Geary and Geary

FAMILY COURT OF AUSTRALIA

GEARY & GEARY

[2010] FamCA 727

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Trial proceeded on an undefended basis in the absence of the applicant wife – Husband severely and permanently disabled from work accident prior to separation – Protective Commissioner appointed as litigation guardian of the husband – Husband unable to account for the wife’s management of the parties’ financial affairs following his accident – Wife failed to proffer to the Court an explanation for expenditure from matrimonial pool – Add backs – Wife’s expenditure reckless and for her sole benefit – Section 79 application for property settlement – Property adjustment in husband’s favour

Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)

Marriage of Coghlan (2005) 33 Fam LR 414
Marriage of Hickey (2003) 30 Fam LR 355
Marriage of Kowaliw (1981) FLC 91-092
Marriage of Robb (1994) 18 Fam LR 489
Marriage of Townsend (1994) 18 Fam LR 505
Omacini v Omacini (2005) 33 Fam LR 134

APPLICANT:

Ms Geary

RESPONDENT:

Mr Geary

FILE NUMBER:

NCC

148

2008

DATE DELIVERED:

18 August 2010

PLACE DELIVERED:

Newcastle

PLACE HEARD:

Newcastle

JUDGMENT OF:

Justice Austin

HEARING DATE:

11 and 12 August 2010

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Not Applicable

SOLICITOR FOR THE APPLICANT:

Not Applicable

COUNSEL FOR THE RESPONDENT:

Mr Duane

SOLICITOR FOR THE RESPONDENT:

Boyd Olsen Lawyers

Orders

The parties shall forthwith do all acts and things and sign all documents necessary so as to authorise, direct, and cause the NSW Trustee and Guardian to pay the monies held in trust, pursuant to Order 17 made on 16 February 2010, to the husband solely.
The parties shall forthwith do acts and things and sign all documents necessary so as to close ANZ Bank account numbers …479 and …598 and cause any monies contained within those accounts to:
(a)Firstly, be paid in discharge or partial discharge of any liability of the parties, or either of them, to the ANZ Bank, and
(b)Secondly, the payment of any surplus to the wife.
The wife shall indemnify, and keep indemnified, the husband against any and all liability in connection with the banking accounts referred to in Order 2 hereof and any other liability, individual or joint, to the ANZ Bank.
Pursuant to s 90AE(1) of the Family Law Act, the wife is solely legally responsible as between the Commonwealth Bank of Australia ACN 123 123 124 (“the Commonwealth Bank”) and the husband and the wife for any and all indebtedness by the husband and the wife to the Commonwealth Bank in relation to and arising from Viridian Line of Credit Account Number …047.
The wife shall indemnify, and keep indemnified, the husband against any and all liability in connection with:
(a) Commonwealth Bank account number …202.
(b)Any Commonwealth Bank loan account, or other liability, associated with the parties’ ownership of the parcel of real property situated at M, Qld, being described as Lot 48 on CP …, Title Reference ….
Unless otherwise provided:
(a)Each party shall be the sole legal and beneficial owner (as between the parties) of all other assets in their respective possession as at the date of these orders, and for that purpose bank accounts are deemed to be in the possession of the person named as the account holder and superannuation entitlements are deemed to be in the possession of the worker or superannuation account holder.
(b)Each party shall be solely liable for and shall indemnify the other against any and all debts attaching or relating to the property in their respective possession and any debts in their respective sole names.
In the event of either party refusing or neglecting to sign within 7 days of a written request to do so any document necessary to implement the terms of these orders the Registrar of the Family Court of Australia at Newcastle is empowered to execute such documents on behalf of the parties pursuant to s 106A of the Family Law Act.
Any and all outstanding applications are dismissed.
Costs of and incidental to the proceedings, including costs orders previously reserved, are reserved for 28 days.

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

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: NCC 148 of 2008

MS GEARY

Applicant

And

MR GEARY

Respondent

REASONS FOR JUDGMENT

Introduction

The applicant wife and respondent husband in these proceedings are in dispute about the proper adjustment of their property interests consequent upon the breakdown of their relationship in January 2008.
The wife unsuccessfully sought an adjournment of the trial, and then filed a Notice of Discontinuance. The wife did not attend the trial, which then proceeded on an undefended basis. The litigation was therefore determined on the evidence adduced by the husband.

