Goncharova & Goncharov (No 2)
[2024] FedCFamC1F 803
•26 November 2024
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 & Harris (1991) FLC 92-254
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143; [2003] FamCA 395
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378
In the Marriage of Woolley (1981) 6 Fam LR 577
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Jones & Dunkel (1959) 101 CLR 298
Kowaliw & Kowaliw (1981) FLC 91-092
Kowalski and Kowalski (1993) FLC 92-342; [1992] FamCA 54
M & M [1998] FamCA 42
Maine & Maine (2016) 56 Fam LR 500; [2016] FamCAFC 270
Mallett & Mallett (1984) 156 CLR 605; [1984] HCA 21
Omacini and Omacini (2005) FLC 93-218; [2005] FamCA 195
Pencious & Pencious & Anor [2014] FamCAFC 171
Perrin & Perrin(No 2) [2018] FamCAFC 122
Stanford & Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
U v U (2002) 211 CLR 238; [2002] HCA 36
W v W (1997) FLC 92-723; [1997] FamCA 3
Waters & Jurek (1995) FLC 92-635; [1995] FamCA 101
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Division: Division 1 First Instance Number of paragraphs: 281 Date of hearing: 20, 21, 22, 23 August 2024 Place: Sydney Counsel for the Applicant: Ms Giacomo Solicitor for the Applicant: Consort Family Law Counsel for the Respondent: Mr Trost Solicitor for the Respondent: Genuine Legal ORDERS
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.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BRASCH J
INTRODUCTION
These are property proceedings brought by Ms Goncharova (“the wife”) on 20 February 2020, to which Mr Goncharov (“the husband”) responded on 20 May 2020.
The parties commenced cohabitation on marriage in Country B in 2004. Both parties have tertiary qualifications from an educational institution Country B. The parties’ two children are Mr K, born 2004 and L, born 2011 (“the children”).
The parties lived in Country B from marriage in early 2004 until they migrated to Australia on the wife’s visa in late 2014.
Thereafter, the parties purchased an unencumbered home in Suburb E, NSW, for $1,775,000 in 2016. It now has an agreed value of $2,385,000. The source of the funding for the purchase is hotly in dispute.
The parties separated in August or September 2019 and were divorced in mid-2022.
A critical issue in this matter is whether the husband owes his parents and a brother AUD$4,136,895. The husband says they lived from his parents’ loans when in Australia and this is how the Suburb E property was acquired. He relies on copies of three Country B loan documents (and relevant supplementary agreements) between he and his parents; two during the parties’ relationship and one post-separation. There is a fourth post-separation loan with his brother.
On the husband’s case, the nett effect of these loan agreements is that the non-superannuation property pool available for division is -$486,786 (NB: in the red; Exhibit 9) and $45,335 total in superannuation.
The husband maintains it is just and equitable that the wife walk-away with what she has received by way of partial property orders, a lump sum spouse maintenance order, some add backs sought by him, bank accounts of $3,379 and less than $20,000 I superannuation.
The wife disputes the veracity of the loans agreements and frankly calls them shams. During the litigation, the wife asked several times for production of the original documents; they were not produced.
On the wife’s case, the non-superannuation pool is $4,539,687 and the agreed $45,335 in superannuation. She says the pool ought be adjusted 60 per cent to her and the balance to the husband.
The status of the purported Country B loans is not the only issue in dispute.
The wife also seeks the husband’s previous 15 per cent interests in two Country B paternal-family companies be included in the property pool. The wife says the husband’s actions to divest himself of those long-held interests after she filed an application to restrain him from doing so were actions designed to rid himself of those assets and the ability to secure company information as a shareholder. The husband said he withdraw from the companies because he was in poor financial circumstances, but did not actually receive any money from his transfer of company shares back to the paternal family companies.
The parties are also in dispute about the valuation of three real properties in Country B. They were valued in October 2022 in Country B currency and then that sum converted to Australian dollars at the same time using the exchange rate set by the Y Bank of Country B on the valuation date. The husband says I should use the October 2022 valuation but apply the exchange rate at time of trial (August 2024). That would reduce the October 2022 valuations (and pool) by about $200,000 on currency fluctuations.
The wife sought the husband’s agreement to update the valuations of the Country B properties in July 2024 (and with corresponding real time exchange rate), but the husband did not engage.
The parties also do not agree whether land owned by the husband in Country B at the time of marriage had a house on it, or not. The husband said it did, the wife said not.
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
On 9 August 2023 I made trial directions for the filing of affidavits, Outlines of Case, a joint balance sheet and objections. On 12 June 2024 I varied those directions at the request of the parties so that affidavits were due by 29 July 2024, and a joint balance sheet and Case Outline by 13 August 2024.
Even though these extensions were proposed by the parties, the wife filed her affidavit on 1 August 2024 and the husband filed his on 9 August 2024. He also filed a further affidavit the day before trial, attaching the valuation of the Country B entities. Unsurprisingly, neither party objected to the late filing of the parties’ affidavits.
