; she has been diagnosed with mild depression and has diabetes, kidney stones and arthritis.  She also suffers from migraine headaches.  These medical aliments are not challenged by the husband. Nor do they impact upon the wife’s current capacity for employment. The wife is employed by the (omitted) as an (occupation omitted) and has been so employed since January 2003.  Her present income is $48,200 plus statutory superannuation per annum. The husband’s income derives from an old age pension, and he is in receipt of Centrelink benefits of approximately $625 a fortnight. The wife has not re-partnered. The husband has re-partnered. He provided to the wife no details regarding his de facto partner’s income, nor her financial resources. Those were provided at trial when Ms D gave oral evidence and was cross-examined in relation thereto. The husband pays rent of $100 each week to Ms D to reside in her home. On occasion he also resides in his own home.

2. Prior to the commencement of the de facto relationship between the husband and wife and in (omitted) 1976, each of them had been previously married and each of them had children from that earlier marriage.  The wife had one child of her previous marriage, D born on (omitted) 1972.  The husband had three children of his previous marriage, namely A born in 1966, B born in 1969 and C born in 1970. 

3. Following the parties’ commencement of their de facto relationship in (omitted) 1976 and their marriage on (omitted) 1978, the parties had three children. They are X born on (omitted) 1979; Z born on (omitted) 1985; and Y born on (omitted) 1986. All are adults now. The husband and wife separated in January 1996 and a divorce was granted on 15 April 2010.  They had lived together for approximately 20 years. At the time of their separation in January 1996, their three children were aged 16 years, 11 years and 9 years of age.  At the time of the parties’ separation, the husband left the former matrimonial home which was situate at Property L in the State of Victoria (‘the former matrimonial home’) and the wife remained in occupation with the parties’ three children.  The wife continues to reside in the former matrimonial home with the parties’ adult son X and the parties’ adult daughter Y.  Both X and Y contribute to the expenses of the household by the payment of appropriate board and other expenses.

Contribution

1. In (omitted) 1976, neither of the parties had assets of any significant value.  The husband had left the entirety of the equity in his earlier family home, its contents and some savings to his former wife, who had relocated to Queensland with the husband’s three children of the previous relationship.  Following the commencement of cohabitation of these parties, the husband and wife paid for the husband’s three children to fly to Melbourne at least once a year to spend time with their father. They would also fly to Queensland to spend additional time with the husband’s children. The wife was supportive of the husband’s relationship with his children, formed a close relationship with them herself, and assisted in the funding of these trips. The wife’s daughter D lived with the parties in Melbourne and she formed a close and loving relationship with the husband which continues to this day.

2. Following the parties’ marriage in (omitted) 1978, they moved in with the husband’s father, Mr D, who was ill at that time.  The wife cared for the husband’s father and the parties used their modest savings to renovate the husband’s father’s residence and provide other funds to him.  The husband’s father died in the following year and his estate was bequeathed equally to each of his eight surviving children. The husband received a not significant sum.

3. The husband and wife purchased the former matrimonial home in July 1979 for the sum of $52,000.  The former matrimonial home was purchased by using funds in the sum of $10,000 borrowed from the wife’s father as set out in a loan agreement between the respective parties and dated 1 October 1982. Interest payments were provided for in the agreement. The loan was never repaid; no interest payments were made; and no demand for same was ever made by the wife’s father. This was then a significant contribution on the wife’s behalf. The balance of funds for the purchase was provided by a mortgage advance.  The parties then applied their income to meet the mortgage loan repayments in respect of the mortgage secured over the former matrimonial home until such time as it was paid out in full – a period of approximately two years.

4. Throughout the course of the relationship, each of the husband and wife worked hard both in their efforts to earn income and in their contributions to the welfare of the family and their care of their children.  The wife worked throughout the three pregnancies, and following each of the children’s birth, she resumed employment, leaving the children to be cared for by her extended family, and by day care services, during her employment absences.  The husband and wife both worked in the business of a company, the (omitted) Pty Ltd (‘(omitted)’).  This business was involved in the (omitted) of (omitted) and was largely seasonal, operating at (omitted) and the like. The parties purchased the business in or around 1987 for the sum of $300,000. They applied $100,000 of joint savings to the purchase at the time of taking over the operation of the business and then paid the balance in two $100,000 instalments over a 24 month period.  The business was carried on through a company structure in which the husband and wife each owned equal shares.  In or around 1993, that business was placed into receivership.  The parties were able to repay some company creditors but not their agent in (country omitted).  The repayment of local creditors enabled them to retain the stock, plant and equipment of the original business enabling them to continue to trade.  In 1994, they established a new company, (omitted) Pty Ltd (‘the Company’), with operating funds required for the first year of trading, being raised by securing a loan using the then equity in the former matrimonial home.

