Gabbard and Gabbard - [2010] FMCAfam 1486

FEDERAL MAGISTRATES COURT OF AUSTRALIA

GABBARD & GABBARD

[2010] FMCAfam 1486

FAMILY LAW – Property – husband’s failure to disclose financial information – adverse inference drawn against husband – consequences of husband’s improper dealings with moneys in the parties self managed super fund.

Family Law Act 1975, ss.75(2), 79

Applicant:

MS GABBARD

Respondent:

MR GABBARD

File Number:

PAC 841 of 2009

Judgment of:

Henderson FM

Hearing dates:

6 and 7 December 2010

Date of Last Submission:

7 December 2010

Delivered at:

Parramatta

Delivered on:

14 December 2010

REPRESENTATION

Applicant:

In person

Respondent:

In person

ORDERS

That the wife is declared to be solely entitled to the property situated at Property C, [C], being the whole of the property contained in Certificate of Title Folio Identifier [omitted] (“the [C] property”).
Within ninety (90) days of the date of these orders the wife is take all steps necessary to discharge the current mortgage on that property and have same transferred into her sole name. The husband is to cooperate in all ways necessary to ensure this Order is carried out including signing any documents required by the wife, the bank or any other lending institution, including a transfer of his interest in the home to the wife.
Pursuant to section 66G of the Conveyancing Act 1919 (NSW), the wife forthwith be appointed Trustee for the carriage of the sale or auction of the property situated at Property H, [H] being the whole of the property contained in Certificate of Title Folio Identifier [omitted] (“the Property H”) and the property situated at Property R, [R] being the whole of the property contained in Certificate of Title Folio Identifier [omitted] (“the Property R”).
The wife thereafter to take all necessary steps and execute all necessary documents to cause the Property H and the [R] property to be listed for sale by private treaty, and sold at the best price reasonably obtainable with an agent nominated by her. The solicitors acting on the sale to be Karen L. Haga & Associates.
In the event the properties to fail to be sold by private treaty within a period of 3 calendar months from the date on which it is listed for sale, they are to be listed for auction at the earliest possible date at a reserve price to be determined by the wife.
The proceeds of the sale of the properties to be dispersed as follows:-
(a)All mortgages in respect of those properties being at minimum Mortgage numbers [1], [2], [3];
(b)In payment of agents commission and advertising expenses and legal expenses of the sale;
(c)Usual conveyancing costs and adjustments upon sale;
(d)The balance to be held by Karen L. Haga & Associates in a high interest bearing account in trust for the parties (“the fund”) and the wife be permitted to deal with those monies as follows:
(i)Repay to the [Mr Gabbard] Superannuation Fund the sum of $164,936.50.
(ii)The wife thereafter appoint accountants, at her nomination, to prepare tax returns and the like such that the fund again becomes complaint pursuant to the Superannuation Industry (Supervision) Regulations 2001 (“SIS Regulations”) and the Taxation Act.
(iii)Any costs associated with the fund becoming compliant to be paid out of this fund.
(iv)The sum of $35,000 to be paid to the wife.
(v)The sum of $1,370.00 to be paid to the wife being the wife’s costs of the preparation of an Affidavit by Mr B for the final hearing together with any mortgage instalment, rates and taxes not paid by the husband.
(vi)Repayment of the shortfall in the net sale price of sale of the property at Property K, [K].
(vii)The balance then remaining to be paid to the husband.
Until such time as the Property H and the [R] property are sold the husband to pay all mortgage instalments and maintain the properties in reasonable order.
The husband to forthwith and within 48 hours of the wife’s request, sign all documents, authorities, undertakings as may be required to delegate to the wife all the powers of the Trustee of the [Mr Gabbard] Superannuation Fund as set out in paragraph 26 of the deed creating the [Mr Gabbard] Superannuation Fund (“the Deed”).
Thereafter, the wife as the delegate of the Trustee of [Mr Gabbard] Superannuation Fund (“the Super Fund”) is to:
(a)cause accounting statements to prepared as set out in paragraph 30 of the Deed;
(b)cause an audit of the fund to be carried out pursuant to paragraph 31 of the Deed;
(c)cause annual returns to be prepared pursuant to paragraph 32 of the Deed;
(d)the wife as the delegate of the Trustee to use her best endeavours to have the [Mr Gabbard] Superannuation Fund become compliant with the SIS Regulations and Taxation Act.
Upon the [Mr Gabbard] Superannuation Fund becoming compliant, then pursuant to section 90MT of the Family Law Act a splittable payment of the funds of the [Mr Gabbard] Superannuation Fund is ordered to take place and the Trustee or its delegate is ordered to split the funds as follows:
(a)The sum of $116,753 to the husband; and
(b)The sum of $51,053 to the wife.
Thereafter, the wife be permitted as the delegate of the Trustee of the [Mr Gabbard] Superannuation Fund to transfer her entitlement in the Super Fund to any approved superannuation entity of her choice pursuant to the Trustees powers under section 60 of the Deed.
Upon satisfactory transfer of the wife’s interest to her nominated Superannuation Fund, the wife’s delegation by the Trustee of the Super Fund to forthwith cease.
Thereafter the [Mr Gabbard] Superannuation Fund be the sole property of the husband.
The husband indemnify the wife in respect of all or any tax debts in relation to any company or entity he has operated including but not limited to [Gabbard] Pty Ltd including but not limited to liabilities arising from any directors loans taken out by the husband at a time when he and the wife were both directors. The Court notes the husband accepts the wife has no liability in respect of any taxation liability or otherwise in [Gabbard] Pty after the date of separation, namely August 2007.
In the event the wife agrees to the husband being given time to raise funds sufficient to discharge the debts set out in Order 6(d)(i) to (vii) then the following will apply:
(a)Orders 3, 4, 5 and 6 insofar as they provide for the sale of the [R] property and Property H property be discharged;
(b)The husband to pay out:
(i)the existing mortgages in respect of the [R] property and Property H property and remove the wife’s name from those mortgages;
(ii)repay to the [Mr Gabbard] Superannuation Fund the sum of $164,936.50 and Orders 6(d)(ii) and (iii), 8, 9, 10(a) and (b), 11, 12 and 13 shall operate.
(iii)the sum of $35,000 to be paid to the wife.
(iv)the sum of $1,370.00 to the wife.
(v)The husband and wife’s share of the shortfall in the net sale price of sale of the property at Property K, [K].
(c)Upon compliance with Order 15(a) and (b), the husband be declared to be solely entitled to the [R] property and Property H property and the wife to sign any document necessary, including a transfer of her interest in those properties to the husband, to bring into effect Order 15.
In the event there is a shortfall in the repayment by the husband of the debts set out in Order 6(a),(b),(c),(d)(i) to (vi), then the wife’s appointment as the delegate of the Super Fund is forthwith remade and Order 8 is reactivated and a splittable payment equalling the amount of any shortfall of debt repayment by the husband may be made by the wife of the husband’s interest in the Super Fund and rolled into a superannuation fund nominated by her.
That in the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders, the Registrar of the Court is appointed pursuant to Section 106A, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT PARRAMATTA