The husband also proposed to rely upon late affidavits from his parents filed 10 August 2024. He had filed a request for them to give evidence by electronic communication on 7 August 2024, but the trial was listed to start on 20 August hence it was out of time and I declined to entertain it; see r 15.16 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (“the Rules”).
Nevertheless, on Sunday 18 August 2024, with the trial to start on the Tuesday, the husband filed an Application a Proceeding seeking, inter alia, his parents give evidence by electronic means. The wife opposed this.
For the reasons given at the time (Goncharov & Goncharov [2024] FedCFamC1F 731), I dismissed the husband’s application about his parents giving evidence electronically. Quite apart from the late filing, the husband was unable to satisfy me of the matters required by rr 15.16 and 15.17 of the Rules, s 102C of the Act, nor whether any of the provisions of the Foreign Evidence Act 1994 (Cth) had application to the matter. Their material was not then relied upon by the husband.
Ultimately, the applicant wife relied upon:
·Affidavit of Ms Goncharova filed 1 August 2024;
·Wife’s Financial Statement filed 5 August 2024; and
·The annexures to her affidavit as set out at the start of Exhibit 3.
The respondent husband relied upon:
·Affidavit of Mr Goncharov filed 9 August 2024;
·Husband’s Financial Statement filed 12 August 2024;
·Further Affidavit of Mr Goncharov filed 19 August 2024; and
·The annexures to his affidavit as set out at the start of Exhibit 2.
Each party was cross examined. Nine exhibits came into existence.
The standard of proof is the balance of probabilities (s 140 of the Evidence Act 1995 (Cth)).
It is well settled that it is not necessary for a trial judge, in reaching a decision, to refer to every piece of evidence or argument presented during the trial (see for example, Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 per Gleeson CJ, McHugh and Gummow JJ, and, Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 385–386 per Mahoney JA).
Credit
Even though these are property proceedings, the parties do have two children, albeit Mr K is over 18 years. I am conscious of what was said in Adamson v Adamson (2014) 51 Fam LR 626 at [89] quoting Carlson & Fluvium [2012] FamCA 32 at [168]; the reality for the children is that their parents still have many years of parenting to do even after they both turn 18 years:
168. ... These parties are, and will remain, the parents of D and K and adverse credit findings in this decision carry the inherent risk that, rather than bringing an end to long-standing conflictual issues, they may be embraced as vindication for the pursuit of further conflict in the future.
However, despite the presence of children, some findings about credit are warranted.
Having watched and listened to both parties, I conclude the wife was a forthright witness who answered questions in a largely responsive manner. She did not argue and made appropriate concessions including, for example, when it turned out she had deposed to the wrong bank account number for the deposit of proceeds from a sale of inherited property. She also referred to the interpreter when she needed.
That is in stark contrast to the husband who rarely answered a question in a responsive way. Further, and I find, that he was evasive, argumentative, answered questions with questions, gave obtuse answers and would not even make simple concessions about matters that were contained within his own material. A simple yes or no was largely beyond him.
There was no suggestion of any language barriers.
Indeed, the cross-examination of the husband took much longer than anticipated because he had to be directed time and again to answer questions. It also took time because, for example, the wife’s counsel had to take him to page after page of his own material before he would accept what it portrayed.
Bizarrely, he also struggled to acknowledge that a person involved in the family companies and was a party to the alleged loan agreements was actually his father. Instead, he referred to his father by names other than that, as if to distance himself from the glaringly obvious familial connection and further his narrative that the family loans were at arm’s length.
Cross-examination also uncovered that the husband still had (as at trial) $150,000 in his possession somewhere in Australia, notwithstanding his parents demanded “100%” repayment of their apparent million-dollar loans more than four years earlier. The husband’s answers to questions about the location of the money were evasive, with him repeatedly saying “I acted on instructions”. That did not help him.
His answers about the location of the original loan documents were, respectfully, obtuse. The wife and Court learned for the first time in cross-examination that his parents had apparently sent the originals to Australia for use in the trial, but he claimed he did not know where they were sent. He said he needed to ask his parents where they were. Given his other evidence that his parents would not send the documents to Australia at earlier times (when the wife wanted them), the idea that they would send them to some location in Australia unknown to the husband was incredulous.
As a further example, his answers about being able to service million-dollar loans without any regular and substantial income were a nonsense. It was plain on his own case that he could not service million-dollar debts, yet, he could not bring himself to easily concede this blatantly clear point.
Having watched the husband give evidence, I formed the view, and find, that the husband wanted documents or looked at documents (when told not to) to divine the “correct” answer that supported his narrative - even though many questions concerned his lived experience or his own material. He also answered questions by saying “I rely on the evidence”. From watching the husband, it also became clear that he was trying to work out where a line of questions was going and therefore how to answer, as opposed to just listening to the question and answering that question.
