Ding and Ding and Ors (No. 2)

[2017] FamCA 863

FAMILY COURT OF AUSTRALIA

DING & DING AND ORS (NO. 2) [2017] FamCA 863

FAMILY LAW – PROPERTY – where the wife has no personal knowledge of the financial affairs and relies on government department searches - s 106B applications – where the husband’s evidence is plausible – where wife asserts the existence of trusts but provides no evidence.

Family Law Act 1975 (Cth)

ANZ Banking Group Limited v Harper (1998) FLC 91-938
Bloch v Bloch [1981] HCA 56; (1981) 180 CLR 390
Calverley v Green (1984) [1984] HCA 81; (1984) 155 CLR 242; 59 ALJR 111
Chorn and Hopkins [2004] FamCA 633, (2004) FLC 93-204
Commissioner of Stamp Duties (Qld) v Jolliffe [1920] HCA 45; (1920) 28 CLR 178
Evans (as executor of the Estate of the Late Evans) v Secretary, Department of Families, Housing, Community and Indigenous Affairs [2012] 289 ALR 237
Gadsden v Commissioner for Probate Duties [1978] VR 653
Gould and Swire Investments Limited [1993] FamCA 126; (1993) FLC 92-434
Herdegen v Federal Commissioner for Taxation [1998] FCA 419
Jarman v Lambert and Cooke (Contractors) Limited [1951] 2 KB 937
Kennon and Spry [12008] HCA 56
Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583
Pflugradt and Pflugradt (1981) FLC 91-052
Richards v Delbridge [1874] LR 18 Eq 11
Stanford v Stanford (2012) 247 CLR 108; (2012) FLC 93-495
West v Weston [1998] NSWSC 459
Whitaker and Whitaker (1980) FLC 90-813

APPLICANT: Ms Ding

RESPONDENT: Mr Ding

SECOND RESPONDENT  Ms K Ding

THIRD RESPONDENT  Mr R Ding

FILE NUMBER: ADC 4389 of 2012

DATE DELIVERED: 1 November 2017

PLACE DELIVERED: Melbourne

PLACE HEARD: Adelaide

JUDGMENT OF: Cronin J

HEARING DATE: 3, 4, 5, 6 April; 13. 14. 15 June 2017

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr McQuade

SOLICITOR FOR THE APPLICANT: Harry Alevizos

COUNSEL FOR THE RESPONDENT: Ms Pyke QC

SOLICITOR FOR THE RESPONDENT: Jaak Oks Lawyers

Orders

1. That the application of the wife filed 23 November 2016 and the husband’s response thereto filed 6 December 2016 are dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Ding & Ding and Ors (No.2) has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: ADC 4389  of 2012

Ms Ding

Applicant

And

Mr Ding

Respondent

And

Ms K Ding
Second Respondent

And

Ms R Ding
Third Respondent

REASONS FOR JUDGMENT

1. In these proceedings, Ms Ding is described as “the wife”. She is the applicant for financial orders.  Mr Ding is described as “the husband” and he is the first of three respondents. The second and third respondents are sisters of the husband. Throughout these reasons, the sisters are referred to by the names “Ms K” and “Ms R”. The wife seeks remedies against them for either having been the recipients of property owned by the husband or as holding property on his behalf. Neither Ms K or Ms R participated in the proceedings.

2. The husband and the wife married in 2002.  They only have property to divide if the wife’s application to set aside transactions or to declare the existence of trusts, is successful.  Absent that, there is little property and in the case of the wife, a significant liability to a company controlled by Ms K arising from a judgment made against her by another Court.

3. Regardless of the outcome of the property dispute, the wife seeks spousal maintenance of $1000 per week.  For the reasons set out, there is not sufficient evidence to justify that order.

4. Whilst Ms K and Ms R were joined in the proceedings and did not participate as parties nor were they called as witnesses, their brothers, Mr U Ding (Mr U) and Mr V Ding (Mr V) were witnesses for the husband and were required for cross-examination.   Thus, this case revolves around the whole family of the husband.

Background of the parties

1. A limited background is necessary to set the context of the wife’s application.

2. The husband and wife married in 2002 either in Country D or Australia; each of the husband and wife refers to a ceremony occurring in each country.  No issue was raised by any party as to jurisdiction.

3. Both husband and wife were born in Country D.  The husband came to Australia in 1980 with his family and the wife came here in 2002.  The husband spent his childhood in Australia, where like his siblings, he was a successful student.  He now has two tertiary qualifications and is an employee health professional.  He obtained his first degree in 1992 and second in 1995.

4. There are two children of the marriage.  B is aged 13 years and C aged 12 years.  They were the subject of separate litigation between the parents and final orders have now been made.  The children live with the husband and spend a limited time with the wife.  The husband’s role as a parent is one of the reasons he gives for maintaining limited hours of employment.  At present, the husband has a “salary package” of $60,000 but he also lives with his parents (as do the children) where he contributes little financial assistance to the household.  The wife’s position is that as a qualified professional, he should be earning much more than he declares.  There is no evidence that he does.

5. The wife is currently working two days per week in the service industry at a business owned by a friend on a remunerated basis. She claimed to have limited English language skills to explain her need for spousal maintenance. Her evidence was generally unsatisfactory. 

6. A contentious issue was whether the husband owes money to members of his family. The wife denies any indebtedness by the husband and says that it either does not exist or at least, will never be repaid. The debt claim arises from the family’s way of supporting each other, buying property in each other’s names and guaranteeing commercial borrowings. As part of the background it is relevant that the husband’s unchallenged evidence is that his parents worked hard to pay for both his secondary and tertiary education and having qualified, his brother Mr V and his sister Ms K supported him financially as they did with other siblings.  I find the family has close ties and each helped the other financially.

7. This financial support went further because the husband pursued an unsuccessful quest for an business operation licence that involved unsuccessful court proceedings. The husband’s evidence which I accept is that he still owes substantial monies to his family.  Whilst no money has been repaid, and no formal demand has been made, the husband’s brother Mr V withstood cross-examination to maintain that he expected his money to be repaid but only when his brother was in a position to do so. Nothing about Mr V’s evidence indicated he ought not be believed even if he is a supporter of his brother.

8. The husband was cross-examined about the unsuccessful application for the business licence and he acknowledged that in 2003, there was a court appeal against the refusal to allow him a licence but that whole issue was ended by 2004. The wife produced no documents to show that the unsuccessful process did not take place. Whilst nothing corroborated the husband’s version of those events, proceedings in this court have been on foot for almost five years and I have presumed that discovery was undertaken. In addition, there were proceedings in the other Court in which the wife was sued by Ms K’s company for taking money from the business at which the husband worked and presumably documents and history were trawled over.

9. As will be seen, most if not all of the family transactions were not recorded in any formal sense, and despite the asserted closeness between siblings, at least two brothers professed not to know much about their siblings’ financial affairs.  That was unusual when, for example, the husband, the brothers and Ms K used the same accountant at least for their superannuation fund.  Whilst much of this raises suspicion, that is not enough to have their evidence doubted or rejected. The onus of proving all of the relevant assertions lies with the wife.