PAC 841 of 2009

MS GABBARD

Applicant

And

MR GABBARD

Respondent

REASONS FOR JUDGMENT

The matter of Gabbard was a three-day property hearing listed on 6, 7 and 8 December 2010. The matter was completed on 7 December 2010. Both parties were unrepresented at the hearing, having each been previously represented.
The wife’s level of preparedness for the hearing, her compliance in a timely fashion with Orders and directions of the Court, disclosure of all financial matters and understanding of sections 79 and 75(2) of the Family Law Act were of the highest level. Her matter was one of the most thoroughly and relevantly prepared cases I have heard.
On the other hand, the husband’s lack of candour in disclosing his financial position to the wife and Court in a timely and thorough fashion, failure to file updating material as directed by the Court on many occasions, failure to produce documents pursuant to a notice to produce issued upon him by the wife, and when directed to produce documents by the Court during the hearing then producing, to use his words, “what he thought the Court wanted,” was in stark contrast to the wife’s thorough, comprehensive and honest accounting of the parties’ financial history and present day circumstances.

Evidence

The evidence of the parties was contained in the following:
For the wife:
a)Amended initiating application filed 30 November 2010;
b)Financial Statement filed 22 November 2010;
c)Affidavits of the Wife filed 25 February 2009 and 22 November 2010;
d)Affidavit of a specialist accountant, Mr B, in relation to consequences of the husband’s improper dealing with the self-managed superannuation fund filed 26 November 2010;
e)
Affidavit of her former solicitor, Ms Haga, sworn and filed

2 December 2010 which the husband agreed to admit into evidence despite Ms Haga not been at Court to be cross –examined.
For the husband:
a)Response, Affidavit and Financial Statement filed April 2009 when he was represented.
Each asked the other questions in cross examination and treated each other in a respectful manner.
The assets and liabilities were as agreed between the parties and the Court during the hearing.
There were a number of exhibits filed.
For the wife:
a)Wife’s Exhibit 1: Letter related to the wife’s legal expenses from Karen Haga & Associates;
b)Wife’s Exhibit 2: A bundle of documents being a summary of documents prepared by the wife for my assistance including in excess of 30 letters to the parties regarding mortgage arrears, notice of eviction, and Court proceeding relating to the recovery of mortgage arrears;
c)Wife’s Exhibit 3: Transaction statement of [Gabbard] Pty Ltd;
d)Wife’s Exhibit 4: ASIC company search and documents from [W] Accountants in relation to shareholdings, directorships and companies in which the parties have an interest;
e)Wife’s Exhibit 5: The original trust deed setting up the parties self managed superannuation fund entitled “[Mr Gabbard] Superannuation Fund – Superannuation Trust Deed”. The husband did produce this deed at my request on the second day of the hearing;
f)Wife’s Exhibit 6: [Gabbard] Pty Ltd tax portal printout showing a running tax debt as at 17/9/2010 of $75,660 which the husband was unable to explain to the Court;
g)Wife’s Exhibit 7: [Gabbard] Pty Ltd trial balance prepared by accountants.
For the husband:
a)Husband’s Exhibit 1: A report by Ms/Mr J setting out the consequences and remedies for the husband’s admitted improper dealing with the superannuation assets of the self-managed superfund;
b)Husband’s Exhibit 2: One ANZ bank statement for [Gabbard] Pty Ltd dated 22/11/2010;
c)Husband’s Exhibit 3: Australian Business Register document for Mr Gabbard;
d)Husband’s Exhibit 4: One invoice from Mr Gabbard to [A] dated weekending 1/12/10 for $3,000; a business card for [P] & Co accountant; and a bank statement for Mr Gabbard from the Bendigo Bank for the period 12/8/2010 to 1/10/2010;
e)Husband’s Exhibit 5: The husband’s Financial Statement produced on the second day of the hearing;
f)Husband’s Exhibit 6: A bundle of receipts and invoices for work done by the husband as a project manager with [A] for the period 30/6/2010 to 1/12/2010;
g)Husband’s Exhibit 7: Printout of statements of three mortgages up to 30/11/2010 for which the husband has the responsibility to service.

