Georgiades and Georgiades & Ors
[2014] FamCA 856
•8 September 2014
FAMILY COURT OF AUSTRALIA
| GEORGIADES & GEORGIADES AND ORS | [2014] FamCA 856 |
| FAMILY LAW – PROPERTY – Final Orders – Constructive Trust – former matrimonial home constructed on land owned by husband’s parents – wife sought a declaration that the third parties hold their entire interests in the former matrimonial home upon trust for the husband and the wife – wife alleges constructive trust or equitable estoppel – wife submits house was constructed using husband’s funds – wife submits husband’s parents gifted the property to husband and wife during a dinner party – where husband maintains no such representations were made – consideration of elements of constructive trust and equitable estoppel – where wife has failed to establish representation was made – where wife was failed to establish detrimental reliance. FAMILY LAW – PROPERTY – Final Orders – Add backs – where wife submits large cash withdrawals made by the husband should be included in the asset pool – where husband and husband’s parents have failed to adequately disclose the financial circumstances of the family business – evidence of husband and husband’s parents unreliable – monies may still be available to the husband – consideration of notional property following Stanford v Stanford (2012) 247 CLR 108 – appropriate to add back aggregate cash withdrawals. FAMILY LAW – PROPERTY – Final orders – where wife seeks a distribution of property 55/45 in her favour – wife’s proposed orders included the former matrimonial home in asset pool – where husband seeks an equal division of property – wife has made significant homemaker contribution while husband provided financial contribution with the assistance of his parents – where husband likely to have the ongoing financial support of his family – wife is primary caregiver for their two young children – consideration of just and equitable – orders made for final adjustment of property in terms of 62.5/37.5 in favour of the wife. |
| Family Law Act 1975 (Cth) s 79(2), 79(4), 75(2) |
| Bell & Bell [2000] FamCA 1301 |
| APPLICANT: | Ms Georgiades |
| RESPONDENT: | Mr Georgiades |
| SECOND AND THIRD RESPONDENTS: | Mr Georgiades Snr and Mrs Georgiades Snr |
| FILE NUMBER: | MLC | 11134 | of | 2011 |
| DATE DELIVERED: | 8 September 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 19, 20, 21, 27 and 28 March 2014 and 28, 29, 30, 31 July 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Smallwood |
| SOLICITOR FOR THE APPLICANT: | MCK Legal |
| COUNSEL FOR THE RESPONDENT: | Litigant in Person |
| COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: | Mr Glick SC with Ms Fisken |
| SOLICITOR FOR THE INTERVENOR: | Berry Family Law |
Orders
That the application of the wife seeking a declaration that the second and third respondents hold the property situate at and known as N Street, Suburb O upon trust for the husband and the wife be dismissed.
In full and final settlement of any claim that either party may have against the other by way of settlement of property or variation of or alteration of their separate interests in property pursuant to s 79 of the Family Law Act 1975 (Cth):-
(a)That within sixty (60) days the husband do pay or caused to be paid to the trust account of MCK Legal for and on behalf of the wife the sum of TWO HUNDRED AND SIXTY NINE THOUSAND SEVEN HUNDRED AND SEVENTEEN DOLLARS ($269,717;
(b)That pending payment of the said settlement sum other than as may be necessary to comply with paragraph 2 (a) hereof, the husband be restrained and an injunction is granted restraining him from encumbering, selling, disposing of or otherwise dealing with the following:-
(i)His title and interest in P Street, Suburb C;
(ii)His shareholding and interest in G Pty Ltd;
(iii)His motor cycle;
(iv)The jet ski;
(v)The boat.
(c)That in default of payment of the said settlement sum, the husband shall forthwith place on the market for sale his one quarter share in P Street, Suburb C, his motor cycle, the jet ski, the boat and his shareholding in G Pty Ltd by public auction or private treaty and upon such terms and conditions as the parties may agree and in default of agreement as may be ordered by this Honourable Court, with the net proceeds of sale to be applied as follows:-
(i)In payment of all costs, commission and expenses of the default sale;
(ii)In payment of the settlement sum or so much thereof as may be outstanding together with default interest from the due date until the date of payment at the rate prescribed pursuant to the Family Law Rules 2004 (Cth) from time to time;
(iii)The balance if any to the husband.
(d)That the husband indemnify the wife and keep her so indemnified against any and all liability of the husband to Mr and Mrs Georgiades Snr;
(e)That each party be liable for and indemnify and keep indemnified the other against any liabilities of each of them associated with or attached to any item of property retained by them;
(f)Subject to the payment of the settlement sum, the husband shall retain to the exclusion of the wife:-
(i)His interest in G Pty Ltd;
(ii)His interest in P Street, Suburb C;
(iii)Funds standing to his credit in bank accounts;
(iv)All motor vehicles in his possession;
(v)His collectibles, household contents and personal effects;
(vi)His superannuation entitlements.
(g)Subject to these orders the wife shall retain to the exclusion of the husband the following:-
(i)Her interest in the property at J Street, Suburb Y;
(ii)Funds standing to her credit in bank accounts;
(iii)All motor vehicles in her possession;
(iv)Her collectables, household contents and personal effects;
(v)Her superannuation entitlement.
That each party will do all such things and sign all such documents that may be required to give effect to this order PROVIDED that if the parties or either of them shall refuse or neglect to execute any transfer or other documentation pursuant to the terms of these orders within seven days after the same shall have been tendered to him or her by or on behalf of the other party for that purpose THEN and in such case a Registrar of the Family Court of Australia upon proof by affidavit of such refusal or neglect is hereby appointed to execute and if in his/her opinion it shall be necessary so to do to settle the same and to do all such other acts and things and to execute such other documents as may be necessary to give full force and effect thereto.
That the proceedings be certified as fit for counsel and senior counsel.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Georgiades & Georgiades and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER: MLC 11134 of 2011
| Ms Georgiades |
Applicant
And
| Mr Georgiades |
Respondent
And
Mr Georgiades Snr and Mrs Georgiades Snr
Second and Third Respondents
REASONS FOR JUDGMENT
INTRODUCTION
The proceedings are for settlement of matrimonial property concerning a marriage of approximately six years, but a period of cohabitation of approximately nine years. Ms Georgiades (“the wife”) commenced proceedings by way of an Initiating Application filed 19 December 2011 and sought orders for settlement of property pursuant to Part VIII of the Family Law Act 1975 (Cth) and in particular the extent to which (if any) there should be an adjustment of their respective interests in their property. Mr Georgiades (“the husband”) opposed the relief sought by the wife in his Response filed 23 January 2012. By Amended Initiating Application filed 1 May 2012, the wife sought an order that:-
Mr Georgiades Snr and MrsGeorgiades Snr be joined as parties to the proceedings.
The proposed third parties are the parents of the husband. They filed an Amended Response to the Amended Initiating Application on 18 February 2013 and following the filing by the wife of a further Amended Initiating Application on 3 April 2013 the third parties filed a Response to that document on 19 May 2013. The husband filed an Amended Response on 27 May 2013.
A convenient starting point is to set out the list of assets and interest in property that the wife contends should be brought to account. There is substantial disagreement by the husband in respect of the wife’s assertion.
J Street, Suburb Y
$ 350,000
Agreed
N Street, Suburb O
$ 720,000
Not agreed
P Street, Suburb C (1/4 share)
$ 60,000
Agreed
G Pty Ltd (1/4 share holding)
$ 266,000
Not agreed
Motor cycle
$ 8,000
Agreed
Jet Ski
$ 3,000
Agreed
Ford motor vehicle
$ 15,000
Agreed
Husband’s furniture
$ 6,730
Agreed
Boat
$ 35,000
Not agreed
Aggregate cash withdrawals by husband
$ 217,800
Not agreed
TOTAL
$1,681,530
Liabilities
Mortgage, Suburb Y
$ 111,000
Not agreed
NET
$1,570,533
In summary, the husband contends that his parents hold the legal and equitable interest in the Suburb O property and denies that the parties hold any interest in same. Whilst the value of the shareholding in G Pty Ltd is not significantly in dispute (although the husband contends that there is a substantial off setting liability by G Pty Ltd in favour of his parents), his principal contention is that his shareholding is held on trust for his parents.
The aggregate of cash withdrawals in the sum of $217,800 is the cumulative count of significant cash deposits paid into the husband’s personal account between 20 November 2007 and 2 August 2010. Those monies were withdrawn by the husband by six irregular but substantial withdrawals. The contention of the husband is that the monies belonged to the family business and that for various reasons they were “parked” in his account but ultimately withdrawn at the direction of his father with no benefit gained or enjoyed by the husband. The wife seeks that the total aggregate sum be treated as an “add back”, and therefore property of the husband and consequently included in the asset pool.
The husband is possessed of a speed boat. There is no significant dispute as to its value but the husband argues that the monies used to purchase the boat were borrowed from his father and that he therefore has a countervailing liability equal to if not greater than the current value of the boat. The wife contents that any alleged loan is a sham.
The wife seeks to bring to account a mortgage liability in respect of the Suburb Y property of $111,000. The husband does not dispute that there is an underlying mortgage but it is his assertion that the wife has drawn down on the mortgage causing it to increase from $66,000 at separation to its current level. The wife agrees that the outstanding mortgage balance has increased and admits that any increase can be attributed to the payment of her legal fees.
To highlight the yawning gulf between the parties, the husband contends that the total net property of each of them is $403,000, whereas the wife considers the total property to be $1,570,530.
The difference is found in the challenge by the wife to the husband’s position that he holds his shares in G Pty Ltd for and on his parents’ behalf, and the wife’s argument that the aggregate cash withdrawals should be brought back to account and in particular the wife’s claim in relation to the Suburb O property. It is the last claim that is central to the involvement of the third parties namely:-
[10]The second and third respondents hold the title on trust for the applicant and first respondent. They represented to the applicant and the first respondent the land was gifted to them, and was theirs to build on. Construction of the dwelling proceeded on the representation. It would be unconscionable for the second and third respondents to retain beneficial ownership of the property.
That claim by the wife has the obvious consequence that if made out will affect the interests of the third parties.
Given the considerable uncertainty in respect of the property that will form the pool of property available for division it is difficult to assess and determine the extent of the parties’ respective contributions or the weight that is given to the various relevant factors pursuant to s 75 (2) of the Act. The wife maintains that her current position, that she should receive 55 per cent of the property of the parties is tempered by how the Court may decide the three central issues namely, the wife’s claim in respect of the Suburb O property, the value of the husband’s shareholding in G Pty Ltd and whether there should be an “add back” to represent the aggregate of cash withdrawals held by the husband. The husband’s position is that there should be an adjustment of the property of the parties to equality. He also records that to date he has paid the total valuation fees of $15,729.50 and that the wife should contribute equally to same.