5. From 1981 until 31 August 1994 the former matrimonial home was free from any encumbrance.  The wife consented to the husband raising a business loan using the former matrimonial home as security on 31 August 1994 and in the sum of $100,000, conditional upon the principal of the loan being repaid by 31 August 1997. This was subsequently a term of the mortgage loan agreement entered into by the parties.  The wife understood the interest-only payments would amount to around $30,000 over the three years of the loan and would be met entirely by the husband through business profits as would the repayment of the principal. The husband and wife obtained that business loan from solicitors (omitted).  The husband, however, did not repay the capital as agreed and by August 1997. Instead he accumulated more debt in the business.  He also, without the wife’s knowledge or consent, and he claims by the making of a telephone call to the relevant solicitors, extended the repayment term of the business loan on not one but two occasions. The husband admitted in evidence, forging the wife’s signature on one occasion in about 2002 on a bank document with the (omitted) Bank. He committed such forgery to enable him to remove the wife as a signatory to company cheques. He denied forging the wife’s signature in respect of his extensions of the business loan.

6. (omitted) were aware the husband and wife had separated prior to August 1997.  In respect of the further advancement of monies, the husband unilaterally contacted the lender’s representatives, (omitted), and extended the loan by verbal agreement with them as set out in a Statement of Claim filed on behalf of the lender in Supreme Court of Victoria proceedings. 

7. The wife did not become aware that the business loan had not been repaid until in or around October 2009 when she received her first correspondence from (omitted).  Her previous contact with them was limited to the execution of the business loan agreement only.  From 1996 to 2009, the husband was the only person to have contact with the lender’s agent.  Thereafter, it was not until March 2012 that the wife became aware that the loan agreement had been altered in August 1997 and again in February 2002 by verbal agreement between the lender’s representative and the husband without her knowledge or consent. 

8. In the husband’s conduct in extending the business loan, he acted to deceive the wife, and acted contrary to their earlier agreement. In so doing he harmed the wife’s financial position. The wife was, in August 1997, not working in the Company, being primarily responsible for the parties’ young children and the performing of all household duties. She had until separation worked in the Company business, but from home.  The wife was engaged in the book work for the business, whilst the husband was mostly engaged in (omitted) and (omitted).  The long hours worked by them and the pressures of the business caused ongoing difficulties in the parties’ relationship. Ultimately they separated.  At the time of separation, the business, (omitted), had a turnover of approximately $1,000,000 per annum.  The Company accounts for the year ended 30 June 1996 indicated closing stock of $171,000; cash in bank of $43,945 and plant and equipment of $28,675. The former matrimonial home was valued at about $160,000, based on an assessment by a local real estate agent.  The home and the Company values were respectively equivalent. 

9. Prior to separation and in about 1993, the wife’s mother gifted the sum of approximately $5,000 to the wife to purchase a parcel of (omitted) Bank shares for the parties’ three children.  The wife’s brother was given a similar amount to purchase shares for his children also.  The shares purchased by the wife amounted to 500 (omitted) Bank shares purchased at $7.81 a share and held by the wife as trustee for Z, Y and X. 

10. By the time of separation in 1996, the reinvestment of dividends resulted in a shareholding of 796 shares, at $10.96 per share. The wife’s evidence was that the intended transfer of those shares to the children had not yet then occurred, they being still minor children. The children commenced to hold the shares in their own names at a later time.  The wife’s evidence was that the husband had always known that the shares were gifted to the children.  Despite the wife’s at times difficult financial circumstances, she never made use of the shares or the dividends paid, as such shareholding was recognised by her as a gift from her mother to her grandchildren.

