Forlan & Forlan
[2022] FedCFamC1F 114
•8 March 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Forlan & Forlan [2022] FedCFamC1F 114
File number(s): ADC 1582 of 2015 Judgment of: MEAD J Date of judgment: 8 March 2022 Catchwords: FAMILY LAW – PROPERTY – Applications by the applicant wife and respondent husband for the alteration of property interests – Where the husband’s father was joined to the proceedings as the second respondent – Where the parties and the husband’s father operated a family business commenced by the husband’s parents – Where the business had been placed in receivership by National Australia Bank in late 2017 – Where at trial the husband and the second respondent remained liable to National Australia Bank in the sum of approximately $2.5 million – Where the wife had negotiated a settlement of her liability with National Australia Bank – Where at trial the remaining assets consisted of a judgment sum received by the wife, the husband and the second respondent in Federal Court proceedings and the assets of a self‑managed superannuation fund of which the wife and husband were the only members – Where evidence as to the value of the various assets was vague and unhelpful but on best evidence was approximately $650,000 to $750,000 – Where legal costs incurred by all three parties totalled approximately $640,000 – Where it was found all three parties contributed equally to the judgment funds – Where it was found that neither the wife nor the husband contributed to the real property owned by the second respondent – Where it was found that the wife and the husband contributed equally both financially and non‑financially over the course of the marriage – Where an adjustment was made in favour of the wife of five per cent pursuant to s 75(2)(o) on account of significant but unquantifiable legal fees paid by the husband from company assets prior to liquidation – Where the husband was previously found to have contravened orders by Loughnan J – Where the contraventions were of a serious nature – Where a suspended prison sentence and Bond to be of good behaviour was imposed – Where an order for costs was made in favour of the wife arising from the Contravention proceedings – Where the costs had been ordered to be agreed or taxed – Where the wife’s solicitors sought the sum of $50,000 inclusive of counsel fees for costs arising from those proceedings by letter to the husband’s former solicitors dated 11 July 2019 – Where the husband adduced no evidence as to the question of costs – Where the wife sought an order for spousal maintenance – Where an order for spousal maintenance had been made during the course of proceedings on each of 10 June 2016 and 8 December 2016 – Where the wife is unable to adequately support herself without spousal maintenance – Where the husband is in receipt of income protection insurance until he attains the age of 65 years and has the capacity to pay spousal maintenance – Where the Court found the husband was untruthful as to the fact of receiving regular unquantifiable income and/or benefits from employment in a business owned and operated by members of his family. Legislation: Family Law Act 1975 (Cth) ss 75(2), 75(2)(o), 79(4), 117(2A)(d) and (3) Cases cited: Stanford & Stanford (2012) FLC 93-518
Townsend & Townsend (1995) FLC 92-569
Weir & Weir (1993) FLC 92-338
Division: Division 1 First Instance Number of paragraphs: 416 Date of hearing: 27-29 July 2020 and 16-17 November 2020 Place: Adelaide Counsel for the Applicant: Ms Lewis Solicitor for the Applicant: Carmen Wood & Associates The First Respondent: Litigant in person The Second Respondent: Litigant in person ORDERS
ADC 1582 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS FORLAN
Applicant
AND: MR FORLAN
First Respondent
MR J FORLAN
Second Respondent
ORDER MADE BY:
MEAD J
DATE OF ORDER:
8 MARCH 2022
THE COURT ORDERS THAT:
1.That this matter be adjourned to 26 April 2022 at 9.15am for the making of final orders for settlement of property.
2.That on or before 14 April 2022 the applicant wife’s solicitors provide to the first respondent husband and the second respondent a draft minute of order.
3.That on or before 14 April 2022 the applicant wife’s solicitors provide a copy of same to the Associate to Justice Mead.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
The parties to these proceedings are in dispute with respect to issues of property settlement.
The applicant is Ms Forlan (“the wife”) who was born in 1963 and is aged 58 years.
The first respondent is Mr Forlan (“the husband”) who was born in 1962 and is aged 60 years.
The second respondent, Mr J Forlan, was born in 1934 and is aged 87 years. He is the husband’s father.
The applicant and the first respondent are divorced, but for the sake of convenience and where a third party is involved in the proceedings I will refer to them as the wife and the husband respectively.
The husband and wife commenced cohabitation in 1985 and married on 1987. They had two children, Ms B born in 1988 and Ms G born in 1996.
In paragraph 19 of the wife’s trial affidavit filed 30 June 2020 she deposed to she and the husband separating in February 2013. This evidence was confirmed by the husband in paragraph 15 of his trial affidavit filed 17 July 2020.
It was common ground that the husband and wife lived in separate residences between February 2012 and February 2013.
At the time of trial the wife deposed to being employed by NN Pty Ltd as a health professional earning an average gross salary of $706 per week, with taxation liability of $80 per week. In addition she deposed to receiving $600 per week by way of spousal maintenance.
The husband failed to file a financial statement. In paragraph 85 of his trial affidavit he deposed to receiving income protection insurance payments at the rate of $7,434.62 net per month.
In paragraph 92 he deposed to suffering a debilitating medical condition since December 2012 impairing his ability to concentrate on work for any length of time, and in paragraph 93 deposed to not being employed and not being able to find employment with his pre-existing condition.
In paragraph 94 he deposed to being required by his insurer to engage in daily activity and choosing to volunteer where and only if he can, including volunteering at a not for profit and at OO Pty Ltd. He deposed further in paragraph 96 to the disability pension expiring upon his rehabilitation or at age 65, which ever first occurs, and then in paragraphs 99 and 100 to having accumulated debts and no savings. I will return to the issue of his attendance at OO Pty Ltd as a volunteer later in these reasons.
The only independent evidence produced by the husband to corroborate any of these assertions were a series of documents addressed to the husband from Financial Institution 1 setting out claim details for certain months in 2019 and 2020. It was specified on the claim detail form that Financial Institution 1 did not deduct tax from the payments which should be declared in the husband’s next tax return. There was a consist payment of $10,437 per calendar month during 2019 and $10,635 per calendar month in 2020. On the claim detail form dated 19 December 2019 the husband was required by Financial Institution 1 to send certain information to them by 1 February 2020, including a doctor’s progress update.[1]
[1] Exhibit “H1”.
On 16 November 2020, the date of resumption of the part-heard trial from July 2020, and whilst being cross-examined by the wife’s counsel, he produced a Notice of Assessment from the Australian Taxation Office (“ATO”) stating his income for the 2019 financial year to be $147,486. He further agreed that the 2020 financial year taxation return that he also produced that day indicated an income of $126,539. He was not cross-examined as to the discrepancy.
In the Notice of Assessment for the year ended 30 June 2019 contained in Exhibit “H1” the husband’s taxation liability for that year was stated to be $43,460.50 and in correspondence to the husband from Mr PP of QQ Accountants, the husband was advised that his estimated tax liability for the year ended 30 June 2020 was $36,778.20.
It was his evidence that the 2020 financial year taxation return had not been lodged. It was unclear if the 2019 return had either been completed or lodged. He was unable to produce that document.
There was no evidence as to whether either of the taxation liabilities referred to above had been paid by the husband as at trial.
It is important to say at the outset of these reasons that the evidence of the husband overall was entirely unsatisfactory.
He made frequent complaint about the ability of the wife to obtain a “legal team” as opposed to his alleged limited ability to obtain legal advice and the consequent necessity to represent himself.
From the date litigation commenced in 2015 with the wife’s Application for settlement of property there was a pattern of failure on the part of the husband to comply with orders for discovery and/or provide financial information to the Court to support his assertions regarding the financial history of the Forlan/F Group. It was common ground that the husband financially controlled that group of companies.
In addition, the husband was found by Loughnan J to have contravened, to the extent of forty‑six counts, orders made by Berman J that were intended to provide the wife with transparency as to the disposition of assets of the group.
In paragraphs 7 and 16 of the judgment of Loughnan J delivered 31 August 2017 his Honour said:
7.The husband took little meaningful part in testing the wife’s case or in presenting his own. In fact, in the unusual circumstances of this case, much of the evidence against the husband was from his own, earlier filed affidavits. He made a few objections to the wife’s affidavit, declined the opportunity to cross‑examine the wife and gave scant evidence in his own case. He presented the evidence of no witnesses other than himself. Unusually, in re-examination, for the first time he gave some detailed evidence about some of the transactions that are the subject of allegations. The husband’s submissions were brief and had little direct relevance to the contravention proceedings…
…
16.The husband was a very poor witness. Much of his evidence was vague. On his own evidence, he has difficulty concentrating. In the course of his written and oral evidence the husband made several inconsistent statements. For example, it was his evidence that sales of specific assets were variously undertaken by him, by his father and by staff of the family business…
Those comments could equally apply to the husband with respect to the presentation of his case in the substantive proceedings.
Financial records relating to and capable of substantiating his evidence with respect to the disposition of funds obtained by him as a result of undertaking the sale of company assets without the wife’s knowledge or consent, which conduct led to the findings against him with respect to the wife’s Contravention Application, were not produced in the substantive proceedings.
Notwithstanding the husband’s claims as to medical issues affecting his memory and concentration I find, particularly taking into account his demeanour at trial, that the intention of the husband was to obfuscate the evidence to the best of his ability. For reasons to which I will refer from time to time I am satisfied that this intention on the part of the husband was the natural progression of his unquestioned financial control of the assets of he and the wife and his father throughout the period of cohabitation and post-separation, and informed many of his actions and decisions thereafter including during the entirety of these proceedings. His presentation was frequently dismissive and argumentative.
It was apparent from the wife’s evidence-in-chief and in cross-examination that throughout the entirety of she and the husband’s 26 year marriage she made little or no effort to understand their financial position, whether by design or otherwise. She made no specific complaint in that regard, other than with respect to the husband requiring her to comply with his demands to agree to the sale of properties to reduce debt in the very late stages of the marriage and post‑separation, and with respect to her attempts to obtain financial information about their assets and liabilities post-separation.
Likewise, it was apparent from the presentation of the second respondent at trial, particularly illustrated by his need to have “notes” in cross-examination to help him remember what he had said in his affidavit, that he had little knowledge and little understanding of financial decisions made by his son from the time he effectively conceded control of F Pty Ltd to him after the death of his wife in 1994.
It was of significant concern to the Court, in circumstances where at the time of trial the value of the assets available for distribution between all three parties was, at most, apparently $650,000 to $750,000, that the wife’s costs at the conclusion of the trial were likely to be in excess of $400,000.
As at 29 July 2020 the husband had incurred legal fees in the sum of approximately $190,000.
As at 29 July 2020 the second respondent had incurred legal costs of approximately $50,000.
There seemed to be little dispute that of the asset pool, the husband and wife’s self-managed superannuation fund comprising a modest unit and cash in the trust account of the wife’s solicitor accounted for approximately $350,000 to $400,000 of the value. These assets of course were not available to the receiver, and there was no suggestion that the second respondent had contributed to the fund in any way.