Accordingly, where the evidence of the husband and wife diverges, I prefer the evidence of the wife.
LEGAL PRINCIPLES
Part VIII of the Act sets out the legislative provisions relating to property orders that may be sought when parties are or were married. The central provision is s 79 of the Act, which gives the Court power to make such orders for the alteration of property interests as it considers appropriate; s 79(1).
Section 79(2) of the Act provides that:
(2)The court must not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.
Section 79(4) of the Act set outs the factors to be taken into account in considering what order, if any, should be made. To that end, the High Court in Stanford & Stanford (2012) 247 CLR 108 (“Stanford”) at [35] confirmed that before an order is made adjusting the parties’ property, the Court is required to make a determination that it is just and equitable to do so. That determination is to be made, however, not as a discrete or preliminary issue.
In Stanford the High Court made clear at [37] that it is necessary to begin consideration of whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.
The well recognised process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 (“Hickey”) at [39]) requires the Court to:
(1)Identify and value, the parties' property, liabilities and financial resources at the date of the hearing;
(2)Identify and assess the contributions of the parties as referred to in s 79(4)(a)-(c) of the Act and determine the contribution-based entitlements of the parties often expressed as a percentage of the net value of the property of the parties, whether examined on a global approach or an asset by asset approach;
(3)Identify and assess the other factors relevant including, the matters referred to in s 79(4)(d)-(g) including s 75(2) of the Act and determine the adjustment (if any) to be made to the entitlements of the parties; and
(4)Consider the effect of the findings arising from the above and resolve what order is just and equitable in all the circumstances of the case.
The Full Court in Bevan and Bevan (1995) FLC 92-600 (“Bevan”) at [72]–[73] held that the decision inStanfordhas not overruled the four step approach.
The Balance Sheet
Exhibit 9 reveals the following agreements and disputes:
Ownership Description Applicants value Respondents value ASSETS 1 Joint U Street, Suburb E, NSW $2,385,000 $2,385,000 2 Joint W Street, City P, Country B $170,720 $119,465 3 Husband X Street, Suburb H, Country B $68,390 $47,850 4 Husband V Street, Suburb H, Country B, house and block of land $429,163 $300,315 5 Husband 15% share in F Company $339,450 $NIL 6 Husband 15% share in G Company $542,485 $NIL 7 Husband Motor Vehicle 1 $8,000 $8,000 8 Husband CBA Account ending …38 $258 $258 9 Husband CBA Account ending …57 $26,011 $26,011 10 Husband CBA EURO Foreign currency Account ending …27 60,500 EURO @1.61 $99,825 $99,825 11 Husband CBA USD Foreign currency Account ending …35 $NIL $NIL 12 Husband R Bank Account ending …64 $6 $6 13 Wife CBA Account ending …18 $100 $100 14 Wife CBA Account ending …27 $373 $373 15 Wife CBA Account …820 $2,906 $2,906 Total $4,072,687 $2,990,109 ADDBACKS 16 Husband Funds transferred to Country B in May 2020 $317,000 Not an addback 17 Husband Cash withdrawn from ANZ acc in 2020 $100,000 Not an addback 18 Husband Cash withdrawn from R Bank acc in 2020 $50,000 Not an addback 19 Wife NAB Bank safe custody 266,000USD @1.51 Not an addback $410,000 20 Wife Legal fees Not an addback $250,000 Total $467,000 $660,000 LIABILITIES 21 Husband 2014 Loan Mr C Goncharov & Ms D Goncharova $NIL $2,504,638 22 Husband 2016 Loan Mr C Goncharov & Ms D Goncharova $NIL $659,832 23 Husband 2021 Loan Mr C Goncharov & Ms D Goncharova $NIL $336,600 24 Husband 2022 Loan Agreement Mr T $NIL $165,825 25 Husband Interest and Penalties Accrued on 2014, 2016 and 2021 Loan Agreement with Mr C Goncharov & Ms D Goncharova $NIL $470,000 Total $NIL $4,136,895 SUPERANNUATION 26 Husband Super Fund 2 $25,968 $25,968 27 Wife Super Fund 1 $19,367 $19,367 Total $45,335 $45,335
I now turn to each item in dispute
Items 2-4: Country B Real Estate
Two of these properties are owned by the husband and one jointly.
I have already given an overview of the dispute here – in short, the husband says I should take the October 2022 valuations in Country B currency but apply an exchange rate as at time of trial in mid-2024. This would reduce the pool by about $200,000 even though there is no evidence (and accepted to be so by the husband) that the underlying assets had decreased in value, or, indeed, increased or stayed the same.
The husband said his approach was a “fundamental of financial reporting that conversion happens on the present rate” (Transcript 22 August 2024, page 16 lines 45-6). Despite my request for assistance on this concept, I was not taken to anything.