11. The husband disputed the wife’s case as to the children’s ownership of this shareholding for a very lengthy period before finally, at trial, conceding that the shares belonged to the children of the marriage, and that he did not seek to include them in the asset pool of the parties.  The affidavit evidence thus relied upon by the wife and as filed by each of the parties’ three children was not challenged by the husband.  The husband’s opposition was a costly exercise for the wife and unnecessarily involved the now adult children in their parent’s dispute. The Court accepts that the shareholding belongs to each of the three children of the marriage. They have now realized the value of their shareholding and provided to their mother the sum of $142,000 in the form of a loan to enable her to remain in the former matrimonial home, in the circumstances referred to hereafter in these reasons.

12. The separation in January 1996 and breakdown of the relationship of the parties was an extremely traumatic experience for both the husband and wife, but in particular the wife.  Her evidence was that not only did she lose her relationship with the husband, but she also lost her job in the business (she ceased to work in it in December 2005) as well as her relationship with the husband’s children from his earlier marriage, which she had built up over many years.  Upon separation, the parties reached an agreement whereby the husband would continue to be responsible for running the Company business, and the wife would be responsible for the children’s welfare.  She remained in the home caring for the children. She had for her use the family (model omitted) motor vehicle purchased some seven years earlier for $50,000. She had financial support from the husband out of his income receipts from the business, although this support was not provided in the initial 12 months of the separation. The wife received a taxation refund of $6,000; accessed savings; and had use of the Company credit card in the 12 months before commencing to receive monies from the husband.  The husband made payment throughout of the children’s private school education costs, and commenced (after the 12 month period) to provide to the wife the sum of $1,000 each month by way of support for the children’s living expenses.  I reject the husband’s evidence that it was any greater sum. It was paid in cash and from the Company accounts. The husband commenced to have his own personal and the Company accounts linked, and transferred money at will between them.

1. The parties agreed in 1996 that the Company would continue to be responsible for the payment of the business loan over the former matrimonial home, taken out with the solicitors in or about 1994 (paragraph 13 of these Reasons), and that the former matrimonial home would be transferred to the sole ownership of the wife in 1997 and upon discharge of the business loan.  The husband would retain ownership of the business.  The wife did not insist upon an immediate transfer of the former matrimonial home to her, notwithstanding the agreement between the husband and wife, as the husband was not then in a position to refinance the loan, and it was necessary for the husband to continue to operate the business to generate an income for himself and for the support of the children. The husband’s evidence was that the agreement between the parties was that upon discharge of the $100,000 business loan – whenever that was – the wife would become sole proprietor of the former matrimonial home and he would solely own the Company and its business. The first time he made such suggestion, that the agreement was conditional, was when he filed an Affidavit in these proceedings in April 2012. I prefer the evidence of the wife as to the terms of the agreement reached between them. The husband lied about this as he did in many other instances in the giving of his evidence. He was not a credible witness. He gave both contradictory evidence and implausible evidence. By contrast, the wife was a truthful witness who gave her evidence in a direct and unembellished way. She displayed a logical thought process that was entirely absent in the husband.

2. Between 1996 and 2003, the wife remained fully occupied in the care of the children.  She did not re-enter the workforce until 2003.  The husband and wife agreed the wife would continue to provide the necessary care and support for the children following separation, and that she would remain in occupation of and obtain ownership of the former matrimonial home.  The wife agreed the husband would take over the business, (omitted) Pty Ltd, and retain all business capital and profits in exchange for the wife retaining the former matrimonial home. 

3. The wife, following separation, made various inquiries of the husband as to whether the business loan had been discharged and whether the husband was making the payments necessary in respect to the loan. The husband was hostile to such discussion. Thereafter, the wife only became aware that (omitted) were demanding repayment of an outstanding sum secured over the former matrimonial home and being the unpaid capital sum of $100,000, together with interest and other amounts, as said earlier in these Reasons, in about October 2009. The wife thought she had the protection of the loan being required (pursuant to its terms) to be repaid in 1997 and presumed the former matrimonial home was unencumbered. Further, her evidence was that in those years she was not concerned as to the business loan. She was struggling to deal with the separation, and her sole priority was raising her children. Money was not a priority for her and did not consume much of her thinking time.

4. At the time of separation in 1996, the former matrimonial home was in poor condition and needed significant maintenance and improvements to be carried out. Shortly after separation, the Company paid for a side fence on the property to be replaced. Thereafter and since 1996 (there being an intervening 17 years), the wife has been solely responsible for paying the rates, taxes and other outgoings with respect to the property, together with the repair and maintenance costs to the home and garden.  She has also undertaken significant improvements and renovations to the property on the basis of her belief that the property was in effect solely owned by her, although the formality of a transfer being registered had not occurred.