Short chronology

The husband is 46 years of age, the wife 44 years of age.
The parties were married [in] 1988, and had no assets of significance at the date of marriage.
The parties’ first child, [X], was born [in] 1994, and their second child, [Y], was born [in] 1996.
Throughout the marriage the husband was a self employed [omitted] and the wife the parent and homemaker. In his Affidavit at paragraph 74(e) the husband said the business had a turnover of $1,000,000 in some years and profits of up to $250,000.
The husband built the former matrimonial home at [H] but it remains incomplete.
In 2005, the husband withdrew about $15,000 from the parties’ savings to buy into the [S] business. That business was sold, on the husband’s evidence, after separation in late 2008. He has not accounted for the proceeds of sale or their disposition.
On 30 June 2006, the parties’ entitlements in their self-managed superannuation fund styled the [Mr Gabbard] Superannuation Fund (“the Super Fund”) the trustee company of which is [Mr Gabbard] Pty Ltd was $51,053 for the wife and $116,753 for the husband. In August 2007, the balance of the fund was $164,936.45.
As best I can ascertain the wife was not involved in [Mr Gabbard] Pty Ltd only the husband is. That company’s sole role is as the trustee company for the Super Fund.
The parties separated on 15 October 2007 but remained under the one roof until 23 December 2007 when the wife and children left the home and moved into a property at [C] which was purchased by the wife by agreement with the husband following separation.
There exists a series of interlocking mortgages over all the items of real estate which still exist being properties at [C], [R], and [H].
[H] is the former matrimonial home and the husband has remained in occupation of that property since physical separation.
The wife approached the husband in late August 2008 and signed a form to assign her share in [Gabbard] Pty Ltd to him and giving him her verbal resignations as a Director of that company
At this time the parties were negotiating a property settlement. The wife sought her share of the Super Fund and what she believed was an unencumbered home at [C]. Otherwise the parties’ assets which were real estate at [K], Property P, [H] and [R], all companies and businesses including the husband’s share of the superannuation fund were to be left with the husband.
The husband became hostile to the wife after receiving this proposal and said to her “You have been greedy. [C] was your super. Now I’ll see you get nothing.” There was no challenge to that evidence at the hearing. The husband admitted similar words in paragraph 77 of his affidavit. For reasons I will later set out I accept these are the words he spoke to the wife and that he has carried this threat out.
In late November 2008, the wife discovered that the parties’ financial affairs were vastly different to that which she believed. The wife had received letters sent to each of them from their mortgagee’s in relation to arrears and defaults in the mortgagees over [K], a property owned by [Gabbard] Pty Ltd, [R], [C] and [H]. It was at this time the wife realised there was default in the mortgage over the [C] property. She had believed that [C] was unencumbered and that the husband has been paying the outstanding mortgages on the other properties.
The parties agreed to sell [K] in late December 2008. The wife believed the husband had accepted advice from the agent to sell the property by way of private treaty to maximise the sale price rather than permit a mortgagee sale.
On 10 December 2008, the wife received a letter from the husband’s solicitor which is annexed to her affidavit. This letter sets out the grim details of the extent of the husband’s liabilities and defaults on mortgages and loans and, most importantly for the wife, that the husband had dissipated nearly all of the assets of the self-managed superannuation fund without her knowledge or consent. On 12 December 2008 there was a balance in the fund of $4,053.68. The husband had used this money to pay his business suppliers and the like and for payment of tax from time to time for himself, his business and perhaps for the Super Fund. He gives some evidence of this is his 2009 affidavit at paragraphs 74(b) and 14(g).
By 12 January 2009 the balance of the Super Fund was $1,767.23. In August 2007 there was $164,936.45 in the Super Fund.
On 23 January 2009 the wife was served with a Notice of Enforcement in relation to the [C] property.
On 6 February 2009 the parties sold an investment property at

Property P which was jointly owned with the husband’s brother. The net proceeds of $334,297.42 from that sale were held in trust in trust with [omitted]. The parties were entitled to $167,148.71 of that money with the remainder to be distributed to the husband’s brother.
On 18 February 2009 the wife was signing documents for the bank in relation to the [K] property when she noticed she was still listed as director of [Gabbard] Pty Ltd, the husband having failed to transfer her share and act upon her resignation from the company in August 2008. The wife took immediate action with her solicitors to rectify this situation.
A statement of claim was served on the wife in relation to possession of the properties at [H], [K] in her capacity as a director of [Gabbard] Pty Ltd, and [C] for non payment of mortgages.
To avoid a mortgagee sale, on 25 March 2009 the parties agreed to Consent Orders for a partial property distribution of the sale proceeds of the Property P property and expend the $167,148.71 as follows:
a)$10,000 is released to each of the parties;
b)$8,500 is applied to the [C] mortgage by the wife;
c)The husband agreed, by Order, to make mortgage payments on the [H] property and [R] which although not mortgaged as such were part of the security for the all monies mortgages.
A further sum of $10,000 each was released to the parties by way of Consent Orders for partial property settlement on 18 May 2009. The husband agreed to make mortgage payments on [H] and [R] and the wife agreed to do same on [C]. The wife has carried out her obligations under the Orders. The husband has not.
The remainder of the sale proceeds was paid to the parties as follows:
a)$71,189.23 to the wife; and
b)$47,459.48 to the husband.
The wife pays $35,000 from her partial property settlement towards the [C] mortgage.
Property K is sold by the mortgagees, despite the wife having agreed to sell same with the husband in late 2008. The property was sold for $430,000 despite the husband asserting it was worth $500,000 in his 2009 affidavit. There was a shortfall of $100,000 on the sale. The husband had forestalled selling the property until the bank took that option away from he and the wife and a mortgagee sale resulted. His words at trial were “I put my head in the sand on that one”.
By the date of the sale and from February 2009 the wife had had no interest or control over the property having resigned as a Director of [Gabbard] Pty Ltd and transferred her share to the husband in February 2009.

The matter was listed in Court for terms on 14 December 2009 after multiple adjournments from March 2009 to allow the husband to

re-finance his debts. The matter was listed on 16 February 2010 for terms of settlement and the Court noted that no further adjournment for Terms will be granted.
On 16 February 2010 the matter had not resolved and it was listed for final hearing on 6, 7 and 8 December 2010. The 12 month lag was given at the husband’s request. His position was then as it is now – he just needs more time to get himself back on track and re-finance his various debts to retain [R] and [H]. The husband had assured his wife and the Court that his loan approvals would be forthcoming. The reality is the husband has been so assuring the wife and Court of this forthcoming event since early 2009.
By early 2010, the wife, her current partner, and the children had left [C] as the wife could not meet the mortgage payments. [C] is rented but the rental does not meet the total of the mortgage costs and the wife has been making up this shortfall from her income.
In April 2010, the wife received a notice advising that the former matrimonial home at [H] is no longer insured. A further writ of possession and notice to vacate was issued in relation to [H]. That eviction is stayed when the husband enters into an agreement with the bank. By August 2010 the wife is advised that the husband has failed to comply with his agreement with the bank and the Notice to Vacate is re-issued.
On 1 August 2010 the company [Mr Gabbard] Pty Ltd was

de-registered.
On 3 August 2010 the company [Gabbard] Pty Ltd has a liquidator appointed.
On 2 November 2010 the wife’s solicitors receive a letter from Bransgroves Lawyers on behalf of the parties’ mortgagee IMB asserting that the husband had failed to comply with his agreed schedule of re-payments and the eviction notice would be reappointed.
A further notice to vacate is issued in relation to [H], and the husband pays monies towards his mortgage and the eviction is stayed.
The wife negotiates with the children’s school, [omitted], in relation to outstanding school fees which the husband had previously agreed to pay. The wife negotiates a bursary being a 50% reduction in fees for both children.
By September 2010, the children’s school fees were in arrears of $12,576.60. The husband and wife each agreed at the hearing that they had an informal agreement whereby the husband was to pay the school fees and in return the wife would not enforce child support payments. Although the school fees are 50% of the real costs the husband has not honoured that agreement either.