The wife rejects the husband's proposed methodology and says I ought use the value of the real properties at time of valuation in October 2022 and the exchange rate that was applied at that time. That exchange rate is in evidence in the valuation documents, and no one challenged the exchange rate set by the Y Bank of Country B on the valuation date.
Leading up to trial, the husband asked the wife to agree to his currency approach. She did not. Thus, in July 2024, the wife proposed updating the valuations and thus contemporaneous exchange rate, but the husband did not engage. In cross-examination, he blamed the wife for not providing a panel of three valuers - not that he proposed any himself. The wife says the Court is therefore stuck with the October 2022 valuations using Country B currency at the prevailing AUD exchange rate at that time.
The husband has failed to persuade me that it is methodologically sound to use the valuation of the underlying assets in October 2022 but use an exchange rate almost two years later, and, where there is no evidence that the underlying assets have themselves altered in value. What is being valued are the underlying assets, not the fluctuations in currency thereafter.
Accordingly, I find the appropriate values for items 2, 3 and 4 are those listed by the wife in her column of Exhibit 9.
Items 5-6: the husband’s alleged interests in two Country B companies
It is not in dispute that the husband owned shares, with other family members, in the companies G Company and F Company. For F Company, the husband held the following as at:
(a)Early 2004 – prior to the parties’ marriage - 6,161 shares worth 12.08% of the registered capital;
(b)Mid-2005, he was gifted 139 shares from his father comprising 0.27% of the registered capital; and
(c)Mid-2014, he was gifted 1,350 shares from his father being 2.6% of the registered capital –after this, the parties migrated to Australia on the wife’s visa. They had been married for some time by this gifting.
(Husband’s affidavit filed 9 August 2024, paragraph 98)
Notwithstanding the passage of time between 2004 and 2014, the husband calculated his shareholding at approximately three cents per share for each transaction. He held a total of 14.95% of the registered capital. Without demur from the husband’s counsel, the wife’s counsel rounded up his interest to 15%.
For G Company, the husband held, as at:
(a)Early 2004 – prior to the parties’ marriage - he held 33 shares worth 5.5% of the registered capital;
(b)Early 2008, he was gifted 1 share from his mother worth 0.17% of the registered capital; and
(c)Mid-2014, he was gifted shares from his father worth 9.3% of the registered capital.
(Husbands affidavit filed 9 August 2024, paragraph 99)
Again, despite a decade’s passing between 2004 and 2014, the husband calculated his shareholding at approximately $8 per share for each transaction. He held a total 14.97% of the registered capital. Again, without demur, the wife’s counsel rounded up his interest to 15%.
The husband said he has “not participated in the management or had involvement in the companies, since in or around November 2014”. He did accept in cross-examination that he had received pay from the companies after their move to Australia, but could not recall the last time he worked for either entity, just that it was for a few hours of work here and there.
In or around November 2020, the husband deposed he told the wife of his intention to transfer his shares in the two paternal family companies.
In December 2020 the wife wrote to the husband that she would be filing an application to restrain the husband from disposing of his shares in the family companies. She sought to have the husband’s interest in those companies valued and included in the pool. She said she served an unsealed copy of the application on the husband on 8 December 2020.
The Application in a Proceeding was sealed on 14 December 2020 (Exhibit 6) and served. She sought orders restraining the husband from disposing any shares in any companies in his name in Country B (Order 6(b)) and valuing those interest (Order 11), as well as orders for the husband to pay her $200,000 in spousal maintenance and $170,000 for legal fees, or a dollar‑for-dollar order in the alternate. In default, she proposed the Suburb E property be sold. She also sought production of the original loan documents, specific disclosure, valuation orders for the husband’s interest in the Country B paternal family companies and, a Single Expert in Country B law be appointed to set out (inter alia) what rights the husband had to information as a shareholder in the Country B companies.
After the wife gave notice of the restraining orders being sought and after the 14 December 2020 application was sealed, the husband started the process to transfer his shares on 15 December 2020. He deposed:
In or around [early] 2021, I withdrew as a participant from the companies and effectively transferred my 15% shareholding back to each respective company. There have not been any injunctions orders or restrictions preventing me from disposing of my shares.
(emphasis added)
(Affidavit of [Mr Goncharov] filed 9 August 2024, paragraph 104)
The last sentence is, I find, disingenuous. Whilst there were no orders in place preventing him from doing as he did, what he does not say in his affidavit is that he took these steps notwithstanding the wife (a) gave him notice on 4 December 2020 that she was going to seek restraints enjoining him from doing so; (b) gave him the unsealed Application seeking just that on 8 December 2020 and orders to value his companies’ interests; and (c) was served with the sealed Application on 14 December 2020.
The husband said he took the steps he did because:
In or around [late] 2020, I was unemployed and experiencing financial hardship. In an effort to support myself and the children, I made efforts to transfer my shares in the companies however, other participants refused to acquire my shareholding.