5. The renovations undertaken to the former matrimonial home following separation, which did not commence until approximately 2003 when her home was, as described by the wife, almost unliveable, have been paid for by the wife from her own income; by monies provided to the wife by the parties’ daughter Y; by borrowings obtained from the wife and repaid to him by the parties’ son X; by monies advanced to the wife from her mother prior to her death in 2003 and in the sum of $10,000; by a payment out to the wife from her mother’s estate of approximately $8,000; and by monies given to the wife from her father of approximately $9,000. The works undertaken were as follows:-

   a)installation of a new kitchen;

   b)installation of a new bathroom;

   c)installation of a new laundry;

   d)installation of new carpet;

   e)installation of new floor tiles;

   f)installation of new lighting;

   g)installation of new blinds and curtains;

   h)installation of new security shutters;

   i)installation of a new ducted air-conditioner;

   j)replacement of previous wooden windows with new aluminium windows;

   k)replacement of previous rear door with new aluminium sliding door and security door;

   l)replacement of front entrance door and then fitting of security door and grill;

   m)replacement of laundry door;

   n)replacement of front entrance door and then fitting of new security door and grill;

   o)replacement of external laundry door;

   p)installation of storage cupboards to the main bedroom;

   q)installation of a new garden-kitchen window;

   r)installation of a new electronic alarm system;

   s)replacement of deadlocks;

   t)erection of a Colorbond pergola and area;

   u)paving of backyard;

   v)attending to restoration of the tiled roof, and subsequently replacing same with a Colorbond roof including new guttering and replacement fences;

   w)attending to repairs to garage and carport, including the front pergola;

   x)replacement of toilets with dual flush toilets in the main bathroom and ensuite;

   y)attending to painting of external surfaces including eaves and gutters, and painting of internal surfaces;

   z)landscaping to the gardening in 2003 and again in 2010;

   Such improvements to the property, carried out by the wife, have involved an expenditure in excess of $148,000.

6. In addition to attending to expenditure on the property and improvements to same, the wife has spent weekends and holidays maintaining and/or improving the former matrimonial home, including herself attending to the gardening, general maintenance and other related activities in order to save costs.

7. Since separation, the wife has lived on a very tight financial budget and has spent little in the support of herself.  She does not go on holidays and rarely goes out in order to save money and attend to the payment of household needs.  Until obtaining her current employment, she was financially in very difficult circumstances. The husband’s allegation that she helped herself to monies from the Company account over many years is a baseless accusation, with not a shred of evidence to support it. In fact there was evidence to the contrary. For example the husband claimed the wife had withdrawn a sum of $2,833.32 to meet a costs order payable by her.  The husband then had to concede that his allegation was flawed, and that the monies were paid by the wife for an interest payment due to (omitted) for the business loan. Such allegation was meant to place the wife in a bad light and had no legitimacy. In fact, the husband’s evidence as to the wife’s ongoing involvement in the Company following separation changed as he perceived it to be more or less advantageous to him. What I accept is his earlier in time evidence that between 1996 and 2006 he conducted the business without the involvement of the wife because that accords with the wife’s evidence.  

8. Some years after separation, the husband purchased a property at Property R in the State of Victoria (‘the Property R property’) with settlement being effected in December 2002.  The wife was unaware of the purchase of this property by the husband at that time.  The property was purchased for the sum of $63,000. The property was financed using funds from the (omitted) Pty Ltd business together with monies borrowed by the husband from D in the sum of $30,000. The books of account of the company indicate the husband paid $4,000 and a further sum of $10,000 in 2002 by way of deposit for the purchase of the property and a subsequent payment of $26,379.22 to effect the purchase.  The company also paid for the conveyancing and legal fees associated with the purchase.  Thereafter, the company attended to payment of all outgoings for the Property R property including telephone rates, water, electricity, gas and insurances. The company also paid $3,856.58 for repairs to the Property R property in 2003. The husband repaid D her advance of $30,000 out of the Company funds in various payments made in 2003, 2004, 2005 and January 2006.  The Court finds the husband did not, as claimed by him in his evidence, repay her in a lump sum out of the superannuation monies withdrawn by him in 2007 and in the sum of $84,917. Those monies were entirely expended by him in such manner as he saw fit. He claimed to have placed $40,000 in the Company accounts. He otherwise could not adequately explain his application of the balance of the funds. He has had the use of the totality of these funds. The Court accepts D’s evidence as to the manner and timing of repayments of sums by the husband, which evidence was supported by documentary evidence. Such was contrary to the husband’s evidence which he subsequently altered in any event, as he observed how the evidence unfolded in the court room.