10. It was not contentious that upon the marriage, the wife moved in to live with the husband in the home of his parents where a number of other siblings of the husband also lived at times.  There, the two children were born. The wife said she was unhappy at that home describing herself as a slave but she acknowledged that did not mean there was a problem in her marriage; her difficulty was with the husband’s family and with the husband for listening to them. Her view about the husband’s family was that they had “disconnected” from her (her words).

11. In February 2011 or thereabouts, the wife moved out of the parents’ home.  She agreed that at that time, there was nothing wrong with the marriage relationship.  Her affidavit was misleading if not wrong.  At paragraph [15], the wife said her marriage was “never an overtly happy one”.  Her own words were put to her as a form of question and she responded that the “problem” lay with the husband’s family not the husband.  At paragraph [28], she said that in about 2008/2009, the marriage had become “increasingly strained” and “I suspected that the husband and I would ultimately separate”.  At paragraph [57] she described the marriage in 2008/2009 as having become “very unsteady”, but in cross-examination, she said she never wanted to separate and said as late as 2012, there was still some “emotion” there.  Paragraph [57] went on to say that subsequent to 2008/2009 the “husband sought to absolve himself from the substantial assets and financial resources he held”.  English is not the wife’s first language but these words were translated to her by an interpreter before the affidavit was signed.  The different language and concepts give rise to uncertainty as to exactly what she meant.  Thus, her actions around that time (rather than her words) give a better insight as to what was happening. 

12. The husband’s version was that the wife wanted to purchase, and live in a home, away from his parents.  Her choice was in a suburb that the husband thought to be affluent and beyond his financial means.  I conclude that the inability to agree on a purchase of a house led to the wife moving out of the husband’s parents’ home to rental accommodation but two days later, the husband moved there as well. This was months before the final separation but also the period about which the wife said there was nothing wrong in the marriage.

13. There does not seem to be any dispute therefore that the parties looked at alternatives to living with his parents which adds credence to the views of both that there were no problems in their personal relationship. There is significance in all of that because the impugned transactions in these financial proceedings had by then already occurred in 2010.

14. The wife agreed that with the move away from the parents, neither she nor the husband had told the other of any desire to end the marriage until he received a letter from her solicitor in June 2012.  The precipitating event was that the husband had not allowed the wife to collect the children from school.  That issue was not explored.

15. In an Outline of Case document filed by the wife for these proceedings and under the heading of “Contributions”, it was said:

    When the marriage ran into difficulties in 2010 the husband proceeded to divest himself of various assets in a series of sham transactions involving his siblings. 

    The wife’s evidence does not support that assertion. 

    Insofar as the wife asserts a sham, the concept of sham was discussed in Equuscorp Pty Limited and Anor v Glengallon Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 where at 486, the High Court of Australia said:

    “Sham” is an expression which has a well-understood legal meaning.  It refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences.

    The onus of establishing the sham lies with the wife. Absent satisfying the court that there were transactions in the nature of a sham, the wife falls back on arguments that the various properties were held upon trust by members of the husband’s family for him. To establish the existence of some form of trust requires the evidence of specific conduct including intentions to be drawn from inferences. That is missing here. Failing the necessary proof that the asserted trusts exist, the wife claimed in the alternative, relief under s 106B of the Act that the husband entered into these 2010 transactions with his family for the purposes of defeating her claim for a property settlement. Obviously, transactions of the husband cannot defeat a claim if there was no legal or equitable interest in the relevant property in the first place.

16. Four other scenarios complete this background. 

17. First, between March 2010 and April 2010, a series of transactions occurred under which the husband’s legal ownership of assets, substantially altered.  It will be apparent that these occurred 18 months before separation and at a time when the wife conceded that her relationship with the husband was not troubling to her even if her life with his family was as a slave.   

18. The second fact is that as part of the wife’s case and denied by the husband, she asserted that when she came to Australia to live with the husband, she brought $50,000 in a suitcase. The husband scoffed at such a suggestion describing her poor financial circumstances in Country D. The wife’s case was that this money explained two things.  After separations, the wife was accused of stealing large amounts of money (much more than $50,000) from the business owned by Ms K and the place where the husband was the manager.  Although the wife’s evidence was vague, she endeavoured to point to the money said to be brought from Country D as an indication that she did not take the business money. 

19. The third, and troubling fact, is that as a result of a judgment in 2016 arising from civil proceedings in another Court brought by Ding Pty Ltd, the wife was ordered to pay $270,000; the  cause of action could only be described as theft. 

20. The civil proceedings were contested by the wife and she was unsuccessful.  The judgment of the other Court was tendered in evidence in the current proceedings.  His Honour noted that as the action began, the wife “would submit” that the action brought by the company “was simply an act of spite in answer to the institution of the Family Court proceedings” by the wife.  If that was so, then in some ways, it supports the husband’s assertion that the family is very close. However, despite the wife’s assertion, the Court made the following findings:

    [238]I do not accept that she (the wife) brought the sum of $40,000 in Australian currency with her (from Country D) nor any substantial sum when she arrived in Australia in 2002.

    [239]I have no doubt that she invented the version that she had brought that cash into Australia and had kept it for seven years so as to explain the opening by her of the various accounts.

    …

    [241]I…find that (the wife) did between 2007 and 2009 take cash monies which had been brought home from the [business].

    …

    [251]There can be no certainty as to the quantum misappropriated.

    …

    [253]Doing the best that I can with the evidence I conclude that the sum of $170,000 is the sum misappropriated by (the wife) from [Ding] Pty Ltd to 2010.  There was no further misappropriation after 2010.

21. That amounts to a finding of misappropriation by the wife when she was living with the husband in his parents’ home.  Evidence before me was not led about the wife’s dishonesty and whether it contributed to the dissatisfaction she had with the husband’s family nor that anything the husband did or said about the dissatisfaction of the family with the wife gave rise to her unhappiness in her relationship. 

22. The other Court found that when it was brought to the company’s attention that money was missing, the responsibility that the husband had previously had of taking the business money home to count and bank, ceased.  In the context of impugned transactions that occurred in 2010, the evidence of what occurred from when the husband found the money and what discussions took place in the family might be seen as critical. Importantly, it was not disputed that in 2009, it was the accountant for the business who raised the cash discrepancies that led to the husband not taking money home any longer.

23. In the context of the statements each of the husband and the wife made about the state of their relationship in 2012, there was no finding by the other Court of impropriety against the husband concerning the defalcation.

24. His Honour noted (at [110]) that after June 2012 when the parties separated, the husband told his sister Ms K about the money he had found in a suitcase in the wife’s possession in the wardrobe.  Thus, on that finding, it could not be said (nor was it said in evidence) that there was a family conference after the accountant expressed concerns in 2009 that might explain the removal or transfer of assets from the husband to compensate Ms K. Further, at no time was it said by the wife either in her evidence in chief or under cross-examination that the problems in the family which caused her to feel like a “slave” or caused her to want to leave the parent’s home, had anything to do with the missing money.

25. The dispute in this Court about the wife having brought money from Country D and the issue about money from the business were both raised.  On any view, the debt to Ding Pty Ltd remains outstanding.  Absent some alteration of property in favour of the wife, any enforcement action against her for recovery of that debt would seem academic. 