Absence of the applicant wife

The wife filed an Application in a Case on 30 July 2010 in which she sought that the trial, fixed to commence on 11 August 2010, be vacated.
The wife’s application was expeditiously listed before the Court for hearing on 6 August 2010. The application was dismissed, and ex tempore reasons were given at that time.
The reason for the wife’s concern about the trial dates was that they clashed with the dates upon which she wished to attend a conference for work purposes. However, the trial dates were fixed long ago in February 2010, with the consent of the wife. She learned of the conference dates well after that time. The evidence adduced by the wife proved that her attendance at the conference was desirable, but not mandatory. The litigation was commenced in January 2008 by the wife and it was more desirable to conclude the litigation than it was for the wife to attend the conference. The husband is disabled and in need of access to monies which are held in escrow pending determination of the litigation. He would have suffered greater prejudice in having the trial delayed than the wife would by being denied the opportunity of attending a conference.
Following the dismissal of the wife’s application to vacate the trial date she filed, on 9 August 2010, a Notice of Discontinuance. The Notice purported to discontinue her prosecution of two separate applications, being:
a)Her Initiating Application filed on 18 January 2008, and
b)Her Application in a Case filed on 30 July 2010.
The Notice was defective in respect of the second application, because that application was dismissed by the orders made by the Court on 6 August 2010.
The Notice was also defective in respect of the first application, because that application was superseded by an Amended Application filed by the wife on 21 January 2009. The Notice did not mention discontinuance of the Amended Application. Although, in all probability, the wife intended to discontinue that application as well, that was not the effect of her Notice.
Even though the wife’s Amended Application filed on 21 January 2009 remained viable, she failed to attend the trial on 11 August 2010 to prosecute it.
The wife failed to appear at Court on 11 August 2010. The husband tendered an email sent by the wife to the husband’s solicitor that day at 7.47 am, requesting that the email be submitted to the Court in her absence.[1] The contents of the email suggested that the wife was at the conference she had spoken of the week before and was not contactable during sitting hours of the Court. She also indicated that, although she was prepared to accede to the husband’s application for him to receive the entirety of the proceeds of sale of real property held in escrow, she disagreed with his demands in respect of items of personalty.
[1] Exhibit H1
The Court was informed that the residual dispute between the parties was probably capable of consensual resolution and so the matter was adjourned until the following day to permit discussions between the parties. Upon resumption of the hearing on 12 August 2010 it was clear that no compromise had been reached. Again there was no appearance at Court by or on behalf of the wife. The husband tendered a series of emails between the wife and the husband’s solicitor, which demonstrate that the wife was aware that the matter had been adjourned to that day, that she was still at the conference, and that she would not be appearing at Court.[2]
[2] Exhibit H2
In the absence of settlement, the matter proceeded to trial on an undefended basis. I am well satisfied that the wife was aware that the trial was listed before the Court on both 11 and 12 August 2010, and that she deliberately chose not to attend. The wife therefore eschewed her opportunity to be heard about the just and equitable outcome of the litigation.

Absence of the Commonwealth Bank

The financial affairs of the parties involve liabilities to the Commonwealth Bank of Australia (“the CBA”).
On 8 October 2009 the husband filed an Application in a Case seeking, among other things, leave to join the CBA to the proceedings.
On 9 October 2009 the Federal Magistrate made an order, in terms proposed by the parties, that upon the CBA filing a Notice of Address for Service certain transcripts of evidence concerning its loans could be furnished to the CBA.[3] However, leave was not actually granted for the CBA to intervene or be joined.
[3] Order 3.1
Pursuant to those orders, the CBA filed a Notice of Address on 11 November 2009, but did not thereafter file any Notice of Intervention or Response to the orders proposed by the wife in her Amended Application, or those proposed by the husband in his Response.
On 15 December 2009, in the absence of the CBA, the Federal Magistrate made a consent order in the terms proposed by the husband and wife restraining the CBA from taking enforcement or litigious steps against them,[4] and the matter was transferred to this Court.[5]
[4] Order 2.1
[5] Order 1
The matter came before this Court on 20 January 2010, at which time orders were made permitting the CBA to intervene in the proceedings,[6] and requiring the CBA to file a Notice of Intervention if it intended intervention.[7] The CBA has not since done so.
[6] Order 2
[7] Order 3
The explanation for inaction on the part of the CBA became apparent at the trial. The husband tendered correspondence, written by the solicitors acting for the CBA to the husband’s solicitor, indicating that the CBA consented to the orders sought by the husband which related to the liabilities owed by the parties to the CBA.[8] The proposed outcome of the litigation was therefore uncontroversial from the perspective of the CBA.
[8] Exhibit H5

Evidence adduced by the respondent husband

The husband did not press for the orders set out within his Amended Response filed on 20 January 2010 when the trial commenced. Instead, he tendered a Minute of Orders that he proposed.[9]
[9] Exhibit H4
In summary, the husband sought sole entitlement to the residual proceeds realised on the sale of the former matrimonial home, his indemnity by the wife against liabilities owed to the ANZ Bank and the CBA, an order that the wife be solely liable for a CBA loan, and orders that the parties otherwise retain the personalty in their respective possession.
As noted, the CBA consented to orders of that nature.[10]
[10] Exhibit H5
The orders proposed by the husband were not apparently repugnant to the wishes of the wife either. Although she had railed against the husband’s former demands for the return of items of personal property to him,[11] the husband abandoned such demands in the orders he finally sought.
[11] Exhibit H1
In support of his proposals the husband adduced in evidence the following:
a)   His affidavit filed on 31 May 2010.
b)     His Financial Statement filed on 5 August 2010.
c)     Affidavit of Mr D filed on 25 June 2009.
d)     Balance Sheet,[12] which, the Court was informed, was tendered to summarise the respective contentions of the parties about the pool available for distribution, and not as evidence of the truth of its contents.
e)     Portions of transcripts of evidence given during earlier interim hearings held on 6, 18, and 27 November 2008.[13]
f)   A purported loan agreement between the parties and one Mr H,[14] which document was the subject of apparent reference in some of the transcript.[15]
g)     Portions of the wife’s Financial Statement filed on 15 April 2009, being paragraph 45, and Part O, Note 2.[16]
h)     Facsimile transmission by the CBA to the husband’s guardian on 5 August 2010 concerning some CBA accounts.[17]
[12] Exhibit H3
[13] Exhibits H6, H7, H8
[14] Exhibit H9
[15] Exhibit H8
[16] Exhibit 10
[17] Exhibit H11
Self-evidently, in the absence of the wife and the CBA, none of the evidence adduced by the husband was challenged.