9. In 2005 the husband took out a mortgage secured over the Property R property. The borrowings were in the sum of $80,000. Approximately $78,000 of these monies were paid by the husband into the Company account and subsequently approximately $40,000 was withdrawn by the husband. Repayments in respect of the borrowings were made using funds from the (omitted) Pty Ltd business.  The borrowings (from (omitted)) were then discharged using a subsequent loan obtained from the (omitted) Bank in the sum of $150,000. The monies advanced from the (omitted) Bank were applied for by the husband and obtained after the wife refused to allow the husband to obtain monies using the former matrimonial home as security.  The husband applied the balance of the (omitted) Bank funds in the sum of approximately $70,000 to finance his ongoing expenditure including holiday and lifestyle expenses.  He claimed also to have spent approximately $10,000 in renovations to the Property R property. There was at the time of the initial borrowings of $80,000 no need to inject monies into the Company accounts. In 2004, the husband had been advised by his accountants to divert income into superannuation as he had made a net profit of $152,000 in that taxation year. 

10. As a result of the husband’s forging of the wife’s signature, he was entitled to remove monies from the Company business account without reference to the wife, and over the years, he used that account to pay for his spending and lifestyle which resulted in a significantly reduced performance of the business.  The wife at no time gave authority for an alteration to be made to the (omitted) authority with the (omitted) Bank which required two signatures for all cheques to be written and authorised.  It was altered to one signature being required by the husband unilaterally.  The wife requested that the original agreement which provided for two signatures be reinstated in 2006 when she and the children sought to assist the husband with his financial difficulties.

11. During the period the husband ran the business, from 1996 to 2006, and thereafter between 2006 and 2009, the business paid all of the husband’s living expenses including his rent, home telephone, mobile telephone, electricity, petrol, insurance, air travel and food, and all other personal expenses such as credit cards. Approximately $50,000 each year was paid on the husband’s personal VISA card, even though most of the debits were personal expenses. 

12. In or about 2006 and at the request of the husband, the wife and children endeavoured to assist the husband in his operation of the Company business, the wife by providing necessary book work and the children by their discussions and endeavours to put in place various strategies to improve the performance of the business.  The wife discovered the business was suffering significant financial difficulty and that the husband was engaging in excessive personal expenditure using the business income such that the business was not able to meet its ongoing debts and purchase goods for (omitted).  (omitted) were declining due not only to problems with the economy, but due to the husband’s failure to appropriately manage and run the business. 

13. The children and the wife offered the husband their assistance in working for the Company business without receiving any wages.  Despite their efforts, the business continued to suffer.  The husband was spending time away from the business and the children and wife were taking more and more of the responsibilities of the business, including collecting debts, data entry, payroll and the like.  At the end of the (omitted) season in December 2008 the wife gave up her January 2008 holidays to work on data entry for the husband in accordance with materials supplied by him. The husband went away to Queensland for a holiday at that time, but had left for the wife a pile of business records being customer invoices and the like for her to enter into the MYOB system.  The wife did so on the basis of her undertaking to the children that she would assist with this part of the business as they had requested of her.  The children themselves were also doing data entry at that time, and the parties’ son, X, had undertaken an MYOB course to be able to assist with data entry.  It became apparent, however, to the parties and their children, that the business could not continue to trade. Accordingly, it ceased to trade in early 2009 and was ultimately sold in June 2009 to a single remaining creditor who was owed $24,489. The sale price was $40,000 before deduction of the monies owed. The asset sale agreement prepared by solicitors made no reference to the stock of the business being sold nor provided any value for same. The husband’s evidence was that the stock was included in the sale price. I reject his evidence and find that he had the benefit of retaining the stock.  The husband claimed the value of the stock to be $39,000 less GST. The wife tendered documents to show the cost price value of the stock to be $59,000 approximately. It is clear the stock was not included in the contract of sale but what the husband did with it is unknown. He has had the benefit of it and in the sum claimed by the wife, who produced more probative evidence with respect to its value.

