Goncharova & Goncharov (No 2)

Case [2024] FedCFamC1F 803

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Goncharova & Goncharov (No 2) [2024] FedCFamC1F 803   

File number(s): SYC 1111 of 2020
Judgment of: BRASCH J
Date of judgment: 26 November 2024
Catchwords:

FAMILY LAW – PROPERTY – BALANCE SHEET - Where husband asserts loans to his family which would reduce the pool to a negative - Where loans found to be a sham - Where husband wishes to use 2022 valuations for three overseas properties but apply the current 2024 exchange rate meaning the pool would reduce by $200,000 - Where no evidence underlying assets have altered in value - Where husband transferred money to family overseas and withdrew cash after the wife filed for interim asset preservation orders - Where sums included in the balance sheet - Where husband divested himself of long-held shares in overseas family businesses after the wife applied to have his interests in those businesses valued - Where husband's interests included in the pool - Where wife used funds for living and re-housing after husband stopped voluntary financial support - Where husband sought add backs of those funds - Where living costs money - Where children cost money - Where wife's use of money not added back 

FAMILY LAW – PROPERTY – CONTRIBUTIONS - Where husband focused on his direct financial contributions during the relationship - Where parties entitled to live as they lived when together - Where holistic assessment required  

FAMILY LAW – PROPERTY – FUTURE NEEDS - Where husband says he should have the vast bulk of the pool so he can maintain himself going forward - Where wife's resources and court ordered sums used on costs of living and children pre-trial 

FAMILY LAW – PROPERTY – ORDERS - Where the division of assets and add backs is so close to assessed percentage outcome that no further order made for payment of a comparatively meagre amount of money by one party to the other   
Legislation:

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) Part VIII, ss 72, 75, 79, 81, 102C

Foreign Evidence Act1994 (Cth)

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 15.16, 15.17
Cases cited:

Adamson v Adamson (2014) 51 Fam LR 626; [2014] FamCAFC 232

Aston & Haymon [2021] FamCAFC 146;

Babett & Falconer (2015) FLC 98-067; [2015] FamCAFC 124

Beklar & Beklar [2013] FamCA 327

Best & Best (1993) FLC 92-418

Bevan and Bevan (1995) FLC 92-600; [1993] FamCA 95

Bulow & Bulow (2019) FLC 93-885; [2019] FamCAFC 3

Carlson & Fluvium [2012] FamCA 32

C & C [1998] FamCA 143

Chorn v Hopkins (2004) FLC 93-204; [2004] FamCA 633

Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154

Ferraro & Ferraro (1993) FLC 92-335

Fielding and Nichol [2014] FCWA 77

Fields & Smith (2015) 53 Fam LR 1; [2015] FamCAFC 57

G and G (2000) FLC 93-043; [2000] FamCA 1075

Goncharov & Goncharov [2024] FedCFamC1F 731

Grier & Malphas [2016] FamCAFC 84

Harris &…

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AGLC
Goncharova & Goncharov (No 2) [2024] FedCFamC1F 803
Case
[2024] FedCFamC1F 803
Decision Date

CaseChat Overview and Summary

In the case of Goncharova & Goncharov (No 2), the parties, Ms Goncharova and Mr Goncharov, were involved in a complex dispute over the division of their matrimonial property following their separation. The matter was heard in Division 1 of the Federal Circuit and Family Court of Australia. The primary legal issues before the court were the valuation of the husband's overseas business interests, the legitimacy of certain loans and financial transactions, and the appropriate division of the marital property pool. The court was also required to consider the contributions made by each party during the relationship and their respective future needs.

The court rejected the husband's claims regarding the application of Country B law to properties owned before the marriage, finding that the jurisdiction was derived from the Family Law Act 1975 (Cth). It found the husband's assertion of loans to his family to be a sham, and dismissed his attempt to apply a 2024 exchange rate to overseas properties to reduce the marital pool by $200,000. The court also dismissed the husband's argument that he should retain a significant portion of the marital assets to maintain himself in the future, given the wife's use of funds for living expenses and the children's costs. The court made no further order for payment between the parties as the division of assets and add backs was close to the assessed percentage outcome.