26. A fourth factual issue completes the background.  In her affidavit of evidence in chief, the wife said she knew nothing about the parties’ finances.  She complained that the husband never consulted her “directly” and at separation, she had little knowledge “regarding these matters” (her trial affidavit [51] and [53]).  At [57] and relying upon an historical analysis of a variety of transactions from official government records, she said:

    It is abundantly clear that the husband has engaged in a systematic endeavour to transfer or otherwise relinquish his interest in his numerous assets and financial resources to his siblings since 2010 and even following the institution of these proceedings.   

27. Leaving aside the argumentative nature of that statement to which no objection was taken, as a matter of evidence, it adds little.  It highlights and corroborates that the wife knew nothing about the parties’ finances. From the wife’s perspective, this case was conducted by challenging the husband’s evidence as to why the impugned transactions (save for the alteration of a superannuation member account and the transfer of 1 share in a company) took place in the 18 months before the final separation and when the parties were still living in the husband’s parents’ home.  It was strenuously argued that the transactions occurred when the marriage was in trouble; I reject that on the basis of the wife’s own evidence.

These proceedings

1. The wife filed an amended initiating application on 23 November 2016 but made clear in the outline of her case filed 3 April 2017, she was seeking the following orders:

   ·That the husband pay $1000 per week spousal maintenance;

   ·Pursuant to s 106B of the Family Law Act, the transfer dated 20 April 2010 by the husband to Ms K of property at G Street, Suburb H be set aside or in the alternative, Ms K be declared to hold her interest in the property upon trust for the husband;

   ·Pursuant to s 106B of the Act, the transfer dated 20 April 2010 from the husband to Ms R, relating to N Street, Suburb M be set aside or in the alternative, Ms R be declared to hold one half of her interest in the property upon trust for the husband;

   ·That Ms R be declared to hold her interest in N Street, Suburb M upon trust for the husband (noting this claim is for the whole of N Street);

   ·Pursuant to s 106B of the Act, the allocation of 98 shares (by Ding Pty Ltd) to Ms K “in or about 2010” be set aside or alternatively Ms K be declared to hold one half of her interest in the shares on trust for the husband;

   ·Pursuant to s 106B of the Act, the transfer of the interest of the husband in I Street, Suburb J to W Pty Ltd “made” 25 February 2016, be set aside;

   ·Pursuant to s 106B of the Act, the transfer of the husband’s shareholding in Ding Pty Ltd “in or about May 2015 (the one share)” to Ms K, be set aside or alternatively Ms K be declared to hold her interest in the shareholding on trust for the husband;

   ·A declaration that Ms K holds her interest in the property at N Street, Suburb M upon trust for the husband;

   ·That the husband indemnify the wife in respect of her debt (the [other] Court judgment) to Ding Pty Ltd;

   ·The assets of the marriage be divided equally between the parties; and

   ·The husband pay the wife’s costs “of an incidental” to this application.

1. Each of the transactions has to be examined separately to have some understanding of how the husband’s legal interest became his, what he did with them thereafter and why he ultimately transferred those interests.  The same investigation needs to be undertaken in respect of whether there is any justification for an assertion by the wife that the sisters Ms R and Ms K hold their legal interests on trust for the husband.

2. By his amended response filed 6 December 2016, the only order that the husband sought was:

   That the assets of the marriage be divided on such terms and conditions as deemed just and equitable by this Honourable Court.

   Leaving aside the description “assets of the marriage”, it is clearly understood that the husband is now seeking that the wife’s application be dismissed.

3. Section 79 of the Act provides that a court may make such order as it considers appropriate altering the interests of the parties to the marriage in property.  Section 79(2) requires that the court shall not make such an order unless it is satisfied that in all the circumstances, it is just and equitable to do so.  Section 79(4) sets out the matters to be taken into account should an order be contemplated.

4. The focus therefore of the court is on the assets of the parties and each of them.  The properties owned by Ms R and Ms K may be altered if the court is satisfied that they are properties of the parties to the marriage.  “Property” is defined in s 4 of the Act to mean:

   In relation to the parties to a marriage or either of them…property to which those parties are, or that party is, as the case may be, entitled whether in possession or reversion.

5. Absent direct knowledge, the wife relied on historical searches undertaken by her lawyers but they simply show the date, the detail of the property transferred and the relevant consideration.  Thus, the wife’s evidence was very limited but that means that a closer examination than usual can be made of what she knew at the time the transactions occurred. I look at each transaction individually below.

6. Throughout the hearing, the wife was accompanied by an interpreter or translator notwithstanding she had undertaken various courses relating to the English language and all of her evidence was given through that interpreter.  I accept however that having a translator can still be difficult for such a witness to express herself.  No complaint was made here about the quality of the translation.

The husband’s concession about one share in Ding

1. When the parties’ relationship commenced and they married, the husband was already a qualified health professional but also the registered proprietor (at law) of some real property.  He also held half of the shares in Ding Pty Ltd which is now largely Ms K’s company; Ms K was the other shareholder.  

2. In 2010, the company shareholdings were restructured by the creation of a total of 100 shares. The husband thereafter held one share and Ms K, 99 shares.

3. A concession was made at the commencement of the hearing about the husband’s one share in Ding Pty Ltd.  In his Outline of Case filed 4 April 2017, the husband said:

   One share transferred to [Ms K] in about May 2015.

   The husband agrees and accepts that the value of such share should be included in the asset pool. 

4. The explanation given for the concession was that issues arose between the husband and Ms K relating to his indebtedness to her and she sought the transfer of the one share in 2015.  The case outline made mention of the other Court judgment against the wife and then went on to say:

   The husband felt a moral and family obligation to do as Ms K requested.

5. It is common ground therefore that the husband notionally has one share in Ding Pty Ltd.  Whilst that sounded like a simple issue, it became complex because the concession by the husband was not as to the value. It was said by his counsel that the value was taken from the net equity of the shareholders in the balance sheet and as such, the court should treat the husband as having an asset worth an estimated $21,000.

6. However, at the commencement of the hearing, the wife sought permission to adduce evidence from a Mr T about the present value of Ding Pty Ltd.  Although with some reluctance, senior counsel for the husband agreed that the evidence could be relied upon by the wife and that it was admissible.

7. Mr T seems to have discerned that the 2015 equity to shareholders was $3,562,429. Thus, the wife would have it that if the husband had retained his original shares, 50 per cent was worth $1,781,214. For reasons to which I later turn, it matters little because I do not accept that there is a basis to set aside the share reconstruction transaction. Even if there was a basis to set aside the restructuring arrangement, the inevitable consequence would be that the Court would have to turn its mind to what, if any, adjustment would have to be made for what has been done by Ms K since 2010 (see s 106B(3)). The wife had not turned her attention to any of that process before the trial notwithstanding this case has been extant for a number of years. Even if it could be suggested here that Ms K was somehow a party to a form of conspiracy to defeat the wife’s claim, the evidence is that the husband has been paid as a salary earner since the restructure in 2010.

8. In June 2015, on Mr T’s analysis, one share would have to be seen as being worth $35,624.  Since the conceded value of $21,000 was drawn from the 2014 balance sheet, three full financial years have passed by and I have no way of clarifying whether the Mr T opinion is current.