(Affidavit of [Mr Goncharov] filed 9 August 2024, paragraph 101)
He then embarked upon a process of withdrawing from the company anyway, but despite his apparent financial hardship, he gave evidence in cross-examination that “according to the [Country B] law, the payment for the shares, the company has to pay a year later” (Transcript 23 August 2024, p. 24 lines 7-8).
Thus, even if he was in financial hardship in November 2020, his evidence was he would not realise any funds for a year. Further, when it came time for payment on 17 January 2022 – a year later – he “used these funds to make payment toward the loan agreement with my parents”; that is, the money went (on his case) to his parents, not him (Affidavit of Mr Goncharov filed 9 August 2024, paragraph 109).
I do not accept the husband’s story. Despite notice from the wife about valuing his interests in and seeking production of Country B company documents, the husband took active steps to divest himself of those interests.
The expert in Country B law said the husband had rights as a shareholder to company information. However, by transferring the shares, he no longer had such rights and said many times in cross-examination that he could not get information because he was no longer a shareholder – which was by his own actions.
So, not only did he divest himself of those interests and seek to place them out of reach of the property pool, he also gave himself a means to avoid producing documents to which he would otherwise have been entitled as a shareholder and would have assisted in the valuation process.
I consider, and find, his actions were to thwart the wife’s efforts to secure information to value his interests in the companies, and to alienate his long-held shareholdings (dating from the day before marriage) from the wife’s reach in these proceedings.
It would be an affront to justice to accede to the husband’s active efforts to reduce the pool and thus the wife’s claim (Kowaliw & Kowaliw (1981) FLC 91-092).
The next question is what value ought be ascribed to Items 5 and 6; the husband says nil, and the wife says $339,450 for F Company, and $542,485 for G Company.
The husband submitted:
It is unclear on what basis that can be put, given that the – it seems to be accepted that the respondent no longer owns those shares. In my submission, they ought not be on the balance sheet, at all, as an asset. At most, they could be considered a disposal of assets since separation.
I accept the shares no longer exist in the husband’s hands, but that was a consequence of the active steps he took to thwart the wife’s application for disclosure about the company, for his shares to be valued and for the inclusion of his interests in the pool.
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.
By actively divesting himself of his shareholding, the husband also conveniently divested himself of the ability to disclose documents as a shareholder. It would again be an affront to justice if he benefitted from his own conduct. His conduct permits a robust approach (Weir & Weir (1993) FLC 92-338).
Items 5-6 are perhaps more in the nature of addbacks than assets, as they are listed on the Balance Sheet. I discuss add-backs more fulsomely in the next pool items. I consider the husband’s actions to be wanton and reckless. He actively and hastily transferred long-held shares he had long held for no relief for his alleged financial difficulties. Further, I accept his counsel’s alternate submission (if I found against him) that it was a “disposal of shares since separation”.
Accordingly, Items 5 and 6 will go into the sheet at the values listed in the wife’s column in Exhibit 9. For the parties’ convenience, I will leave as they are on their Balance Sheet under assets, even though they are more properly addbacks.
Items 16-20: addbacks
The wife seeks to add back Items 16-18 against the husband, being matrimonial monies said to be taken by him. In turn, the husband seeks to addback items 19-20 against the wife, being items from a safety box and legal fees.
The Full Court held in Omacini and Omacini (2005) FLC 93-218 (“Omacini”) at [30] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
However, the Full Court at [39] also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule” (C & C [1998] FamCA 143 at [46]).
An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation (M & M [1998] FamCA 42 (“M & M”) at [2.11]). Thus, reasonably incurred expenditure does not usually come within accepted categories of addbacks.
As was highlighted in the more recent Full Court decision of Trevi & Trevi (2018) FLC 93-858 (“Trevi”) at [30] two fundamentals emerge from Omacini and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually taking the matter up as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing property.
Item 16 – USD$225, 684 transferred by the husband to Country B in May 2020
Item 17 – $100,000 cash withdrawn by husband from an ANZ account in May 2020
Item 18 - $50,000 cash withdrawn by husband from a R Bank account in May 2020
The wife filed an Amended Application for Final Orders on 30 April 2020 seeking interim parenting orders, as well as interim orders for her to have sole use and occupation of the Suburb E home and various asset preservation orders including that the husband be “restrained from transferring any funds from Australian to any overseas accounts” (Exhibit 4).
The matter came before the court on 6 May 2020 and the husband was ordered to file his response material. The order lists both parties appearing by phone and both legally represented. He must be therefore taken to be on-notice about the orders sought by the wife.
Notwithstanding being on-notice of the interim orders sought by the wife, the husband converted AUD$317,358 in Australian bank accounts to USD $225,864 USD between 8 and 19 May 2020 and sent the USD to his parents in Country B. The husband accepts he sent these monies to his parents and does not dispute the exchange rate, albeit says one transfer was for USD$193,200 whereas the wife says it was USD $193,000. I will use the wife’s figure. On the Balance Sheet at Exhibit 9, the total transfers are rounded down to $317,000.