There are two children of the marriage namely V Georgiades born in 2006 and H Georgiades born in 2008. The parties have reached agreement in respect of parenting arrangements and in a general sense the children live with the wife but spend substantial and significant time with the husband.
The proceedings were initially managed by Bennett J and were listed for trial on 23 October 2013. The third parties sought that there be an adjournment of the final hearing and following ex-tempore reasons, the proceedings were adjourned for final hearing on 11 March 2014.
Her Honour’s reasons are encapsulated in the following paragraphs:-
[5]Very broadly and in relation to but one of the assets which it is said to be divisible between the husband and the wife, at least on the wife’s account, it is that the monies which were paid to construct the dwelling on the property at [N Street, Suburb O] were monies to which the husband was beneficially entitled in which the third parties had no entitlement. Therefore, when service providers and trades people were paid for the construction of that dwelling, they were paid with monies that came from the husband and the wife, rather than monies to which the third parties were entitled. Ms Smallwood, in opposing the adjournment says that a reading of the affidavit material thus far would indicate what the wife’s case is and what case they have to meet. I am afraid that I cannot agree with that.
[6]Not only is there the contentions in relation to whose monies paid for property in this particular case but what remedies would be attracted in the event that the wife succeeds in making at least some or all facts alleged by her.
Her Honour was of the view that it would not be fair for the proceedings to commence at that stage if there was uncertainty as to the case that the third parties had to meet.
As part of the further orders made that day, her Honour required that the wife file and serve “contentions of fact and law” relied upon and that the husband and the third parties file and serve a response to the wife’s “contentions of fact and law” and if so advised his or own different contentions.
During the course of the trial before me, there was considerable reference to the respective contention documents filed by each of the parties and submissions made before her Honour on 23 October 2013.
The trial commenced before me on 19 March 2014 and evidence was taken on 20, 21, 27, 28 March 2014 and then on 28 and 29 July 2014 with final submissions on 30 and 31 July 2014. Judgment was thereafter reserved.
DOCUMENTS RELIED UPON
The wife relied upon the following documents:-
(1)Further Amended Initiating Application filed 28 March 2013
(2)Financial Statement of wife filed 16 September 2013
(3)Affidavit of wife filed 1 May 2012
(4)Affidavit of wife filed 16 September 2013
(5)Trial affidavit of wife filed 13 February 2014
(6)Affidavit of Ms A filed 16 September 2013
(7)Affidavit of Ms K filed 16 September 2013
(8)Affidavit of Ms S filed 18 May 2012
(9)Affidavit of Mr K filed 10 May 2012
(10)Affidavit of Mr A filed 16 September 2013
Additionally, the wife relied upon the document titled “Contentions of Fact and Law of the applicant” filed 2 December 2013.
The husband relied upon the following documents:-
(1)Amended Response filed 27 May 2013
(2)Financial Statement of husband filed 13 September 2013
(3)Trial Affidavit of husband filed 27 September 2013
(4)A document titled “Husband’s Response to Applicant’s Contention of Fact and Law” filed 2 August 2013.
The third parties relied upon the following documents:-
(1)Response to Further Amended Initiating Application filed 19 May 2013
(2)Affidavit of Mr Georgiades Snr filed 29 August 2013
(3)Affidavit of Mr Georgiades Snr filed 7 October 2013
(4)Affidavit of Mrs Georgiades Snr filed 7 October 2013
(5)Affidavit of Mr B filed 11 September 2013
(6)Affidavit of Mr B filed 25 February 2014
(7)Affidavit of Mr Z filed 7 October 2013
(8)Affidavit of Ms Z filed 7 October 2013
The third parties also relied upon a document entitled “Response of the Second and Third Respondents to the Applicant’s Contentions of Fact and Law” filed 16 December 2012.
Notwithstanding that they were referred to in the Outline of Case document filed by the third parties, they did not call nor rely upon the affidavits of Mr A G and Mr P G.
ORDER SOUGHT
The wife sought orders as set out in the Further Amended Initiating Application filed 3 April 2013. Principally she sought a declaration that the third parties hold their entire interests in the property situate at N Street, Suburb O in the State of Victoria upon trust for the husband and the wife. Thereafter, she sought orders by way of settlement of property which were better particularised in the Outline of Case document filed 14 October 2013.
On the basis of an adjustment of property (including the Suburb O property) 55 per cent in her favour she sought orders that would require the husband to pay the settlement sum of $599,441 and thereafter effectively each party would retain their own separate property.
The husband relied upon the orders sought in his Amended Response filed 27 May 2013.
He sought orders by way of settlement of property that would require the wife to pay a settlement sum equivalent to 40 per cent of the equity in the property at J Street, Suburb Y.
At the conclusion of the hearing, the husband handed up a Summary document which sought that there be an equal division of the property of the parties as promoted by the husband.
The second and third respondents continued to seek orders as set out in their Response filed 19 May 2013. Effectively, the second and third respondents seek the dismissal of the orders sought by the wife directed to their legal interest in the Suburb O property.
BACKGROUND
The husband was born in 1973 and is 40 years of age. The wife was born in 1975 and is 39 years of age.
In 1986 the husband’s parents purchased vacant blocks of land at 1A and 1B N Street, Suburb O for the sum of about $84,000. In 1991 the husband’s father purchased property at P Street, Suburb C with the property being ultimately placed in the names of the four children as registered proprietors.
Whilst still a matter of some dispute, the third parties assert that in 1992 they borrowed monies from their daughter Ms Z in the sum of $36,000 and in satisfaction of that debt, they transferred to her the vacant land at 1A N Street, Suburb O.
In 1994 a factory was built on the Suburb C property and the neighbouring blocks at P Street.
It is conceded that the husband’s parents provide funds to the four children (the registered proprietors of the property) in the sum of $223,245 to meet the construction costs. When completed in 1997, the P Street premises were leased to KK Pty Ltd (“KK”) as trustee for the Georgiades Family Trust which operated the trading entity known as “ZZ”.
In January 1996 Ms Z and her husband Mr Z commenced construction of a dwelling on 1A N Street.
On 25 August 1999 G Pty Ltd is incorporated with each of the siblings being the directors and holding one share. The assertion of the husband is that his share (and similarly the shares held by his three siblings), are held on trust for the third parties. This is not an agreed position and before there can be a concluded asset pool which sets out the property of each of the parties and their separate and joint interests, a decision is required as to the ownership and interest that the husband has in the G Pty Ltd shareholding.
In 1999 G Pty Ltd purchased a property in north east Victoria with funds loaned by KK which in turn borrowed money from the Commonwealth Bank for $520,000. There does not appear to be any controversy in this aspect of the history of G Pty Ltd but to the extent that there is alleged to be a loan by KK in favour of G Pty Ltd, issues remain for determination as to whether the said loan is secured and the current extent of the liability.
In 2000 the husband alleges that he spoke to his parents and asked whether he could reside in any house that was eventually constructed on 1B N Street, Suburb O. The extent of any discussion, any agreement reached and the terms and conditions of same remain a matter of dispute and require a determination and resolution.
The husband also alleges that in or about 2000 the husband and his siblings signed a loan agreement in favour of the third parties confirming that monies advanced to acquire the P Street property and then to build the factory premises thereupon was a loan. There remains significant dispute between the parties as to the status and veracity of this and subsequent loan agreements.
The wife purchased the Suburb Y property in 2001 for $183,000 with a mortgage of approximately $160,000. It was at about this time that the parties met and by September of that year, they commenced cohabitation at the Suburb Y property.
In March 2003, the third parties obtain a building permit in respect of the Suburb O property and preparatory work commences leading to the construction of a new home on the property.
In April 2003, the husband’s father underwent major heart surgery following a heart attack in March 2003. It was common ground that Mr Georgiades Snr remains in poor and parlous health.
The wife asserts that the parties became engaged in July 2003 coinciding with her birthday. The husband alleges that it occurred three days later. In general, not much turns on that issue save and except its proximity to the departure of the husband’s parents overseas on 27 July 2003 and their return on 24 October 2003. The wife alleges that soon thereafter there was a celebratory dinner at the home of the third parties. The wife and husband were present. The wife’s parents were invited and also attended. The significance of that dinner is central to the wife’s case in that it was on that occasion Mr Georgiades Snr allegedly gifted the land at 1B N Street, Suburb O to the parties as a wedding present. There remains some uncertainty on the wife’s case as to the precise date of this dinner. The husband and his parents for their part deny that the dinner took place soon after the return of the third parties from overseas and say that a dinner did take place but at a time after the engagement party in November 2003 and closer to the date of wedding in October 2004. It is specifically denied that Mr Georgiades Snr made any representation regarding the Suburb O property.
The construction of the new home on the Suburb O property continued and on 28 March 2006 the parties moved out of the Suburb Y property and took up residence in the new home.
The child V was born in 2006 and the child H was born in 2008. There is relevance to the event of the birth of the child V. The wife alleges that she had a cordial and happy relationship with the husband’s parents, but in particular his mother Mrs Georgiades Snr. On her case, Mr Georgiades Snr considered that V, being the first born child, should have a first name that derives from the Georgiades family. The parties refused and according to the wife it was that act of defiance that then poisoned the relationship that she had with her husband’s parents. For their part, the husband contends that his parents never approved of the wife and considered her unsuitable in every respect to marry the husband and form part of their family. Whilst there is no doubt that the Georgiades family, but in particular the husband’s parents, harbour a dislike and even loathing for the wife, the relevant issue is whether that was a pre-existing attitude as and from the commencement of the relationship between the parties, or whether as the wife alleges it arose as and from the date of V’s birth in 2006.
On 11 July 2010, the husband purchased a speed boat for $40,500. The husband’s position (and supported by his parents) is that he borrowed most if not the entire purchase price from his parents. It was intended at the time money was provided that it would be by way of a loan and accordingly, repayable upon terms and conditions. The wife disputes that the money used to purchase the boat was his parents’ money and if it was, then it was a gift and not repayable. Apparently, in December 2010 Mr Georgiades, assisted by his accountant Mr B, attended upon a solicitor Mr I who took instructions and then prepared four loan agreements, one of which purported to evidence the loan arrangements between the husband and his parents for the purchase of the boat. That document forms Annexure “NG2” to the trial affidavit of the husband filed 27 September 2013. It is demonstrable from the document that the date that the agreement is purportedly made, namely 12 July 2010, is obviously not the date upon which the husband’s parents, the husband and the husband’s sister Ms Z as witness affixed their signatures. That could only have happened in or after December 2010.