The husband conceded in cross-examination that any cash funds he may receive from the remainder of the assets, namely monies standing to the credit of all parties in the Commonwealth Bank of Australia, may well be taken by National Australia Bank in circumstances where he and his father, the second respondent, had an outstanding liability to the National Australia Bank in respect of a commercial bill, in an amount somewhere between $2‑$2.5 million.
History of proceedings
On 21 October 2015 the wife instituted proceedings for settlement of property.
She sought an equal division of she and the husband’s assets and spousal maintenance at the rate of $1,500 per week. She also sought interim spousal maintenance in the same sum and an extensive raft of orders directed to the issue of discovery.
It was common ground that when the proceedings were commenced the Forlan/F corporate group was being marketed for sale for $10 million by RR Brokers.[2] The sale efforts were ultimately unsuccessful.
[2] Wife’s trial affidavit – paragraph 57.
Following separation the wife had continued her administrative duties at the Suburb K premises of the group for a period of time, for which she was paid $1,800 per week net of tax, plus superannuation.[3]
[3] Wife’s trial affidavit – paragraph 59.
Sometime prior to the wife instituting proceedings each party had sought legal representation and correspondence had been exchanged. Exhibit “W8”, being correspondence from the husband’s then solicitors MM Lawyers to the wife’s then solicitors SS Lawyers suggested communication between solicitors had commenced by early 2015. The issue of the wife’s continuing role at the F Group and her remuneration and benefits was, according to that communication, a source of contention.
In an Amended Initiating Application filed by the wife on 19 November 2015 she sought, inter alia, an order placing restraints on the husband’s ability to deal with any assets of the F Group. It seems that by that time the financial circumstances of all three parties were continuing to deteriorate, particularly noting that efforts to sell the group had not met with success.
On 25 November 2015 the husband filed an Application in a Case seeking an adjournment of the wife’s Application for interim spousal maintenance, discovery orders and in the alternative a dismissal of her spousal maintenance application, as well as an order that the dog owned by he and the wife be in the possession and care of each of them on an alternate week basis.
On 30 November 2015 various orders were made by Berman J, but of particular significance was order 6 which was in the following terms:
That during the period of the adjournment a mandatory injunction is granted requiring the husband to provide to the wife through her solicitor with a copy of any contract for sale of any item and if no written document confirmation of an intention to sell any item not less than seven (7) days prior to a contract being signed or an intention to dispose of, sell or transfer any item and following any sale, to confirm receipt of payment of such sale proceeds within seven (7) days of it having been received.
That order fell into abeyance on 29 January 2016 and was revived by a further order of Berman J on 23 February 2016.
It was that order the husband was later found to have contravened to the extent of forty-six counts.
On 19 January 2016 the husband filed a Response to the wife’s Initiating Application wherein he sought on a final basis that their assets be divided between them as the Court deemed appropriate, after firstly determining by agreement in writing the interest of parties other than the husband and wife.
He then sought a raft of interim orders under the headings “Interim payments to wife or for her benefit”, “Sale of assets of [F Group]”, “Discovery by husband”, “Discovery by wife” and “Litigation Costs”. The discovery orders sought by the husband were equal in complexity to those sought by the wife.
On 25 January 2016 the wife filed a Further Amended Application, again primarily relating to interim spousal maintenance and issues of discovery as well as seeking a report by Mr N as to the structure and operation of the F Group and the Forlan Group.
The wife also sought orders to restrain the husband from selling, mortgaging, charging, transferring or dealing with any asset of the F Group or the Forlan Group and that the husband’s father Mr J Forland, be similarly restrained. In addition the wife sought the appointment of a receiver and manager of:
·F Pty Ltd;
·TT Pty Ltd;
·UU Pty Ltd;
·E trading as VV Services and WW Company;
·F1; and
·F2.
She also sought litigation funding in the sum of $100,000 from the husband either personally or from the resources and assets of the F Group and/or the Forlan Group.
At a hearing on 2 February 2016 the husband’s father, Mr J Forlan, was represented by counsel in circumstances where it was proposed that he join the proceedings as the second respondent.
On 28 February 2016 Berman J ordered a payment to the wife by the husband in the sum of $12,000 for the months of February and March 2016 and a further $6,000 for the month of April 2016. He adjourned the wife’s urgent and interim spousal maintenance application to 29 April 2016.
His Honour did not characterise the payment for the months of February and March 2006 but that order was preceded by his Honour’s notation that:
The wife’s Amended Initiating Application filed 25 January 2016 seeks $1,500 per week for her support as and from 27 November 2015 and seeks a lump sum for legal costs.
The order would reflect a payment to the wife in the sum of $6,000 for each of the months of February and March 2016 which would equate to $1,500 per month that the wife sought “for her support”.
On 31 March 2016 the wife filed an urgent Application seeking orders to prevent any proceeds of sale of equipment being dispersed to the ATO or to E Pty Ltd, as well as further financial information with respect to the financial affairs of various entities in the Forlan/F Group.
On 4 April 2016 Mr J Forlan filed an affidavit as the second respondent opposing certain orders sought by the wife in her Further Amended Application filed 25 January 2016. The second respondent did not file a formal Response in the proceedings until 22 June 2020.
On 10 June 2016 Berman J ordered that the husband pay the wife spousal maintenance at the rate of $600 per week. He further ordered that the parties jointly instruct a single forensic expert to prepare a financial report directed to various matters including the financial viability of the F Group of companies. In addition, his Honour ordered a “dollar for dollar” order in favour of the wife.
Following comments made by him in [75] of his reasons delivered 10 June 2016 concerning the mandatory injunction order originally made by him on 30 November 2015, his Honour said in [76] to [86], in reference to the issue of sale of plant and equipment:
76.Nonetheless the parties generally considered that they would be bound by the underlying rationale of the order namely, that in order to better promote transparency in terms of the operation of the [F Group] and to give effect to the consensus that plant and equipment needed to be sold in order to reduce debt, the husband considered that it was sensible for him to comply with the terms of the original order.
77.Unfortunately the issue of the sale of plant and equipment has provided further fuel for dispute.
78.The mistrust between the parties has not lessened by the husband selling a significant quantity of [equipment] without giving the wife advance notice.
79.The husband’s solicitors forwarded correspondence dated 21 March 2016 enclosing a signed contract in respect of [equipment] evidencing a sale and purchase agreement between [F1] and [Q Pty Ltd] for an agreed price of $243,973.60. The wife did not have any say in the contract nor was any opportunity given to her to object as to its terms and conditions or have input as to how the net proceeds of the sale of the equipment would be utilised.
80.The status of the equipment sold and the relevant vendor entity within the [F Group] was further confused by correspondence from the husband’s solicitors which suggested that the equipment was not owned by [F1] but rather by [F2] as trustee for the [I Pty Ltd] FFT.
81.By affidavit filed 13 May 2016 the husband acknowledges that “there appears to have been presentation of an incorrect position in relation to the ownership of the [equipment]”. The husband now says that [F1] is not the owner of the equipment. It is owned by [I Pty Ltd].
82.A further area of confusion has arisen in respect of incorrect information provided to the wife as to the account into which the net proceeds of the sale would be provided. It would now seem to be the case that the relevant NAB account for [I Pty Ltd] is account […].
83.The wife generally accepts that at present it is difficult to find a source of funds from which an order requiring a lump sum to be paid to the wife could be sourced.
84.Whatever funds may remain in [I Pty Ltd] accounts or may be the subject of future deposit is clearly property of that entity. Whilst it is agreed that the wife is the sole director and the husband the sole shareholder of [I Pty Ltd] that does not mean that funds that flow into that account can be used at the discretion of the parties.
85.Whilst it may be possible to convert money held in an account to the husband by way of a dividend, that requires a direction from the director of the company and could only be made after a proper assessment has been undertaken as to the primary obligations of [I Pty Ltd].
86.There are likely to be liabilities that [I Pty Ltd] is obliged to service and also the extent to which any money available should be prioritised to the NAB loan secured generally across the group is a relevant consideration.
Those comments were particularly apposite to the further Application in a Case filed by the wife on 10 October 2016 seeking, inter alia, the transfer of funds in a National Australia Bank account in the name of I Pty Ltd to the trust account of the wife’s solicitors for the purpose of litigation funding.
On 27 October 2016 the wife filed a Further Amended Case Application which application sought the same orders as that filed on 10 October 2016, together with an order appointing a receiver and manager of all entities of the Forlan/F Group.
On 4 November 2016 the wife filed a Further Amended Case Application seeking, inter alia, payment to her of $50,000 in partial satisfaction of her application for litigation funding and the receiver and manager appointment to which I have referred earlier.
By way of Amended Response to an Application in a Case, filed by the husband on 8 November 2016, he sought that the wife’s two Applications in a Case to which I have referred be dismissed together with her Further Amended Application.
On 9 November 2016 administrators were appointed to the Forlan/F Group through the actions of their creditor National Australia Bank.
There was no evidence before the Court that Justice Berman was aware of that appointment at the time of the hearing on 10 November 2016.
On 10 November 2016 Berman J ordered at paragraph 1:
1.That the husband do provide in writing to the wife on or before 4 pm on 16 November 2016 a detailed plant and equipment register list of all plant and equipment within the power, possession or control of the [F Group] which includes the following details:-
(a)Specifics as to each item of plant and equipment currently held;
(b)The entity which currently owns the plant and equipment.
(c)If any items of plant and equipment have been sold or transferred to an entity outside the [F Group] since 1 July 2016, the date of sale, the purchase details and the date and the entity which received the proceeds of sale.
The matter was next before the Court on 18 November 2016 when Berman J ordered, inter alia, injunctions against the husband and the second respondent in the following terms, namely:
2.Until further the husband and the second respondent be restrained and injunctions are granted restraining each of them from selling, disposing of, encumbering or otherwise dealing with any asset ([any form of plant and equipment], cash or otherwise) of [F1] or any other entity within the [Forlan/F Group] (excluding [E Pty Ltd], [F Pty Ltd], [F2] and [I Pty Ltd]).
The order made by his Honour on 18 November 2016 was also not indicative of the Court having knowledge of receivers being appointed.
On 5 December 2016 the husband filed an Amended Response to an Application in a Case, together with an affidavit in support. In that affidavit the husband deposed to the appointment of YY Accountants as receivers and administrators.
I am satisfied that was the first information provided to the wife or to the Court with respect to that appointment.
On 8 December 2016 a consent order was made by Berman J (as amended on 13 December 2016) in the following terms, namely:
1. That by way of partial property settlement:
(a)That the husband pay to the wife’s nominated bank account the sum of $603 per month in respect of the wife’s personal loan referred to in paragraph 14 of the wife’s affidavit of 7 December 2016 and secured by the Audi motor vehicle used by the wife.