Issues for determination

The issues for the Court are these:
(1)What is the pool and value of the matrimonial assets;
(2)The parties’ percentage entitlement to their assets;
(3)Whether the wife can retain [C], as she wishes to do;
(4)Whether the husband can retain [H] and [R], as he wishes to do;
(5)Whether the wife retains [C], and the [H] and [R] properties are sold as the wife contends;
(6)Whether all the properties are to be sold;
(7)How to deal with the consequences for the parties of the husband’s unauthorised dealing with and dissipation of the funds in the self-managed super fund entitled the “[Mr Gabbard] Superannuation Fund” (“The Super Fund”);
(8)Whether I grant the wife’s application for her costs from March 2010 to date being the date on which she made an open offer to settle with the husband and her costs for Mr B expert’s report;
(9)Can I be satisfied that there is capital gains tax payable on the sale of [K]. I have no objective evidence to support this contention and given it was sold at a loss I am unsure how such a liability would arise;
(10)How I deal with the husband’s contention that there exists a tax liability for each party arising out of Directors loans taken out during the marriage from the company [Gabbard] Pty Ltd. That company is in liquidation. The husband’s evidence is he is trying to get it out of liquidation;
(11)How I deal with the husband’s assertions of $40,000 in tax debts now which he has given no objective evidence to support. I note he asserted at paragraph 69(c) of his 2009 affidavit that the joint tax debts were $126,000.

Wife’s position

The wife says what I ought to do is this.
The wife wants credit for the $35,000 she paid into the [C] mortgage which has kept that property in a viable position. She wants that property transferred to her. She will discharge the current mortgage which will give her equity of about $80,000. The home is worth $600,000 on the agreed list of assets and liabilities, and the mortgage is $512,000.51.
The wife asserts I should appoint her as trustee for sale of both [H] and [R] to be initially by way of private treaty and, if unsuccessful, by way of auction. [Real estate agent omitted] to be appointed as agent on the sale and Karen Haga & Associates Solicitors to be appointed solicitors on the conveyance.
The wife says the husband will not cooperate with her in the sale of these properties. Her contention is supported by the husband’s desire to retain the properties at all costs and his absolute lack of cooperation in preparing for the final hearing and cooperating in the sale of [K].
On the other hand the wife has her finances organised as she exhibited to me at the hearing. The husband has not even taken a first step to refinancing.
From the proceeds of sale and after discharging the mortgages the wife would repay the Super Fund.
The wife seeks that husband be Ordered to pay her costs, including all costs associated with having the Super Fund become compliant, and the shortfall from the sale of [K].
If there is anything left over from the sale of the properties there be a fifty-fifty division.
Pending sale the husband to keep [H] and [R] in reasonable condition and pay all mortgages, rates, taxes and outgoings. If he fails to do this any costs associated with that failure are to be deducted from his share of the asset pool.
Once the super fund is made compliant there is to be a splitting Order with the wife to receive her entitlement and the balance to the husband. To achieve this I am to appoint the wife the delegate of the trustee of the Super Fund.
Otherwise, the parties retain what they each have in their possession or control.
The wife seeks an indemnity from the husband in relation to any debts arising out of the resurrection of [Gabbard] Pty Ltd, including tax liabilities from any alleged director’s loans or other unsupported tax debts.
The wife says that she accepts the asset pool as I have determined, and to which I will refer later.
The wife’s case is that she contributed all her income to the family and home. She agrees whilst the marriage was on foot, she and the husband each contributed equally to their assets and family by way of income, or effort and energy in caring for the children. The husband also agrees with this position.
The wife had one caveat. During the marriage she is unsure how the husband’s income was paid to him. He was a self-employed [omitted] during the marriage and continues to be employed in the [omitted] industry. The wife is unsure about the alleged director’s loans the husband asserted arose during the marriage. I too am uncertain about these alleged loans. Evidence to support these loans came from the husband and was exhibited by the wife at the last minute on the second day of the hearing and was in a most unsatisfactory form.
Similarly the tax debts he alleged are just that - allegations arising from his 2009 affidavit.
There are no current tax returns for any of the companies of which he is a director either [Gabbard] Pty Ltd or [Mr Gabbard] Pty Ltd or for the Super Fund. The last tax return annexed to the husband’s affidavit is for [Gabbard] Pty Ltd and is for the year end 2006.
The husband annexed financial statements for 2007 to 2008 for [Gabbard] Pty Ltd but no tax returns for those years and no Notice of Assessments or BAS statements for himself or any Company.
Currently the husband says he earns $3,000 a week from [A] as a project manager via [Mr Gabbard] Pty Ltd. That evidence came from the husband’s lips and a bundle of 9 or so invoices and receipts showing payment of monies from [A] to this company.
I found this evidence unsatisfactory to support his contention that this was his weekly earnings. Some invoices and receipts showed amounts of $13,000 paid or payments of $9,000.
Secondly the husband provided no tax returns, BAS statements or any other document including a series of bank statements to support his asserted income.
The wife says I cannot accept this evidence of the husband’s income and he could earn less or more than he asserts.
The wife says that since separation she and the husband’s contributions have been vastly different both to the assets of the marriage and the children. She has made a superior contribution to the care of the children including their financial support. The husband does not pay child support nor school fees which the wife negotiated a reduction in to 50%.
The husband has failed to make payments of mortgages in a timely manner despite Consent Orders he do so. The wife has used her partial property settlement and her income towards mortgage payments for [C], school fees and the children’s living expenses. The wife believes she will ultimately pay the school fees as the husband does not adhere to agreements he makes with her or financial institutions.
[X] is in her Higher School Certificate year in 2011. [X] has some mental health issues resulting in incidents of self harm and the like, which is of real concern to both parents. In those circumstances the mother is most desirous that [X] remain at [omitted] School to complete her Higher School Certificate in an environment with which she is familiar and which is supportive of her. [Y] is in year 8.
The wife says she is the children’s primary emotional and physiological parent and that [X], in particular, has a difficult relationship with her father.
The husband has not honoured agreements he made with the Court, has failed to comply with Court Orders to pay mortgages, file material, disclose his financial position, or adhere to agreements reached with financial institutions to pay mortgages and loans in a timely fashion. He pays lump sums at the last possible moment to stave off inevitability such as an eviction notice but does little to address the fundamental issues which have lead him to that path.
The husband did not cooperate with the sale of [K] to maximise its sale price and left it to the wife to deal with a mortgagee sale. The wife was unable to have the husband cooperate with that sale and at the time of the sale she was no longer a director or shareholder of the company, [Gabbard] Pty Ltd, which owned the property. The husband himself said he put his head in the sand on that sale. Thus the wife contends that shortfall of $100,000 arising from the [K] sale ought be the husband’s debt.
The husband retained the proceeds of the sale of the [S] business and failed to account to the wife for the proceeds of sale. When pressed on that issue in cross examination the best he could do was tell the Court he only sold it for what he paid for it and made no money on the sale.