The parties separated on 22 November 2010 and after residing with her parents, the wife and the children moved into the Suburb Y property.
Proceedings were issued by the wife on 19 December 2011, a Response was filed by the husband on 23 January 2012 and a Divorce Order was made on 3 April 2012.
STATUS OF THE CONTENTIONS OF FACT AND LAW AS ORDERED BY BENNETT J ON 23 OCTOBER 2013
Following the adjournment of the final hearing on 23 October 2013 being the first day of trial, Bennett J ordered that each of the parties prepare a document described as “Contentions of Fact and Law”.
The focus of her Honour’s order was to better understand the case being put forward by the wife in respect of the declaration sought that the Suburb O property of which the husband’s parents were the registered proprietors was held on behalf of the parties “pursuant to a constructive trust”. It was argued in the alternative by the wife that if not a constructive trust then she claimed “an equitable estoppel”.
The husband and his parents oppose the orders sought by the wife and, taking into account the value of the Suburb O property as against the balance of the property of the parties, the dispute is significant. On the wife’s case it would represent almost one half of the total property of the parties. Its importance is self-evident.
The documents are clearly not pleadings, but are of assistance in better understanding the material facts upon which the wife at first instance relies to support her equitable claim. In opposition, the material facts that the husband and his parents say are relevant to the dismissal of the wife’s claim are helpfully traversed. Each of the parties provides a summary of the law that they say supports their adopted position.
The contention documents cannot have the status of evidence in circumstances where they are not sworn and in any event each of the parties rely upon extensive affidavit material in compliance with the trial directions of Bennett J.
In Boileau v Rutlin (1848) 2 Ex 665 at 680-1 Parke B observed:-
It would seem that [Bills in Equity], as well as pleadings at common law, are not to be treated as positive allegations of the truth of the facts therein, for all purposes, but only as statements of the case of the party, to be admitted or denied by the opposite side, and if denied to be proved, and ultimately submitted for judicial decision…the statements of a party in a declaration or plea, though, for the purposes of the cause, he is bound by those that are material, and the evidence must be confined to them upon an issue, ought not, it should seem, to be treated as confessions of the truth of the facts as stated.
In Buckmaster v Meiklejohn (1853) 8 Ex 634 the following was said:-
In point of law, pleadings are not admissions but are merely the statements of the case, which the party wishes to raise for the opinion of the jury.
I consider that the contention documents including matters of fact and law are analogous to pleadings in terms of how the information contained within the document should be treated. They are nonetheless, helpful in the sense that they supplement in a detailed and helpful fashion the case outline documents filed on behalf of each of the parties. The respective contention documents highlight the seminal importance of the status of the Suburb O property to the proceedings.
The preparation of the contentions document submitted on behalf of the husband was the subject of cross examination by the wife’s counsel. He was asked the circumstances by which he came to prepare the document and it was his clear assertion that he had prepared the document with the assistance of a friend (ultimately revealed to be Mr Z). The husband was challenged with respect of the circumstances surrounding the preparation of the document on 20 and 21 March 2014. At line 14, page 254 of the transcript the following exchange takes place:-
Ms Smallwood: Yesterday we were talking about; when we stopped we were talking about the response you filed to the applicant’s contentions of fact and law. Do you remember we were talking about that?
Husband:Mmm.
Ms Smallwood: And you said that you had not seen your parent’s response to the second and third respondent’s applications to contentions of fact and law prior to drawing yours.
Husband:That’s correct.
Ms Smallwood: Yes, do you stick to that do you?
Husband:Yes.
Ms Smallwood: You stick to that do you?
Husband:I didn’t see it, yes.
Ms Smallwood: Ok. And this friend who helped you.
Husband:Yes.
Ms Smallwood: Who was that?
Husband:Do I have to name him?
Ultimately, the husband named his brother-in-law Mr Z. The husband was shown the response document prepared on behalf of his parents and he denied that he had ever seen that document prior to the preparation of his response.
For reasons best known to the husband he chose to maintain a trenchant position namely, that his document had not been prepared with the assistance of seeing his parents’ document or by his parents’ solicitor.
Ultimately, I required the wife’s counsel to present both documents for comparison to the husband and counsel properly highlighted that the wording of the documents were in some areas identical and importantly, the husband’s document and the document prepared by his parents’ solicitor bore the same reference numbers. The implication was obvious. This was put to the husband as follows:-
Ms Smallwood: You see that there is a reference document there.
Husband:Yes
Ms Smallwood: 130699
Husband:Yes…
Ms Smallwood: Yes, and look on your one. That’s the same reference number of the document.
Husband:Right
Ms Smallwood: Yes, because it’s the template that was used by you to do yours, your parent’s document wasn’t it?
Husband:That’s what it looks like to be, yes.
Ms Smallwood: Yes and that’s the truth isn’t it?
Husband:No it’s not the truth. I am just telling you I did not look at this one here that you’re saying my parents, to do this one. That’s what I am saying.
The husband maintained his position that he was given assistance by Mr Z. Indeed, the husband said that Mr Z had helped him prepare the document, read it and then told the husband to sign it, and on his case he did.
Interestingly, when Mr Z gave his evidence and was asked about this matter, his answer was predictably truthful. The contentions document was highly complex and contained significant reference to material facts and the law. Mr Z thought it laughable that he would be able to construct such a document.
The evidence of the husband on this topic was unsatisfactory. For reasons that are not immediately apparent in terms of the significance of the contentions document, the husband refused to tell the truth. So obvious was the falsehood that the husband’s response could only be described as bizarre.
LIST OF WITNESSES
The Wife
The evidence of the wife was presented initially in her affidavit material filed 16 September 2013 and 13 February 2014.
At the commencement of the relationship, the wife had recently purchased the Suburb Y property with a deposit of approximately $20,000 and assistance from the First Home Buyers grant of about $14,000. The husband owned a motor vehicle and a motor bike. The wife alleges that the husband advised her that he had an interest with his siblings in “a farm at [north east Victoria]” and also in a property at P Street, Suburb C.
From the commencement of cohabitation, the parties lived in the Suburb Y property for about five years until taking up residence in the Suburb O property. The wife alleges that she would continue to meet the mortgage on the Suburb Y property, but that the husband would use his income towards the construction of the home on the Suburb O property.
As time passed, the husband disclosed and the wife accepted that his family had interests in various farm and other properties and produced a well-known product namely “ZZ”.
Following the engagement of the parties in July 2003, the husband’s parents travelled to Greece and returned in late 2003. The wife’s evidence is that following their return there was one celebratory dinner during which the husband’s father announced that “he was giving us the block of land for our marriage”.
Noting the wedding occurred on 30 October 2004, the parties planned an engagement party. The husband’s parents did not attend. It is their evidence that by that time they thought so little of the wife that they were barely able to be civil to her. The wife alleges that at that time she had a close relationship with the husband’ s parents and it was only that she and the husband had invited the husband’s brother and his wife who had previously refused to comply with the “naming tradition” that was the reason for the parents’ refusal.
The house construction commenced in late 2003 following the completion of a retaining wall and the granting of a building permit. The construction concluded in about 2006 with the parties taking up occupation.
Whilst there is significant dispute as to the level of involvement by the wife, I accept that she had some input into the plans for the construction of the home, was involved in the purchase of whitegoods and had substantial influence in terms of the interior style, fit-out and decoration. The wife asserts that the kitchen and laundry benches were non-standard to suit her height and that she and the husband worked tirelessly during every spare moment on the house in respect of those jobs that did not require the skill of a tradesperson. The wife also comments that some of the work undertaken was performed by tradespeople known to her or upon her recommendation.
To the extent that the husband denies the effort and involvement of the wife as alleged, I prefer the wife’s evidence to that of the husband. The discovery of invoices suggests that the building costs were in excess of $300,000. It is common ground that all of the tradespeople, material and other house components were paid for by cash provided by the husband. The wife believed that the husband had access to large quantities of cash and accepted the husband’s “boasts” about his ability to access cash at short notice. Whilst it is true that the husband appeared to access substantial quantities of cash, it is his evidence that it was at all times his father’s money. As will be seen, the husband paid cash for a boat in the sum of $48,500, allegedly borrowing $40,500 from his parents. He paid cash of $14,000 to enrol the child V in her school and the wife observed on at least one occasion the husband accessing $10,000 in cash in order to assist his cousin.
I am in no doubt that the husband was in the practice of boasting of the financial security of his parents and of his own prospects even to the point where he either asserted or at the very least did not dispel the impression gained by the wife that he had access to cash and was the owner of certain items of property.
The parties did pay for some outgoings but they were relatively modest. The Georgiades family appeared to cover a significant proportion of the household outgoings.
During the course of the marriage, the wife denies that there was any discussion of loans as between the husband and his parents and she treated the Suburb O property as if it was owned by the husband at all material times.
Subsequent to their separation in November 2010, the wife became aware of significant cash withdrawals totalling $217,800 that were deposited in the husband’s bank account between November 2007 and July 2010. The wife considers that the cash monies were by way of additional supplement to the modest income received by the husband from his employment in the family business, whereas the husband’s position is that the large withdrawals during this period were monies relating to the business takings and that they were deposited in his account rather than in the business account, initially in error and then for convenience.
The parties have reached agreement as to the parenting arrangements in respect of the children. The husband has been assessed for child support in the sum of $37 per week. The wife is employed as a sales assistant. The husband continues his employment in the family business.
The parties have a poor relationship. It is unlikely that the wife will receive any significant financial support from the husband.
The wife was cross examined by the husband to little effect, but more so by senior counsel on behalf of the husband’s parents.
As was expected, there was significant focus on the acquisition of the Suburb O land and its subsequent development.
The wife conceded that any statement made by Mr Georgiades Snr purporting to gift the Suburb O land to the parties only occurred at a dinner held to celebrate their engagement. Additionally, she also conceded that the architectural or drafting plans were prepared before the date of the alleged representation and the purported gift.
The wife was challenged as to her statement in an affidavit filed 1 May 2012 that the construction of the house was “completed by using the savings that both the husband and I had”. The wife asserts that this was a truthful statement and whilst she did not have significant savings, she alleges that the husband had access to large amounts of cash.
Mr Glick SC put to the wife certain statements made by her in the contentions document as ordered by Bennett J. The wife accepted the previous representation made by her namely:-
A finding of there being a constructive trust ought to be made upon the following grounds:-
(1)The respondent worked for many years for the parents and their corporate entity for little wages
is not an accurate reflection of the wife’s case. The wife agreed with that proposition. She also accepted that the husband was not “registered as the owner-builder” of the Suburb O property but rather, his father had been named as the registered owner-builder.