Background facts

The parties commenced cohabitation in 1996 and later married in 1998.[18]
[18] Husband’s affidavit, par 9
At the commencement of cohabitation the husband was in a reasonably secure financial position. He then had assets which included shares, savings, tools, a car, and a motor cycle.[19] Although there is no evidence as to the value of those assets at that time, the shares were sold some years later for $30,000.[20] He had no debts.[21] The husband was also in full-time employment.[22]
[19] Husband’s affidavit, par 14
[20] Husband’s affidavit, par 18
[21] Husband’s affidavit, par 16
[22] Husband’s affidavit, par 15
The wife’s financial position was less secure at that time. Although she was in full-time employment,[23] she only owned a car and some personal effects.[24] The wife and her daughter from a previous relationship, who was then aged only 5 years,[25] were living with the wife’s parents.[26]
[23] Husband’s affidavit, par 15
[24] Husband’s affidavit, par 17
[25] Husband’s affidavit, par 10
[26] Husband’s affidavit, par 17
The wife’s daughter lived with the parties for the entirety of their cohabitation. The evidence, such as it is, indicates that the wife received little by way of child support for her daughter from that child’s father.[27] The financial burden of maintaining that child fell predominantly upon the wife and the husband.
[27] Husband’s affidavit, par 11
In early 2001 the parties purchased an unimproved real property at N, which ultimately became the former matrimonial home.[28] The purchase was funded primarily by a bank loan, and the balance by the proceeds realised by the sale of shares owned by the husband from before cohabitation.[29]
[28] Husband’s affidavit, pars 18-19
[29] Husband’s affidavit, par 18
The husband improved the N property for the parties over time through hard work.[30]
[30] Husband’s affidavit, pars 19, 25, 27
There was one child born to the parties’ relationship. That son was born in August 2001,[31] not long after the N property was acquired.
[31] Husband’s affidavit, par 10
Some years later, in 1997 or 1998, the husband left his employment and became self-employed.[32] His business was gardening and arborist work. The business was conducted as a partnership between the parties, with the wife undertaking the bookkeeping work for several years.[33] A casual employee was later retained to do the bookkeeping work for the partnership.[34]
[32] Husband’s affidavit, par 20
[33] Husband’s affidavit, par 21
[34] Husband’s affidavit, par 21
The income earned by the husband was contributed to the household and used to sustain the parties, their child, and the wife’s daughter.[35]
[35] Husband’s affidavit, par 24
On 10 October 2005 the husband was gravely injured in a work accident. He was rendered totally blind and his mobility was permanently and substantially restricted. He spent many months in hospital convalescing.[36]
[36] Husband’s affidavit, pars 30-31
Until the accident, the husband had actively engaged in household duties and the care of the children.[37] That ceased following the accident. The husband became totally reliant upon the wife.
[37] Husband’s affidavit, pars 28-29
At the time of the husband’s accident in late 2005, the parties were in a stable financial situation. They owned the N property in which they lived, which was then subject to a mortgage of less than $63,000, the partnership business, a car, personal effects, and superannuation interests.[38]
[38] Husband’s affidavit, pars 36-38
In addition to those assets, the husband carried insurance for personal injury and disablement.[39] He made a claim upon those insurance policies following his accident and substantial sums of lump sum compensation were paid.
[39] Husband’s affidavit, pars 32, 41
According to the evidence, the husband was paid out the following insurance payments:
a)   On 21 February 2006  200,000.00[40]
b)     On 15 March 2006  6,133.18[41]
c)     On 9 March 2007    23,770.60[42]
$229,903.78
[40] Husband’s affidavit, Annexure D2
[41] Husband’s affidavit, Annexure J
[42] Husband’s affidavit, Annexure K
Whilst the husband was still in hospital, the parties discussed use of the expected insurance monies to discharge the mortgage over the N property and possibly to purchase a new car.[43]
[43] Husband’s affidavit, pars 33-34
At some point the wife was formally appointed as the husband’s financial manager by reason of his disability. There is no evidence as to when that occurred, but the financial management order in favour of the wife was revoked in August 2006 by the Guardianship Tribunal.[44]
[44] Husband’s affidavit, Annexure B, page 9
In any event, following the husband’s accident the wife took control of the parties’ financial circumstances. The husband was incapable. The husband is now simply unable to account for how the wife handled the parties’ financial affairs after his accident, and more particularly, after the payment out of the insurance monies.
What can be said with certainty is that:
a)The insurance monies were not used to discharge the mortgage over the N property, as the parties discussed. But for a repayment of $10,710 in May 2006,[45] the mortgage continued to be paid by weekly repayments of $150 at least until the end of December 2007, at which time the debit balance was still more than $57,000.[46] The sum of $11,000 was redrawn on that loan between February and March 2007,[47] and the husband was not responsible for that redraw.[48] It seems that there was still a debit balance on the mortgaged loan which required discharge on the sale of the N property in September 2008.[49]
b)The insurance monies paid out in February 2006 were not paid into any of the banking accounts under the control of the husband.[50]
c)The insurance monies paid out in March 2006 were paid into the joint ANZ account of the parties, but then transferred into the sole account of the wife.[51]
d)The insurance monies paid out in March 2007 were paid into a joint account of the parties, but then mostly withdrawn by cheque by some person other than the husband, presumably the wife, several days later.[52]
[45] Husband’s affidavit, Annexure E
[46] Husband’s affidavit, par 43, Annexure E
[47] Husband’s affidavit, par 44, Annexure E
[48] Husband’s affidavit, par 45
[49] Husband’s affidavit, par 61, Annexure Q
[50] Husband’s affidavit, par 42
[51] Husband’s affidavit, par 50
[52] Husband’s affidavit, par 51, Annexure F pages 104-105
If the wife has a good explanation for how that money was allocated or expended she has not deigned to share it with either the husband or the Court. The husband harbours a belief that the money was either squandered or retained by the wife for her benefit.
It is true that large sums of money were paid into the ANZ account of the wife in February and May 2006 by E Business,[53] which was then transferred into the joint ANZ account of the parties,[54] but there were then substantial redraws from that account for which the husband was not responsible and which he cannot explain.[55]
[53] Husband’s affidavit, par 46, Annexure H
[54] Husband’s affidavit, par 46, Annexure G
[55] Husband’s affidavit, par 49