(b)Such payments to commence in December 2016 and to continue to be [made] until June
20172018 or until final order in this matter (whichever is the earlier).2.That the husband do all things and execute all documents necessary to authorise his bankers (presently Westpac) to disburse in favour of the wife the sum of $1,200.00 per fortnight upon and from monies received from [Financial Institution 1] in satisfaction of his obligations to pay the wife spousal maintenance payments pursuant to the order of this Honourable Court made 10 June 2016.
On 5 April 2017 the wife filed a Contravention Application. She alleged the husband had breached orders of his Honour Justice Berman on sixty-one occasions. The relevant orders were contained in orders made by his Honour on each of 30 November 2015, 23 February 2016 and 10 June 2016.
Proceedings were heard by the Honourable Justice Loughnan over three days from 31 July 2017 to 2 August 2017.
On 31 August 2017 Loughnan J made the following orders:
(1)The Court Noted that the Contempt Application filed by the wife on 29 May 2017 was withdrawn on 31 July 2017.
(2)The Court Noted that as to allegations 24(a), 24(b), 31 and 34 to 45 inclusive, the Contravention Application filed by the wife on 5 April 2017 was withdrawn.
(3)The Court Found that [Mr Forlan] contravened orders of this Court without reasonable excuse as contended in the following allegations in the Contravention Application: 1(a), 1(b), 2(a), 2(b), 3(a), 3(b), 4(a), 4(b), 5(a), 5(b), 6(a), 6(b), 7(a), 7(b), 9(a), 9(b), 10(a), 10(b), 11(a), 11(b), 12(a), 12(b), 13(a), 16(a), 19(a), 19(b), 20(a), 20(b), 21(a), 21(b), 22(a), 22(b), 23(a), 23(b), 25(a), 25(b), 26(a), 26(b), 27(a), 27(b), 28(a), 28(b), 29(a), 29(b), 32 and 33.
(4)The proceedings are to be listed on a date convenient to the parties and the Court in relation to consequential orders under Part XIIIA of the Family Law Act 1975 (Cth) arising as a result of those findings.
(5)Otherwise the Contravention Application filed on 5 April 2017 is dismissed.
That order was followed by his Honour’s order of 20 November 2017 in the following terms:
(1)The proceedings are listed for the making of final orders in the Contravention proceedings on 30 November 2017 at 10.30 am Central Daylight Time.
(2)Those proceedings will be conducted by video link and the husband shall attend personally at the Adelaide Registry of this Court on the adjourned date and shall remain there until released by the Court.
(3)The husband shall pay the costs of the wife of and incidental to these proceedings on a solicitor and own client basis with the quantum of the costs to be as agreed or as assessed. Subject to the assessment processes, those costs shall be paid within 14 days after the conclusion of the property settlement proceedings between the parties.
The final order with respect to the Contravention proceedings was made by the Honourable Justice Loughnan on 30 November 2017 in the following terms:
(1)In respect of the contraventions of Court Orders by the husband found proved on 31 August 2017, the husband is sentenced to a term of imprisonment for a period of two months.
(2)The sentence of imprisonment in Order 1 herein shall be wholly suspended provided that the husband attends on a registrar of this Court in Adelaide within 14 days from the date of these orders and enters into and thereafter complies with, a bond for the period of two years with the conditions that he be of good behaviour and complies with all orders of this Court. The bond will be without monetary term, surety or security.
(3)In the event that the husband fails to enter into a bond in accordance with Order 2, a Warrant of Commitment shall issue in the usual form directing:
(a)the Marshal, all officers of the Australian Federal Police and all officers of the police forces of all the States and Territories of the Commonwealth of Australia to take the husband and convey him to the Yatala Labour Prison, Northfield, South Australia, and to deliver him to the General Manager of the Yatala Labour Prison, together with the Warrant; and
(b)the General Manager of the Yatala Labour Prison, to receive the husband into custody and keep him in accordance with the order of 30 November 2017, a copy of which is attached to the Warrant.
(4)In the event that the husband enters into such a bond but it is alleged that during the term of the bond he has committed a breach of conditions of the bond, he shall be brought before Justice Loughnan, or in his absence another judge of the Family Court of Australia, to show cause why the term of imprisonment imposed by these orders should not be served forthwith.
On 22 February 2019 Berman J listed the matter for final hearing as a five day matter on 18 November 2019. His Honour made an extensive raft of procedural orders in relation to trial preparation.
On 23 July 2019 the matter came into my docket and the trial eventually commenced on 27 July 2020. The matter continued on each of 28 and 29 July 2020 but as a result of the second respondent suffering a serious fall in the early hours of 30 July 2020 the matter ultimately resumed on 16 November 2020 and concluded on 17 November 2020.
At the time of trial the wife sought final orders in terms of her Fourth Further Amended Initiating Application filed on 3 July 2020 in the following terms:
In full and final settlement of any claim that the Applicant or the first Respondent may have against the other for the settlement [of] property or alteration of interests in property pursuant to section 79 of the Family Law Act 1975 (as amended) (Cth) (“the Act”) and in full and final settlement of the Applicant's claims against the second Respondent:
1.[order not sought]
2.That in relation to the first Respondent's superannuation entitlements with the [Superannuation Fund 1] (“SMSF”):
2.1.that paragraphs 2.1 to 2.5 of these orders are binding on the trustees of the SMSF;
2.2. that in accordance with section 90MT(1)(b) of the Act:
2.2.1.the Applicant is entitled to be paid the specified percentage out of the first Respondent's interest in the SMSF;
2.2.2.the first Respondent's entitlement in the SMSF is correspondingly reduced by force of the order;
2.2.3.the specified percentage for the purposes of the order is 100% of the current balance of the said SMSF;
2.3.that the trustees of the SMSF do all things and sign all documents necessary to:
2.3.1.calculate in accordance with the requirements of the Act and the Family Law (Superannuation) Regulation 2001 (Cth) (“FLS Regulations”) the entitlement awarded to the Applicant in the immediately preceding paragraphs of this order; and
2.3.2.pay the entitlement whenever the trustee makes a splittable payment from the first Respondent's interest in the SMSF;
2.4.that this order has effect from the operative time and the operative time is the beginning of the day upon which this order is made;
2.5.that, after service of the payment split notice in accordance with the Superannuation Industry (Supervision) Regulations 1994 (Cth) (the “SIS Regulations”) the first Respondent shall do all things and sign all documents necessary, including but not limited to exercising the Applicant's request in accordance with the SIS Regulations for the transfer or rollover of the non-member spouse's interest in the first Respondent's name in the SMSF to the Applicant;
2.6.there be liberty to each party and the trustees of the SMSF to apply regarding the implementation of these orders affecting the interests of the first Respondent and the Applicant in the SMSF;
2.7.upon the implementation of these orders, the first Respondent do all such things required to effect his resignation as a the (sic) trustee of the SMSF and his entitlement to membership of the SMSF.
3.That the first and second Respondent[s] sign all such documents as may be necessary to authorise the Commonwealth Bank [ZZ Street] to pay to the Applicant the entirety of the balance of those monies held in the joint names of the parties with that bank being A/C No. […] 31 to an account nominated in writing by the Applicant forthwith upon the making of these orders.
4.That in the event that the amount paid by or on behalf of the second Respondent to the National Australia Bank (“NAB”) to enable the NAB and the second Respondent to enter into a Deed of Settlement whereby the NAB covenant and agree to release the second Respondent from liability for repayment of facilities with that bank being Mature Facilities Account No. with the last four digits […] 76 (incorporating NAB Business Markets- Flexible Loan Account No. with the last four digits […] 32) (“the Facilities”) is not less than $940,000.00 (“the NAB payment”) then and in that event the second Respondent and/or his nominee be entitled to retain the equity in the property situate at [R Street], [Suburb S] (“[R Street]”) free from any claim or demand on the part of the Applicant.
5.That in the event that the NAB payment is less than $940,000.00 then and in that event the second Respondent shall pay to the Applicant such further sum as this Honourable Court determine is just and equitable having regard to the evidence before the Court in relation to the quantum of the NAB payment.
6.That to facilitate the making of the orders referred to in paragraphs 3-5 herein:
6.1pursuant to section 78(1) of the Act the Court declare that the second Respondent holds his estate and interest in that real property situate at and described as [R Street], [Suburb S] in the State of South Australia (hereinafter “[R Street]”) subject to a resulting and/or constructive trusts on behalf of the Applicant and the first Respondent.
6.2in the alternative to paragraph 6.1 herein, and pursuant to section 78(1) of the Act there be a declaration made as to the legal and equitable interests of the Applicant and the first Respondent in [R Street].
6.3that there be an inquiry and accounting as to the financial and non‑financial contributions of the Applicant and the first Respondent to the acquisition, costs, improvements, maintenance and upkeep of [R Street].
6.4that the second Respondent do pay to the Applicant and the first Respondent such sums as may be necessary to satisfy the entitlements of the Applicant and the first Respondent pursuant to paragraphs 6.1, 6.2 and 6.3 hereof.
7. [order not sought]
8. [order not sought]
9. [order not sought]
10. [order not sought]
11. [order not sought]
12. [order not sought]
13. [order not sought]
14. [order not sought]
15. [order not sought]
16. [order not sought]
17. [order not sought]
18.That pursuant to sections 72 and 74 of the Family Law Act 1975 (Cth) (As Amended) the first Respondent do pay to the Applicant spousal maintenance in the amount of $600 per week until 20 February 2028 such maintenance to be paid in the same manner as provided in order 1 of the Orders of 10 June 2016 and order 2 of the Orders of 8 December 2016.
19.That upon the implementation of the above orders the Applicant do all such things as may be reasonably required to effect the removal of the Caveat lodged by her over [R Street].
20.Pursuant to section 157 of the Evidence Act (Cth) 1995 (sic) the Reasons for Judgment of Loughnan J in these proceedings of 31 August 2017 and 20 November 2017 be admitted into evidence at the trial of these proceedings.
21.That this Honourable Court fix the costs payable by the first Respondent pursuant to the Judgment of Loughnan J of 20 November 2017 in the amount of $50,000.00.
22.That the first Respondent
husbandpay the Applicant’swife’scosts of and incidental tothis Applicationthese proceedings (save for the proceedings heard by Loughnan J in his Judgment of 31 August 2017).23.Such further and other Orders as this Honorable Court deems fit.
On 16 June 2020 the husband filed a Response to the wife’s Third Further Amended Initiating Application (her Fourth Further Amended Initiating Application having not been filed by that date) and sought the following final orders:
1.That the Application for Final Orders sought by the Applicant in her Third Further Amended Initiating Application filed 10 June 2020, whether Orders sought regarding the First Respondent or the Second Respondent or both Respondents, be dismissed.