Husband’s position

The husband’s position was as follows.
The husband’s opening application was that I grant an adjournment to give him more time to obtain finance and legal advice. I dismissed that application summarily.
The matter has been in the Court system approaching two years, the husband had solicitors initially and has had ample opportunity to

re-finance and obtain new lawyers.
The facts are that the husband does not want to sell these properties. He would, in those circumstances, find it most difficult to cooperate with the sale. I cannot give him any further time to refinance the loans to buy out the wife’s interests in those properties. He has had 18 months to do so and has failed to take any step.
There has been several eviction notices, notices to vacate and the like issued against the husband and the wife consequent upon the husband’s failure to make mortgage payments. The husband has failed to honour his re-payment schedule with the banks, pay the children’s school fees and with his many defaults and arrears I accept the wife’s submissions that his credit rating must have been affected. Justice requires the matter be finalised.
The Orders he sought I make were that the wife have [C] providing the mortgages are discharged. The husband not only wants the [C] mortgage of $512,051 discharged but also a mortgage secured over the [H] property which he says relates to [C] of $165,957. This would result in a debt of $678,000 for a property worth $600,000 on the wife’s side.
The husband will refinance the remaining debts and retain [H] and [R] and will do so by 25 January 2011. He will rent out [R]. I do not know why he has not done so earlier given his evidence that he no longer needs the factory unit to earn his income and has not needed it since at least June 2010.
The husband says he will attend the Australia Taxation Office within seven days of the Orders being made and fix up the mess he has created by his actions in making the self managed super fund non-compliant. The husband will indemnify the wife in relation to making the super fund becoming compliant.
He asserts the wife is not liable for any director’s loans in [Gabbard] Pty Ltd created after October 2007 but is liable for loans prior to that date.
He asserts a tax debt at separation of $40,000. He will take responsibility for 70 per cent of that debt leaving the wife with a debt of $12,000 which she is to directly pay to the ATO.
He agrees to a splitting Order when the fund becomes complaint as set out by the wife.

The asset pool

The agreed values are:
a)[C] – $600,000;
b)[H] – $700,000;
c)[R] – $270,000.
d)The wife has a Toyota Corolla worth $15,000.
Those assets total $1,585,000.
Adding back the partial property settlement. The wife received $20,000 together with $71,189 making $91,189. The husband received $20,000 with $47,459 making that $67,459.
That is a total of $158,648. Add that to the current assets in the parties’ name and I find a gross net asset base of $1,743,648.
The liabilities are as follows:
a)The mortgage for [H] – $340,085;
b)The mortgage relating to [R] – $127,719;
c)The mortgage the husband says relates to [C] –$165,957;
d)The Property C mortgage of $512, 051;
e)The wife’s car loan of $22,000;
f)Shortfall from the sale of [K] $102,835.
This being total debts of $1,270,287.
This gives a net pool including add backs of $473,361.
The wife has two current superannuations in nominated funds totalling $22,800 and the husband agrees they should be hers and I agree with that submission.
There is the debt to make the super fund compliant of $164,936.45. Thus the net position is in reality $308,425 without any capital gains or other tax debts taken into account tax. The Super Fund must be repaid and it is priority.
The Property K debt is a matter for the parties and their lending institution. It must ultimately be repaid and I will call this the second priority debt. The question is from whose share of property settlement these debts ought to be paid.
At first blush, it would appear that the wife and husband are equally liable for the shortfall of the [K] sale. The property was owned by [Gabbard] Pty Ltd, a company of which they were each directors and share holders. However, the husband’s conduct, which he admitted as “putting his head in the sand”, led to a mortgagee sale and a reduced the sale price.
The husband was difficult and stubborn in his conduct when the property was first listed for sale. He would not agree to reduce the price, he would not negotiate and he would not deal with the bank in a timely and professional manner. Thus a mortgagee sale ensued of a property owned by a company which at sale the wife had no interest in. In those circumstances, it may be that this debt is one for the husband alone.
The Super Fund debacle is entirely different. The husband alone improperly dealt with the assets of the Super Fund and the wife was in complete ignorance of his actions until it was too late. He has waived any rights to certificates under the Evidence Act when his lawyers published a letter on 10 December 2008 setting out his transgressions.
The husband agreed that the consequences of his actions ought to fall on him alone. Although the husband agreed with this proposition at the hearing, as with all matters concerning the husband, he sought to back pedal. He argued that the wife was also a signatory to the Super Fund cheque book and could have written some cheques before 15 October 2007, the date of separation.
I reject that evidence entirely. It was clear to me from reading the affidavits, particularly paragraph 14(g) of the husband’s affidavit of

23 April 2009, that the husband alone accessed the moneys in this fund without the wife’s knowledge or consent. The wife had no idea of the husband’s improper dealings with the assets of the Super Fund until its resources were almost depleted in late December 2008.
Further in paragraph 14(g) the husband admits to what he had done with the Super Fund and that he intended to repay the monies and have the fund again become compliant. That affidavit was sworn some

18 months ago and he has done nothing.
The evidence by the husband in his affidavit of 23 April 2009 and his evidence to me are repetitive. His words are not consistent with his actions. What he says he is going to do is not what he does. He has said to his wife, to the Court and in his affidavits, “I will pay the mortgages… I’ll pay the school fees in lieu of child support payments… I’ll repay the Super Fund”. The husband has not repaid the Super Fund or school fees and inconsistently paid the mortgage.
There have been two District Court proceedings commenced by way of statements of claim for possession. There have been two eviction notices issued. There have been threats of his children being removed form their school for non payment of school fees in circumstances where his daughter had fragile mental health and her school is a comfort and support to her.
There have been two adjournments of these proceedings on his assurances that he was able to raise sufficient funds to buy out the wife’s interest in the properties he wished to retain and making good the Super Fund. Yet he has done none of this. He did not bring any evidence to this Court of his attempts to obtain finance in the last