Deposits were also made by E Business to the CBA account of the parties in March and April 2006,[56] about which similar observations may be made.
[56] Husband’s affidavit, Annexure E, pages 62 and 65
The E Business is controlled by the wife’s parents.[57] There is little evidence as to why those payments were made by that business to the accounts of the parties. The inference, which I draw, is that the payments were repayments of amounts loaned by the mother to her parents from the insurance monies paid out to the husband. That inference arises from the notes attending some of the deposit payments in the CBA bank statements of the parties, which describe the payments as “[E] repmt” and “[E] loan repay”.[58] The wife had no other source of funds before early 2006 to make substantial loans to her parents other than the insurance monies.
[57] Husband’s affidavit, pars 47-48
[58] Husband’s affidavit, Annexure F, pages 62, 77
Even though the E deposits were probably repayments of monies loaned by the wife to her parents from the insurance monies, there is no evidence that the amounts repaid fully discharged the amounts advanced. Nor is there any evidence that the husband ultimately derived any benefit from the repayments that were made. The husband certainly denies his receipt of any benefit.
On 9 February 2007 the husband appointed the wife as his attorney, without limitation.[59] The wife accepted that appointment by endorsing the Power of Attorney on 16 March 2007.[60]
[59] Husband’s affidavit, par 52, Annexure L
[60] Husband’s affidavit, Annexure L
Contemporaneously, on 8 March 2007, the parties contracted to purchase a property in Queensland,[61] which was predominantly funded by a loan raised from the CBA.[62] Although the husband professes ignorance of the transaction, both as to the purchase and the loan, the expert witness called by the husband believes that the husband’s signatures upon the loan agreement and mortgage with the CBA are most probably genuine.[63]
[61] Husband’s affidavit, par 53
[62] Husband’s affidavit, par 54
[63] Affidavit of Mr D, report pars 7-8, Annexures Q2, Q4
That property was later sold in November 2009, pursuant to an interim order to do so,[64] and the entirety of the sale proceeds were used to partially discharge the debt secured over that property. The residual liability has apparently been waived by the creditor.[65]
[64] Order 1.1 made on 6 November 2008
[65] Husband’s affidavit, par 62
There was another transaction that occurred in March 2007, which holds more significance for the outcome of these proceedings. The parties had operated an overdraft account with the CBA from at least as early as October 2005.[66] The account had a relatively small fluctuating credit or debit balance up until 26 March 2007.[67] However, several days later, on 31 March 2007, the account disclosed a debit balance of over $135,000,[68] which debt continued to burgeon over ensuing months.[69] By 7 September 2009 the debt under that account had grown to $198,601.91.[70] As at 5 August 2010 the debt stood at $215,324.83.[71]
[66] Husband’s affidavit, Annexure F page 40
[67] Husband’s affidavit, Annexure F page 105
[68] Husband’s affidavit, Annexure F page 106
[69] Husband’s affidavit, Annexure F pages 106-145
[70] Husband’s affidavit, Annexure P
[71] Exhibit H11
It would seem that on 5 March 2007 the wife and husband applied for an extension of that overdraft facility.[72] Pursuant to that application the CBA granted a loan with a credit limit of $180,000 on 14 March 2007, which the parties accepted by signature of the consumer credit contract schedule on 20 March 2007.[73]
[72] Affidavit of Mr D, Annexure Q1
[73] Affidavit of Mr D, Annexure Q3
The expert witness relied upon by the husband considers that the husband’s signature on the loan application is genuine,[74] but that the signature on the consumer credit contract schedule purporting to be the husband’s is not his signature.[75] The husband’s recollections of what he may have signed at the CBA around that time are too muddled to be reliable,[76] but he denies knowledge of his participation in a loan of $180,000.[77]
[74] Affidavit of Mr D, report pars 7-8, Annexure Q1
[75] Affidavit of Mr D, report pars 5, 10-12, Annexure Q3
[76] Husband’s affidavit, pars 55-58
[77] Husband’s affidavit, par 59
What became of the funds withdrawn from that CBA account from March 2007 remains controversial. I accept that the husband did not make those withdrawals and that only the wife could therefore have done so. At some point during the litigation the wife asserted to the husband’s solicitor that the monies were loaned to a third party, and a loan agreement was produced to verify the transaction.[78] The husband’s solicitor earlier informed the Court that she received that document from the solicitors then acting for the wife.[79]
[78] Exhibit H9
[79] Exhibit H8, page 7
The loan agreement is dated 31 March 2007 and purports to record a loan of $140,000 by the parties to one Mr H, repayable in full by 31 October 2008. The document bears three signatures, which purport to be those of the parties and the debtor.
There is no evidence about the source of the monies given to Mr H, but the husband’s solicitor informed the Court on 18 November 2008, without objection from the wife, that two cheques totalling $140,000 were drawn on a CBA account in favour of “[H Business]”.[80] I impute that the CBA account referred to is the same account for which the credit limit of $180,000 had been arranged in March 2007, and which was placed into debit of over $140,000 by early April 2007.[81] It was revealed in evidence during an interim hearing that those cheques were banked into accounts controlled by Mr H on 22 and 27 March 2007.[82]