2.That in full and final settlement of any claim that either the Applicant or First Respondent may have against the other for settlement of property or alteration of interest in property:
2.1Regarding their respective entitlements within [Superannuation Fund 1] (the SMSF)
2.1.1the parties take all steps necessary and sign all documents to cause the real property at [AB Street, Suburb AC] to be sold, upon such terms as are mutually agreed, with the net proceeds of sale to be deposited into a bank account in the name of the SMSF (if there is not such a bank account currently) and combined with any other assets of the SMSF which the parties are to ensure are paid into such a bank account and if necessary to be converted to cash for that purpose,
2.1.2the parties engage a mutually agreed accountant to take all steps and make all payments (using the funds in the said bank account) to meet all regulatory requirements with which the SMSF is legally obliged to comply, including paying any taxation and accounting fees, to enable the net assets of the SMSF to be divided between the Applicant and the First Respondent so that she has the benefit of 50% thereof and he of 50% thereof,
2.1.3there be such superannuation splitting orders and orders requiring the parties to effect rollovers of their respective entitlements as will enable each to pay his or her percentage share of the net assets of the SMSF into a new fund of that party's choice,
2.1.4that thereafter the SMSF be wound up at the parties' equal shared cost.
2.2That within 14 days of the date of a Final Order, the three parties take all steps necessary to cause the funds held in the CBA account [... ...]31 in their three names to be disbursed:
2.2.1 as to 50% thereof to the Second Respondent,
2.2.2 as to a further 25% thereof to the Applicant,
2.2.3 as to a further 25% thereof to the First Respondent,
And do thereafter close such bank account at their equal cost as to any applicable bank fees,
2.3That the Applicant and the First Respondent take all steps necessary to sell the [transport entity] in his sole name, applying the sale proceeds to pay all monies owed to [AD Pty Ltd], and paying any additional debts then owed, equally, but taking into account the First Respondent having started paying on 5 May 2020 a sum of $500 per month and all current outstanding fees, with the Applicant to make such payment as will result in the parties’ payments being equal.
2.4That the Applicant and First Respondent retain all other real and personal property in his or her sole name or possession free of any right or claim or entitlement of the other.
2.5That the Applicant and First Respondent pay to the exoneration of the other any debt and liability in their respective sole names.
2.6That the Applicant and First Respondent release each other from any debt or liability owed by one to the other.
3.That this Honourable Court note and/or declare that the Second Respondent holds 100% of the legal and equitable interest in the property at [R Street], [Suburb S] (of which he is the sole registered proprietor) for himself entirely and not in any respect in trust for the benefit of the Applicant and/or the First Respondent.
4.That within 14 days of the date of a Final Order the Applicant remove the Caveat placed by her upon the Certificate of Title to the home of the Second Respondent, at her cost in all things and further that she file a Notice of Discontinuance in the District Court in respect of the Action commenced by her there.
5.That the Order made on 10 June 2016 providing for the First Respondent to pay spousal maintenance at the rate of $600 per week to the Applicant be discharged.
6.That the First Respondent having paid a lump sum of $50,000 to the Applicant in December 2015/January 2016, (and noting that he has incurred significant credit card debt and liability for his own legal fees since then) each party pay his or her own legal fees without contribution by the other.
7.That, should this Honourable Court determine to Order a payment by the First Respondent of the Applicant's legal costs, this Honourable Court fix the costs payable by the First Respondent pursuant to the Judgement of Loughnan J on 20 November 2017, following details of the costs incurred being provided to this Honourable Court and in a sum not greater than $30,000, free of interest, such fixed sum to be paid by the First Respondent to the Applicant by periodic payments of an amount determined but not greater than $600 per week, with the first such payment to be made upon the conclusion of the spousal maintenance payment currently to be paid pursuant to the Order made by Berman J on 10 June 2016, and should the insurance payments which the First Respondent receives at present cease before payment is made in full, then at such other rate of periodic payment as is agreed or ordered by this Honourable Court.
8.That the Applicant pay the sum of $2,750 being one third of the Mediation fee paid in full by the Second Respondent, to the Second Respondent.
9.That, other than as set out in the preceding paragraph, each party pay his or her costs of and associated with the proceedings before this Honourable Court.
10.Such further or other Order as this Honourable Court deems appropriate.
On 22 June 2020 the second respondent filed a Response to the wife’s Application seeking the following final orders:
1.The application for final orders by the Applicant in her Third Further Amended Initiating Application be dismissed.
2.The Applicant and First Respondent sign all documents as may be necessary to authorise the Commonwealth Bank, [ZZ Street] to pay to the Second Respondent 50% of the balance of those monies held in the joint names of the parties with that bank being account number […] 31 to an account nominated in writing by the second respondent forthwith upon the making of these orders.
3.That the caveat lodged by the Applicant on the property situated at [R Street], [Suburb S] ([Suburb S] Property) be removed by the Applicant at her cost within 14 days of the date of a Final Order by the Family Court.
4.Further, in relation to the [Suburb S] Property, upon the making of the Family Court orders:
4.1The District Court proceedings relating to the [Suburb S] Property be discontinued with no order made as to costs; and
4.2 Any injunctive orders regarding the [Suburb S] Property be discharged.
5. The Family Court note and/or declare that:
5.1The Second Respondent holds 100% of the legal and equitable interest in the [Suburb S] Property for himself entirely; and
5.2The Applicant and the First Respondent make no claim or assert any entitlement in relation to the [Suburb S] Property.
6.That the Applicant pay the Second Respondent's costs of and incidental to these proceedings.
Between the matter coming into my docket in July 2019 and the final hearing the wife sought numerous interim and procedural orders primarily directed to obtaining information, not only from the husband but from members of his family and individuals who had either worked in or for the Forlan/F Group, with respect to details of the disposition of assets of various entities in that group post-separation.
The Court raised its concern as to the costs being incurred by the wife on several occasions, particularly taking into account that by that time it was abundantly clear that all the parties’ financial circumstances had changed significantly since the time the husband and wife separated in February 2013.
Her pursuit of the information must be seen in the light of the husband’s proven disregard of previous orders of the Court designed to ensure some level of transparency with respect to his conduct regarding the disposition of various assets of the group. However, it was noted that receivers had been appointed as long ago as November 2016 and no subpoenas had been issued with respect to that receivership.
The evidence before the Court was that the National Australia Bank was still owed somewhere between $2-$2.5 million with respect to a commercial bill where the husband, the wife and the second respondent were the borrowers and the only evidence as to any assets remaining available for distribution suggested they were confined to the husband and wife’s interest in their self‑managed superannuation fund, some funds standing to the credit of all three parties arising from confidential litigation in the Federal Court and a house property owned by the second respondent. This house at R Street, Suburb S was the only remaining security for the commercial bill.
Issues in dispute
It was the wife’s case that she should be entitled to retain all of the funds standing to the credit of all three parties in the Commonwealth Bank of Australia as well as one hundred per cent of the assets held in her and the husband’s self-managed superannuation fund.
It was her position that the husband had utilised, to her exclusion, funds raised by him from the sale of Forlan/F Group plant and equipment as well as real estate owned by the husband and wife in their personal capacities, for his own benefit, his family’s benefit and/or for unexplained purposes, both prior to and to some extent subsequent to receivers and managers being appointed to the business entities comprising the group.
The husband sought that the assets held by the superannuation fund be divided equally between he and the wife. He further sought that each of he and the wife retain twenty-five per cent of the cash deposit in the Commonwealth Bank of Australia with his father, the second respondent, to retain fifty per cent of those funds.
The second respondent sought fifty per cent of the funds in the Commonwealth Bank of Australia and that the wife remove the caveat on the property registered in his name at R Street, Suburb S, as well as a declaration that he holds one hundred per cent of the legal and equitable interests in the Suburb S property for himself and that the husband and wife have no claim in relation to that property.
Ultimately, there was no dispute with respect to the second issue raised by Mr Forlan Senior notwithstanding paragraphs 4, 5 and 6 of the wife’s Fourth Further Amended Initiating Application filed 3 July 2020 which were not pursued at trial.
Principles involved in determination of Applications for settlement of property
The husband and wife no longer share or intend common use of their property and are not in agreement as to how it should be divided. Each party seeks specific orders altering their interests in property.
The husband and wife cohabited between 1985 and 2012, with final separation occurring in February 2013.
Between approximately February 2012 and February 2013 they lived in separate residences, but both deposed to separating in February 2013 in their respective trial affidavits. I am satisfied the period of cohabitation was between 27 and 28 years.
I find in those circumstances that it is just and equitable to make and order adjusting the property interests of the husband and wife.[4]
[4] Stanford & Stanford (2012) FLC 93-518.
For reasons to which I will refer later herein I am not satisfied that it is just and equitable to make any order adjusting the property interests of the second respondent. I will however make orders confirming his property interests.
I intend to order that the wife remove the caveat on the property owned by the second respondent.
There was no evidence that the funds standing to the parties’ credit arising from the Federal Court litigation were held other than in equal shares, namely one third each.
Mr Forlan Senior adduced no evidence as to any District Court proceedings and I will dismiss that part of his application. I will also order the declaration sought by him.
None of these orders will alter his existing interests in the cash at bank or real estate owned by him.
In order to assess the husband and wife’s competing proposals the Court must:
(a)determine the asset pool available for distribution;
(b)consider and make findings as to their respective contributions to that pool in accordance with the provisions of s 79(4) of the Family Law Act 1975 (Cth) (‘the Act’);
(c)consider and make any necessary adjustments to those findings taking into account the relevant matters under the provisions of s 75(2) of the Act; and
(d)having considered these matters and in arriving at a determination as to the distribution of the husband and wife’s assets, the Court must be satisfied that such distribution effects justice and equity as between them.
Evidence at trial
The wife relied on her Fourth Further Amended Initiating Application filed 3 July 2020, together with her affidavit filed 30 June 2020, her financial statement filed 30 June 2020 and the affidavit of her witness Mr AX filed 30 June 2020. Both the wife and her witness Mr AX were cross-examined by the husband.
The husband’s sister Ms AE and his brother-in-law Mr AE were subpoenaed to give evidence by the wife and were examined by the wife’s counsel.
The husband relied on his Response to Final Orders filed 16 June 2020 and his trial affidavit filed 17 July 2020. He did not file a financial statement. He was cross-examined by the wife’s counsel.
The husband’s father relied on his Response to the wife’s Third Further Amended Initiating Application filed on 22 June 2020 and his trial affidavit filed on 17 July 2020. He did not file a financial statement. He was cross-examined by the wife’s counsel.
Asset Pool
It was the wife’s evidence, contained in her financial statement filed 30 June 2020 that as at that date the amount standing to the credit of the husband, the wife and the second respondent in Commonwealth Bank account BSB … account number …31 was $313,870. In her trial affidavit filed 30 June 2020 she deposed to a sum of $313,000.