9. The husband’s position was that he had no entitlement to the 1 share in any event. That matter needs to be considered again below.

The wife’s list of assets when the case began

1. The wife’s summary of argument began by asserting that the “Asset Pool” was:

   ·The wife’s savings at separation  $50,000

   ·The wife current savings  400

   ·The husband’s savings  634.34

   ·The husband’s interests in I Street, Suburb J               200,000

   ·The husband’s interest in O Street, Suburb P              180,000

   ·The husband’s interests in L Street, Suburb M              25,000

   The husband’s interest in Ding Pty Ltd  1,050,847.50

   ·The husband’s entitlement in Ding Family

   Super Fund123,995

   Total Gross Assets  $1,630,876.84

2. Counsel for the wife then sought additional assets to be “added back” to the gross assets just mentioned.  It was then sought to include:

   ·    G Street, Suburb H  $500,000

   ·    N Street, Suburb M  158,000

   ·    L Street, Suburb M  130,000

   Total “Add backs”  $788,000

3. In addition to the entitlements said to be in the Ding Family Super Fund, the husband also had an interest in the REST Super Fund of $119,106.39.

4. The wife then sought to set aside from those assets or “take off the top”, the judgment of the other Court which was said to be $243,000 as a liability.  The wife seemed to be suggesting that it was a joint responsibility notwithstanding the  Court’s finding.

5. The wife’s summary of argument, obviously drawn prior to the evidence being tested, made the following assertions:

   [6]When the marriage ran into difficulties in 2010 the husband proceeded to divest himself of various assets in a series of sham transactions involving his siblings.

   The wife seeks a finding as to contributions as to 57.5 per cent to the husband and 42.5 per cent to her so as to reflect the husband’s greater initial contribution.

   The husband continues to work as a [health professional] and has an income earning capacity in the vicinity of $150,000 per annum;

   The wife is employed [in the service industry] receiving Centrelink benefits;

   The wife seeks a further adjustment to her of 7.5 per cent.

6. It will therefore be seen that the wife is seeking an assessment by the court of her contributions and then an adjustment for s 79(4)(e) factors, so that assets are divided equally.

7. When considering the relief sought, it will be apparent that no superannuation splitting orders were contemplated by the wife.

Submissions at the end of the case

1. In his final written submissions, counsel for the wife submitted that the “asset pool would be”:

   The husband’s entitlement in the REST Superannuation

   Fund$119,106.39

   The husband’s interest in the Ding Family Super Fund  58,000.00

   Net proceeds from N Street  117,500.00

   L Street, Suburb M  130,000.00

   G Street, Suburb H (said to be $500)  500,000.00

   The husband’s interest in Ding Pty Ltd   1,781,214.50

   Total Gross Assets  $2,705,820.89

   (but erroneously said to be $2,206,320.89)

2. As can be seen, the difference between the “pool” asserted at the commencement of the hearing and that at the end, is large both in value but also in respect of the assets asserted to be property of the husband.

3. It is important to deal with each of the assets sequentially.

Ding Pty Ltd

1. On 2 February 1999 the accountant for the business (and for the family generally) (Ms X) who gave evidence in the other Court but not in this court, had a meeting with the husband and Ms K.  According to her file note tendered in evidence, she was instructed that Ms K and the husband were “going to set up” business and she suggested incorporation of an entity.  She must have received those instructions because Ding Pty Ltd was incorporated on 8 February 1999.  Each of the husband and Ms K thereafter held one share. 

2. Significantly, in Ms X’s 1999 notes, there appeared these words:

   If one disqualified as [licence holder] – then the other party will take over the share of business – ie the one Ord share.

3. This arrangement was implemented well before the marriage of the husband and wife.  The expression “disqualified as licenced [holder]” was scrutinised in cross-examination by the wife’s counsel.  The husband vociferously maintained it meant that if either he or his sister was unable to hold an operating licence to run a business, the other party would be the sole owner.

4. I am not concerned about the use of the word “disqualify” even though Ms X was not called to give evidence because, I have the evidence from the husband himself as to not just his understanding but also what was then pursued within the family to implement the siblings’ plan.

5. The husband was challenged a number of times about the distinction between owning and operating a business licence as against being an equal shareholder in a company conducting a business.  His constant refrain was that there was a distinction between various business licences (because he was licenced in any event) but from his perspective, none of that mattered if he had no operating licence. The significance of the difference lies in the fact that if one takes the original plan as indicated in Ms X’s note, what followed was an intention to run two businesses. That plan failed despite the extensive and apparently costly efforts of the husband to get an operating licence. The licensing had nothing to do with the issue. The siblings had intended to run two businesses under a taxation and profit sharing arrangement through Ding Pty Ltd and that failed. That justified Ms K having the control of the profit of the company because the husband would not have been operating as an owner of a licence.

March-April 2010

1. Between July 2009 and early 2010 (according to the judgment of the other Court) Ms K informed the husband that he was no longer to take the business money home. At that point in time, the husband was an equal shareholder with Ms K.  But, whilst the formal documents might point to legal relations, family arrangements do not always follow the law.

2. Loose arrangements between family members do not necessarily conform to contractual principles nor conversely, are they governed by a presumption that they are not contractual in nature; each set of circumstances must be examined to see what the parties intended (see Evans (as executor of the Estate of the Late Evans) v Secretary, Department of Families, Housing, Community and Indigenous Affairs [2012] 289 ALR 237).

3. First, I find that the husband’s version of what underpinned the setting up of Ding Pty Ltd is quite plausible and I accept that. 

4. Having set up the company, the husband then applied for approval to establish his own business.  His unchallenged evidence is that he failed.  Again, vociferously under vigorous cross-examination, the husband explained that he could not get the necessary licence because of the existence of a competitor within a two kilometre radius.  It seems that Ms K could get that licence but that was because she had acquired a requisite “number” as recognised by the Commonwealth Government for another business.

5. The siblings’ plan failed.  A lot of money was spent challenging the refusal but the husband was unsuccessful. The husband was funded through this legal process by his family members.  That gives rise to his current debt to the family.

6. Few, if any, questions were asked about the legal proceedings to obtain the licence.  I know nothing about them as no documents were called for and none were tendered indicating the nature and extent of the litigation.  That is curious because, according to the judgment of the other Court, the process was begun in 2001 and the husband married in 2002.  I do not know how much knowledge the wife had of those proceedings and whether or not they were concluded by 2002 because she said little about them even though she was in the house for some of that period.  Indeed, on those relevant dates, she was marrying the husband and coming to Australia in the midst of it all.

7. The wife had no recollection of any discussion before the marriage about the business court case but she claimed the husband told her he owned two businesses.  There was nothing in the evidence to support that.  The wife volunteered that she became aware that the husband did not have a licence he needed which indicates that what the husband said was more probable than not. 

8. I find that after the failed siblings’ plan, the husband was employed as manager of a new business operating out of Y Plaza and which was licenced to Ms K.  The wife produced no evidence such as taxation returns to indicate that what the husband said about that was incorrect. Whatever façade the husband may have created with the wife on the question of owning two businesses, I am satisfied that he was an employee.  In that capacity, he brought home, and was responsible for, the cash takings. 