[80] Exhibit H7, page 2
[81] Husband’s affidavit, Annexure F, pages 105-107
[82] Exhibit H8, page 7
The husband flatly denies willing involvement in any such transactions.[83] He suspects that the wife forged his signature on the loan agreement, because she admitted to him that she had forged his signature on documents in the past.[84] The husband does not regard that as an isolated incident.
[83] Husband’s affidavit, par 60
[84] Husband’s affidavit, par 63
During the course of this litigation the wife instructed her solicitors to inform the Court that she held a cheque in favour of the parties in the sum of $186,316.54 in purported repayment of the loan earlier made to Mr H.[85] In contravention of interim orders to produce the cheque to the Court,[86] the cheque was not produced. The wife herself later informed the Court that the cheque had been shredded.[87] Neither that cheque nor a replacement has ever materialised. Nor has the wife ever produced evidence of cancellation of the cheque, in breach of the Court’s further order.[88]
[85] Exhibit H6, pages 4, 6
[86] Order 3 made on 4 November 2008; Order 3.1 made on 6 November 2008
[87] Exhibit H7, pages 1-3
[88] Order 2 made on 18 November 2008
Mr H himself attended Court on 27 November 2008 pursuant to subpoena and gave evidence. He was shown a document with three signatures. He agreed that the signature on that document purporting to be his was in fact his,[89] but said that the signature had been fraudulently endorsed upon the document by some other person by some digital reproductive means.[90] The document was tendered as Exhibit H1 in the proceedings that day.[91] That exhibit is the loan agreement, which was tendered as an exhibit in the present proceedings.[92]
[89] Exhibit H8, page 6
[90] Exhibit H8, pages 7, 16
[91] Exhibit H8, page 7
[92] Exhibit H9
Mr H alleged that the $140,000 had been loaned to the business trading as “H Business”, rather than to him personally,[93] and that although the debt was disclosed as a liability in the accountancy records of the business, there was no prospect of the debt being repaid by the business.[94] Mr H denied ever furnishing the wife with a cheque in the sum of $186,316.54 by way of repayment.[95] He said that his association with the wife ended in June 2007.[96] The evidence given by Mr H about the terms of the loan was completely inconsistent with the contents of the loan agreement.[97] He asserted that the wife intended to take the money out of his business accounts as soon as the money went into those business accounts.[98]
[93] Exhibit H8, pages 9, 13
[94] Exhibit H8, page 15
[95] Exhibit H8, page 9
[96] Exhibit H8, page 11
[97] Exhibit H8, pages 13-14
[98] Exhibit H8, page 13
I conclude that the credit limit on the CBA overdraft account was extended in March 2007 in order to permit the wife to provide money to Mr H, or some enterprise over which he had control. It is unnecessary to determine the wife’s motive. The sum of $140,000 was then advanced by the wife to Mr H from that CBA account in March 2007. The loan agreement was later contrived by the wife to explain the withdrawal of those funds from the account. It is unnecessary to decide whether the loan agreement was contrived on 31 March 2007, being the date endorsed on the document, or afterwards. There can be no dispute that the preparation of the loan agreement occurred after the withdrawals were actually made and the cheques given to Mr H on or about 22 and 27 March 2007. Mr H and the husband both deny endorsement of their signatures upon the loan agreement.
The debit balance of the CBA overdraft account continued to escalate by further withdrawals, for which the husband was not responsible, and interest charges accruing to those withdrawals. There can be little doubt that the debt was created by the wife alone.
At some point during 2007 an application was made to the NSW Guardianship Tribunal for guardianship and financial management orders to be made in favour of the husband. That application came before the Tribunal on 12 November 2007, but was adjourned.[99] A financial management order was subsequently made on 14 February 2008, appointing the Protective Commissioner as financial manager of the husband.[100]
[99] Husband’s affidavit, Annexure B
[100] Husband’s affidavit, Annexure A
The parties separated on 9 January 2008,[101] shortly before that order was made.
[101] Husband’s affidavit, par 9
The wife filed her Application to commence these proceedings on 18 January 2008, and on 23 April 2008 the Court appointed the Protective Commissioner as the husband’s litigation guardian in these proceedings.[102]
[102] Order 1
In late January 2008 the husband vacated the former matrimonial home and eventually moved to his present accommodation in February 2008.[103]
[103] Husband’s affidavit, par 9
The wife remained in occupation of the former matrimonial home until its sale in September 2008. The net proceeds of sale amounted to $326,412.31.[104] Those monies were deposited into the trust account of the husband’s solicitors pursuant to Court order made on 17 October 2008,[105] and were later transferred to the control of the NSW Trustee and Guardian following further orders on 16 February 2010.[106]
[104] Husband’s affidavit, Annexure Q
[105] Order 2.1
[106] Order 17
The proceedings, which had been commenced in the Federal Magistrates Court, were transferred to this Court on 15 December 2009.
The matter was later fixed for trial on 11 August 2010.
As earlier noted, the wife’s application to vacate the trial date was dismissed on 6 August 2010, and the trial proceeded in her absence on 11 and 12 August 2010.