Neither the husband nor the second respondent adduced any further evidence to dispute either of those amounts but for the purposes of these reasons I intend to use the amount of $313,870 as the basis for calculations.
The asset pool available to the husband and the wife comprised:
(a)their share of the funds referred to in paragraphs 101 and 102 above; and
(b)the assets of the [Superannuation Fund 1].
The wife’s evidence with respect to the husband’s and wife’s superannuation interests was contained in paragraph 9(a) of her trial affidavit wherein she said, when referring to the asset pool at the date of trial, “a modest superannuation interest of the husband and I comprised of a unit at Suburb AC and a small amount of cash (total value E$350-$400,000)”. In paragraphs 322 and 323 of her trial affidavit the wife said:
322. The husband and I are members of the [Superannuation Fund 1].
323.The only significant asset of the super fund is a modest residential dwelling at [Suburb AC] and cash formerly invested with [Superannuation Fund 3] (but currently held [in] my solicitors trust account pending its reinvestment into an industry fund) totalling E$350-$350-$400,000 (sic).
In Part J of the wife’s financial statement filed 30 June 2020 in paragraph 45 she deposed to an interest in “[Superannuation Fund 1] – financials currently being updated by Court appointed accountant” with the gross value “Not Known”.
The husband did not file a financial statement. In paragraph 8(a) of his trial affidavit he repeated the words contained in paragraph 9(a) of the wife’s trial affidavit to which I have referred.
No evidence was adduced by either party as to whether their member benefits in the self‑managed superannuation fund were equal or otherwise.
In circumstances where the only assets of any significant value available to the husband and the wife at trial were the assets in the Superannuation Fund 1, the absence of evidence particularising the value of the fund at that time and the value of the member benefits of each of them was surprising to say the least.
In closing submissions the wife’s counsel, when submitting that the wife should receive the totality of the assets of the self-managed superannuation fund, referred to it consisting of a small unit with a value of $350,000 to $400,000, that the wife could not live there as it was owned by the superannuation fund and therefore against rules pertaining to superannuation, and she would only get the benefit of the fund in any event at retirement age in 2028.
In the wife’s financial statement filed 30 June 2020 she deposed to an interest in the Superannuation Fund 2 (member number …73) in the sum of $10,823. No evidence was adduced by her as to when she joined that fund, or whether the value standing to her credit was acquired during the course of cohabitation.
I note however that the matter was not addressed at all by the husband and he sought no orders with respect to that fund.
What was important common ground but essentially treated as a “sideline” issue by both the husband and the wife, was the liability at the date of trial of the first and second respondents to National Australia Bank with respect to a commercial bill.
All three parties conducted their cases without reference to the outstanding commercial bill other than in the broadest sense. None of the parties sought any orders with respect to that liability.
No specific evidence was adduced as to the exact amount outstanding as at the date of trial although the wife deposed in paragraph 167 of her trial affidavit to the balance of that debt to the best of her knowledge as at 30 June 2020 being between $2-$2.5 million.
The only evidence adduced by the husband as to the amount of the debt was contained in annexure “MF1” to his trial affidavit being a letter of demand to he and the wife from National Australia Bank dated 18 May 2017 claiming a total amount owing in the sum of $3,614,120.28.
The second respondent adduced no evidence about the amount outstanding with respect to the commercial bill as at the date of trial.
At trial the second respondent remained living in a property at R Street, Suburb S, a property owned in his sole name which provided accommodation for both he and the first respondent.
Although the wife’s formal application sought a payment from the second respondent in such amount as the Court deemed just and equitable in the event that any settlement was to be entered into between National Australia Bank and the second respondent enabling the second respondent to retain the property for a price less than $940,000, that part of the application was not actively pursued by the wife at the conclusion of the trial.
The wife asserted that the Suburb S property had been valued at something in the vicinity of $1.2 million at a time when the daughter and son-in-law of the second respondent were entering into negotiations with National Australia Bank to purchase the property for $940,000 in late 2017 or early 2018.
The evidence at trial was that those negotiations had taken place but they had not come to fruition. There was no evidence before the Court as to whether National Australia Bank would be prepared to renew those negotiations in the future. Neither Mr nor Ms AE were able to say whether they would have the money or still be prepared to purchase the property for their father in the future.
As at trial the property remained security for the National Australia Bank commercial bill debt and had been caveated by the wife.
In paragraphs 49 and 50 of the wife’s trial affidavit she deposed to the National Australia Bank inviting she, the husband and the second respondent to put a joint proposal to the bank with respect to the sale of the properties at Suburb D and R Street or, if that was not possible, to put individual proposals. No joint proposal was put to the bank.
The wife’s position was that she had cooperated with the bank in selling the Suburb D property that had been registered in her sole name and reached an accommodation with it as to it retaining all the proceeds of sale, in consideration of a covenant that she would not be pursued further with respect to her liability for the bill.
It was the husband’s evidence that he chose not to lodge a caveat on the Suburb D property as he believed it was the correct decision to sell the property and continue to pay down the incurred debt.[5]
[5] Husband’s trial affidavit – paragraph 53.
As the husband deposed in that same paragraph, the Suburb D property was “also part of the mix”, namely one of the properties providing security for the National Australia Bank commercial bill.
The wife’s sensible approach to negotiations with National Australia Bank was not frustrated in any way by any action taken by the husband, and the benefit to the wife was that she achieved release from her personal liability under the bill.
The property at Suburb D was purchased by the husband and wife during the period of the marriage. There was no evidence adduced to support any contention that the husband had any less of an interest in the property than did the wife notwithstanding that it was registered in her sole name, as was the Suburb AF property.
The end result of the wife’s reasonable and successful negotiation was that the husband was left with no assets against which he could negotiate a release from his personal liability under the commercial bill debt arrangement with National Australia Bank. At trial he therefore remained personally liable, together with his father, for a debt to National Australia Bank in the amount of approximately $2.5 million.
The reality of this matter is that if the assets of the husband and wife held in their self-managed superannuation fund were recoverable by the liquidator there would be almost no assets available for distribution between them.
I accept the husband’s evidence that any of the funds awarded to either he or his father from the “[BA Investment Scheme]” litigation funds may be claimed by National Australia Bank.
Taking all of those matters into account I find that the assets available for distribution between the husband, the wife and the second respondent are the fruits of the Federal Court litigation standing to the credit of all three parties in the Commonwealth Bank of Australia in the amount, for the purposes of these reasons, of $313,870. I am satisfied the amount of interest that would have accrued on that fund would be minimal and I accept that the initial capital deposit may have been a sum lesser than $313,870.
I find that the assets available for distribution between the husband and the wife comprise two thirds of the litigation proceeds, the value of which I fix as best as I am able at $209,247 together with the assets of their self-managed superannuation fund. The only evidence adduced by both the husband and the wife as to the value of the assets of the fund was, as referred to in submissions by the wife’s counsel, a total value of somewhere between $350,000 and $400,000. I intend to adopt the sum of $400,000 noting that the assets include a residential dwelling.
For the purposes of these reasons therefore I find that the total assets available for distribution between the husband and the wife total $609,247.
Contributions
The husband and wife cohabited for a period between 27 and 28 years.
There was no evidence adduced by the wife as to her employment history save and except for having worked in the office of the Forlan/F Group in the latter part of the marriage.
They had two children who are now adults.
It was the wife’s case that the husband operated the Forlan/F Group throughout the period of cohabitation and post-separation. That evidence is supported by that of the second respondent. It was conceded by the husband.
I accept the wife’s evidence that the financial decisions regarding the operation of the Forlan/F Group during cohabitation and for a period post-separation were made by the husband and acceded to without question by her.
I accept the evidence of the second respondent contained in his trial affidavit that the husband operated the Forlan/F Group effectively as his own business and that the second respondent trusted him to do so and to protect his (the second respondent’s) interests.
Neither the husband nor the wife adduced evidence as to the value of any assets brought in to the marriage by either of them.
It was the husband’s evidence, undisputed by the wife, that at the time of the marriage in 1987 he had a twenty-five per cent interest in the business of F Pty Ltd. He deposed to his father and his mother owning seventy-five per cent of the company which involved hiring equipment.[6]
[6] Husband’s trial affidavit – paragraph 25.
It was the wife’s evidence that at the time of the marriage in 1987 the husband had an interest in the business of F Pty Ltd, eventually acquiring a significant shareholding. She said that thereafter a number of other “corporate entities” were created in which the husband and wife were directors and shareholders. The wife described the series of companies as the Forlan/F Group.[7]
[7] Wife’s trial affidavit – paragraph 31.
In paragraph 32 of the same affidavit she deposed to becoming a director of F Pty Ltd and the sole director and shareholder of I Pty Ltd as well as having directorships and shareholdings in a number of other entities within the group including in particular Forlan Investments Pty Ltd.
It appeared that at the time the husband and wife separated some twenty corporate entities were associated with the Forlan/F Group. This group was owned primarily by the husband and wife but the husband’s father also had a significant financial interest at least in F Pty Ltd. Sometime in 2012 the group’s debt was refinanced with National Australia Bank to the extent of a commercial bill facility in the sum of $3.5 million. Security for the bill involved not only group assets but personal assets of all three parties.
In paragraph 25 of the husband’s trial affidavit he deposed to the wife becoming a director of F Pty Ltd after the death of his mother in 1994. The wife deposed to the business being:
…essentially conducted on behalf of entities controlled by my former husband and I, although there were minority shareholders in some of the corporate entities. The main one was [E Pty Ltd]. Those minority shareholders were employees or former employees of the [Forlan/F Group].[8]
[8] Wife’s trial affidavit – paragraph 33.
In paragraph 34 of her trial affidavit the wife deposed to the husband having:
…the day to day conduct and control of the [hire] business, made all operational decisions and performed all executive functions of the group entities…
In paragraph 30 of the husband’s trial affidavit he deposed to the business being “essentially conducted by me but there were some minority shareholders.”
The second respondent deposed to allowing the husband to run the business as he was unable to do so because of the limitations of his language skills. He deposed to being paid $800 net per week, working either five or six days a week and allowing the husband to manage the finances.[9]
[9] Second respondent’s trial affidavit – paragraphs 27 and 28.
The husband did not dispute the evidence of the wife contained in paragraph 35 of her trial affidavit that the husband’s father’s role “was that of a labourer in respect of contracts secured by my former husband.”
It appeared to be common ground that in 1997 the husband and wife purchased two blocks of land at Property 1, H Street, Suburb S and Property 2, H Street, Suburb S, built homes on each block, sold Property 2, H Street, Suburb S at and moved in to the house they built at Property 1, H Street, Suburb S.
The husband worked in the family business, F Pty Ltd throughout the period of cohabitation and post-separation until it was taken over by National Australia Bank. The husband’s parents owned a seventy-five per cent interest in the business and the husband a twenty-five per cent interest. The husband’s father was a tradesperson.