18 months and had not even looked at his capacity to borrow prior to the weekend before the hearing.
He has avoided foreclosure on [R] and [H] by paying lump sums at the eleventh hour. The threat of his children being removed form school was dealt with by the wife agreeing to pay the fees upon his failure to do so. The forced sale of [C] was dealt with by the wife using her part of her partial property settlement to pay towards the mortgage.
The husband has not made his mortgage payments or other payments on his properties in a timely or sensible fashion and yet says to me today and to use his words:
Trust me when I say I will refinance these properties at [H] and [R]. Give me time to raise enough money to pay back the super, my share of [K], and discharge the wife’s interest in [H] and [R]. I am here in Court and telling you this.
I find the husband does not do what he says and cannot be relied upon to honour undertakings, agreements or obey Orders of a Court.
The husband had the temerity to ask the wife to refund to him 50 per cent of the rental receipts for [C] when the evidence was that the rent did not cover the mortgage and the wife was making up the shortfall.

He was shocked when I told him that the [K] debt was part of the property proceedings and ought to be repaid, if at all possible, from the assets. He believed he could deal with that issue himself later and after this case was finished.
The husband did not concede that the superannuation moneys and tax owing must be forthwith repaid nor that the tax returns for the non-complying years completed and lodged with the ATO before any approach was made to them. He told me he believed if he went to the ATO now, some two years after depleting the fund, he could sort it out. He believed the ATO would give him time to pay and he would be able to pay the money back over time by instalments. If rectification is so simple why has the husband not taken this action sooner? He has not because the rectification of this mess is far from simple or the outcome assured.
As to the husband’s income, he produced invoices for work carried out as a [omitted] for [A] on the last day of the hearing and going back for some 6 months, these being Husband’s Exhibit 6. He made no disclosure to the wife prior to that time despite the invoices dating back 6 months and despite her repeated requests for some information of his income throughout the proceedings.
The husband did not bring any BAS statements or profit and loss or any other financial document to support his income, the cost to him of earning his income, or the tax he pays, to enable the Court to determine what his net income is. He did not bring any banking records showing deposits of his income into a bank account.
On the last day of the hearing, he produced a print out of his three mortgage loans, showing all were in credit for the first time in over two years. These were marked Husband’s Exhibit 7. The credit was current to 30 November 2010. However, I note in respect of [H] and [R], default fees of $50 were debited to each of those loan accounts on

23 November 2010. The husband continues to have difficulty in making timely payments on his loans.
Thus, despite the husband’s assurance of now being fiscally responsible and financially viable, his own evidence is to the contrary. The wife has no faith in the husband honouring any financial agreement and her submissions on this issue is that it is unlikely he will be able to obtain finance with his poor credit history has much force.
The husband would have me believe he has engaged a mortgage broker to investigate a loan for about $700,000 to buy out the wife’s interest in the properties at [H] and [R]. He told the Court he had given the mortgage broker financial documents. I asked the husband, “What were the financial documents you have given to your mortgage broker?” He said they were the same documents I had, namely a series of invoices and receipts from [A] house since June 2010.
This is the husband’s own evidence. His evidence supports the wife’s submission that he should not be given any further time to refinance these properties and that to end their financial relationship she be appointed trustee for sale of [H] and [R] for the best price reasonably obtainable, debts, mortgage and the like discharged, the Super Fund repaid, instructions given to the accountant to have the Super Fund again become complaint, and she repay the [K] debt from his share of the matrimonial property as the Court can have no faith the husband will do so. If there is any balance left over that be divided between them with the issue of costs to be dealt with at the end.
I accept the wife’s submission without hesitation. The husband was not a credible witness. He was not an accurate historian. He gave information sought at the last minute and even then filtered the information he produced to the Court.
On the first day of the hearing, I had asked each of the parties to produce further information, the superannuation trust deed, title searches, ASIC searches and the like. I asked the husband to bring all his Bendigo Bank statements and all the bank statements he had at home. He produced one statement from the Bendigo Bank despite having more at home. When I queried why he produced one statement and not all statements he said:
I thought you only wanted the statement supporting the deposit of sufficient moneys by me to pay the lump sum of $13,000 to my mortgages.
That is not what I requested the husband produce. I asked him to produce the bank documents he had. I am entitled to and will draw an adverse inference against the husband due to his failure to comply with the wife’s solicitor’s and her request for information for well over