Matrimonial pool of property

Having regard to the evidence and submissions of the husband, I find that the matrimonial pool of property comprises the following, rounded to the nearest dollar:

No.	Assets	Party	Value	Total
1	Proceeds of sale of N property	joint	331,025
2	ANZ account …479	joint	nil
3	ANZ account …598	joint	174
4	GBS account …121	H	2
5	NSW Trustee & Guardian account	H	15
6	Furniture	H	3,000
7	Tools	H	1,500
8	Bookkeeping business	W	nk
9	Plant and equipment retained by the wife	W	45,950
381,666+
Add-backs
10	Monies wasted from, and interest recklessly incurred on, CBA overdraft account …047 by wife	W	215,325
11	Insurance monies disbursed by wife	W	229,904
12	CBA account …202 proceeds kept by wife	W	1,426
446,655
Liabilities
13	CBA overdraft account …047	joint	215,325
14	ANZ overdrawn account …479	joint	250
15	Home study loan	H	1,601
217,176
Superannuation
16	E Super Pty Ltd	W	12,000	12,000
Net total	623,145+

The items comprising the pool require some elaboration.
Item 1 is uncontentious. The residual proceeds of sale of the former matrimonial home exist and are held in escrow by the NSW Trustee and Guardian. The current quantum of the proceeds is proven by the husband’s Financial Statement.[107]
[107] Part O
Items 2-7 inclusive are proven by the husband’s Financial Statement.[108]
[108] Pars 37, 42, Part O
Item 8 is the wife’s business. It is known that the wife has a banking account with the ANZ Bank styled “[wife] t/as [wife] [Bookkeeping Business]”.[109] Mr H earlier told the Court in evidence that the wife had performed bookkeeping services for him or his business and rendered to him tax invoices in her business name for those services.[110] The wife also informed the Court on 6 August 2010 that she wished to vacate the trial so that she could attend a conference in Melbourne to update her skills with MYOB, a well known computer-based bookkeeping program. I comfortably conclude that the wife owns and operates a bookkeeping business, but there is no evidence which permits any inference to be drawn about the value of that business or the assets it comprises.
[109] Husband’s affidavit, par 40, Annexure H
[110] Exhibit H8, pages 6, 8, 9, 11, 13
Item 9 relates to chattels which comprised the business conducted in partnership by the parties at the time of the husband’s accident at work in October 2005.[111] Apart from some comments made in her email dated 11 August 2010,[112] which is not evidence to which the wife has actually deposed, the wife has not provided any explanation for what became of those chattels. They remained in the possession of the wife at the time the husband vacated the former matrimonial home in January 2008.[113]
[111] Husband’s affidavit, par 26
[112] Exhibit H1
[113] Husband’s affidavit, pars 64-65
I accept the husband’s evidence about the value of those chattels totalling $45,950.[114] The husband had specialised knowledge based upon his experience in the gardening and arboreal industry, which equipped him to offer expert opinion evidence about the value of such chattels used within that industry (see s 79 of the Evidence Act).
[114] Husband’s affidavit, par 64
Items 10 and 13 may be discussed together. As previously discussed, the CBA overdraft account was taken from a small credit balance of $138.78 to a large debit balance of over $140,000 within a period of little more than a week between late March and early April 2007.[115] The explanation for that significant adverse change in the parties’ asset position was, I find, the wife’s unilateral decision to provide $140,000 to Mr H, or businesses under his control, which monies were paid out of that CBA account. Thereafter, the debit balance of the account continued to grow by reason of further withdrawals and interest charges for which, I find, the wife was responsible. I am satisfied that the husband was not responsible for any of those withdrawals. Inferentially, they must have been made by the wife.
[115] Husband’s affidavit, Annexure F, pages 105-107
The expenditure from the CBA account was the idea of the wife. She did not discuss the withdrawals with the husband. He did not consent or acquiesce to them. None of the expenditure from the account benefitted the husband.
The mere expenditure of funds or utilisation of assets by a party does not of itself justify notional add-back of the expended funds or utilised assets as a premature distribution or waste of such funds or assets. The Court needs to make some assessment of the reasonableness of the expenditure (see Omacini v Omacini (2005) 33 Fam LR 134 at 146), before deciding whether to notionally add-back the expenditure under one of the recognised categories of add-back (see Omacini at 144-145). The failure of the party responsible for the expenditure or dissipation to afford a fulsome explanation for the expenditure or dissipation is a matter of significance in the determination of the reasonableness of it (see Omacini at 146).
I am satisfied that the monies provided by the wife to Mr H were dissipated either wantonly or recklessly so as to justify add-back of those monies to the pool on principles established by Marriage of Kowaliw (1981) FLC 91-092 (see Omacini at 145). I am far from satisfied that a loan to Mr H was actually intended by the wife, but even if a loan was genuinely intended, the circumstances in which it was conceived and implemented were so woefully inadequate that the wife’s conduct can properly be described as wanton or reckless. The advances were made to the debtor before the loan agreement was even prepared, the name of the entity to which the advances were made did not correlate with the name of the debtor on the loan agreement, and no security for the loan was arranged. There is now no real prospect of the monies being recovered. There probably never was. I find on the balance of probabilities that the alleged cheque of $186,316.54, for purported repayment of the loan, never existed.
As for other withdrawals made by the wife from the CBA account after March 2007, she has proffered no explanation for them at all. The wife was generating an income from the operation of her bookkeeping business. There was no apparent need for her to dissipate those extra funds from the CBA overdraft account for reasonable living expenses. Those withdrawn monies have now simply been lost from the matrimonial pool. I am satisfied that that expenditure should also be added back to the pool.
The interest charges on the overdraft account have only been incurred because of the growing debit balance. If the debit balance is the sole responsibility of the wife, then so must the allied interest charges.
The debt due by the parties to the CBA under the overdraft account remains a joint liability. However, the debt was caused by the wife in circumstances that justify the notional add-back of those funds to the pool as an asset enjoyed by the wife. The quantum of the debt, and axiomatically the add-back, is established by the evidence.[116]
[116] Exhibit H11
Item 11 relates to the insurance monies payable to the husband in respect of his disability, but which were taken by the wife. The quantum of the insurance payments was earlier computed,[117] and the unilateral use of the funds by the wife is also earlier discussed.[118] In the absence of any explanation at all from the wife about what became of those funds, an inference fairly arises that she either wasted the money, kept it for herself, or acquired assets for herself which remain undisclosed. There is no evidential basis for inferring that the money was reasonably spent. Those funds are therefore also added back to the pool.
[117] See paragraph 39 of these reasons
[118] See paragraphs 43-48 of these reasons
Item 12 relates to a joint CBA account disclosed in the Financial Statement of the husband.[119] The account was closed by the wife on 6 February 2009 without the knowledge of the husband,[120] and the proceeds of the account retained by the wife. The proceeds of the account were therefore prematurely distributed solely to the wife in the manner contemplated by Marriage of Townsend (1994) 18 Fam LR 505, justifying the add back of those funds to the pool (see Omacini at 144).
[119] Par 37
[120] Exhibit H11
Items 14 and 15 are liabilities that are disclosed in the husband’s Financial Statement.[121] There is no suggestion that the liabilities have not been properly incurred by the husband in the ordinary pursuits of life, in circumstances where he is reliant upon a disability pension for income,[122] and he has been locked out of the proceeds of sale of the former matrimonial home pending the outcome of these proceedings.
[121] Pars 50, 53
[122] Husband’s Financial Statement, par 12