The wife was further challenged on earlier matters raised in her affidavit that more closely linked the celebratory dinner at which the wife alleges that the Suburb O property was gifted to the date of the parties’ engagement in July 2003.
The importance of the dinner is obvious and the wife was challenged as to previous affidavit material which did not bring to account the overseas travel of the husband’s parents and the subsequent evidence of the wife that the celebratory dinner occurred in October 2003 and not earlier.
The wife also conceded that the plans for the building of the home were concluded a number of months prior to the alleged gift in October 2003. The wife was required to concede certain inaccuracies in her affidavit, particularly in relation to any temporal connection between the engagement, an alleged dinner in October 2003 and the preparation of the house plans. The wife also agreed that by the time of the celebratory dinner and by reference to the building cost invoices tendered as Exhibit 1, about $65,500 had been expended on the property. The wife accepted that proposition.
Generally, the wife was a satisfactory witness. She was prepared to concede inconsistencies between her current evidence and earlier affidavit material together with representations made in the contention document.
To the extent that it was put to the wife she was not telling the truth as to her evidence in respect of the celebratory dinner following the announcement of the parties engagement and the method and manner by which the house was constructed it did not appear to be a deliberate attempt by the wife to mislead but rather, a genuinely held view which, upon proof to the contrary she was prepared to concede. To a large degree her evidence was coloured by her belief of what she says were representations made by the husband boasting of his involvement in the business and his ability to access cash. Much of the difficulty in this case arises from the propensity of the husband to “big note and embellish himself” and her reliance upon those misstatements.
I consider the wife generally to be a witness of truth.
Mr L
Mr L was the draftsperson who prepared plans comprising the design of the house to be built on the Suburb O property. His only involvement was the preparation of plans which form Exhibit 4. He did not have any detailed recollection of his dealings with the parties but had assumed that the plans were for the husband and the wife notwithstanding that the name on each of the plans was that of “Mr Georgiades Jnr”. The witness agreed that the original drawings were prepared in January 2003 with revision in March 2003. The witness agreed that any view held by him that the husband and the wife were to live in the property was an assumption on his part and not as a result of any suggestion or statement made to him.
Mr A
This witness is the father of the wife. The thrust of his evidence as contained in his affidavit filed 16 September 2013 is that shortly after he and his wife learned of the engagement in July 2003, the husband’s parents invited the wife’s parents to a celebratory dinner. It was his recollection that at that dinner the husband’s father stated that he was “gifting the block of land at [1B N Street, Suburb O] in the State of Victoria to both [the husband] and [the wife]”.
Not surprisingly, Mr A was cross examined as to his meaning behind the use of the word “shortly”. There was some uncertainty in the evidence of this witness. At line 3 on page 156 of the transcript is as follows:-
Glick: And then I will leave it!
Answer:Well, how many times do I have to answer it. Shortly, to me means shortly afterwards. A month.
Glick: Shortly after…?
Answer: In my language, shortly could be anytime.
Glick:” It could be anytime?
Answer: Shortly. It could be anytime within months, yes.
Question: Ok 6 months later?
Answer: That’s still…it’s under a year.
It was put to Mr A that the inconsistency in the wife’s evidence as to the timing of the celebratory dinner following the engagement and after the husband’s parents had returned from Greece was uncertain and problematic. The witness was asked whether he had been made aware of the inconsistency and had in effect modified his evidence to have a period of time more expansively described than the original meaning intended to be conveyed by the word “shortly”. The witness denied the assertion.
The witness was further challenged as to his recollection as to when the celebratory dinner took place. The witness was unable to remember when the husband’s parents returned from overseas and the best he could do was to recollect that it occurred prior to the engagement party. That is of little assistance to the wife’s case. The witness was unable to recollect the exact date of the engagement party. Whilst the recollection of the witness was that it was more likely in 2003, it is open on the evidence that it could have occurred in the following year.
Other than the alleged celebratory dinner and the engagement party, the witness gave evidence as to a reciprocal dinner at their home for the husband’s parents and then a meeting to trial the wedding food. The witness was not able to recollect with any precision the dates of these subsequent meetings, but was clear that not on any other occasion did the issue of the alleged gift of the house arise for discussion.
Generally, I find that the witness was doing the best that he could to recollect the chronology of events but that ultimately his memory was flawed and the significant uncertainty as to crucial dates supports the view that his evidence is unreliable.
Ms A
The evidence of this witness was contained in an unsatisfactory affidavit filed 16 September 2013 which did no more than adopt the evidence and affidavit of her husband, Mr A.
The obvious difficulty arose when it was put to the witness that in adopting the affidavit of her husband, she also adopted the uncertainty created by the use of the word “shortly”.
The witness was asked for her recollection of the date of the celebratory dinner. She was uncertain in which month, but believed that it was before the engagement party and therefore not in the month of September 2003. There is no note of the dinner, this witness did not write a letter thanking the husband’s parents for their hospitality, nor was there any subsequent telephone or other communication in respect of the dinner.
The witness was able to confirm that the engagement party was in mid November 2003. By necessary implication, if there had been a dinner at the home of Mr and Mrs Georgiades Snr then it must have occurred after they returned from Greece in late October 2003 and prior to the engagement party.
Whilst I have no doubt that the witness was attempting to be helpful, she was also uncertain as to the chronology of the event and indeed the uncertainty was further compounded by the following evidence given at line 3, page 204 of the transcript:-
His Honour: Can I just ask you a question. I am sorry. I know people are asking you lots of questions about this dinner?
Answer: That’s fine.
Question:On your evidence there appears to be two dinners that happened between [late] July 2003 and [mid] November 2003. There was the gift dinner and then there was a dinner at your home?
Answer:That’s correct.
Question:That’s as you remember it is it not?
Answer:Yes.
Question:Alright. Are you able to say how far apart these dinners were. So I accept that you don’t remember the dates of these dinners or even the month, but do you have a sense as to whether the dinners were separated by one week, one month, three months, six months?
Answer:No it wasn’t! It wouldn’t be six months that I can recall.
Question:Do the best you can. I want you to think about it.
Answer:It’s a long time ago.
Question:No.
Answer:I don’t know. Two weeks or something.
I was not assisted significantly by the evidence of this witness.
The Husband
The husband’s evidence is contained in his trial affidavit filed 27 September 2013. It is his position that at the commencement of cohabitation he had a 25 per cent interest in the property situate at P Street, Suburb C which was subject to a loan to his parents in the sum of $200,000. He had some modest savings, a motor bike worth about $12,000 and some personal belongings. The wife’s assets were not dissimilar in value in that she was the registered proprietor of the Suburb Y property which was subject to a mortgage in the sum of $160,000. Over and above that interest, she owned a motor vehicle, some modest savings and her personal belongings.
The husband asserts that his income throughout the course of the marriage was modest and as at the date of separation he was earning about $33,000 per annum. He denies specifically any other financial benefit or financial assistance provided by his parents.
The husband does not concede that he holds any interest in the Suburb O property. He says that his father contemplated that he and his wife would live in the property once completed, but that he wanted the husband to project manage the building works. The husband specifically denies that he made any decisions whatsoever in respect of the building in that every aspect of the construction had to be approved by his father. The husband used none of his own money but rather all of the building works were paid for by his parents.
The husband denies that the wife chose any of the materials or had any involvement in the in the interior design or fit-out.
The husband alleges that in August 2005 as the property was nearing completion, his father agreed that the parties could take up residence in the property rent free and that he was happy for them to remain in the Suburb O property until the mortgage on the Suburb Y property had been discharged. The arrangement was clearly open-ended and there was no definition and particularity to the terms and conditions of the ongoing residence. Indeed, the husband continues to reside in the property under terms not dissimilar to that which he said was agreed by his parents.
Whilst the husband acknowledges that he holds a 25 per cent shareholding in G Pty Ltd, and notwithstanding their disclosure in earlier affidavit material and his financial statement, it is his position that at all times he holds the shares on trust for his parents.
The property at P Street, Suburb C was purchased by the husband and his three siblings in March 1992. He says that his father provided the funds for the purchase of the property which comprised vacant land. In 1994, a factory was constructed on P Street and an adjoining property owned by two of the husband’s siblings at P Street. The husband’s parents loaned the siblings $223,245 and it is alleged that the siblings entered into a loan agreement with the husband’s parents on 3 May 1994. The original loan agreement cannot be found and it is a matter of some contention as to the circumstances in which a duplicate document was prepared in order to replicate the original.
Upon the completion of the factory premises, they were leased to KK Pty Ltd as trustee for the Georgiades Family Trust trading as “ZZ”.
Rent is notionally paid by KK to the siblings, but in reality it is retained by the husband’s parents in repayment of the underlying loan. The current amount outstanding is $140,000 with the husband’s share being $35,000.
In 2010, the husband purchased a boat for $48,000 with monies entirely provided by his parents. The husband alleges that he is obliged to repay the monies and that the agreement is evidenced by a loan document dated 12 July 2010.
The husband denies that the wife assisted in any way with the construction and/or decoration of the Suburb O property. Other than the application of some undercoat painting, he denies that the wife attended to any cleaning of the property nor organising any of the tradespeople. Whilst the husband asserts that he “worked tirelessly to build my parents’ property” he denies that the wife had any such involvement, and that she was not entitled to consider the property “our home”.
The husband admits that there were occasions when he had significant sums of cash in and around the home, but not to the extent as alleged by the wife, nor does he accept that he received cash income supplemental to his regular income.
Under cross examination the husband was challenged as to his knowledge of his involvement in G Pty Ltd. He was uncertain as to whether he was a director and he says that his father asked him to sign a document when the north east Victorian property was purchased and he did so without reading the contents of the document.
When the husband’s shareholding in G Pty Ltd was raised, his position was that he was not aware of the nature of his interest and has not ever bothered to check notwithstanding that the proceedings were ongoing for some years and that he knew his interest in G Pty Ltd was a live issue.
It was pointed out to the husband that he had asserted in an earlier affidavit that he had a quarter share in a property at P Street, Suburb C but also held shares in G Pty Ltd.
The husband also alleges that his parents formed a dislike for the wife almost from the very first meeting, but in particular when he moved into her unit. In his earlier affidavit material, the husband asserts that his parents developed a dislike from the time of their first separation in 2003.