9. The evidence of what was happening in 2010 does not support a conclusion that there was a sinister motive for the restructuring nor does it support a conclusion that the husband agreed to the arrangement with Ms K to defeat any claim of the wife.  The view the husband held that his share was of no value is hardly controversial; the husband and his sister set up the company to fulfil a plan which did not come to fruition and as such, he was of the view which I accept, that he had no entitlement to any value in that business.

10. It was submitted on behalf of the wife [19.7] of her submissions that the transfer by the husband in 2016 of his one share in Ding Pty Ltd and now including it in the assets for division, was at odds with his suggestion that in 2010, when he agreed to the share restructuring, his prior shareholding had no value based on his assertion that he had not obtained the licence to operate/own the business.  I reject that submission. 

11. One might question why the husband had a share at all but the husband’s layman’s explanation seemed plausible in circumstances where the wife produced no evidence to the contrary.

12. It was his uncontroversial evidence that Ms K offered him a single share after the restructure.  Why that happened was not comprehensively explored but again, the husband’s acceptance of the restructure is consistent with everything the family did.  Thus, I reject the suggestion that there is a link between the restructuring and the husband now bringing the one share “to account”. 

13. It is not apparent on the evidence when the wife began working in the business.  She wanted work skills and was engaged to do tasks within the business including bundling up money. 

14. Over the ensuing six years after the husband’s loss of the legal battle, no change to the structure of the shareholding of Ding Pty Ltd occurred.  Thus, while the husband might not have been entitled to be some form of partner with Ms K, each left the legal position as it was for years.  One might anticipate that the financial documents over that period would either confirm or refute the family arrangement but that documentation did not eventuate.  I have presumed the documents do not support the wife’s position.

15. The financial statements for the period from 2000 onwards (at least until 2015) were not put in evidence by anyone.  The discrete period of 2009 to 2011 was called for and with some exasperated pressure from me, they were produced by the husband and given to the wife.  Having been so produced, they were not tendered in evidence.  Mr T prepared a report (because it was attached to an affidavit by the wife’s solicitor) which contains a critique of the Ding Pty Ltd financial for the years 2011-2012 to 2014-2015. 

16. Thus, on the evidence, I accept the husband was treated by Ms K as a manager.  There is no evidence about any profit sharing arrangement. It was the husband’s evidence that a large amount of money had been incurred in the legal dispute about the licence and that in part, it was funded by Ms K.  He maintained he owed Ms K $188,000.

17. As for the corroborating evidence about the retention of one share at all when the restructuring occurred, the husband’s version of his sister Ms K’s approach to him was borne out by a file note of the accountant.  The production of that document arose in unusual circumstances as follows.

18. Counsel for the wife asked the husband whether there was a minute of any company decision. His response was that there was and it was called for. Exhibit 6 is a file note dated 23 March 2010 in which the accountant recorded a request from Ms K to change the structure because the husband was “no longer part owner” but then the following words appear “however she wishes to give him a small portion”.  It was not suggested that this “minute” was concocted or prepared for some other fraudulent purpose.

19. I shall deal with the wife’s application under s 106B of the Act below but the evidence of the wife as at March 2010 indicates she saw no problem in the marriage. Whilst there was obviously some concern by the accountant about the missing money, nothing in the wife’s evidence indicates that the restructuring was attributable to that. No evidence was led to show that the cause of any losses in the business at that time was thought to be attributable to the wife in 2010.

20. The only plausible explanation for the restructuring and the husband’s retention of one share, was that given by the husband and corroborated by the notes of the accountant.

21. In this same period, the husband also owed his brother Mr V an estimated $255,000 for advances to assist him in the same legal challenges pursuing the business licence.  Mr V gave evidence and submitted himself to cross-examination. It was put to him that he lent the money to Ding Pty Ltd and he denied that. Absent documentation, which one would have expected would show a loan raised in the company’s accounts, there is no reason for me to reject the brother’s evidence that he lent the money to the husband personally. I reiterate my earlier comments about family arrangements.  Again, no documents were produced.

22. There is significance in the absence of evidence here because of the duration since this litigation began but also that Ding Pty Ltd and the family had Ms X as an accountant. Whilst the husband made no attempt to call her as a witness, when he was challenged about a number of things, he said he would get what was needed such as the detail about the setting up arrangements of the company.  Thus, to the extent that the wife did not have access to the documents of the company, and bearing in mind Ms K was a party, no complaint can now be made about discovery. I have inferred that the evidence of Mr V about the loan being personal as distinct from to the company is correct.

1. There is also no evidence that there was some arrangement as between Ms K and the husband that Ms K would hold the shares on trust for him.  Ms K was a party to these proceedings but there is no evidence of discovery being an issue of litigation although I understand there was a subpoena issued at one point but I know nothing more.  No interrogatories appear to have been served.  I see no reason to conclude that Ms K was hiding anything.

The valuation of Ding Pty Ltd 

1. The evidence relied upon by the wife about the valuation of the company shareholdings was prepared by Mr T whose expertise as a valuer was not challenged.  Mr T complained that he had limited information and no access to the people involved in the business or their accountants from which he could have obtained information.  It is not suggested that he had asked and was refused that permission or if that occurred, it was not raised with me.

2. Mr T observed that he had obtained searches as well as information so he had at least an understanding of the background.

3. No indication is given in his report that he was aware of the defalcation proceedings in the other Court nor for that matter, is there any indication in the balance sheets on which he relied, to show that the company was cognisant of, or dealing with, that defalcation.  That may be due to the fact that the judgment of the other Court was not handed down until 2016 and the information given to Mr T ended in 2015.  But on any view, the proceedings of the other Court were under way in 2015.  I have been unable to find any reference to that issue in Mr T’s instructions from the solicitor for the wife, as late as 24 May 2017.  The importance of this lies in a number of factors.  Mr T queried the company’s turnover and also its claim for expenditure on legal costs.  Neither he, nor the court, was, or is, aware of how the defalcation proceedings affects those matters.

4. Mr T also relied upon an assumption that the wages were not correct because in his view, the husband should be working fulltime.  Against that, I have the evidence of the husband who says that his income is a reflection of the reduced time because of his obligations to the children. Whilst that may mean that the allowance made by Mr T was not high enough, it also makes me uncertain about the accuracy of his assessment.

5. Mr T wrote that the net value of the 100 shares was $3,562,429 or $35,624 per individual share.  The husband was prepared to concede that the one share he gave away to his sister was valued at $21,016.95.  Thus, assuming that the property of the parties to which I shall later refer is the one share, the value must be between $21,016.95 and that attributed to it by Mr T of $35,624.  In my view, both of those figures are unreliable.  The husband’s figure is unreliable because it was determined upon the balance sheet as at 2014 which is three years ago.  Mr T’s valuation is unreliable because he was not given adequate information that this court has and in any event, his information is two years old.

6. In my view, the best evidence is Mr T’s figure, it being more current but in any event, in the ultimate determination, for reasons to which I turn, it does not matter.