There was no evidence adduced by the wife as to her occupation at the time she and the husband commenced cohabitation or at any time prior to the birth of their first child Ms B in 1988.
In paragraph 289 of the wife’s trial affidavit she deposed to being actively engaged in the purchase and renovation of real properties throughout the marriage.
The business in which the husband worked with his father appeared to provide a satisfactory standard of living for the husband and wife and their children, as well as the husband’s father, with the husband taking the primary lead in the running of the business, particularly after the death of his mother in 1994.
The only evidence adduced by the wife as to any work undertaken by her outside of the home during the period of cohabitation was that contained in paragraph 290 of her trial affidavit where she deposed to working in the administration of the Forlan/F Group in the last years of the marriage. The wife had become a director of F Pty Ltd after the death of the husband’s mother in 1994.
Thereafter, various other corporate entities were created with the husband and wife as directors and shareholders. Both describe those companies as the Forlan/F Group.
Both the husband and wife were directors and shareholders of Forlan Investments Pty Ltd and the wife was the sole director and shareholder of I Pty Ltd. The company E Pty Ltd also included minority shareholders who were employees or former employees of the Forlan/F Group.
It was common ground that in 2000 F Pty Ltd purchased vacant land at AG Street, Suburb K.
It was also common ground that in 2007 a half interest in that property was transferred to Forlan Investments Pty Ltd, a company in which the husband’s father had no interest.
On 4 April 2016 the second respondent filed an affidavit in respect of which the husband was cross-examined. He confirmed that he had attended at AH Lawyers with his father to assist in the preparation of that affidavit.
In paragraph 25 of that document the second respondent deposed as follows:
On 27 June 2007, [F Pty Ltd] transferred a 50% interest in the property at [AG Street], [Suburb K] to [Forlan Investments Pty Ltd]. I do not believe that [Forlan Investments Pty Ltd] actually paid [F Pty Ltd] for this 50% interest. It was arranged by [Mr Forlan] without any consultation with me, even though I owned 75% of the company. In fact, [Mr Forlan] told me that this was a mistake which arose out of a misunderstanding between the Conveyancer (engaged to transfer a small portion of the front of the property which was being sub-divided and sold off) and the Lands Titles Office. [Mr Forlan] told me that as a result of the mistake an entire 50% of the property was transferred to [Forlan Investments Pty Ltd] and for no consideration… [Mr Forlan] subsequently told me that this had all been rectified and that [F Pty Ltd] owned 100% of the [AG Street] property again. I have now been shown a copy of the Certificate of Title for [AG Street] and it is clear that [Forlan Investments Pty Ltd] is still registered as the owner of a 50% interest in the property. [Mr Forlan] has told me, however, that he and the Conveyencer (sic) are contuing (sic) in their efforts to reverse this error and to return 100% ownership of the property to [F Pty Ltd]…
No evidence was adduced by the husband to support any efforts being made by him to remedy a “mistake” with respect to the transfer of that land.
In paragraph 16 of the same affidavit of the second respondent he deposed as follows:
In 1994 my wife passed away. With the loss of my wife who had also been my business partner I relied more and more on [Mr Forlan] to assist in running [F Pty Ltd] and the building business. As it transpired [Mr Forlan] gradually took over management and started to exclude me from his business plans, the corporates structure he set up and the financial arrangements for the business. Ultimately, although I continued to work for [F Pty Ltd] as [a tradesperson] in the company, [Mr Forlan] excluded me completely from all business and financial decisions and I now realise that I put too much trust in him and that he has taken advantage of me and my assets.
Notwithstanding that at the time of the transfer of the half interest in the Suburb K property the wife was a director of Forlan Investments Pty Ltd as well as the husband, I am satisfied that with that decision the husband continued his pattern of financial control of the various corporate entities, that the wife signed the documents required of her without question as was her pattern until shortly after separation, and the second respondent signed the documents required of him by his son without having any proper understanding of what he was signing.
The transfer of the half interest in the property, which I am satisfied occurred solely at the instigation of the husband in the absence of any real interest on the part of the wife and any understanding on the part of the second respondent, was based on the husband’s decision
“to move assets into our own entities by way of preventing my sister [Ms AE] from claiming any of our assets should my father [Mr J Forlan] pass away.”[10] I do not accept the husband’s evidence contained in that paragraph as to these decisions being made jointly with his wife.
[10] Husband’s trial affidavit - paragraph 26.
No evidence was adduced by him as to what particular assets he was referring to, nor did he adduce evidence as to any particular discussions with the wife relating to their alleged joint intent to thwart the wishes of his parents that his sister “be privy to half of their 75% share of the business.”[11] He did not cross-examine the wife as to that issue.
[11] Husband’s trial affidavit - paragraph 26.
Likewise, no specific evidence was adduced in respect of the contents of paragraph 27 of his trial affidavit where he deposed, inter alia, to he and the wife believing it was their right to ensure that any growth would not be shared by his sister such that they created other entities as he, the wife and his father grew the business.
I find that the husband lied to his father directly and by omission with respect to the transfer of fifty per cent of the Suburb K property owned by F Pty Ltd to Forlan Investments Pty Ltd, a company in which only he and the wife had shareholdings and of which they were directors.
I am satisfied that the second respondent had no knowledge until many years later of a transfer of fifty per cent of the property at AG Street, Suburb K, until then owned by F Pty Ltd, the company commenced by the second respondent and his wife, to the company owned by the husband and the wife, namely Forlan Investments Pty Ltd.
In 2005 the husband and wife purchased a three-story townhouse at Suburb D registered in the sole name of the wife, and in 2006/2007 the husband, the wife and the husband’s father purchased a block of land at AJ Street/Corner of R Street, Suburb S.
It was common ground that the Suburb S property was subdivided and developed, requiring the demolition of an existing dwelling. Three dwellings were then built, two were sold and the third retained by the husband’s father.
The wife’s evidence was that that property was transferred to the husband’s father. She deposed in paragraph 273 of her trial affidavit to funds for that property coming primarily from group entity funds and funds borrowed and repaid by she and the husband personally.
The husband deposed to his father purchasing the property with funds from the sale of his previous home at Property 2, R Street, Suburb S and personal funds.[12]
[12] Husband’s trial affidavit - paragraph 33.
In the affidavit of the second respondent filed 4 April 2016 he deposed to selling a property at R Street Property 2, Suburb S in 2006 for $726,000 and using the proceeds of that sale to purchase the property at R Street, Suburb S from F Pty Ltd.
He further deposed to the property at Property 2, R Street, Suburb S being held by the AK Trust. He deposed to the corporate trustee of that entity being AL Pty Ltd of which he, his daughter Ms AE, and the husband were the directors. The property at R Street, Suburb S was however registered in the sole name of the second respondent.
He deposed to that occurring in circumstances where the husband, his sister and he agreed that the home did not need to be held in trust any longer because of promises made to him by the husband to keep it separate from the building business and from the financial arrangements for the Forlan/F Group.
All of those matters are referred to in paragraphs 17 to 22 of the affidavit of the second respondent filed 4 April 2016.
In 2009 the husband and wife purchased a property in Suburb AF for $510,000 registered in the sole name of the wife.
There was no evidence adduced by either the wife or husband as to any dispute between them with respect to the various purchases of real estate.
It was the husband’s evidence, not disputed by the wife, that between 2008 and 2012 the various companies associated with the Forlan/F Group were adversely affected as a result of the global financial crisis resulting in exposure to bad debts.[13]
[13] Husband’s trial affidavit - paragraph 34.
In 2012 the husband negotiated a commercial bill facility of approximately $3.5 million with the National Australia Bank to consolidate debts. In paragraph 35 of the husband’s trial affidavit he deposed to he, the wife and his father being the joint borrowers of those funds.
In cross-examination it was the husband’s evidence that the funds borrowed were not just invested in the Forlan/F Group but used to refinance mortgages over real estate previously held by Bank 2.
He conceded that he was in control of the dealings with respect to the obtaining of the commercial bill and the apportionment of the funds borrowed to the commercial entities and the real estate liabilities.
He conceded that his father, although one of the debtors under the refinancing arrangements, was “not across” those dealings in 2012.
I referred earlier herein to the evidence of the second respondent regarding the house at R Street, Suburb S being placed in his sole name rather than in the name of a trust in circumstances where he trusted his son to keep that property out of any financial arrangements of the Forlan/F Group or any of the business dealings of the husband and wife.
I accept the evidence of the second respondent that he agreed to the husband obtaining the commercial bill facility in 2012 in the sum of approximately $3.5 million, but only on the basis that he understood that his property at R Street, Suburb S would not be used as security for any such advance.
I find, having observed and listened to the second respondent during the proceedings, that he had no knowledge of his property being used as security for the commercial bill at the time that facility was negotiated by the husband. It is unclear from the evidence when he became aware of that situation but I find on his evidence that he was eventually contacted by National Australia Bank with respect to discussing what action they were likely to take with respect to the sale or otherwise of that property and that in that regard he was assisted by his daughter Ms AE.
Not only have I found earlier in these reasons that the husband lied to his father with respect to the transfer of the Suburb K property occurring by way of a “mistake”, but I also find that he lied to him, either directly or by omission, such as to deprive him of the knowledge of the R Street property being included as security for the commercial bill.
I am not satisfied that any actions they took were with the purpose of the company group, previously owned by the husband, the wife and his father, “rising from the ashes” in another guise for the benefit of the husband.
It was unfortunate that notwithstanding significant efforts made by all three parties over many years their business was ultimately unsuccessful and most of their assets lost.
I find that the husband and the wife contributed equally to the acquisition, conservation and improvement of their remaining assets by way of their respective financial and non‑financial, direct and indirect, and parenting and homemaking contributions. These comprise their superannuation entitlements and their interest in the “[BA Investment Scheme]” litigation funds.
I am not satisfied that either the husband or wife contributed in any way to the house property at R Street, Suburb S owned by the second respondent in his sole name.
I accept the evidence of the second respondent as referred to in paragraphs 174 to 176 inclusive herein as to his acquisition of that property.
I reject the evidence of the wife as to that issue which was vague and unhelpful.
I am satisfied that what were described as the proceeds of the “[BA Investment Scheme]” litigation were equally contributed to by each of the wife, the husband and the second respondent.
I have earlier determined that for the purposes of these reasons I adopt a figure of $313,870 as the amount available to all three parties resulting from the Federal Court litigation.
Neither the husband nor the second respondent adduced any evidence to support their contention that the funds were awarded on the basis of fifty per cent in favour of the second respondent and twenty-five per cent in favour of each of the husband and the wife.
It was the wife’s evidence that the settlement of the Federal Court proceedings that led to the award to all three of the parties was confidential. In the absence of any evidence to the contrary, I am satisfied that each of the three parties contributed to one third of those funds.