The husband was cross examined as to matters of insurance on the house. The husband conceded that for the four years of occupation, the wife had attended to the insurance and the policies were in the names of the parties. The husband alleges that he had never had a conversation with the wife about the insurance policies and it was only after it came to his attention that the policies were in their names rather than the names of his parents that he took steps to have the error corrected. The effect of the husband’s evidence is that he concedes he asked his wife to arrange the house and contents insurance, but he alleges that he did not tell the wife how much to insure the property for and effectively left it to her to guess.
The evidence of the husband on this topic was unsatisfactory. His attitude and demeanour was “off hand” and he did not impress as trying to assist the Court in a better understanding of the issues.
The husband was asked as to the status of his legal fees noting that he appears as a self-represented litigant. He confirmed that his father had paid his previous legal fees in the sum of $105,000 and he confirmed that he considers he still owes his father that sum and intends to repay it. The unlikely prospect of that occurring was highlighted by reminding the husband that his income at present is about $30,000 per annum. If the husband is to be believed, his financial position is further exacerbated by a boat purchased by him shortly after separation with monies borrowed from his father in the sum of $40,000. I am in no doubt that the husband will never be called upon to repay the monies and again it was obvious that the husband was simply not telling the truth. It is inconceivable that on $30,000 the husband could ever repay the liabilities that he alleges are outstanding. There is significant uncertainty as to the financial circumstances of the husband and the financial arrangements that exist between he and his family. I do not accept that the husband has made full and frank disclosure of his financial circumstances.
It was put to the husband that replicate loan agreements were signed by him and in relation to G Pty Ltd the husband signed as a director. This was done notwithstanding the husband’s uncertainty as to whether he holds that position or not.
In respect of the repayment of loan monies allegedly provided by his parents, the husband was not able to assist the Court. I am uncertain whether the husband was not prepared to answer the questions on the topic truthfully or whether his state of knowledge is so deficient that his evidence can only be given the most minimal weight.
It was put to the husband that whilst he had annexed insurance certificates over the Suburb O property to show that the interests of the husband’s parents had been noted, he had failed to exhibit certificates which showed that following the separation of the parties the subsequent certificates noted the husband as the policy owner in respect of the property and contents. In effect, if the husband was keen to establish via the insurance certificates that when it came to his attention that his parents were not properly described as the policy owner, he responded but could not explain why he took no similar action when his own name appeared.
The bundle of insurance certificates forms Exhibit 7. The husband’s explanation as to why he did not disclose the complete history of the insurance arrangements was unclear and unsatisfactory.
On 12 July 2010, the husband purchased a boat in the sum of $48,000. His evidence was that he had about $7,500 in cash and in order to complete the purchase his parents advanced him $40,500 by way of an alleged loan. Neither the initial deposit provided by the husband nor the balance of the monies provided by his parents were the subject of record in the sense that the purchase price was paid in cash.
Whilst this evidence has a focus in terms of the status of the alleged loan arrangement, it is important that at the time the husband purchased the boat he acknowledged that the wife was not happy about it. The wife said that the money could have been used for a number of different purposes and on the husband’s case his income was modest and but for the accommodation of the husband’s parents allowing them to remain in the house rent free, the family would have had difficulty in making financial ends meet. In summary, the wife’s position was that the purchase of the boat was financially reckless. The husband was challenged as to his motivation to buying the boat notwithstanding that he conceded that he was not prepared to pay for the children’s ongoing education. His reason for buying the boat was simply that he liked fishing.
I am in no doubt that if the financial position as presented by the husband should be accepted, the purchase of the boat could only be considered as financially reckless. The other alternative explanation open to me on the evidence is to find that the husband had a level of confidence that his parents represented a ready source of funds without any condition of repayment.
At page 311 of the transcript, the husband is shown his first financial statement filed 23 January 2012 which discloses a reference to G Pty Ltd with a value of $175,000. The husband was not able to explain the inclusion of his interest in Ge Pty Ltd as part of the property owned by him.
His best explanation was that his father’s accountant had helped with the figures and the preparation of the document but he is uncertain. The document was clearly prepared by the husband’s lawyer and presumably on his instructions.
The following evidence is recorded at line 44 of page 311 of the transcript:-
His Honour: How would anybody? How is anybody going to know, Mr [Georgiades]? You see, you would appreciate that until these questions are being asked of you, anybody reading this document, me reading this document, would assume that what’s in there? What’s in there?
Answer: That’s true.
Question:How would anybody know what parts of the document are matters about which you are certain and about which you now say you are not sure or you don’t know? How would anybody know?
Answer: I understand your point there.
The husband effectively conceded that the information contained in the financial statement and by reasonable implication the documents that follow have a significant level of unreliability about them. The husband was cavalier in his response and I am satisfied that he was unconcerned in respect of his obligation to make full and frank disclosure.
The husband’s difficulties were further compounded by it being highlighted that in the first financial statement filed he listed the boat loan to his parents at $48,000, when in fact his evidence was that it was only ever $40,800 taking into account he had provided the initial deposit of $7,500. The husband conceded that it was an error not just in respect of the first financial statement but also carried forward into the second financial statement filed 13 September 2013. The husband’s evidence on the topic was unsatisfactory.
Whilst it will be dealt with separately under the topic of the various alleged loans and the purported loan agreements, it is important to note the husband’s evidence that he did not engage Mr I, solicitor, to prepare the loan agreements, but rather his parents did.
The husband was questioned as to the method and manner by which the invoices and bills for the house construction was handled. His evidence was that all accounts were paid in cash provided by his father upon the husband’s request. The husband gave an example that when a tradesperson, for example the renderer, would need to be paid he would ask his father who would then organise the money and pass it on to him.
The following appears at line 45 of page 337 of the transcript:-
His Honour: Did you pay a tradesperson $36,000 in cash?
Answer:Yes, that’s what my father wanted to do. Where he got the money, ask him.
Question:No I am not criticising anybody. I am just-it is an unusually large transaction to pay a tradesperson?
Answer: That is what it was the bill…
Question:But someone would physically have to get the cash to you, you would then give the cash to the tradesperson?
Answer: That’s correct.
Question: He would put it in his kit bag or whatever he has got?
Answer: Yes.
It was then put to the husband that between June 2006 and 30 April 2008 there were no invoices that had been supplied. The husband conceded that work was done during that period and whilst there would have been invoices rendered, they were all provided to his father. The husband could not explain why the invoices were not available notwithstanding work had clearly been undertaken during that period.
The father was also challenged in respect of his evidence that when the whitegoods were purchased, notwithstanding that he went with the wife to the shop, he was nonetheless acting on his mother’s instructions as to the particular appliances that she wanted. The husband’s evidence was that he was aware of the “pop-up” shop and before he had inspected what was on offer he spoke to his mother who was in Greece at the time and she gave him a description of the particular appliances that she wanted. The husband’s evidence on this topic was vague and uncertain. It is more likely that the decision as to the whitegoods to be purchased was made as between the parties rather than under the direction of the husband’s parents. If that had been so, it is difficult to explain why the husband would not then have told the wife that his mother had already determined the range of appliance options rather than remain silent on the topic. The husband does not say that he told the wife that he was under his mother’s instructions rather than it being a decision that the parties were able to freely make.
The husband was shown his credit card statements between the period 18 December 2004 to 18 January 2010. The statements were tendered as Exhibit 8. Various significant deposits were highlighted and the husband was asked for an explanation. The husband accepted that they could not have been part of his wage because he was able to identify those separate deposits. The amounts were significant. On 18 October 2007, there were deposits totalling $10,078 which had the effect of placing the credit card account in credit of $9,215.
On 20 November 2007, there was a transfer of $12,000 cash from the account.
The husband was challenged as to the provenance of other large cash deposits into his credit card and other accounts. The husband was not able to provide any explanation and his standard answer was that he had no idea about the various transactions.
Whilst it is possible that the husband may have had difficulty in recollecting with precision the detail of various transactions involving large cash deposits that had occurred a number of years ago, I do not consider that the husband could have no information and no recollection of at least some of the circumstances surrounding these deposits. Once the husband conceded that it was not his wage, it is difficult then to accept he has no recollection at all as to the various transactions. The husband’s evidence was evasive and I formed the clear view that he was doing his best not to assist the Court in gaining a better understanding of his financial dealings.
The husband was shown statements from his Commonwealth Bank Streamline Account tendered as Exhibit 9. His attention was directed to a number of significant cash deposits which over the period from 20 November 2007 to 2 August 2010 (when the deposits seem to have come to an end), the aggregate totalled $217,800. At first the husband was not able to proffer any explanation as to the source of those monies, but ultimately his evidence was that on occasion and at the end of a working day if there were cash monies left on the premises, he would collect them and deposit them in his bank account.
The obvious question was put to the husband namely, if the monies belonged to the employer company KK and given that it also banked with the Commonwealth Bank and at the same branch as the husband, why not put the money into the company account?. When that was put to the husband, his evidence was as follows:-
Ms Smallwood: Can I ask you why you didn’t put it in – and that was [KK] Pty Ltd’s money.
Answer: Yes.
Question:Yes. And given that [KK] also banked with the Commonwealth.
Answer: That’s correct.
Question:And you had to take the cash to the Commonwealth Bank.
Answer: Yes.
Question: Why did you not put it into [ KK] Pty Ltd’s account.
Answer:I don’t have their numbers and details of the – of [KK]. I have always had my own account card, which – and I just said, I will put it into mine and my father knew it was there. I don’t have the details of the [KK] account.
Question:And you never thought to say to your dad, give me the details of the account and I will just pay the cash in when I go down to the bank tonight.
Answer: No, no, no.
Question: See I suggest to you you’re just lying about that.
Answer: No I am not lying.
Question: Yes.
Answer:You’re assuming I am lying; I am telling you I am not. I’m sorry.
The husband conceded that by way of withdrawals of amounts not related to the deposits into the account, the following large monies were withdrawn:-
20 November 2007 $30,000
29 December 2007 $35,400
21 June 2008 $49,000
2 September 2008 $19,000
2 June 2009 $54,400
27 August 2010 - $30,000
TOTAL $217,800
There was no satisfactory explanation by the husband as to why the amounts remained in his account for relatively long periods of time. It would not have been difficult for the husband to ask the officer manager for the account details of KK. There was no sensible explanation to justify paying the income of KK into any other account.
The evidence of the husband on this topic was demonstrably unsatisfactory. His answers made no sense and even making substantial allowances for what might be considered lax financial controls, I was not satisfied that the husband was attempting to assist the Court.