The court concluded that the husband's interests in the overseas family businesses should be included in the marital pool, despite the husband's attempts to divest himself of these interests post-separation. The wife's use of funds for living and re-housing was not added back to the pool, and the court found that the wife was entitled to live as she did when she was with the husband. The court ordered the husband to transfer his interest in the Suburb E property to the wife and to transfer certain bank account funds to the wife's nominated account. The wife was ordered to transfer her interest in the City P property to the husband. Each party was to retain their respective assets and be solely responsible for their liabilities.

Orders

Orders of the court

SYC 1111 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS GONCHAROVA

Applicant

AND:

MR GONCHAROV

Respondent

ORDER MADE BY:

BRASCH J

DATE OF ORDER:

26 NOVEMBER 2024

THE COURT ORDERS THAT:

Suburb E Property

1. Within 30 days from the date of these Orders, the Respondent do all acts and things necessary to transfer to the Applicant the whole of his interest in the property situated at U Street, Suburb E in the state of New South Wales (“the Suburb E Property”), being Lot … in strata plan … at Suburb E Folio identifier ….

CBA Account ending …27

2. Within 7 days from the date of these Orders the Respondent do all acts and things necessary to transfer all funds held in his CBA bank account ending in …27 at 20 August 2024 (being $99,825) to the Wife’s nominated account and pending compliance with this Order, the Husband be restrained from making any debits from that account or otherwise dealing with those accounts including setting up direct debits and withdrawing funds.

The City P Property

3. Within 60 days of the receipt of the payment pursuant to Order 2, the Applicant do all acts and things and sign all documents necessary to transfer to the Respondent all of her right title and interest in the property situated at W Street, City P, Country B to the Respondent.

106A Order

4. That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A of the Family Law Act 1975 (Cth), to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.

Applicant’s Assets

5. The Applicant Wife will receive / retain the following:

(a) All of U Street, Suburb E NSW

(b) CBA Account ending …18

(c) CBA Account ending …27

(d) CBA Account ending …20

(e) Her member account with Super Fund 1

(f) CBA EURO Foreign currency Account ending …27

Respondent’s Assets

6. The Respondent Husband will receive / retain the following:

(a) All of W Street, City P

(b) X Street, Suburb H

(c) V Street, Suburb H, house and block of land

(d) His interests in F Company and G Company

(e) Motor Vehicle 1

(f) CBA Account ending …38

(g) CBA Account ending …57

(h) CBA USD Foreign currency Account ending …35

(i) R Bank Account ending #7864

(j) Funds transferred to Country B

(k) Cash somewhere in Australia

(l) His member account with Super Fund 2

Other

7. That except as otherwise provided in these Orders, the Wife be solely, legally and beneficially entitled to the exclusion of the Respondent, to all property of whatsoever nature and kind in her ownership, possession and/or control as at the date of these Orders.

8. That except as otherwise provided in these Orders, the Husband be solely, legally and beneficially entitled to the exclusion of the Applicant, to all property of whatsoever nature and kind in his ownership, possession and/or control as at the date of these Orders.

9. Each party hereby forgoes any claims they may have to any superannuation benefit to or owned by the other. The party in whose name any such policy of superannuation or insurance stand shall be deemed to be the owner and the beneficiary of such policy to the exclusion of the other.