Item 16 is the wife’s accumulated superannuation interest. It is disclosed by her in paragraph 45 and Part O, Note 2 of her Financial Statement filed on 15 April 2009. Those portions of her Financial Statement were tendered.[123]
[123] Exhibit H10
The Court is generally exhorted to treat the parties’ superannuation entitlements separately from assets, but that need not necessarily be the case (see Marriage of Coghlan (2005) 33 Fam LR 414 at 428-429). The husband did not directly address that issue in submissions, but inferentially, by inclusion of the wife’s superannuation interest in the Balance Sheet[124] he intended that it be treated as another matrimonial asset. It is appropriate in the circumstances of this case to treat the superannuation interest of the wife as property because the interest is only a modest amount and represents only a very small proportion of the pool.
[124] Exhibit H3

Assessment of contributions

Once the matrimonial pool of property is established as the first step in the property adjustment process (see Marriage of Hickey (2003) 30 Fam LR 355 at 370), the second step is to examine and evaluate the parties respective contributions pursuant to s 79(4)(a)-(c) of the Family Law Act (“the Act”).
It was submitted by the husband, and I accept, that each party worked hard in the relationship. I impute that they structured their family life in such a way that they each devoted their time to employment and household duties in relatively equal measure, albeit that their contributions may have been in different forms.
The husband submitted that his overall contributions were vastly superior to those of the wife, and that the nature of his superior contributions could be differentiated on three bases – firstly, his superior capital contributions at the commencement of cohabitation, secondly, his non-financial contributions to the improvements of the N property in which the parties lived, and thirdly, the insurance monies paid out for his injuries and disabilities which were paid into the family finances.
The initial capital contribution of the husband at the commencement of cohabitation was indeed more valuable than that of the wife, but the disparity was not as great as was urged by the husband. There is a paucity of evidence about the value of the assets that were introduced to the relationship by the parties. The asset of significance that was introduced to the relationship by the husband was the parcel of shares, later sold for $30,000. That money was used to partially fund the purchase of the real property at N in which the parties then resided.
I do not accept the submission that the husband’s contributions of physical labour to improve the N property are more significant than comparable contributions made by the wife. The parties moved into the N property after its purchase in early 2001. Their child was born in August 2001. No doubt while the husband was labouring around the grounds of the property the wife was caring for their child and attending to household tasks. I infer a general equivalence about the parties’ non-financial contributions.
I accept that the introduction of the lump sum insurance monies to the matrimonial resources is a contribution of significance by the husband. The insurance payments totalled nearly $230,000 and were paid out towards the end of the parties’ relationship. Had the monies been utilised in the manner discussed by the parties, the existing liabilities of the parties would have been entirely discharged. At that point in their lives, a capital influx of some $230,000 would have represented a significant proportion of the entire pool of property.
The husband submitted for a contribution-based entitlement to 80% of the pool of property. I reject that submission. I do not agree that the husband could rationally regard his overall contributions as four times greater than the wife’s.
I am satisfied that the overall contributions of the husband were superior to those of the wife, but not by anywhere near that margin. I am satisfied that a proper contribution-based adjustment is 60% to the husband and 40% to the wife.