I accept that the husband had a significant amount of his legal fees paid from funds generated through the various entities in the Forlan/F Group but I am not satisfied on the evidence of either party that the amount can be properly quantified. This facility was not available to the wife.
I find that the issue is better addressed in my consideration of s 75(2)(o) of the Act.
I find that monies expended from group funds for the purposes of obtaining valuations and commercial advice were appropriate in circumstances where the business gradually ceased to be viable and commercial decisions needed to be made during that process. I am not satisfied that the husband benefitted personally in that regard such that there should be any adjustment in favour of the wife.
In all of the circumstances I find that contribution to the assets of the marriage should be assessed as equal on the part of each of the husband and the wife.
I further find that the husband, the wife and the second respondent contributed equally to the funds awarded to them arising from the “[BA Investment Scheme]” litigation.
I further find that the husband and the wife made no contribution to the property owned by the husband’s father, the second respondent in these proceedings.
Section 75(2) factors
The wife is aged 58 years and the husband 60 years.
The wife deposed in paragraph 330 of her trial affidavit to being in reasonable health, although suffering from gastrointestinal problems.
In paragraph 92 of the husband’s trial affidavit he deposed to being in poor health, having been struck by a debilitating medical condition in December 2012 which impairs his ability to concentrate on work for any length of time. He deposed to suffering from dizziness, nausea and “fogginess” of mind.
The wife deposed to average gross weekly income in the sum of $1,306 per week with expenditures of an almost equal amount of $1,299. Her income included $600 per week by way of spousal maintenance paid by the husband.
She deposed to having $48,000 by way of savings in the Bank 3 as well as a one third interest in the funds standing to the credit of all three parties in the Commonwealth Bank of Australia arising from the “[BA Investment Scheme]” litigation in the sum of $104,623. She also deposed to owning a motor vehicle with an estimated value of $6,000, having household contents worth approximately $3,000 and a painting and jewellery with a combined value of $6,300.
In addition to her member benefit in the Superannuation Fund 1, the specifics of which she was unable to detail, she deposed to an interest in Superannuation Fund 2 in the sum of $10,823.
The husband did not file a financial statement but deposed in paragraph 85 of his trial affidavit to receiving income protection insurance in the sum of $7,434.62 per month. Exhibit “H1” referred to in paragraph 13 of these reasons evidenced the husband receiving $10,635 per calendar month during the 2020 year, prior to any taxation liability that attached thereto being taken into account.
Correspondence to the husband from his accountant Mr PP from QQ Accountants, also contained in Exhibit “H1”, advised the husband that his estimated tax liability for the year ended 30 June 2020 was $36,778.20.
A payment of $10,635 per calendar month equates to an annual gross income of $127,620. A deduction of $36,778.20 results in an annual net income of $90,841.80 being $7,570.15 per month.
In the absence of any better evidence which was easily available to the husband, I am satisfied that for the purposes of these proceedings the husband receives approximately $7,570 per month by way of income, which roughly accords with the evidence contained in paragraph 85 of his trial affidavit.
In addition, I am satisfied that the husband receives either cash income or benefits in lieu in consideration of the work done by him at OO Pty Ltd. It is not possible to quantify that payment or benefit on the evidence.
That was also evidence that was easily available to the husband and I am satisfied that it was deliberately withheld from the Court.
The husband has a fifty per cent interest in the assets owned by the husband and wife’s self‑managed superannuation fund arising from his member benefit entitlements.
According to his case outline but in circumstances where there was no evidence to support that submission, he owns a transport entity in Suburb D which is devoid of any equity.
In his Response to the wife’s Third Further Amended Initiating Application filed on 16 June 2020 which was his Response before the Court at the time of trial, he sought an order regarding that Berth in paragraph 2.3, namely:
That the Applicant and the First Respondent take all steps necessary to sell the [transport entity] in his sole name, applying the sale proceeds to pay all monies owed to [AD Pty Ltd], and paying any additional debts then owed, equally, but taking into account the First Respondent having started paying on 5 May 2020 a sum of $500 per month and all current outstanding fees, with the Applicant to make such payment as will result in the parties’ payments being equal.
I am satisfied the sale of that property is a matter for the husband. I do not intend to make any financial adjustments between the husband and the wife as sought by him in the absence of any evidence to support such an order.
I am satisfied that the husband has no assets of significance, and of course he remains liable with his father for the National Australia Bank commercial bill debt.
I find on the evidence that he has no capacity to pay or discharge the commercial bill or any part of the commercial bill.
I find that the second respondent can only satisfy his liability in respect of the commercial bill by either selling the R Street property with National Australia Bank to retain the entire proceeds in the same manner as the wife sold the property at Suburb D, or in the alternative the daughter and son-in-law of the second respondent purchasing the property from National Australia Bank to enable their father to remain resident in the house.
I am satisfied that the wife has the physical and mental capacity for appropriate gainful employment and is so gainfully employed, particularly in circumstances where for almost the entirety of a long marriage it appears she did not work outside of the home save as to her work in the very latter stages of the marriage within the Forlan/F Group to which I have referred earlier herein.
I find that notwithstanding that the husband is in receipt of a disability pension, he has some level of physical and mental capacity for appropriate gainful employment and undertakes employment at the business owned and operated by his sister and brother-in-law for remuneration or benefit, the details of which the Court is unable to quantify on the evidence.
I am satisfied that the commitments of the wife necessary to enable her to support herself as set out in her financial statement are modest and appropriate.
The husband chose not to file a financial statement and accordingly the Court has no evidence before it as to those issues to enable it to make a finding as to the reasonableness or otherwise of his commitments.
Neither party have the responsibility to maintain any other person or child and neither are entitled to a Commonwealth pension, allowance or benefit. Neither the husband nor the wife are of an age to access their superannuation entitlements.
The husband and wife are divorced. In circumstances of the failure of the family business, neither party is or will be in a position, on the evidence, to maintain a standard of living commensurate with the standard of living they enjoyed during the period of the marriage.
The wife lives in rented accommodation paying modest rent of $360 per week. There is no evidence that the wife has any capacity to purchase her own accommodation.
The husband lives in his father’s house. In the event that his father’s house is sold by National Australia Bank the husband will have to find other accommodation. There is no evidence to suggest that he would have the capacity to purchase a property, particularly in light of his outstanding liability to National Australia Bank.
The terms of the order the Court proposes to make will divide the superannuation entitlements of the husband and the wife between them in such proportions as the Court considers just and equitable and divide the cash money standing to the credit of all three parties in the Commonwealth Bank of Australia in such proportions as the Court deems just and equitable.
The assets in this matter are limited indeed. The wife currently receives $600 per week by way of spousal maintenance from the husband pursuant to existing court orders. Without that payment the wife would not be in a position to meet her modest weekly expenses. The wife seeks an order for the continuation of spousal maintenance.
I am satisfied that for reasons to which I will refer, it is appropriate that the order for spousal maintenance continue and in those circumstances do not intend to make any adjustment in favour of the wife on account of the husband and wife’s disparity in income.
The only other factor the Court considers relevant to take into account pursuant to s 75(2) of the Act is that set out in s 75(2)(o), namely:
[A]ny fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account…
Earlier in these reasons I found the Court was unable to quantify the amount of legal fees paid by the husband from funds generated through the family business enterprise in respect of which not only the husband and wife had an interest, but also the second respondent.
It was the wife’s case that the husband had paid $81,000 of his costs from company funds. I am not satisfied on the wife’s evidence that such a specific amount can be quantified, but I find that the amount paid by the husband taking into account his own evidence was significant. Neither annexure “MF8” to his trial affidavit or the material contained in a letter to him from his previous solicitors dated 29 July 2020 regarding fees clarified the source of fees paid. Paragraphs 243 to 249 inclusive of the wife’s trial affidavit did not clarify matters.
The husband was on notice as to the wife’s evidence regarding him utilising Forlan/F Group company funds to pay his own legal fees in relation to these proceedings. I have already found that it was not unreasonable to use such funds for the purpose of obtaining accounting and commercial advice as the company’s financial situation and future generally became dire.
I am also mindful that during the period post-separation until the company was placed into receivership in late 2017, any income earned by the husband came from the group enterprise. It would have been a fairly simple exercise for the husband to carefully peruse the material contained in annexure “MF8” to his trial affidavit and clearly specify to the Court how much of his legal fees were paid from company funds and how much from his own accounts.
The husband’s failure to provide accurate financial information as to his assets and liabilities as at the date of trial was a further example of his efforts to obstruct the wife and the Court in understanding and evaluating an equitable division of his and the wife’s assets.
These issues of course are normally dealt with at the time of determining the quantum of the asset pool and considering the issue of whether funds utilised by one party or another should be “added back” in circumstances where they have effectively been prematurely distributed to that party rather than being available to both parties.[21]
[21] Townsend & Townsend (1995) FLC92-569.
Taking into account the very vague nature of much of the evidence in this matter to which I have referred at length and the very modest size of the asset pool, I am satisfied that this issue is best dealt with pursuant to the provisions of s 75(2)(o).
In the judgment of the Full Court of the Family Court in Weir & Weir (1993) FLC 92-338 the plurality of the Court said, when discussing deliberate non-disclosure of financial circumstances in cases before the Court:
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party….
I am satisfied that accurately sums up the position in this particular matter.
I intend to deal with the assets available for distribution in this matter as two separate and distinct pools, namely the husband and wife’s superannuation entitlements and the “[BA Investment Scheme]” litigation fund.
Dealing firstly with the “[BA Investment Scheme]” fund, I intend to order that the second respondent receive an amount equal to one third of the total amount standing to the credit of all three parties in Commonwealth Bank of Australia account number BSB ... account number ...31.
The wife deposed to the balance in that account as at the time she filed her financial statement on 30 June 2020 to be $313,870. I accept that interest would have accrued to that account since that time.
Nevertheless, using that figure as a guide, a deduction of the entitlement of the second respondent would leave a balance available to the husband and wife of approximately $209,247.
That amount, when added to the approximate value of the assets standing to the credit of the husband and wife as members of the Superannuation Fund 1 results in an amount available for distribution between them of somewhere in the vicinity of $609,250.
As I said earlier herein, neither the husband nor wife adduced accurate evidence as to the value of the superannuation fund assets at the time of trial, including the cash component , the value of the residential dwelling or their member benefit entitlements. That evidence was available to both of them.
Taking all of the evidence available to the Court into account I am satisfied that for the purpose of these proceedings the total asset pool available for distribution between the husband and the wife should be fixed at $609,250.
I find that it would be just and equitable to make an adjustment pursuant to s 75(2)(o) of the Act in an amount of seven and a half per cent in the wife’s favour on account of the benefit obtained by the husband in respect of payment of a substantial but unidentifiable amount of legal fees. I find that it would be just and equitable to effect that adjustment by way of the wife receiving a greater share of the cash funds available to the husband and wife.