10. That each party be responsible for any liabilities in their own names including but not limited to, credit cards.

11. That each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these Orders.

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

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

Finally, I reject the husband's evidence in cross examination, that I ought apply Country B law for the period of time from when the parties were married in Country B in 2004 until they departed that country for Australia in 2014. The effect of the husband's approach would have, according to him, seen two Country B properties he owned prior to marriage being excluded from the pool. To his credit, the husband’s Counsel did not urge this path upon me. My jurisdiction is derived from the Family Law Act 1975 (Cth) (“the Act”).BACKGROUND I have already referred to the various dates relevant to the parties’ relationship, their children, their move from Country B to Australia and purchase of the Suburb E property. I add the following. The wife was born in 1982 and the husband in 1979. The wife filed an Initiating Application on 20 February 2020. Orders were sought for both parenting and property. On 10 July 2020, orders were made for the husband to pay the wife $70,000 and he remain in the Suburb E property. On 2 August 2021, the Court ordered the husband pay the wife: $180,000 as a partial property settlement within 60 days; and, $55,140 as lump sum spouse maintenance within 28 days. The court also ordered the Suburb E property be sold if he failed to comply with those two payment orders. The husband deposed he made the payment in or about October 2021 being well outside of the court deadlines for payments. Subsequently, on 25 February 2022 the court ordered valuations of the properties owned by the two parental Country B companies. The husband did not engage in drafting the joint letter of instructions and the wife had to approach the Court for further orders to facilitate same. The valuation of the Country B companies’ real properties was completed on 26 October 2022. The valuation of the companies was not completed until September 2023, with the wife having to pay the whole cost of the valuation as the husband did not pay his half despite court order. The report was not received by the parties until mid-June 2024. On 23 September 2021, parenting orders were made to the effect that Mr K live with the father and spend time with the mother according to his wishes. L was to live with the mother and spend alternate weekends (7pm Friday to 7pm Sunday) with the father. She was also to have seven consecutive days with the father in the four school holidays blocks. The proceedings were transferred to Division 1 of the Federal Circuit and Family Court of Australia on 8 April 2022. On 8 August 2023, further parenting orders were made for the parties to have equal shared parental responsibility for L and the ICL was discharged. Mr K is now 20 years old and is free to live as he wishes. It seems he lives primarily with the father. L is now 13 and lives with the mother and spends alternate Fridays (7pm) to Sundays (7pm) with the father during school terms and seven consecutive days with the father in the four school holidays blocks, except in odd numbered years where she spends 14 consecutive days with the father in the term 4 school holidays.Material