The wife also says the husband withdrew AUD$150,000 cash between 11 and 13 May 2020. The husband accepts the quantum of the cash withdrawal to be so. The $150,000 in cash is set out at Items 17 and 18.
The withdrawals and transfers all occurred after the wife filed her amended application for (inter alia) interim sole use of the Suburb E property and asset preservation orders on 30 April 2020. The transactions also occurred after the husband was ordered, on 6 May 2020, to file his response but before he was required to do so by 20 May 2020.
The husband did not disclose these transactions in his 19 May 2020 affidavit or Financial Statement (Exhibit 5). In cross-examination, he said they were “loan repayments” and I infer that meant he did not need to. However, it would make no sense if he was using money from his parents to pay back his parents. That is just a round-robin robbing Peter to pay Paul which does not actually reduce indebtedness. Therefore, more likely than not, he was sending matrimonial money to his parents.
The husband puts into evidence texts from his parents of 9 and 10 May 2020 where they issued “notices of demand requesting I repay 100% of the 2014 and 2016 Loan Agreements”. His parents said they were in tightened financial circumstances. It is observed the demand was for 100 per cent and to be paid immediately. The alleged loans at that stage were about AUD $3 million.
The timing of the demands was most convenient for the husband in light of the wife’s 30 April 2020 application for interim property orders.
The husband said he had to honour the demands from his parents. But even on his own case, he did not. Instead of, say, entering into a specific power of attorney in Country B with his mother to propose and (if agreed by the wife) facilitate the sale of Country B properties, or seeking the wife’s consent to sell the Suburb E property to meet these alleged debts, he converted about 10 per cent of the amount said to be owing (AUD$317,358) and sent USD$225,864 to his parents. That was hardly honouring the demand.
Further, with respect to the AUD$150,000 cash withdrawal, he deposed:
On 18 May 2020, in the amount of $l50,000.00 AUD towards the Loan Agreements by way of cash payment. My parents instructed me to return the loan in cash and retain the money in Australia due to them planning to come to Australia.
(Husbands Affidavit filed 9 August 2024, paragraph 80(b)).
It is hard to see how their circumstances were dire such that they essentially said (in rank hearsay) ‘keep the cash in case we come out’.
In cross-examination, the husband said the $150,000 came off his loan balance, but the actual $150,000 still exists “somewhere in Australia” - four years after the demand for 100% was made.
Then not long after he failed to meet the May 2020 demand for “100%” repayment of the alleged loans given his parents apparent tightened financial circumstances, the husband’s case is his parents advanced him more money under the alleged Loan Agreements – AUD$70,000 on 23 July 2020, AUD$34,500 on 10 September 2020 and AUD$45,000 on 3 and 20 November 2020. There were more advances after that too.
For reasons that follow under Items 21–25 below, I conclude that the Loan Agreements are contrivances to reduce the pool. It follows that I do not accept the husband’s transfers of USD monies to his parents were loan repayments. To that end, the husband’s counsel appropriately conceded:
It is conceded that the respondent returned funds to [Country B] in May 2020, that he withdrew funds from ANZ and [R Bank], in cash, in 2020.
…
Your Honour, I would concede that if your Honour finds that there are no loans, and that in fact these were just his own withdrawals, that your Honour could make the finding that these were premature dispositions of property.
And, under principles in Trevi, could be considered warranted an add-back. …
(Transcript of Submission of 23 August 2024, p. 4 lines 14 - 16, 19 – 23)
I agree.
Further, on balance, I find the husband’s so-called repayments after the wife filed her application for interim orders, after the husband was ordered to file material, and before he did so, to constitute a course of conduct to alienate funds from the property pool.
On the husband’s cross-examination, the $150,000 withdrawn in cash still exists. I will include it in the pool and even though it may more properly be an asset than an addback. I will keep it under the heading “Add backs” simply for convenience as that is how the table was presented. It still fits squarely within an addback too as conduct which was wanton and reckless and/or as his counsel said, a premature distribution of funds if I was against him on the loans.
As for the $317,000, there is no suggestion the husband used these funds for his reasonable living expenses such that an addback may not be warranted (Trevi [29]). Other than being sent to his parents, what became of the funds is unknown (Pencious & Pencious & Anor [2014] FamCAFC 171). I find the transfer of that money was designed to reduce the pool and pre‑empted the wife’s then application to, inter alia, preserve the asset pool. Indeed, the husband actively did precisely what the wife sought to enjoin and before the court could consider the matter.
Further or in the alternate, it was a premature distribution of funds, as per the husband’s concession if I made certain findings.
I consider dealing with the $317,000 and $150,000 under s 75(2)(o) would not do justice between the parties because it would likely be lost in amongst other competing s 75(2) factors. Rather, I consider the husband actively sought to alienate the $317,000 and $150,000 from the pool and in the shadow of an application to not do so; that conduct constitutes an exception (Trevi at [30]) and will be added back. It would be an afront to justice to do otherwise.