The husband was referred to paragraph 34 of his affidavit sworn 26 September 2013 where the following is recorded:-
In previous affidavit and financial statement filed in these proceedings I had stated that I had a 25 per cent shareholding in [G Pty Ltd]. When I disclosed those shares in my previous affidavit and financial statement I believed I was required to do so because they were in my name. I understand that at all times my siblings and I held our shares on trust for my parents.
The clear implication is that notwithstanding the statement to the contrary, the husband at all times understood that he held the G Pty Ltd shares on trust.
The husband was asked when he gained that understanding and he admitted that it was only during the course of the proceedings that somebody told him that he wasn’t really the owner of the G Pty Ltd shares. Clearly, it is not the case that the husband had an understanding from the very beginning but rather, is purportedly accepting what someone else has told him is the circumstances of the proceeding.
The husband’s evidence was unsatisfactory as to why he was a director and whether he brought his own judgment to bear or whether he was simply available to do the bidding of his father. I am satisfied that whatever the position might have been, the husband on each and every occasion would do exactly as his father requested without question.
The following appears at pages 409 – 410 of the transcript commencing line 30:-
Ms Smallwood: When the matter became before her Honour Bennett J on 27 February 2013 and we touched upon this already, your counsel indicated to the Court that you thought you owed, pursuant to the loan agreement, some $368,000; do you recall me touching upon that the other day.
Answer: Yes.
Question:Ok. What do you say now, Mr [Georgiades], do you say you owe the $368,000 which would now have increased of course with respect to interest.
Answer: Yes.
Question: Do you say you owe that.
Answer: Yes.
Question: Who do you owe it to.
Answer: To my father, if that’s the case.
Question: Ok, and is the basis of that debt a loan agreement.
Answer: On the [G] thing.
Question: Yes.
Answer: Yes.
Question: Yes.
Answer: That’s what it is saying.
Question:Yes but you also say that you don’t own your interest in the [G Pty Ltd] shares beneficially but that you hold them on trust for your dad.
Answer: That’s correct.
Question: And your mother.
Answer: Sorry.
Question: And your mother.
Answer: I don’t know. And my mother is that what you said.
Question: Yes I did. Yes.
Answer: Yes if that’s the case, yes.
Question: Is that the case, I’m asking you.
Answer:I am assuming it is, yes because my mother and father are the actual owners.
Question:And I ask you why would you owe them a loan yourself of some $400,000, it would be now, it was $368,000 back in February 2013. Why would you owe them money for something for a – the real estate purchased by [G] Pty Ltd when you now have no beneficial interest in that real estate.
Answer:Well that’s the way the accountant done something. I don’t know. You will need to ask him. He will…
His Honour: Is that a serious answer Mr [Georgiades].
Answer: Well I didn’t do the paperwork. I don’t do anything.
Question:You understand the logic of what Ms Smallwood is putting to you don’t you.
Answer: Yes, I understand what she is saying yes.
Question:So you are asserting that you don’t have an interest in the shares.
Answer: No I don’t have an interest.
Question:Therefore you don’t have an interest in the property that the company owns.
Answer: No.
Question:And given and therefore it doesn’t make sense that you would owe anybody money for something that you don’t have an interest in.
Answer: That’s true.
Question: You understand.
Answer: Yes that’s true.
The husband’s evidence on this topic was nonsensical and again I formed the view that he was not trying to assist the Court in gaining a better understanding as to the method by which he allegedly held the shares in G Pty Ltd on trust for his parents.
The husband was questioned at length as to the circumstances of the loan agreements evidencing the four loans between the husband and his parents. The husband had little or no knowledge of the circumstances surrounding the preparation of the replicate loan agreements and I am satisfied that he gave no instructions to the accountant, nor did he challenge the financial arrangements. When the husband was asked whether he was still paying the loan to his parents for the P Street loan and if so, what was its current status, the following evidence appears in the transcript at page 414 – 415 commencing line 1:-
Question:Well you’re still paying [KK] – sorry – you’re still paying the rental to your parents from [KK].
Answer:The rental is still – yes. That’s still going.
Question:And what’s the state of that loan.
Answer:What’s the balance of it…the balance I don’t know.
Question:You don’t know.
Answer:No I don’t know.
Question:At all.
Answer:Be honest, I am telling you no.
Question:Have you ever known.
Answer:No.
Question:Never.
Answer:No.
Question: Why not. Don’t you care.
Answer:No.
Question:You don’t.
Answer:No I don’t.
Question:Why would that be.
Answer:Just the way I live.
Question:Just the way you live.
Answer:Yes.
Question:Is that a serious answer.
Answer:Well no I don’t care, I trust my…
Question:Mr [Georgiades], you understand it is an answer which doesn’t – it doesn’t place you in good light, does it on this particular topic.
Answer:They will tell me when it’s finished and the…
Question:Will they.
Answer:Yes and the accountant, yes.
The husband did not impress as a witness of truth. He gave little regard to the answers that he gave and he had about him a demeanour which was to the effect that he simply did not care as to whether his answers were true or not.
His evidence was entirely unreliable and I have no doubt that he was prepared to concoct his evidence if he thought it would assist in promoting the position adopted by his family.
His answers to questions were vague and inconsistent and in respect of some matters he was either deliberately lying or demonstrably reckless.
Mr Georgiades Snr
The evidence of this witness is contained in his affidavits filed 15 June 2012, 29 August 2013 and his trial affidavit filed 7 October 2013.
He asserts that in 1991 he purchased vacant land at P Street, Suburb C and then later further vacant land at P Street.
In 1994, a factory was constructed on the property which was clearly designed to further the business interests of the family. Mr Georgiades Snr confirmed that the business operates under the name of KK.
The P Street property was placed in the name of the four children. A loan agreement was prepared in relation to P Street and signed by the children, Mr Georgiades Snr and his wife. The KK business operates from business premises and pays rent.
In or about 1986, Mr Georgiades Snr purchased two vacant blocks at 1A and 1B N Street, Suburb O. He says it was his intention to build a house on each of the blocks and that he engaged an architectural draftsman to undertake that process.
There were difficulties with the block in that it was very steep and because there were other priorities he did not move forward with the plans.
As a trade-off for monies provided by his daughter Ms Z, Mr Georgiades Snr transferred 1A N Street, Suburb O to her in satisfaction of the debt. Ms Z and her husband constructed a home on the property and managed the project themselves. Mr Z holds the qualification of an engineer. In or about the year 2000, Mr Georgiades Snr says that the husband asked whether if the house was eventually built on 1B N Street whether he could live there. The husband’s parents considered the request and ultimately agreed to it. That discussion allegedly took place prior to the husband meeting the wife.
In 2006, the husband’s parents purportedly honoured the agreement and did not demand the payment of any rent or utility charges. Accordingly, if that evidence is correct the necessary implication that flows from it is that when the house was built the husband’s parents had no intention and/or expectation that they would take up residence in the property at any foreseeable time.
In 1999, the husband’s parents purchased the rural land at north east Victoria. The four children were made directors of G Pty Ltd and four shares were issued. The witness refers to Annexure BG1 to his affidavit filed 29 August 2013 being an ASIC document which shows that the shares held by each of the four children are not beneficially held.
In order to fund the purchase of the rural property, KK obtained a loan from the Commonwealth Bank of $520,000. That money was then advanced to G Pty Ltd for the purchase of the property. It is his evidence that as at 30 June 2012 G Pty Ltd is indebted to the husband’s parents in the sum of $1,437,238 and to KK as trustee of the Georgiades Family Trust in the sum of $74,924.
To the extent that it is a relevant consideration, he says that he had little contact with the wife from the time that the parties moved into the Suburb O property and it was only following the separation of the parties that the witness and his wife were able to establish a relationship with their grandchildren.
In evidence, it was put to the witness that the intention of the formation of G Pty Ltd was to protect the rural property from creditors arising out of pending litigation. Mr Georgiades agreed that was the initial concern. He also agreed that the monies borrowed by Mr Georgiades Snr and his wife from the Commonwealth Bank in order to purchase the farm required that his three sons were guarantors.
It was put to him that the original loan to G Pty Ltd now exceeds $1.5 million and accordingly the loan could not be considered “genuine”. The witness was not able to properly answer the question but rather, deferred to that decision having been made by his former accountant Mr F, now deceased.
When pressed, his position was that as long as he was alive he would expect payment, but if he dies then he does not know what would happen.
The witness was asked whether the loan agreement in respect of G Pty Ltd was really intended to be no more than a device to potentially reduce the pool of property available to the wife in terms of these proceedings. In short, that the loan agreement was a sham. Mr Georgiades Snr had little answer to the proposition that the terms of the current loan agreement would see him at the age of 94 years before it was repaid and in circumstances where there were no interim or other payments required. When interest is added, the amount outstanding would far exceed the value of the underlying property. The simple answer from the witness was that it was a matter to put to his accountant.
The witness was demonstrably unhelpful and his attitude was such that he was clearly resentful of the process in which he found himself as a party and struggled to understand why he should be required to answer any questions about his financial affairs.
Mr Georgiades Snr was asked as to the circumstances of providing the husband with $40,000 to purchase the boat. It is clear from his evidence that there was no agreement at the time and the transaction was as simple as the husband asking for the money and Mr Georgiades Snr being able to provide it from cash readily available to him. He did not have to go to the bank and it is his evidence that he always carries cash to maximise any opportunities that might arise.
It is important that Mr and Mrs Georgiades Snr were keen to “alienate” the farm property given that they were in litigation and they had received advice that they should not be shown as directors of the company or shareholders.
Annexure BG 2 to the affidavit of Mr Georgiades Snr filed 7 October 2013 is the loan agreement between the husband’s parents and G Pty Ltd via the four directors.
The loan agreement is a replicate of the alleged original agreement which had been signed in or about October 1999. The evidence in respect of this loan agreement together with others signed by various members of the Georgiades family is unsatisfactory and uncertain. The loan agreements annexed to the affidavit of Mr I, solicitor, are the draft agreements prepared by Mr I following instructions from Mr Georgiades Snr and his accountant Mr B. Those agreements were forwarded to Mr B and he then says that they were forwarded to the Georgiades family for signing. Some of the loan agreements are demonstrably different to the agreements that appear as annexures to the affidavit of Mr I.
Whilst I am satisfied that Mr and Mrs Georgiades Snr borrowed money from the Commonwealth Bank and then on-lent those monies via KK to effect the purchase of the north east Victoria property by G Pty Ltd, I cannot be satisfied as to the terms and conditions of any loan, nor that the purported loan agreement ever existed in the first place. The evidence of the husband and his father was inherently unreliable and I have already found that there was a clear plan to ensure that the husband’s financial interests were arranged following separation in such a way as to minimise the property that was available for the Court’s consideration.