The Ding Family Super Fund

1. The Ding Family Super Fund was set upon on 1 April 2004 with four trustees. They are the husband and his siblings and each of them holds a member account with a different balance.

2. The husband relied upon professional advice and competence and had no idea how the fund operated. He was not able to explain various recorded financial statement movements but that was because he was only interested in his own account rather than the whole fund of which he was a trustee.

3. Notwithstanding this litigation had been extant for five years, little attention was paid to fund asset movements.  No relief was sought by the wife against the husband either to set aside transactions within the fund or to split any entitlement of the husband in the fund.  That does not mean that the court does not have power to do so.

4. The wife’s final position as articulated by her counsel was that there were “unexplained anomalies” in the books of account. It was submitted that the husband’s failure to call his accountant entitled an inference to be drawn that any evidence the accountant could give would not assist the husband.  I do not accept that because of the way the evidence unfolded.  That evidence however, showed that little, if any, attention had been paid by the wife and her advisors to the discovery process.

5. The 2011 statements showed the husband’s closing balance as $118,035; that was just after the separation. In the following year, the balance was reduced to $43,600.

6. During cross-examination of the husband, I indicated dissatisfaction with his inability to explain why the fund’s balance sheet showed that significant diminution.  He explained the discrepancy as “bookkeeping errors” and that the figures were in the “wrong column” but it was obvious that he was guessing.  Unable to give an adequate explanation, overnight he approached Ms X who produced documents to explain the discrepancy.  All of this was unsatisfactory because it meant time was wasted unravelling what had occurred.   Whilst I am critical of the husband, the endeavours of the wife to sort out what had happened were not much better. Whilst the husband was criticized for inadequate disclosure of documents, it was similarly noticeable that no attempt was made to pursue them. Importantly, no orders were sought in relation to the member account (unless the court reads “The assets of the marriage be divided equally between the parties” as an endeavour to alter the superannuation account) and no endeavour was undertaken to deal with the superannuation interest as a different species of property from the other assets of the parties. The wife’s view about the deceit of the husband was reflected in the final submissions of her counsel where he submitted that the “adjustments” to the husband’s member accounts occurred after separation and it was another “attempt…trying to minimise the (wife’s) entitlement so as to defeat any claim” (she may have). The evidence does not support that assertion.

7. The superannuation fund acquired L Street and O Street.  Consistent with the family arrangements earlier mentioned (and indeed corroborative of what the husband did in 2010 in transferring assets), whilst the registered proprietors were family members, there was no dispute amongst the family that these two properties were to be recorded as being assets of the fund.  The member accounts had to then reflect the equity in those assets in some way and the husband’s vociferous statement that he was only interested in his member account does not make much commercial sense.

8. The husband’s view was that O Street belonged to his younger sister and when asked about L Street, he stated that the recording of it in the books of account was more wrong bookkeeping. He maintained that $90,000 of the purchase was provided by the superannuation fund and the balance provided by his sister Ms K. 

9. The husband’s evidence was that both O Street and L Street were properties bought by Ms K notwithstanding that is not what the titles showed.

10. According to the wife’s evidence, O Street was purchased by the husband with Ms K on 19 August 2005.  That information was entirely drawn from the land titles search.  If further inquiries had been made through discovery, the wife would have found that notwithstanding the registered proprietor was as shown on the title, the property was owned by and recorded in the superannuation fund. Obviously, as there were four individual trustees, the auditor would have been required to consider the connection between the registered proprietor and the superannuation fund itself.  These accounts were all signed off by not just the trustees but also by the auditor. 

11. L Street was acquired by all four siblings on 13 June 2008.  According to the wife’s historical title search, the husband owned a portion because that is what the document indicated.  Inquiries through discovery might have revealed the actual position that it had been included in the fund.

12. If all four family members were trustees, the “bookkeeping errors” were perplexing but then, that is the way the family operated.  What was more disconcerting was that the accountant’s work was inadequate.

13. The answer seemed to be clearer when there were documents produced during the trial showing that after a discussion between Ms X and the fund’s auditor, concerns were expressed that the fund was not recorded as the registered proprietor.  In these file records, Ms X noted that Ms K was using her member account funds to acquire a property and that fact seems then to have been recorded in her member account.  There was nothing wrong with that except the trustees did not seem to understand what was happening.

14. When the various superannuation member accounts are examined in that light (and I take into account that was not the way the wife presented the case), it can be seen that the individual members did make disparate contributions and that accounts record the disparate balances.

15. The focus then returns to how the husband’s member account went down dramatically in one particular year. 

16. O Street was placed in the fund’s balance sheet as an asset.  Thereafter, it was a matter for the trustees as to how each member’s interest was recorded because each had an interest in the whole of the fund (albeit the husband did not understand that).  Subsequent to its purchase, there was no apparent revaluation of the O Street property and thus, the members’ accounts did not really reflect the true interest of the members.  Just where the income position fitted in, no inquiry seems to have been undertaken.

17. O Street was then sold in 2014 for a lot more money than the balance sheet value.  The trustees then had to determine how that money was distributed to the members’ accounts.  They (or at least I suspect the accountant) did so according to how the members provided the relevant acquisition money.

18. But there then appeared an additional problem.  The original recorded value was wrong and no endeavour had been made to rectify it. Although the entries remained untouched, the issue was whether the error should have been rectified much earlier if the member accounts were reflecting contributions as deemed appropriate by the trustees.

19. The superannuation fund’s 2011 statement of financial position shows O Street worth $209, 387 but in 2012, it was reduced to $104,693.  Documents produced showed that the purchase price was $100,000 and the additional $4693 reflected taxes and charges. There is no other explanation than that it was put into the fund balance sheet incorrectly. The relevant documents were produced to show the correct purchase price and there was no challenge to those details. The wife would have known those details in any event from her historical searches.

20. The consequence of the error was that the member balances were wrong.  When the position was realised and rectification of the accounts occurred, it was the husband’s member account that was most significantly affected and his balance of $118,035 was reduced to $48,822.  That looked remarkably suspicious until one took into account the family arrangement about reflecting acquisition funds.  I find that the accountant corrected the error appropriately. 

21. The accountant finally provided documents to the parties during the trial showing how Ms K’s calculation reflecting how her member account was made.  To confirm the purchase price, a document was produced from the conveyancing company confirming the receipt of the monies for the acquisition including the additional costs.  There was also a cheque account statement of the superannuation fund which showed a withdrawal on 12 August 2005 of $104,693.25 alongside which is a handwritten note “O”.  There are also unsigned minutes of a meeting of the trustees dated 5 July 2005 in which a resolution was passed for the acquisition of O Street.  Ms K was to acquire it with funds from her member account balance.  Having regard to the way this family did things, whilst the accounting was sloppy, the accounts ultimately seemed to reflect the reality.  Time was wasted in this trial but the husband contributed to the debacle by not having his house in order.

22. In case it is thought that this error was detected during the trial, that is not so.  The error was found in 2012 and then corrected.  That correction coincides with the separation of the parties and whilst that also looks suspicious, there is no other evidence than that to which I have referred.

23. The fund acquired L Street and the way that was recorded supports the conclusion that the O entry was incorrect.  The subsequent sale of O Street however brought about an adjustment much in favour of Ms K rather than the husband. 