Item 19: withdrawal by wife of $410,000 from a NAB safety deposit box
The husband deposed that on or around late 2019 the wife went to the NAB and removed the contents of a safety deposit box, being cash of USD $300,000, jewellery, “my” original loan agreements, and other documents (Husband’s affidavit filed 9 August 2024, paragraph 40). He said the USD$300,000 equated to AUD $460,539. The husband annexes the Logbook recording attendance upon the box to his affidavit.
That is the height of the husband’s evidence-in-chief on this topic. There is no record of USD$300,000 being contained within the box or evidence of its original source.
In cross-examination he accepted he too had accessed the safety deposit box in late 2019, shortly after separation. He also said in cross-examination that the money “came in cash. It wasn’t a bank transfer. It came in cash overseas from [Country B]” and later said it was “a gift” from his parents. Separately, there did not seem any rhyme nor reason why some money said to come from his parents were loans and others were gifts.
The wife says they had USD$33,615 in the deposit box and not USD$300,000. She deposed that in late 2019 she removed the USD$33,615 and jewellery from the box, the former of which she then converted to AUD$48,145 and put in a CBA account, and the latter she sold for $7,000 and lived off.
The wife’s actions in late 2019 were at a time when the husband agreed he was not providing financial support for her, and therefore the children, after the wife received the benefit of an AVDO in late 2019.
In cross-examination, he said there was no court order requiring him do so, as if the financial needs of his wife and their children was dependent upon a court making an order.
It is common ground that the husband stayed in the unencumbered Suburb E property on separation, whereas the wife had the expense of rent and associated living costs. It is also not disputed that husband failed to pay child support until 2023.
The paucity of the husband’s evidence on this topic fails to persuade me that the wife took USD$300,000 as he alleged. I also consider the wife’s use of funds, which she admitted taking, were applied by her to rental and living costs at a time when she was neither receiving financial support from the husband nor child support for the children. I will not add them back (Omacini; Grier & Malphas [2016] FamCAFC 84).
Item 19 will be removed from the pool.
Item 20 – wife’s legal fees
The husband wants to addback the wife’s legal fees in the sum of $250,000 (per Exhibit 9) or $200,000 (Husband’s affidavit filed 9 August 2024, para 39(c)). I do not know how he arrived at those figures; the wife’s Costs Notice gives a total of $230,819.
The husband’s very brief submissions on this topic did not address quantum, but were to the effect that $250,000 must have been paid from “the marital assets, or the respondent’s borrowings” from his parents.
For the reasons under the next disputed pool items, I consider the husband’s borrowings from his parents to be a contrivance. Therefore, the husband’s submission that the wife’s legal fees came from the respondent’s borrowing falls away. Further, it is a curiosity that the husband did not positively claim his legal fees were sourced from the said borrowings; contrary to r 12.06(6) of the Rules, he fails to say anything at all about the source of funds for his legal fees.
The wife did refer to the source of funds for her fees but in a general way referring to the sources as being “applicant wife’s earnings, savings and part of funds received pursuant to orders 2 August 2021.” The wife was not cross-examined on the source of her legal fees, meaning I cannot determine what came from earnings or post-separation savings and what might have been from matrimonial sources (Chorn v Hopkins (2004) FLC 93-204 at [58]; Beklar & Beklar [2013] FamCA 327 at [141]). It is not for me to arbitrarily apportion the application of the funds (Aston & Haymon [2021] FamCAFC 146 at [20]).
Ultimately, it is for the husband to persuade me both as to quantum and as to the source/s of legal fee payments that would warrant an add-back of all or some of the legal fees. He has failed to do so.
The loans generally
It is first observed that at no stage has it been asserted that the wife was, has been or is a party to any of the four loans and variations. There is no evidence in the husband’s affidavit that he even discussed the loans or variations at any stage with the wife when together.
On 29 September 2020, the Court made orders for a qualified expert in Country B to examine the Loan Agreements said to be executed by the husband and his parents. It seems that did not occur. The originals have never been made available to the wife or a Single Expert. The husband says the wife did not pursue those orders, but it is clear she never gave up seeking the original Loan Agreements and issued Notices to Produce which went unanswered. It is equally clear the husband had them in his possession in Australia at least twice but did not hand them over.
It is also plain that since arriving in Australia he has not earned a salary or remuneration which would see him in a position to repay the principal and interest said to arise under the loans and variations.
All loan agreements are written in Country B language; some were translated in 2020 and most in 2021. The husband’s evidence is he did not take any legal advice about any of the lending documents and “just signed them”. He maintained the loans with his parents were arm’s length transactions.
The husband said in cross-examination she always knew about the loans; the wife denied this in her cross-examination.
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-separation
Loan 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.