It was highlighted that in the husband’s financial statement filed 23 January 2012 he included his interest in G Pty Ltd at a value of $175,000.
The financial statements for G Pty Ltd are annexures to the affidavit of Mr B filed 5 September 2013. They provide a running history of the financial position of the company, but in particular they record from as early as 2001 the unsecured loan from the husband’s parents of $568,828. I have already commented on the unsatisfactory manner in which the account appears to have been conducted and in particular the inadequate explanation of why in the 2009 year the unsecured loan went from $644,200 to a secured loan of $1,207,530.
Given the purported loan agreement requires no interim or other payments until 4 October 2029 and noting the rate of interest of 6.5 per cent, it is obvious that the total loan would exceed the value of the property by a significant sum. Even on its present valuation, G Pty Ltd is indebted to Mr and Mrs Georgiades for an amount greater that the current value of the land.
I find that the loan agreement is a device designed to minimise the available property of the parties.
The very fact that on the husband’s own case the purported loan agreement contains no requirement for any interim payment and that no payment has been made since 1999 would entitle the Court to assume that there is no real likelihood of the loan ever being called in and certainly not in the year 2029.
I am not entitled to affect the substantive rights of third parties and I do not intend to do so. Given the unsatisfactory evidence given by the husband and his father, I am not satisfied that the evidence of the husband and his father, the purported loan agreement or indeed, the financial statements of G Pty Ltd oblige the Court to find that there is any loan outstanding and if there is, that the obligation for repayment is so certain that I should bring it to account. See Biltoft & Biltoft (1995) FLC 92-614.
The suggestion that the husband should be bound by a joint and several guarantee to the Commonwealth Bank in respect of an interest in G Pty Ltd that he says he holds for his parents is difficult to reconcile.
In all the circumstances, I reject the position put by the husband and I propose to attribute a value to the husband’s shareholding and interest in G Pty Ltd of $266,000. To the extent that demonstrably the property was purchased with funds supplied and arranged by the husband’s parents, that will be brought to account as a matter of contribution, noting however that there is no certainty as to the financial arrangements between the husband and his parents, and what benefit they have received from the company over the years.
BOAT AND LOAN
As discussed, little weight can be placed on the evidence of the husband and his father as to the circumstances of the acquisition of the boat in the husband’s possession. There was little or no evidence as to the terms and conditions of the acquisition and whilst it would seem likely that the husband’s father provided cash to the sum of about $40,500 to enable the husband to purchase the boat, where that money came from and what arrangements existed between the husband and Mr Georgiades Snr is not known.
The boat was purchased on a whim and in circumstances where the husband knew the wife was opposed to the transaction. On the husband’s case, the family was short of money given the husband’s modest income and it was only that they did not pay mortgage or rent that they could make financial ends meet.
The loan agreement entered into between the husband and his parents is clearly a concoction by the parties to allege a loan that was unlikely to have been the original intention or agreement. The loan document that was ultimately signed by the parties and forms Annexure BG1 to the affidavit of Mr Georgiades Snr filed 7 October 2013, is not the same document that was prepared by Mr I on the instructions of Mr Georgiades Snr and his accountant Mr B. Importantly, paragraph 6 of the agreement is significantly different to the final agreement in respect of the deletion of the reference to the property at “[1B N Street, Suburb O]”. Given the unsatisfactory evidence of the Georgiades family arising from their inability to explain how the original loan agreement as presented by the solicitor was subsequently altered, I have little difficulty in rejecting that there is any loan arrangement between the husband and his parents. Indeed, senior counsel for Mr and Mrs Georgiades Snr did not wish to be heard in respect of the legion of inconsistencies arising from this transaction.
I propose to bring the boat to account in the sum of $35,000 and exclude any purported loan.
TREATMENT OF CASH WITHDRAWALS
Between 20 November 2007 and 2 August 2010 the husband banked significant amounts of cash totalling $217,800 into his personal accounts. The husband withdrew equivalent amounts as detailed elsewhere in these reasons.
The explanation of the husband was both nonsensical and incredible. It was suggested by him that the money represented the daily takings of KK from time to time and rather than leave the cash in the factory premises overnight, the husband took the money with him and banked the cash into his personal account. It was conceded by him that it could have been banked into the KK account given that both KK and the husband used the same bank and branch. Ms Z says that she disapproved of the practice and made it known that it should stop. According to her, her request was denied both by her father and presumably the husband.
The wife sought discovery from the husband and his parents of various documents which would assist in establishing whether the assertion of the husband namely, that the monies banked by him could be linked to the takings of KK could be established.
The response from the solicitors of the husband’s parents that the relevant category of documents had either been lost or destroyed was clearly unhelpful. It became problematic when the evidence of Ms Z established that there were other collateral documents that would have provided assistance as to the extent of cash received by KK during the relevant period.
The position of the husband was that he certainly neither had any documents which would assist in the enquiry nor did he have access to them. The response of his parents was that whatever documents may have existed they were now lost or destroyed.
I consider that the husband and his father have not been prepared to assist the wife by making full and frank disclosure. The deposits into the husband’s account during the relevant period are clearly identified and it would not have been a difficulty to provide the takings for the relevant periods which would clearly have established the true position.
In Bell & Bell [2000] FamCA 1301 the Full Court said:-
[44]The obligation of parties in financial proceedings to make a full and frank disclosure of their financial circumstances, and all matters relevant thereto, has been considered in a number of authorities; St John v St John (NSW Court of Appeal 19 June 1974, unreported per Hutley JA); Penfold v Penfold (1980) FLC 90-800 at 75,055; Livesey v Jenkins (1985) 1All ER 106; Oriolo v Oriolo (1985) FLC 91-653; Guinti v Guinti (1986) FLC 91-759; Mezzacappa v Mezzacappa (1987) FLC 91-853; Milligan v Milligan (Full Court, 4 February 1991, unreported); Black & Kellner (1992) FLC 92-287; Weir v Weir (1993) FLC 92-338;…
[45]In our opinion, some of the principles emerge from authorities are as follows:-
·In proceedings in the Family Court, in relation to financial matters, there is an obligation on each party to make a full and frank disclosure of his/her financial circumstances and all matters relevant thereto;
·The obligation arises because of the necessity for the Court in such proceedings to consider all aspects of the financial circumstances of each party (step 1, 2 and 3);
·If there is a non-disclosure, in the relevant sense, then the failure to disclosure undermines the who process of adjudication of the proceedings in relation to financial matters;
·The obligation is not created by the rules or practice of the Court and the rules simply set out the procedure by which that obligation may be fulfilled;
·If there is a deficiency in the rules or practice adapted for the purpose of making such a disclosure mere compliance with the requirements of the relevant rule or practice, if deficient, is not enough;
·A finding of non-disclosure may, in appropriate cases, result in the other party being granted, without more, the relief sought. However it does not follow that the outcome sought is appropriate in all such cases. It depends on the circumstances of each case. It may be, in the circumstances of certain cases that it is appropriate to simply award to the innocent party all that he/she seeks. However, we do not accept that such an outcome is required or necessary in all cases where there is a finding of non-disclosure. That said, it also does not follow that non-disclosure should be ignored; Penfold & Penfold (supra). However, if there is finding of non-disclosure there should always be reasons given supporting the finding and for the consequences of such a finding.
[46]It may be appropriate, depending upon the circumstances, to make notional adjustments to the pool of assets to reflect identified items of property that have been bona fide disposed of or one party only has had the benefit of to the exclusion of the other party; Townsend & Townsend (supra); Farnell & Farnell (1996) FLC 92-681.
[47]It may also be appropriate, depending upon the circumstances, to notionally include in the pool of assets items of property in respect of which no or no reasonable explanation has been given for the assertion that they no longer exist or never existed; Mezzacappa & Mezzacappa (supra). In other words, it is also possible, in appropriate cases, to have regard to, and notionally include in the list of assets, what is called unascertained property the value of which is capable of some identification and quantification.
The question remains therefore how the Court should treat the aggregate sum of $217,800 given that I am satisfied the husband puts forward no credible alternate explanation to the proposition of the wife that the husband was entitled to that money.
The approach of “adding back” a notional item of property to the property interests of each of the parties has limited scope.
In Watson & Ling (2013) FLC 93-527 Murphy J at paragraph 33 – 34 said:-
How might that be recognised? First, consistent with existing authority, it can be recognised pursuant to s 75(2)(o) (cf s 90SF(3)(r)) (see, for example, Omacini & Omacini (2005) FLC 93-218, Browne & Green (1999) FLC 92-873 and Cerini). Secondly, it might be contended that it might be recognised within the assessment of contributions. This Court has long eschewed the notion of “negative contributions” (see, for example, Antmann & Antmann (1980) FLC 90-908). Nevertheless, it might be argued that the “non-dissipating party” can be seen to have made a disproportionally greater indirect contribution to the existing legal and equitable interests (for example to their preservation) if it is established that, but for the other party’s unilateral dissipation, those existing legal and equitable interests would have been greater or had a greater value.
The assessment of the circumstance under discussion is, ultimately, a matter of discretion ... Equally, however, authority dictates that it will be “the exception rather than the rule” (Cerini at [46]) that a direct dollar adjustment equivalent to the amount of the alleged dissipation of the pool is made to the otherwise entitlement of a party …
Whilst the cases where it would be appropriate to “add property back” to the interests of each of the parties will be relatively few, I do not consider that there is no place for such a consideration.
The present case has about it the significant distinction of the husband being uncooperative and recalcitrant in respect of his obligation to make full and frank disclosure. He does not have the luxury of attempting to deflect his obligation to provide appropriate discovery onto others. See Re Ronald Neville Mcgorm ex-parte: the Co-operative Building Society of South Australia [1989] FCA 87:-
[5]The obligation resting on a party obliged to give discovery requires that he make proper enquiries and efforts to identify and disclose all relevant documents that are not in his possession. The obligation extends to making enquiries from the person in whose possession the documents now are; see Mertens v Haigh [1863] EngR633. It was said in the 19th Century case of Taylor v Rundle 41ER429 at 433 by Lyndhurst LC “if it is in your power to give the discovery, you must give it; if not, you must show that you have done your best to procure the means of giving it”….
[6]The scope of the enquiries that should be made will depend on the circumstances of the case having regard to the need for discovery in order to dispose fairly of the matters in question, or to save costs in the proceedings. The enquiries must be reasonable, but do not demand of the party giving discovery that he goes to lengths which are oppressive.