24. Ms K made the major financial contribution to the acquisition of assets and it was not argued that trustees cannot make such distributions to member balance sheets as they see fit. There is no application to set aside those accounting transactions.  I accept therefore that what the documents show is now correct and notwithstanding the coincidence, I accept the figures provided by the husband are correct.

The judgment money

1. The wife was remarkably silent in her evidence about the judgment of the other Court despite wanting relief from payment by orders of this court.  She simply said there was a $243,000 judgment against her.  There is no evidence to support the relief that she seeks that the husband indemnify her in respect of that debt.  For that relief to be provided, the court would have to be satisfied that it is just and equitable that either the debt be included as a liability of the parties or alternatively, that there is some other basis upon which the husband can be ordered to take responsibility for it.

2. It has not been suggested by the wife, nor was it suggested to her, that the debt to Ding Pty Ltd was not real.

Was the debt something to do with the husband?

1. The husband was cross-examined about the money that he regularly took home from the business.  Again, there was no challenge to the findings of the other Court; it was not suggested to the husband that he was complicit in the defalcation that gave rise to that judgment.  It is difficult to see the debt as something for which the husband could be said to be responsible.  Justice and equity requires the court to acknowledge that the wife has that debt and that she is either unable to pay it and most likely, will ever be able to pay it.

The Trusts allegations

N Street

1. The wife’s written evidence sworn with the assistance of an interpreter and specifically relating to N Street, but not any of the other real properties, was that she had a “belief” about the property purchases.  She said that in respect of N Street, the price had been paid by the husband although the legal title owner was Ms K.  At [56] (xii) she said:

   The husband and his family would discuss this during family gatherings (my underlining).

2. This is an assertion that the husband is the beneficial owner notwithstanding Ms K’s legal interest. Nothing was said about where the husband had, or could have, obtained the necessary purchase money.  The wife’s historical search showed that the purchase price was $1.62 million.  It is hard to understand how a “belief” based on discussions with family could form any evidentiary basis to assert an interest but in any event, the husband denied the wife was correct about this “belief”.

3. Neither the husband nor the wife was seriously probed in cross-examination about the issue.  No documents were produced from any subpoenaed bank records to show how this transaction came to be.  Nothing was put in evidence to show that the husband had the necessary capital to provide to Ms K, which might justify the wife’s belief.  Nothing was put to the husband to show that he was paying a mortgage or other recurring expenses associated with N Street.  The absence of any plausible evidence warrants the court giving the matter no further consideration.

L Street

1. The wife relied on historical searches for her evidence about L Street.  The two significant dates in relation to this property are September 1999 when the property was purchased by the husband alone and the second in 2010 when he disposed of it.

2. It was the husband’s case that at the time of the purchase of L Street, he was in employment as a health professional earning a wage of about $30,000.  He said that the purchase of this property was to facilitate the redevelopment of it into a business and a surgery.  It was to include his brother Mr V who is a dentist. 

3. The wife could not say much about what happened in 1999 because it preceded the relationship.  The husband’s parents paid the deposit and the balance of the purchase price was funded by a mortgage. 

4. Thereafter, the husband’s brother Mr V paid the mortgage payments.  The wife put no evidence before the court showing Mr V’s evidence was wrong.  If there were bank records or conveyancing records, the wife did not produce them. I reiterate my concern that 5 years has gone by and having regard to that, the absence of such material is hard to understand if she is asserting there is objective evidence to show something inconsistent with what the husband and his brother asserted. Importantly, the wife was present through the latter years and notwithstanding she said she knew nothing about finances, one might have thought she would have pursued avenues if she knew the husband was saying he did not pay the mortgage payments.

5. The husband’s brother deposed that the payments were made by him but with some small contribution from Ms K.  The evidence of the brother showed a lump sum payment totalling $131,546.38.  There was also evidence that the brother had paid for the costs of the construction of the building.  All of these occurred prior to the marriage so it could only be within the knowledge of the wife to the extent that she was either told about it or from her historical searches.  The evidence of the wife was vague.  I am satisfied that the husband made no financial contribution and that by virtue of an agreement between the brothers, the husband never had a beneficial ownership of that property.  At all times both the husband and his brother asserted that there was an express trust in favour of Ms K and the brother himself.  All of that becomes relevant when I consider the nature of the asserted trusts. 

6. Mr V gave evidence and confirmed the background facts.  Significantly, the mortgage was discharged in 2004.  The husband asserted that from the time of its acquisition, he held the property on trust for Mr V. 

7. In April 2010, according to the husband, Mr V asked him to transfer the property to Ms K and he did so.  There is controversy about what happened to the property thereafter but my focus is on the period until the transfer in 2010.

8. The wife’s case is that Ms K held, and holds, the property on trust for the husband and in the alternative, the transfer should be set aside under s 106B on the basis that it defeated or had the effect of defeating her claim.

9. In final address, counsel for the wife submitted that of the purchase price of $122,000, $97,000 was borrowed by way of commercial mortgage and the balance seems to have been accepted by the wife as having been provided by the husband’s mother. It was then submitted that as there was no indication of a loan, the Court should accept that the shortfall was advanced by the mother on behalf of the husband and thereby it became his contribution. As the husband was the mortgagor, it was submitted that he contributed all of the funds for the purchase.

10. There are certainly inconsistencies in the evidence of the husband. He said in his affidavit that his parents and siblings (Ms K and Mr V) paid the deposit and shortfall at settlement but in cross-examination, he denied that Ms K had contributed any money and that he did not hold the property on trust for Mr V. The confusion does not help but I have the evidence of Mr V that he paid the mortgage and that he developed the site to use as a business.  He considered it to be his.

1. Subsequent to Prince, s 79(10) was inserted into Part VIII of the Act.  That provision entitles creditors to become parties if the creditor may not be able to recover the debt and relevantly in this case, if orders were made of the type sought by the wife on the basis that the submission about the debts was upheld.  None of the creditors in this case sought to be heard albeit one brother was a witness and when cross-examined by counsel for the wife, defended his entitlement to recover his debt. 

2. Section 79(4)(e) of the Act requires the court to consider taking into account (by s 75(2)(ha)) the effect of any proposed order on the ability of the creditor to recover the debt.  There is no requirement that the wife be given priority over the creditors nor vice versa.  In this case, it is academic because I do not find there is property to divide.

3. I reject the submission that debts incurred prior to marriage should be ignored because they predate the relationship; they are simply matters to be taken into account.

4. In my view, on the husband’s current income and, absent any property, his prospects of making a commitment let alone a payment, are remote.  Those debts are therefore acknowledged but there is no point including them in any formal list.  On the other hand, the wife’s debt is unlikely to be repaid either but I accept it is real and should be treated as such.

What are the assets and liabilities?

1. I find that the legal and equitable interests of the husband and wife are as follows:

Assets

Husband’s share in Ding Pty Ltd  $35,624

Liabilities

Wife’s judgment in the other Court  $245,000

Superannuation

Husband’s superannuation interests  $171,606

1. I have included the husband’s interest in Ding even though it is acknowledged as having been transferred by him to his sister.  The husband’s counsel said it should be included and I intend to do so.  The share in Ding Pty Ltd is the only property owned by either of the parties.  The husband’s superannuation cannot be put into that same category for the reasons I have already set out. 