14. In about 2009, the wife became aware the husband had made a claim against his superannuation with (omitted) Fund.  The wife became aware of this when she decided to roll her (omitted) superannuation into her current superannuation fund.  The (omitted) superannuation fund in which she had an interest as at 30 June 2007 had a balance of $29,291. However, when the wife requested the roll-over of this amount, she was advised that her balance had been reduced to $15,382 as at 22 September 2009, as the husband had withdrawn his superannuation entitlements without notifying the wife, and this meant the wife was being charged for a life insurance policy despite no contributions being made to the fund, resulting in a significant reduction in the fund’s balance.

15. Asset Pool

    (1)The former matrimonial home at Property L in the State of Victoria, valued at $525,000. It is registered in the husband’s name;

    (2)The real property at Property R in the State of Victoria, valued at $215,000.  A mortgage is secured over the property which is currently in the sum of approximately $150,000.  The equity in the property is thus $65,000. It is registered in the husband’s name;

    (3)A (omitted)  boat, valued at $5,000 by the wife and $1,500 by the husband. There is before the Court no expert valuation. The husband claims to have only a one half interest in same;

    (4)A Mercedes Benz motor vehicle in the name and possession of the husband, valued at $2,500;

    (5)A Mazda motor vehicle in the name and possession of the wife valued at $8,000;

    (6)Household contents - modest and not valued; and

    (7)Interest in (omitted) Companies in receivership. The wife is happy for the applicant to retain any interest that the parties may have in that shareholding, and the husband desired for a transfer of same to him.

Liabilities

(8)The wife owes the parties’ three children the sum of $142,000. This debt was incurred to pay out the debt secured over the former matrimonial home in 1994;

(9)The parties’ respective debts;

(a)Wife’s legal costs;

(b)Husband’s legal costs as contained in borrowings made by him as follows:-

(i)(omitted) Bank personal loan, $50,000;

(ii)Monies owed to the children, $20,000;

(iii)Monies owed to Ms D, $5,000;

(c)Husband’s accountants debt $21,000 approximately;

(d)Husband's (omitted) Bank credit card debt, $14,285, but including $8,000 to $10,000 for legal costs.

Superannuation

(10)(omitted) superannuation of the wife valued at $49,000.

s.75(2) matters

1. The real property situate at Property H in the State of Victoria is registered in the sole name of the husband’s de facto, Ms D.  This property was purchased by Ms D following settlement with her former husband.  The monies that were applied to the purchase of the property were monies of Ms D solely. The husband made no financial or other relevant contribution.  The husband resides with his de facto partner in this property. Ms D attends to the repayments of all expense, including a mortgage taken out in the sum of $328,000, relating to the property. She is aged 51 years and employed as a (omitted). She has resided with the husband for four or five years at those times that he is not spending time at the Property R property. The husband pays a rental sum to her as referred to above. This property does not form part of the pool of the assets of the husband and wife in these proceedings.

2. It was not until the husband swore an Affidavit on 22 October 2010 that he disclosed to the wife that he had a personal agreement upon the sale of (omitted) Pty Ltd with the purchaser, that he would be engaged as an independent contractor being paid $600 gross per week together with 25 per cent commission on net profits from sales.  The husband not only did not disclose the existence of such agreement to the wife, but failed to disclose his earnings to the Court in previous documents.

3. During the years, the husband also paid monies out of company funds to family members including in large sums (approximately $47,000) to D. The monies to D however were often in repayment of monies advanced by her to the husband. Some monies were also for work performed by her. D has been a generous supporter of her father and he has gone to her to obtain credit when he might not have elsewhere. He now owes her further monies in respect of his legal costs. The husband has a problem being financially responsible. He also blames others for his inadequacy. He talked of imminent bankruptcy in the proceedings but had no qualms borrowing further from his children, sums he may never repay. His attempt via these proceedings to now obtain funds from the wife by selling her home up could be described as morally bankrupt. The cost and distress he has occasioned her was unnecessary and cannot be fully recouped by her. His whole application is misguided and should be dismissed. He has been the beneficiary of the Company and significant monies, as set out herein, over time. He has acted fraudulently. Contribution and matters as set out in s.75(2) of the Family Law Act 1975 (Cth) (‘the Act’) overwhelmingly favour the wife. Just and equitable orders in the circumstances of this case are those which the wife seeks.