I am mindful that the wife deposed to superannuation benefits in her sole name with the Superannuation Fund 2 in the sum of $10,823. The husband makes no claim with respect to that entitlement. I note that the wife has been in paid employment since separation and that the benefit is minimal, commensurate with her income.
Spousal Maintenance
The wife is seeking that the husband continue to pay spousal maintenance in the sum of $600 per week until 20 February 2028, to be paid in the same manner as provided for in order 1 of the orders of 10 June 2016 and order 2 of the orders of 8 December 2016.
I am satisfied that the wife is undertaking employment to the extent that she is reasonably able after being out of the paid workforce for almost the entirety of the marriage, and is reasonably able to generate $706 per week gross from her employment. Notwithstanding that I have found her commitments necessary to support herself to be modest and appropriate I am satisfied that she is unable to support herself at that level adequately on that income.
I find that the husband is reasonably able to maintain the wife in circumstances where he is in receipt of income protection insurance which expires either upon his rehabilitation or at age 65, which ever first occurs.
This is another matter in respect of which the husband elected to give little detailed evidence including when the insurance was taken out, the source of funds for the insurance payments, and the date on which his claim was approved.
I am satisfied however in the circumstances of this case and the financial history of the husband and wife that the Court is entitled to assume that the benefit was acquired from premiums paid during the period of the marriage.
The husband’s evidence was that he was not employed and would not be able to find employment with a pre-existing condition of the type from which he suffers.
I find on his evidence that the husband will be entitled to the income protection insurance until he attains the age of 65 years in February 2027.
I find on the evidence in relation to his 2019 and 2020 income and payment details from Financial Institution 1 contained in Exhibit “H1” that the amount of the income protection insurance increases each year.
The husband elected to give no evidence as to the commitments necessary to enable him to support himself, but I am mindful he resides in a home with his father. As at trial the National Australia Bank had taken no action to sell the property.
I have found that he receives monthly net income of approximately $7,500 and that he further receives unquantified income or benefits from his employment at OO Pty Ltd.
In all of the circumstances I am satisfied that it is appropriate to continue the interim order made by Berman J with respect to the husband’s payment of spousal maintenance in the sum of $600 per week on a final basis. I accept the husband’s evidence that he will no longer receive his insurance income once he attains the age of 65 years. I find that his liability should cease at that time.
Costs arising from Contravention proceedings
The wife further seeks an order that the Court quantify costs payable by the husband to the wife pursuant to paragraph 3 of the order of Loughnan J of 11 October 2017 in the sum of $50,000.
His Honour ordered the costs to be paid as agreed or as assessed. He further ordered that subject to the assessment process the costs be paid within fourteen days after the conclusion of the property settlement proceedings. That order was made on 29 November 2017.
Annexure “SF1” to the wife’s trial affidavit was a copy of a letter sent by the wife’s solicitors to the husband’s former solicitors on the question of costs dated 11 July 2019. The wife sought that costs be agreed in the sum of $50,000 inclusive of counsel fees.
The husband did not dispute that evidence in his trial affidavit. He adduced no evidence himself as to the question of costs.
I find that taking into account the serious nature of the contraventions of the orders of Berman J, found against the husband by Loughnan J, and the complicated nature of those Contravention proceedings, they resulted in the wife incurring unnecessarily high legal fees.
I find it is appropriate to make an order that the husband pay to the wife the sum of $50,000 on account of her legal fees arising from the Contravention proceedings before his Honour Justice Loughnan. The proceedings were necessitated by the failure of the husband to comply with previous orders of the Court and the husband was wholly unsuccessful.[22]
[22] Family Law Act 1975 (Cth) s 117(2A)(d) and (3).
CONCLUSION
Taking those matters into account I am satisfied that it would be just and equitable for an adjustment to be made in favour of the wife of seven and a half per cent on account of s 75(2)(o) factors.
For the purpose of these proceedings I have found that the value of the assets available for distribution between the husband and wife approximates the sum of $609,250. A division of the assets as to fifty-seven and a half per cent in the wife’s favour and forty-two and a half per cent in the husband’s favour would result in the wife retaining assets to a value of $350,319 and the husband retaining assets to a value of $258,931.
The adjustment can be made by a payment to the wife from the husband’s share of the funds remaining to the credit of the husband and the wife in the Commonwealth Bank of Australia following payment of one third of those funds to the second respondent.
I have found the capital sum invested in the Commonwealth Bank of Australia following upon the “[BA Investment Scheme]” litigation to be $313,870 for the purpose of these reasons. I previously found that each party contributed equally to those funds. Each of the three parties is therefore entitled to one third of the capital and interest in that fund.
I intend to order that the second respondent’s one third share of the funds be withdrawn within fourteen days of the date of this order, and that this order shall be sufficient authority for the second respondent and/or Ms AE to effect the withdrawal.
I make that order in circumstances where I am satisfied on the evidence and on the presentation of the second respondent that he may need assistance to effect the withdrawal and that he is assisted with financial matters by Ms AE.
In circumstances where I found that the husband and wife made no contribution to the property at R Street, Suburb S owned in the sole name of the second respondent, Mr J Forlan, I am prepared to declare, as sought by him, that neither the husband nor wife have any legal or equitable interest in that property. It will be necessary for the caveat placed on that property by the wife to be removed and I will so order.
To effect the adjustment in favour of the wife of seven and a half per cent on account of s 75(2)(o) factors as I have determined, the wife will be entitled to a payment from the husband in the amount of $45,694. This can be achieved by this amount being paid to the wife from the husband’s half share of the Commonwealth Bank of Australia funds, by way of her withdrawing same at the time of withdrawal of her half interest.
In addition I have determined the husband should pay the wife’s costs arising from the Contravention proceedings before Loughnan J in the sum of $50,000. This amount can also be paid to the wife from the husband’s share of the Commonwealth Bank of Australia funds, in the same manner as the $45,694 referred to above.
This will result in the funds being divided equally in the first instance but the total amount of $95,694 being paid to the wife from the husband’s half share.
With respect to the Superannuation Fund 1 I intend to order that the fund be wound up and that the husband and wife each have the benefit of fifty per cent of the net assets of the fund, to be rolled over into a fund of their choice.
It was unfortunate that neither the husband nor the wife saw fit to put evidence before the Court as to whether, at the very least, their member benefits in the fund were of equal value whatever that value might be, or whether there was a differential in the member benefits and if so, by what amount or percentage. The Court is therefore unaware of whether a “splitting order” is required to effect equality of their member benefits.
The winding up process will no doubt require the sale of the residential property at Suburb AC and perhaps the calling in of any cash assets of the fund or conversion of fund investments into cash.
Following upon the gathering in of the fund assets, various steps will need to be taken to comply with superannuation regulations to effect the winding up of the fund and the rolling over of the husband and the wife’s member benefits to a fund of their choice.
I do not consider that the Court has sufficient information to draw the order that will be necessary to give effect to a winding up of the fund such that each party retains fifty per cent of the remaining assets of the fund to roll over into their own fund.
In the minute of order tendered to the Court on 20 November 2020 by the wife’s counsel certain orders were sought by the wife arising from the liquidation of E Pty Ltd and by way of indemnities and fulfilment of financial and statutory obligations arising from any interest held by the wife in the Forlan/F Group. I do not consider any such orders would have any real or practical effect or be of any benefit to the parties. I decline to make such orders.
Taking into account the terms of the order I intend to make I am not persuaded that an order for costs of the proceedings as sought by the wife is made out. Accordingly, there will be no order as to costs and all applications will otherwise be dismissed.
In those circumstances and upon delivery of these reasons I intend to order the wife’s solicitor to draw orders to give effect to the terms of paragraph 415 of these reasons.
The orders that I intend to make will come under the following headings and be numbered appropriately:
Declaration
·A declaration that neither the applicant wife nor the first respondent husband hold any interest at law or in equity in the R Street property owned by the second respondent which property he holds free from any claim or demand on behalf of the applicant wife and/or the first respondent husband.
Costs Order arising from Contravention Proceedings
·That the first respondent husband pay the applicant wife’s costs arising from paragraph 3 of the order of Justice Loughnan dated 20 November 2017 pertaining to the Contravention proceedings fixed in the sum of $50,000 inclusive of counsel fees, disbursements and interest.
·That such costs be paid to the applicant wife contemporaneously with her withdrawal of her share of the Commonwealth Bank of Australia funds in account number ...31 by way of her withdrawing same from the first respondent husband’s share of those funds.
Spousal Maintenance Order
·An order for spousal maintenance in the sum of $600 per week in the same terms as the orders of Justice Berman of 10 June 2016 and 8 December 2016 with the first payment to be in accordance with the existing cycle of payments pursuant to those orders and payable fortnightly in advance until 20 February 2028.
Property Settlement Order
·By way of full and final settlement of the claims of the applicant wife and first respondent husband against the other for settlement of property and spousal maintenance and the claims of the applicant wife against the second respondent and the claims of the second respondent against the applicant wife:
·That within fourteen (14) days of the date of the order the second respondent or his agent Ms AE withdraw from the monies standing to the credit of the husband, the wife and the second respondent in the Commonwealth Bank of Australia, [ZZ Street] Branch, BSB … Account Number …31 an amount equal to 33.3 per cent or one third of the total amount standing to the credit of all three parties.
·That upon compliance by the second respondent with the above order the applicant wife forthwith do all such acts and things as are necessary to effect the removal of the caveat lodged by her over his property at R Street Property 2, Suburb S.
·That within seven (7) days of compliance by the applicant wife of the terms of the above order the applicant wife withdraw one half of the amount remaining in the Commonwealth Bank of Australia account number …31 together with the additional sum of $95,694.
·That within seven (7) days thereafter the husband withdraw from that account the balance held in the account and close the account.
·That the order of the Court be sufficient authority for each party to comply with the terms regarding the withdrawal of funds from the said Commonwealth Bank of Australia, [ZZ Street] Branch account without any further authority required of any of the other parties.
·That each party be entitled to retain for their own sole use and benefit absolutely funds withdrawn by each of them pursuant to the terms of the order.
·Such order as shall be necessary to effect the winding up of Superannuation Fund 1 at the expense in all things of the fund and in such manner as shall comply with all relevant superannuation legislation regulations, including any superannuation split that might be necessary to equalise the member benefits of the husband and the wife and with the ultimate outcome of each party rolling over their fifty per cent share of the fund assets into a complying superannuation fund of their choice.
·That all extant applications be otherwise dismissed with no order as to costs.
I take into account that it may be necessary to obtain accounting advice prior to the drafting of the orders relating to the husband and wife’s superannuation interests and accordingly I intend to adjourn the matter for the making of orders for a period of seven weeks from the date of judgment, namely 26 April 2022 at 9.15am. I am prepared to call the matter on at an earlier date to make the order if requested by the parties.
I certify that the preceding four hundred and sixteen (416) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Mead. Associate:
Dated: 8 March 2022
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