Evidence

Evidence Before The Court

I accept the wife’s counsel’s candid and appropriate submissions that there are limitations to the valuation of the husband’s interests in the company (Transcript of submissions of 23 August 2024, p. 33 line 20 – p. 34 line 6); for example:The documents that pertain to the current financial status of the business are the FS2022, for [G Company], and FS2022 for [F Company]. They’re financial statements for 2022. There are no leases, there are no bank accounts, there is no general ledger, no tax returns, no particulars of its debt, no evidence of any money it might be owing to shareholders. That’s it. And your Honour would be concerned about the veracity of those two documents, given that the husband’s father, at the time that these were prepared, was the CEO of these two businesses. And, obviously, it was under his hand that those documents were prepared.… Two of the things that your Honour will note from the report – if I could take your Honour to page 4, it talks about:The book value of the fixed assets. Adjustment of fixed assets. The book value of the fixed assets.Now, nobody knows what that means. We don’t know what debt relates to the company. We don’t know how the book value of assets is determined in [Country B]. We do, however, have, on page 4, a valuation of the fixed assets of the company [in Country B currency]. Those were valuations that were done independently by somebody valuing the real estate. And we say that that is the best evidence that your Honour has of the value of that company. And, similarly, your Honour with – I make the similar arguments with [G Company]. Those details are on page 8. We have the book value of the fixed assets. Don’t know what that is, not sure how that was arrived at.And then we have the of the fixed assets themselves, that we say comes independently from a valuer of the real estate. (Emphasis added)(Transcript of submissions of 23 August 2024, p. 33 lines 7 – 35) In reply, the husband’s counsel did not take up these matters signposted by the wife above:Now, what the husband no doubt will say to you is, “Look, it’s really unfair to me for you to ignore all the other things that are on those tables on pages 8 and 7” – sorry – “6 – 5”. It would be completely inappropriate for me to divine some kind of alternate valuation. What I am ultimately left with is $nil for the husband on the basis he has no interests in the companies. Or, for the wife, almost $882,000, to which there is some principled approach on the expert’s report, albeit with the limitations set out above. In that regard, there is much force the following submissions for the wife, which I accept, when looking at those limitations:And what I would say about that, your Honour, is the following. Disclosure was in his hands. The wife had no capacity to be able to get documents relating to this business, because no one would give them to her. The husband was a shareholder up until [early] 2021. And it is very clear from the initial letter that was sent to the husband, prior to these proceedings even commencing, that he was required to disclose things in relation to the businesses. And he says to you that he has done that. So, my submission, your Honour, is, with respect to these valuations, that a Weir argument should apply. That is, that the husband should not benefit from his failure to disclose.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Finally, it is common ground that in order to get money out of Country B, it cannot be transferred from your own Country B bank account to your own bank account elsewhere. It must come from a family member or other person and be called a donation. Thus, just because a family member is identified as the transferer of funds, that does not mean they are the original source of the funds. Items 21 and 22 – two loans said to arise between the husband and his parents during the marriage, and varied post-separationLoan 1 –November 2014, varied April 2016 and late 2020 The entirety of the husband’s evidence with respect to the 2014 loan agreement and the 2016 and 2018 variations is set out at paragraphs 45 to 48 of his affidavit filed 9 August 2024, plus corresponding annexures. To say the evidence is scant is an understatement. The husband deposed that the 2014 agreement was for USD$1.8 million to mature in late 2020 with interest at 0.01% per annum. The husband said the loan was to be repaid at maturity unless the lenders requested earlier payment. He said the 2014 Agreement was varied in April 2016 with an amended maturity date of late 2026 and loan amount amended to USD$1,637,018 to assist with the purchase of the Suburb E property for the sum of $1,775,000. 00. This variation allowed his parents to register an encumbrance on the property title. He said the 2016 variation was varied by an agreement in late 2020, with a new interest rate of 3 per cent per annum to apply from 1 January 2021. The husband’s evidence concluded:There is an outstanding amount of $1,637,018 USD and at the exchange rate of $1 USD to $1.53 AUD as of 28 July 2024, an amount of $2,504.638 AUD plus interest on the 2014 Loan Agreement.(Affidavit of [Mr Goncharov] filed 9 August 2024, paragraph 48) It is the wife’s case the first she knew of this loan was when the husband filed his affidavit and financial statement in these proceedings on 19 May 2020, where he asserted a debt to his parents of $2.945 million. He also deposed to the texts of demand from his parents on 9 and 10 May 2020 calling in “100%” of the loans. Curiously, the husband’s transfers of funds began on 8 May 2020, a day before one demand and two days before the other. The husband confirmed in cross-examination that with respect to the 2014 agreement:(a)He entered into the 2014 loan before they left Country B in late 2016, and he is the borrower and his parents are the lenders;(b)His affidavit said nothing about any discussions with the wife about: borrowing USD$1.8 million; how they might pay for it; what the interest rate might be; and, time to pay;(c)He had never borrowed USD $1.8 million before and it was a “significant” transaction;(d)His affidavit said nothing about any discussions with his parents about: the loan; whether he could afford to borrow the money; rates, penalty rates and terms; (e)When the copy attached to his affidavit was certified on 9 June 2020 by a JP in NSW, he had the originals at that time because he asked his parents to send him the originals from Country B for the certification, and they did; (f)He shipped the documents back to his parents in June 2020;(g)Since then, he had asked his parents to send the originals again but they said no because there was no order for forensic examination (even though they were provided for certification without court order and again have been sent somewhere in Australia for the trial without court order);(h)The originals were in Australia as he gave evidence at trial but, “I need to ask my parents where they sent them. They sent – they told me that I can receive the documents today”;(i)The wife first asked for the original loan agreement and variations on 29 June 2020 and again on 20 November 2020, but he did not provide them;(j)The law of the contract is Country B;(k)Country B Legislation would guide any disputes;(l)He has no evidence how the agreement might be enforced in Country B or in Australia; and(m)He entered into the loan prior to moving to Australia where he had no job.