18 months, from his failure to comply with a notice to produce which he accepted was served on him, and his failure to comply with my request that he produce his banking records at the Bendigo Bank and other banks, including the IMB.
I explained to the husband how I was able to draw this adverse inference, what the rule was, and the consequences of drawing an adverse inference against him which was that had he brought the documents to the Court, they would not have assisted his case. The husband had no answer to that because there is none. The husband is simply not to be believed nor is his evidence accepted by the Court. I cannot rely upon it.
Having accepted the wife’s position in relation to the sale of assets, I will now address the vexed issue of the superannuation. The wife was put to unnecessary expense in having a report prepared for the hearing by Mr B. The reason this was unnecessary is that the husband produced at the hearing a document obtained for him by his solicitors from Ms/Mr J in July 2010 on this very issue. I had made Orders for the wife to prepare Mr B’s documents on 8 November 2010 as the husband said he had no such document. I knew such a report would be necessary for the hearing as I am not a tax expert.
Knowing the wife would carry out my directions as she always had, I made the Order for her to do so. It was unnecessary as the husband possessed a report on this very issue. The husband will pay the costs the wife has expended for Mr B’s report, which is $1,370.80. See Wife’s Exhibit 4.
Mr B and Ms/Mr J agreed on the process to have the Super Fund made compliant. Moneys must be fully refunded, that is, rectify the error that has occurred. Tax returns are to be prepared for the non complying years, which from the evidence are 2005 to 2010, then advise the ATO of the conduct and actions of the husband and the parties await the ATOs decision.
The unfairness of this situation is that the husband’s unilateral actions which are a contravention of the super industry superannuation regulations, ASIC regulations, the Tax Act, his obligations as a director of the trustee company of the Super Fund and his obligations as a director generally may implicate the wife as she was a director and shareholder of [Gabbard] Pty Ltd for a period of time when the husband paid monies from the Super Fund into that business. This is clearly set out in Husband’s Exhibit 1.
The possible consequences for a breach of the Act in relation to a self managed fund are significant. Fines of up to $220,000 can be ordered to be paid against parties, the parties can lose the tax benefit of the fund, interest and other penalties can accrue.
I accept the wife’s evidence that in August 2008, the husband asked her to sign over her share in the company [Mr Gabbard] Pty Ltd, which is the trustee company of the Super Fund. He did this by asking her to assign her share to him and sign a share transfer. I accept the wife carried this out in his presence, gave the document to him and confirmed with him that this would also operate as her resignation as a director of the company. I find the wife communicated to the husband in August 2008 her intention to resign as a director of [Mr Gabbard] Pty Ltd, assigned her shares in that company to him and trusted the husband would act upon this.
I find the husband did not act as he promised the wife he would. He did not carry out his promise to her. The wife was required to write to the parties’ accountants on 18 February 2009 when she realised she was still a director of [Mr Gabbard] Pty Ltd asking them to note her resignation as a director and to assign her share to the husband. This occurred after she had discovered that the husband had unilaterally and without her knowledge or consent improperly accessed the funds in the Super Fund and that he had not acted upon his promise to her in August 2008 regarding transferring the share to himself and having her resign as a director.
I find the wife had no knowledge whatsoever of the husband’s dealing with the assets of the Super Fund prior to and in late December 2008. Her knowledge came from a letter his solicitors sent to her solicitors as part of these proceedings. I find the husband was slow in revealing his fraudulent behaviour to the wife and that she was unaware of the extent of the husband’s dealing with the super fund assets until late December 2008. In February 2009 the wife took steps then available to her to distance herself as best she could from the consequences of the husbands conduct.
Going to the super fund trust deed, Wife’s Exhibit 5. The husband is the founder of the deed. The trustee of the super fund is [Mr Gabbard] Pty Ltd and the husband is the sole director and shareholder.
The husband’s interest in the Super Fund is $116,753 and the wife’s $51,053. The fund was set up in 2002. The husband as a director of the trustee company has breached paragraphs 23.3, 23.4, 23.5 of the deed.
By virtue of paragraph 26.1 of the deed the trustee may delegate to a person all the powers of a trustee to act in accordance with the trust deed. The trustee may appoint a custodian to carry out services on behalf of the trust, pursuant to paragraph 27.3 of the trust deed, including making investments, decisions and the like, paragraph 27.4. The trustee’s obligation to ensure the fund is compliant is set out in paragraphs 29, 30, 32 and 33. The husband is in breach of his obligations as a sole director of the trustee company to notify the tax department that the fund is not compliant, pursuant to paragraph 34 of the deed.
The trustee may, in its discretion, transfer a member’s superannuation entitlement to an approved fund under paragraph 60 and this is what the wife wants to do – split the fund and have her moneys transferred to an approved super fund.
The fund may be terminated by the founder and the trustee, as set out at paragraph 62 of the deed. It is clear, after perusing the deed, that I can, by Order, as between the husband and wife, ensure the wife is appointed as the trustee’s delegate to pay the fund’s money, to ensure tax returns are prepared, and that the fund again becomes compliant. The wife can then, as the delegate of the trustee, split the parties’ superannuation entitlement, role over the wife’s interest as she directs to an approved fund, and leave the husband with his entitlement to the fund.
Once those matters are attended to by the wife her delegation may then be extinguished leaving the husband the founder and director of the trustee company and its assets.
It is an imperative that the wife be given all authority to ensure the fund becomes compliant and that she take her share of the super out of the self managed fund and into an arm’s length fund. To ensure this happens, it is imperative that the wife be given authority to sell assets and rectify the husband’s transgressions.
The husband tells the Court that in relation to the [Gabbard] Pty Ltd directors’ loans that he is in the process of reviving [Gabbard] Pty Ltd from liquidation. He tells the Court, through Wife’s Exhibit 7, that there are shareholders’ loans in the company which he and his wife are responsible for, although he accepts the wife has no responsibility for loans post-separation.
The evidence he relies upon does not enable me to make the finding he asks I make. The documents relied upon do not show directors’ loans in the company accounts as no company accounts or financial statements, tax returns and the like were produced since 2006. I do not know when these loans were taken out from the documents exhibited. The Exhibit has been prepared by an accountant, perhaps, for the accountants purposes but is not supported by any source documents and is little but an aide memoir for an accountant.
The Exhibit makes reference to directors’ loans in the company. Perhaps if the company is revived they will resurface but at this point in time the company is still in liquidation and thus there is no current liability for directors’ loans if they even exist and I have no capacity to determine if the wife has liability for same.
If [Gabbard] Pty Ltd is resurrected and liabilities of any nature arise from that resurrection I will Order the husband to indemnify the wife for any debts or liabilities. If he wants to resurrect the company the consequences will fall to him.
The other option is to hold in trust a portion of money to which the husband is entitled from the sale of real estate pending resolution of these matters including the Super Fund debacle. As I have found however that is not possible.