1. The husband claimed that the parties both be responsible for a debt to his accountants.  The husband however has an obligation to maintain his own taxation and financial records.  That he has incurred significant expense after a lengthy period of not attending to them, is his responsibility and liability.  The accountants lodged a caveat against the title to the former matrimonial home without authority to do so.  The wife subsequently incurred expense in having the caveat lapsed as there was no basis for the accountants to maintain same, given she had personally attended to a payment of her share of their accounts as required by Court order. 

2. One of the more shocking aspects of this litigation was what occurred in the Supreme Court of Victoria. The wife was not aware of these proceedings, she not being served, until after judgment was entered. The wife was required to raise funds urgently to prevent (omitted) enforcing a warrant of sale against the former matrimonial home. This could only be accomplished by a loan to her from the children. The need for that was due to the delay in the husband signing a transfer of land with respect to the former matrimonial home and returning same to the wife. He only did so upon being advised by the wife’s solicitors that the Court would be requested to execute the transfer under s.106A of the Act. As a result of that delay the wife could not obtain finance through traditional means. She cannot now do so as caveats have been registered against the title to the former matrimonial home by the husband’s solicitors to secure their costs. The husband acted throughout all of this in nothing less than a dishonest and scheming way, intent as he was on securing a sale of the former matrimonial home. He will do anything to obtain monies from any source with no mind to whether they can be repaid or the personal distress that his actions might cause. He is completely financially irresponsible. The total amounts repaid for the business loan including the principal interest and penalties thereon totalled in excess of $250,000 as a result of it not being repaid in a timely fashion. This wastage is directly attributable to the husband.

Costs

1. Pursuant to s.117 of the Act, the Court shall make a costs order against the husband in respect of those costs previously reserved on 17 March 2011. The matter had to be adjourned because of the husband’s failure to lodge taxation returns and to be in a position to proceed. He had not prepared the matter for trial and it was required to be relisted (A sum of $1,500 is appropriate in respect of the wife’s costs thrown away). On 13 February 2012, the matter came before the Court and the husband again applied for an adjournment on the basis he had not done what was necessary to be done for the matter to proceed. The wife’s costs were reserved and it is appropriate that the husband pay them in the further sum of $1,500. On 5 March 2012, the matter came on for trial. Again the husband sought an adjournment. That was opposed. Ultimately, the matter was adjourned as the husband had not put sufficient affidavit evidence before the Court and nor had he completed necessary Company returns. The wife’s costs were fixed in the sum of $7,500 and reserved. Again, it is appropriate the husband pay those. On 20 April 2012, a further amount of legal costs were incurred by the wife in the sum of $3,360 and thrown away because of the husband’s again lack of preparedness for trial. On 27 September 2012, the wife was required to file an Application seeking for the husband to transfer his interest in the former matrimonial home to the wife because of the Supreme Court proceedings and its outcome. Her costs were fixed in the sum of $1,700 and reserved. Again, it is appropriate for the husband to pay this amount. These sums total $15,560.

2. It is appropriate a costs order be made in each of these instances because each occasion of adjournment was the result of the husband’s failure to, at times, comply with earlier orders of the Court; the husband’s failure to act in a reasonable way to bring this matter efficiently to trial; the husband’s oppressive conduct; the husband’s refusal to make reasonable or any discovery in a timely manner; and the husband’s failure to file taxation returns. His opposition to the wife’s Application of 27 September 2012 was an abuse of process. The wife has incurred unnecessary and burdensome legal costs because of the husband’s conduct.

3. The husband has been entirely unsuccessful in these proceedings. Neither party is in receipt of legal aid and the asset pool is a modest one and hence the incurring of excessive costs a significant burden, especially to the wife who endeavoured to progress the matter with diligence and who retained legal representation throughout. I acknowledge the husband has limited capacity to pay these costs but that factor is but one for the Court to consider. The husband conducted the proceedings with flagrant disregard of the financial burden his combative conduct has placed upon the wife.

I certify that the preceding forty-three (43) paragraphs are a true copy of the reasons for judgment of Judge Hartnett

Date:  29 November 2013