Adjustment of property interests

The third stage in the process is to determine whether any adjustment of the contribution-based entitlements is warranted by reason of the matters proscribed by s 79(4)(d)-(g) of the Act.
The parties are now both aged 43 years.[125]
[125] Husband’s affidavit, pars 7-8
The parties’ child has just turned 9 years of age.[126] He lives with the mother, and will continue to do so because of the husband’s disabilities. The husband pays no child support to the mother,[127] presumably because his only form of income is a disability pension.[128] The burden of maintaining the child will fall upon the mother.
[126] Husband’s affidavit, par 10
[127] Husband’s Financial Statement, par 31
[128] Husband’s Financial Statement, par 12
There is no evidence before the Court about the mother’s current income, although she does derive income from the conduct of her bookkeeping business. The value of that business is unknown. It is an asset or financial resource that will remain within her control. I am satisfied that the wife has a satisfactory income earning capacity, notwithstanding her continuing care for the parties’ child.
The modesty of the wife’s accumulated superannuation entitlements means that they are not influential at this stage of the adjustment process.
I am satisfied on the evidence that the husband made contributions of significance to the care and support of the wife’s daughter from a former relationship. That is a matter of relevance under s 75(2)(o) of the Act, and must therefore be taken into account pursuant to s 79(4)(e) of the Act at this stage of the adjustment process (see Marriage of Robb (1994) 18 Fam LR 489 at 498-499). The husband’s financial contribution towards, and his occasional care and supervision of, that child continued from the commencement of cohabitation in 1996 until his debilitating accident in late 2005. The wife’s daughter recently attained majority and the wife is no longer under any duty to maintain that person.
The husband is now severely and permanently disabled. He lives in accommodation provided by the Australian Home Care Service,[129] the cost of which represents a large proportion of his disability income.[130] He will never work again and will require some level of constant care.
[129] Husband’s Financial Statement, par 21
[130] Husband’s Financial Statement, pars 21, 12
Having regard to those considerations, the husband submitted for an adjustment in his favour of approximately 5%. I am persuaded that such an adjustment is equitable.

Just and equitable orders

The overall result requires that the husband receive a 65% share in the matrimonial pool, which amounts to $405,044 (65% x $623,145 = $405,044).
Of the matrimonial pool, the husband presently has the benefit of only items 4, 5, 6, and 7, and retains total or partial liability for items 13, 14, and 15.
If the husband is absolved of liability for the debts comprising items 13 and 14, his net asset position is currently valued at $2,916 ($2 + $15 + $3,000 + $1,500 - $1,601 = $2,916).
For the husband to derive his proper entitlement he needs to receive a further $402,128 ($405,044 - $2,916 = $402,128).
There are insufficient remaining assets identified for the husband to be paid a further $402,128. The only asset which is available for distribution is the trust fund containing the proceeds of sale of the former matrimonial home, amounting to $331,025. The husband is aware of that. He submitted that he should have sole entitlement to those funds, and that he would abandon any claim to any other assets in the possession of the wife, either existing or undisclosed. In the circumstances, I regard that as the only rational outcome. Order 1 requires payment of those funds to the husband. Apparently, that is not an outcome with which the wife disagrees.[131]
[131] Exhibit H1
The plant and equipment comprising item 9 may no longer exist. The wife intimated that some of the equipment may have been disposed of by her.[132] In the face of the wife’s opposition, the husband abandoned any claim to that personalty.
[132] Exhibit H1
The wife has had the benefit of the monies added back to the pool as items 10, 11, and 12. Those monies are not now available to satisfy the entitlement of the husband.
It is just and equitable that the wife be made solely liable for the CBA overdraft account, which is an outcome supported by the CBA.[133] Order 4, which gives effect to that intention, is made in the same terms propounded by the husband and the CBA. Order 5 also ensures that the wife retains sole responsibility for other liabilities of the parties to the CBA.
[133] Exhibit H5
Orders 2 and 3 ensure that any funds held with the ANZ Bank are applied in partial discharge of any liability of the parties to that bank, with the wife to indemnify the husband against any residual liability to the ANZ Bank.
Order 6 provides that other items of personal property and superannuation entitlements remain where they fall.
The orders provide that the wife retains the benefit of items 2, 3, 8, 9, 10, 11, 12, and 16, and bears sole responsibility for items 13 and 14, which means that she will have, or have had, the benefit of assets with a net value of not less than $289,204. That amounts to more than 46% of the pool, and exceeds her entitlement.
For those reasons I am satisfied that the orders set out at the commencement of these reasons are just, equitable, and proper.

I certify that the preceding one hundred and eighteen (118) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Austin

Associate:

Date: 18 August 2010

[2010] FamCA 727

18 August 2010

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