Determination

Going now to determining the parties’ entitlement to their assets under section 79 of the Act. This is a four-stage approach.
I must determine the asset base, what it is constituted of and its value.
I then ascribe to each of the parties their percentage based entitlement to their assets based upon their past contribution to the assets, be it financial, non-financial or as a parent and homemaker. I may have regard to any particular post-separation contributions to children or property or assets over and above those in the past if that be the evidence.
Then I look at the factors under section 75(2) in terms of the capacity of the parties to provide for themselves, care for children, and the like, in the future and determine whether there ought be a further adjustment to their entitlement based upon their contributions to take into account their future needs.
The last stage is to look back at the proposed Orders and determine whether they are just and equitable in all the circumstances.
Both parents agree that their contribution to their assets in the past was equal, both financially, in direct effort, indirect effort, and as parent and homemaker.
The wife assets her needs under section 75(2) in the future are greater than the husband’s as has been her post-separation contribution to the family and assets. She primarily cares for the two children of the marriage. [X] has significant mental health issues. [Y] is 14. The husband pays no child support whatsoever by way of school fees or otherwise. The husband’s disclosed income of $3,000 per week is a far higher income than hers as a deputy principal. I accept the wife’s submissions.
I find the wife’s and husband’s contribution to their current assets based upon their past contributions to be equal resulting in a fifty-fifty division of their assets.
I will allow the wife an adjustment of 5% for her superior post-separation contribution to the family including the sole maintenance of the children including school fees and maintaining the [C] mortgage together with the children’s sole emotional and physiological support.
I will allow the wife a further adjustment of 10% for her more limited capacity to provide for her needs into the future over the husband’s capacity due to his superior earning capacity, her greater obligation to care for the children financially, emotionally and psychologically, which is apparent from the husband’s poor record of honouring any agreement in relation to paying his child support or school fees.
This would result in the wife being entitled to 65 per cent of the assets and the husband 35 per cent.
The further relevant matters are these.
The husband is to repay the super fund $164,000 odd from his share of the matrimonial property.
I will credit the wife with the $35,000 she paid in reduction of the [C] mortgage which will also be deducted from his share of the matrimonial property.
I will make no Orders in relation to capital gains tax as I have no evidence to support any capital gains tax as being payable.
There is also the issue of the shortfall in the sale price of [K] and the then mortgage which debt is now around $102,000.
I will Order the wife, as trustee, to sell [H] and [R]. I too have no faith in the husband’s capacity to refinance these mortgages or comply with any Orders for an orderly sale. This finding is based upon the husband’s abject failure to comply with the Court’s Orders at any level over the last 18 months, his poor credit history and lack of evidence of capacity to borrow.
The net asset pool if all the items of real estate are retained is $473,361 and the mortgages and car loan only are discharged. If divided 65/35 this results in the husband being entitled to $165,676. The husband has already received $67,000 in a partial property distribution. This reduces his entitlement to $98,676.
If he is to re-pay the super fund of $164,000 it is clear there is insufficient equity in the items of real estate to be retained by the husband let alone give the wife a credit for her reduction in the [C] mortgage or $35,000 or for her costs.
On these figures it is clear that the properties at [H] and [R] must be sold in the absence of the husband’s capacity to borrow any money let alone sufficient monies to discharge the above two debts as well as the existing mortgages.
Thus, to determine whether the wife can retain [C], which is important to her in providing a home for her children, I will need to reassess how the pool of assets will be constituted upon sale of [R] and [H].
The combined gross values of [R] and [H] are $970,000. There are debts of $633,000 in respect of those properties. Possibly there might be a net of $336,000, maybe more. There will be sale costs, agent’s commissions and the like to be paid. As best I can I can ascertain there may be $300,000 resulting from the sale of these two properties. It is hoped that they will sell for greater than the agreed value and thus increase the net cash available.
Upon a re-drawing the asset pool on the basis of a sale of [H] and [R] and the wife keeping Property C I find:
a)[C] is worth $600,000;
b)The net sale of [R] and the [H] is $300,000;
c)The wife’s Corolla $15,000.
This gives an asset pool $915,000.
The add backs are $91,189 to the wife and $67,459 to the husband giving a total pool of $1,073,650.
The Liabilities are:
a)The Property C mortgage of $512, 051;
b)The wife’s car loan of $22,000.
This gives a net pool of $539,599.
A 65/35 split is $188,859 to the husband.
The husband is to repay from his share the superannuation debt of $164,841. This will leave him $24,018, which is insufficient to pay the shortfall from [K] and allow the wife $35,000 for the [C] mortgage reduction. Additionally he has already had the benefit of $67,459 as a partial property distribution and thus there may be a shortfall of $40,000 to re-pay the super debt. On the other hand there may be sufficient funds. This is dependant upon the actual sale price achieved and the costs of sale.
The husband has a shortfall from his entitlement to the matrimonial property to repay the debts I find he is to pay. This is the situation the wife faces if she wishes to retain [C].
The wife wants to retain [C]. She says this is an important home for her children, and the issue of the debts are matters that she will deal with to enable her to retain that property.
I will accede to the wife’s request for her to retain [C], on the basis that she discharges the husband from the mortgage, and I will allow her

90 days to do this.
I will appoint her as trustee for the sale of the [R] and [H] property.
I will appoint her delegate of the trustee of the Super Fund, to have that fund made compliant. The wife may have to make a contribution to this repayment of debt if there is a shortfall. I will give her all the powers necessary to engage accountants and the like so that the fund again becomes compliant under the Act and regulations, to repay herself $35,000 and $1,372.80 being her costs of Mr B’s report if at all possible.

I find the husband should be solely liable for the [K] debt. The husband told me he put his head in the sand in relation to that sale and left it up to the wife in the end to sort matters out.
Secondly, the husband has not disclosed his true financial position. I am unclear and in the dark as to what the husband earns, net or gross, what his assets and liabilities are, what money he has in the bank as he produced virtually no documents to support what he told me.
I will make the splitting Order for the super fund which will be $116,753 to the husband and $57,053 to the wife.
The only way the husband can keep his properties is if he is able to raise a figure of around $900,000, which would enable him to discharge the mortgages, pay off [K], and re-pay the super debt, the wife $35,000 and $1,372.80.
If however the wife is agreeable to giving him that time, that is a matter entirely for her and my Orders will reflect that option, but he can only do this if his wife agrees.
If upon the sale of the properties there is a shortfall of the husband’s obligation to repay debts, then the wife will receive from the husband’s entitlement to superannuation an amount sufficient to make up the shortfall or if there is insufficient monies in the Super Fund to effect this Order then 100% of the husband’s entitlement by way of a further splittable payment, as that is the only asset left.
It is clear there are insufficient moneys to for the husband to pay the wife’s costs.
I find these Orders are a just and equitable division of the matrimonial property having regard to the evidence, the parties pre and post separation contributions, together with their future needs, and the husband’s conduct in dealing with matrimonial assets and conduct throughout these proceedings.
The husband’s conduct during the later part of the marriage, after separation and during the hearing is relevant under section 79(4)(e) being a fact and circumstance which in my opinion the justice of the case required I take into account.
Therefore, I make the Orders as set out at the commencement of this decision.

I certify that the preceding one hundred and eighty-nine (189) paragraphs are a true copy of the reasons for judgment of Henderson FM

Date: 15 February 2011