2. The judgment of the other Court is peculiar to the wife because of the finding that the defalcation had nothing to do with the husband but that does not mean that it should be taken against other assets.  Indeed, the wife’s application was for an order that the husband take responsibility for it.  There is no justification for such an order even if the husband had the capacity to pay it.  There are no other assets against which any debt could be attached or on which any transfer could be made. 

3. I find there is no other property left between the parties to alter.  The husband’s superannuation could not satisfy any debt at the moment because a splitting order (which is not sought by the wife) would not provide cash.  However, I would not make such an order here where so much money was unashamedly in the hands of the wife (as outlined in the judgment of the other Court) the absence of which is unexplained or not satisfactorily explained.  For example, if I accept that the $50,000 was available to the wife at separation, but she has spent it on living expenses and legal fees, the husband would be contributing towards her legal costs if I somehow added back that money. 

4. If there was some justification for considering a splitting order in relation to the superannuation, I would still find that the husband’s contributions exceeded those of the wife by virtue of his role in the welfare of the family.  Considering the various factors in s 75(2) relating to his responsibilities for the care of the children without assistance from the wife would make it unjust and unequitable to then reduce his superannuation member account. 

Is it just and equitable to make an order?

1. Considering the substantial shortfall of assets if one looked at this from a “pool” concept, the reality is that the shortfall arises as a result of the liability of the wife. 

2. To consider what, if any order, would be just and equitable, one must take into account the matters set out in s 79(4).

3. The evidence about contribution is scant.  I know what the parties had at the commencement of their relationship.  The husband had interests in property albeit he held some on trust and his interest was otherwise nominal.  The wife’s case was that she had $50,000 which she brought from Country D and I have rejected that.  Each party therefore really contributed very little by way of equity when the relationship began.  Whilst the wife was clearly the major carer for the children up until the time that the parties separated and then the making of parenting orders, the husband has had a substantial role in caring for them since that time even to the point that the wife’s role (whether out of her control or otherwise) has been minimal.  There is no sign of that changing and the children are now in their teenage years.  In my view that is a very significant contribution made by the husband.

4. Section 79(4)(e) requires the court to take into account the matters set out in s 75(2) of the Act.  This is also relevant to the wife’s claim for spousal maintenance. 

5. For the purposes of that provision, both parties are of an age where they can obtain employment and there are no health considerations that would preclude them from having employment.  There are no considerations relating to children that would impact upon the economic situation of either party other than the fact that the husband has reduced his working hours and earns less so that he can maintain the care of the children.  Whilst some of that evidence was challenged, I accept his version that he does work the hours that he does and is not otherwise remunerated.  I accept the husband’s evidence that he is earning $60,000 per year but he also has the benefit of the assistance of his family such as by way of contributions towards his legal fees.  Even if that sum is to be repaid, it is a resource that is unavailable to the wife and I suspect, he will be unlikely to repay it in the foreseeable future. 

6. The wife’s financial circumstances are modest.  She works part-time in the service industry but I have no sense of what her future earning capacity is.  She has the limitation of restricted English language skills but even if she could obtain employment, there is no indication that it would be anything more than modest.  In summary, it is a most unusual case and very difficult to identify evidence that would enable findings in respect of the various discrete components particularly of s 75(2) of the Act.

7. It would not be just and equitable to endeavour to alter the interests that the husband said he had in Ding Pty Ltd in which he had transferred having regard to the quantum of that amount.  It would not be just and equitable to make a splitting order in favour of the wife for the reasons I have set out.  In those circumstances, the wife’s application for property orders must fail.

Spousal maintenance

1. The wife’s application was for an order that the husband pay her $1000 per week by way of maintenance.  Having satisfied myself that the husband’s income is as I have described it, such an order could not be made.

2. Section 72 of the Act relevantly here provides that the husband is liable to maintain the wife to the extent that he is reasonably able to do so if, and only if, the wife is unable to support herself adequately whether:

   (a)by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;

   (b)by reason of age or physical or mental incapacity for appropriate gainful employment; or

   (c)for any other adequate reason.

   having regard to any relevant matter referred to in sub-section 75(2).

3. I have already dealt with the s 75(2) factors but they need to be considered again specifically in the context of spousal maintenance.

4. The wife’s evidence was:

   My prospects of obtaining gainful employment in Australia is (sic) limited due to my difficulties with the English language and lack of formal vocational skills.  The husband enticed me to leave my home and family in [Country D] at the time of marriage on the understanding we would marry, live together thereafter and raise a family.  I was 25 years of age at the time.  This however did not prove to be the case and I now find myself in a position where I am alone, have no vocational skills, have an imperfect grasp of the English language and very little prospects of gaining gainful and steady employment into the future.  My situation therefore is very tenuous and difficult.

5. The difficulty with that evidence is that it is a conclusion and assertion rather than giving any indication of the endeavours that she has made.  It was only in cross-examination that issues associated with what part-time work she had was fleshed out.

6. In five years, all of her employment has been part time but in addition to the sources she nominated which at the moment amount to 16 hours per week, she said she had also worked as a “clothing assistant” which I understood to mean a position in retail. Her explanation for the limited work was her language difficulty and her limited experience. However, although she did not have the children living with her, she was silent on what other jobs, if any, she had pursued. She is capable of work in the service industry but she did not indicate how much success or otherwise she had in pursuing work there. When she was asked about her intention to work full time, she responded by saying that she might run her own business. She is otherwise currently supported by Centrelink payments.

7. In his final submissions, counsel for the wife submitted that the wife “clearly has a need for maintenance”. Whilst that might be so, she has to establish the first step before she is entitled to claim against the husband. Her evidence about her current working capacity was vague. I am not satisfied that she cannot support herself adequately without maintenance based on the lack of effort to produce evidence as to attempts.

8. Even if I was wrong about that, I am not satisfied that the husband has the capacity to pay.

9. Counsel for the wife submitted a series of figures all of which were determined on the basis of the entitlement of the husband to the assets which I have rejected. I accept that the husband has an income of $1269.21 gross per week; his expenses indicate that he has a incapacity to pay maintenance.  He receives $115 per week from Centrelink.  His income from earnings is therefore $1153 per week.  From that sum, he pays income tax, health insurance and then is expected to support himself and the two children.  He does not receive child support from the wife but manages to have his expenses met by other members of his family including his mother but their contribution is towards the extensive schooling expenses of the children.

10. An examination of the husband’s expenditure on himself and the children shows that the preponderance of the $850 per week he has left after the payments out of his gross income, are predominantly food and expenses associated with the children including clothing and shoes and activities associated with them.

11. I am satisfied in the circumstances that he does not have the capacity to support the wife.

12. In my view, there is no basis here to make an order for spousal maintenance and that application will be dismissed.

13. There being no successful application by the wife, her application for property settlement and spousal maintenance is dismissed.

I certify that the preceding Two Hundred and Thirty Nine (239) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 1 November 2017.

Associate:

Date:  1 November 2017