Accordingly, this is not a situation where the husband has provided a satisfactory explanation as to how the money has been utilised. All that is known is that it entered the husband’s account in circumstances which defy logical explanation and without pattern or temporal connection to the date of deposit or the amounts so deposited significant cash sums are withdrawn.
There is no evidence as to the destination of the funds and I consider it open to the Court to find that in the absence of full and frank disclosure, those monies may still be available to the husband as opposed to the proposition that they have been dissipated, spent or in some way returned to KK or the husband’s father.
I propose to include in the pool the aggregate cash withdrawals of $217,800.
LEGAL FEES
The current mortgage on the Suburb Y property is $111,000. The wife concedes that at the date of separation the mortgage had been reduced to $66,000 (the wife says $70,000). The extent of the increase can be attributed to day to day living costs and expenses of the wife, but predominantly to the payment of her legal fees in respect of the present proceedings.
Whilst the husband was self-represented, it is his case that his legal fees were about $105,000, but they have been paid for by his family. There is no real contention that he will be required to repay those funds. Indeed on his case, with an income of about $30,000 per annum taking into account all the alleged obligations he says he has to his family, it would be an impossibility for that to occur. Moreover, it is inferential from the evidence of Mr Georgiades Snr that he recognises those monies are not likely to be repaid and any loan arrangements are likely to be forgiven on his death.
In Truman & Truman [2013] FamCA 765, Fowler J gave consideration to the treatment of legal fees incurred by the parties. At paragraph 54 his Honour said:-
This Court does not follow the practice of adding back and dividing non-existent assets. There is no warrant for doing so in the Act. The once fashionable practice was one which assisted in pointing perhaps the way to a just solution; however, there exists plenty of opportunity for the Court to come to a just and equitable assessment as to the source and application of funds in its consideration of contribution under section79 (4) and matters referred to in section 75 (2) and also in particular section 75 (2) (o).
I do not propose to add back the parties separate paid legal fees into the pool of assets.
Given my finding that the husband is unlikely to be required to repay legal fees to his father, it would seem to me to be a proper matter to bring to account under s 75 (2) (o) of the Act.
SUPERANNUATION OF THE PARTIES
The husband has an entitlement with AMP and as at the date of his last financial statement being 13 September 2013, he held an AMP interest to the value of $34,507 and an interest in a self-managed superannuation fund namely X Georgiades Superannuation Fund of $23,632.
The wife holds superannuation with XX Super in the sum of $62,124.
Taking into account the ages of the parties and noting that the husband and wife each have more than 20 years before they will satisfy a condition of release, I propose to leave their respective superannuation entitlements to the parties without adjustment.
JOINT LIST OF ASSETS AND LIABILITIES
Wife
| Net value of J Street, Suburb Y | 239,000 |
| Ford motor vehicle | 15,000 |
| TOTAL | $254,000 |
Husband
| Quarter share P Street, Suburb C | 60,000 |
| Motor cycle | 8,000 |
| Jet Ski | 3,000 |
| Furniture | 6,730 |
| Boat | 35,000 |
| Aggregate cash withdrawal | 217,800 |
| G Pty Ltd shares | 266,000 |
| TOTAL | $596,530 |
| COMBINED TOTAL | $850,530 |
CONTRIBUTIONS
Section 79 (4) (a) – Financial Contributions
This is a relationship of about 10 years with two young children. At the commencement of the relationship, the wife had a modest interest in her property at Suburb Y. The husband held his interest in P Street, shareholding in G Pty Ltd and his motor cycle.
By reference to the valuation evidence as set out in the affidavits of the single experts M Firm in relation to the north east Victoria property and Mr W in relation to the P Street property, their value as at September 2001 $665,000 and $120,000 respectively.
I am not told of the value of the husband’s motor cycle but accept that it was of significant value.
For the reasons already given, I consider that the acquisition of the aggregate cash withdrawals and the boat form property of the husband that was accumulated and accrued during the course of the relationship and the husband has failed to establish that the genesis of those items of property came from either his family or the Georgiades family business other than by the proper entitlement of the husband.
During the course of the marriage, the parties worked hard and cooperatively in order to accumulate their asset pool and to make proper provision for the family. The husband remained in full time employment, whereas the wife managed her employment to enable her to properly care for and supervise the children.
Post separation, the position is more complex. Orders were soon made putting in place appropriate arrangements for the care of the children. The husband continues to assert that his wage is modest and is not the subject of any supplement by ongoing benefit provided by his family. The wife returned to the Suburb Y premises and it became her place of residence. The husband with the alleged consent of his parents, continues to reside in the Suburb O property. He does so rent free and without mortgage payment. I am uncertain as to the extent of the utility charges that he is responsible for, but taking into account the history, it is more likely than not that the Georgiades family in some manner or other pays for the husband’s ongoing utility expenses. I assume the husband pays his other outgoings.
The Full Court in Pierce & Pierce (1999) FLC 92-844 has provided helpful assistance as to the manner in which significant contributions should be brought to account:-
In our opinion it is not such a matter of erosion of contribution but a question of what weight should be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contribution by a party with all other relevant contributions both of the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
Neither party has put significant evidence before the Court as to the non-financial contribution made either directly or indirectly in respect of the property of the parties.
Section 79 (4) (c)
During the course of the relationship the wife was the primary carer for the children made the significant homemaker contribution. The husband however remained in continuous employment within the Georgiades family business and provided the necessary financial support, certainly during the period when the wife suspended her employment in order to look after the children.
Post separation the care of the children has been effectively shared.
On balance, there should be modest adjustment in favour of the husband to reflect his introduction into the relationship of his interests in G Pty Ltd and P Street, which together now represent a significant proportion of the total property pool. That is however tempered by the advantage to the husband of his continued residence in the Suburb O property and the likelihood that the majority of his expenses both in respect of that property and otherwise are paid for by the Georgiades family business.
The wife has not had that advantage following separation.
In all the circumstances and taking into account the relevant contribution factors, the contributions of the parties should be recognised as 57.5/42.5 per cent in favour of the husband.
Section 75 (2) factors
The parties are 41 and 39 years respectively. They are both in good health.
The wife is currently employed as a sales assistant and her income is in the order of $46,600 per annum. The husband alleges that his income from KK Pty Ltd is not dissimilar. The difficulty that I have is that I do not accept that the husband has been full and frank in respect to the totality of his financial arrangements with his family and the Georgiades family business and it is likely in all the circumstances that he will continue to receive generous and substantial ongoing financial benefit. He continues to reside in the Suburb O property on terms that are most favourable to him. That will continue into the future. He continues to operate a valuable boat in circumstances where his underlying income would not suggest such a pastime to be financially sensible. He is unlikely to be required to pay his legal fees (if they have indeed been paid by the Georgiades family) and from time to time he will receive distributions from the Georgiades Family Trust and other substantial benefit.
I do not consider that there is any likelihood that the husband will be asked to leave the Suburb O property and look for and fund his own accommodation.
The relationship between the husband and his family is particularly close and there is no suggestion that the extraordinary financial generosity of the husband’s parents towards him on the husband’s case, will not other than continue.
The care of the children is effectively shared, although the current orders provide for the children to remain in the wife’s care for eight days out of every fourteen.
As indicated, both parties are in employment. The wife’s income is relatively certain. There is no certainty or indeed any ability to accurately assess the extent of the husband’s income or his ability to access cash supplemental to his income.
Neither of the parties have the responsibility to support any other person, nor am I advised that either of them are eligible for a pension allowance or relevant benefit.
Whilst the wife rails against her circumstances and those of the husband residing in the Suburb O property, I consider that the generality of the situation is that the parties have a not dissimilar standard of living and that whilst as far as the wife is concerned it is modest, is nonetheless adequate.
Neither party is obliged to pay spousal maintenance to the other.
I do not consider that there are any factors relevant to ss 75 (2) (ha), (j), (l), (m), (n), (naa), (p) and (q) that are relevant to the proceedings.
Section 75 (2) (o) needs to be considered, particularly in respect of the manner in which legal fees paid by the parties should be brought to account. Whilst the expenditure of the wife on her legal fees has had the effect of increasing the mortgage on the home, equally on the husband’s case, the payment of his substantial legal fees by his father would appear to be an appropriate offsetting and countervailing factor. I do not consider that there should be any adjustment to bring to account the manner in which each of the parties paid for their separate legal fees.
When giving consideration to the manner in which the relevant s 75 (2) factors should be brought to account and in particular the appropriate weight that should be given, I am reminded of the judgment of Fogarty J in Waters & Jurek (1995) FLC 92-635 where at page 82,376 the following is said:-
In the majority of property cases little difficulty is encountered in the contribution step and increasingly in the general run of cases the conclusion is likely to be one of equality or thereabouts. There is no doubt that the centre of gravity in the determination of property cases has especially, in more recent times, moved to the evaluation of the s. 75 (2) factors, and the significance of that has been heightened because of recent Full Court decisions which have emphasized those provisions and indicated that they should be given real rather than token weight.
As was said by his Honour “the provision does not invite a process of social engineering” (Clauson & Clauson (1995) FLC 92-595 at 81,912).
In Clauson (supra) at page 81,911 the Full Court said:-
It has long been recognized that in most cases the most valuable “asset” which a party can take out of the marriage is a substantial, reliable, income earning capacity; see Best & Best (1993) FLC 92-418 at 80,295.
There is, we think, at times a tendency to assess s. 75 (2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the Court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s. 75 (2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue.
Accordingly, I am obliged to give real weight to the relevant s 75 (2) factors.
For the above reasons, I propose to provide a further adjustment of 20 per cent in favour of the wife.
CONCLUSION
Accordingly, the rights of the parties in respect of matrimonial property held jointly and severally shall be adjusted to reflect 62.5 per cent of the total to the wife and 37.5 per cent to the husband.
Of a total pool of $850,530, the wife should retain $531,581.
The wife retains the following:-
J Street, Suburb U
239,000
Ford motor vehicle
15,000
TOTAL
$254,000
By order made 27 February 2013, the husband was to pay the full cost of valuations and then have liberty to seek contribution from the wife. The husband claims that the total amount paid was $15,729. Notwithstanding that the husband has not demonstrated that he will be required to pay his costs to his parents, it is reasonable that the wife be responsible for one half of the costs in the sum of $7864.
The wife is therefore entitled to a settlement sum of $277,581 less the sum of $7,864, namely $269,717. I propose to give the husband 60 days for the payment of the said amount.
Orders will be made as set out at the commencement of these reasons.
I certify that the preceding three hundred and eighty two (382) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 8 September 2014.
Associate:
Date: 8 September 2014
0
5
1