With respect to the April 2016 variation, he confirmed in cross-examination:
(a)His affidavit said nothing about any discussions with the wife about the variation;
(a)The variation allowing the purchase of the Suburb E property came two months after the purchase of that property;
(b)His affidavit said nothing about any discussions with his parents about the variation;
(c)He had the original for certification in June 2020 but has never provided the original to the wife;
(d)The variation was signed by he and his parents in Australia;
(e)Country B law would apply;
(f)It just changed the loan amount and maturity date;
(g)Even though he had made no repayments, his parents extended the maturity date;
(h)The revised amount was USD$1,637,018 and at a time he had a work contract for $80,000 per annum and accepted his income would be insufficient to even meet the principal;
(i)His parents could mortgage against the property, but he did not know what “the intention” of that was and did not ask them;
(j)His parents drafted it and he just signed it;
(k)There is no evidence before the court that a Country B contract could be enforced in Australia or enforced in Country B against property in Australia, but his Australian lawyers told him it was enforceable;
(l)The Suburb E property was purchased as joint tenants with the wife, but the loan variation with his parents allowed them to encumber the property even though she was not a party to the variation.
The husband also accepted that just before an interim hearing on 24 June 2020 where the wife sought sole use of the property and asset preservation orders (amongst other things), his father lodged a caveat over the property, with his knowledge, based on the loan agreement and variation. The caveat lapsed and the husband’s parents have taken no steps to enforce the agreements or be joined to these proceedings:
Have your parents told you that they intend to commence proceedings against you in [Country B] to enforce the contracts against you?---To my best knowledge, not.
The next variation of Loan 1 is dated late 2020, entered into just days after the wife applied for a range of orders including lump sum spouse maintenance, money for legal fees and sale of the Suburb E property in default. The husband said he could not see a “correlation” between the variation and wife’s application.
The husband accepted in cross-examination that: the place of the 2020 variation was Country B, but he was in Australia when he signed; Country B law remains the law of the contract; and, the change to the agreement was a change to the interest rate.
Loan 1 discussion
I accept the wife’s evidence that the first she knew of this loan was when the husband deposed to it in his May 2020 court documents. Quite apart from my credit finding to prefer the wife’s evidence over the husband’s where they differ, I cannot accept the husband’s assertion in cross‑examination that “she knew all about them” when he did not depose to a single conversation with her (or his parents) on this ardently disputed topic in his evidence-in-chief.
I am satisfied this loan and its variations are a contrivance designed to frustrate the wife’s claim to a property adjustment. I am well satisfied of that because of the combination of the following matters:
·The loan documentation was not produced until just prior to the June 2020 hearing of the wife’s application for sole use of the Suburb E property and asset preservation orders. That timing was beneficial to the husband whereby the husband could point to the loan as a means to resist the wife’s application;
·Not a single discussion is deposed to by the husband with the wife or his parents in his affidavit with respect to the loans and variations pre-dating separation – and that is in circumstances where he has well known the loans have been in issue for four years;
·Nor does he depose to any conversation with his parents with respect to the post-separation variations;
·The husband’s failure to provide the original documents leads me to infer that had he done so, they would have not passed forensic examination (Jones & Dunkel (1959) 101 CLR 298);
·The husband’s evidence about his parents' actions with respect to the original loan documents did not fall into any species of truth – his parents sent him the originals at least twice without court order, once so he could get the originals certified and translated, and second for trial (not that he knew where they were sent, a further incredulity). I say at least twice, because some translations bear 2020 and others 2021, and the originals were in Australia at time of trial, but he did not know where. Yet, the husband maintained he could not get the originals from his parents to meet the wife’s many requests and Notices to Produce because there was no court order for forensic testing;
·The loan quantum and repayment terms in the loan and variations are fanciful as the husband had no means to service the principle, let alone principle and interest. His idea about paying the loans from capital gains seemed to me (and I find) made up on the spot – there is no capital gains on a principal place of residence, and even if he meant the increase in the property’s value, then that would require sale but he does not seek the sale of any properties;
·A term of the April 2016 variation is a fiction whereby the lenders could encumber the Suburb E property even though the husband and wife were joint tenants of the property and she was not a party to the loan variation;
·The 9 and 10 May 2020 demands for “100%” repayment was an artifice created to give the husband cover to send money overseas before the hearing of the wife’s application in mid-2020. I find it was an artifice because, contrary to his answers, the husband did not honour the demand, and only sent 10% to his parents. He kept another $150,000 “somewhere in Australia”, and, despite his parents need for 100% repayment due to their financial circumstances, they continued to ‘loan’ him more money;
·The husband started “repaying money” upon demand but one day before one demand and two days before another. Time zone differences do not explain that;
·The husband’s father’s caveat was lodged in June 2020, just before the hearing the wife’s 30 April 2020 amended application for sole use and asset preservation orders. That was another convenience favouring the husband in his resistance of her orders;
·The caveat lapsed and the husband’s parents took no steps to protect their interests, not even joining these proceedings to protect their allegedly considerable interests;
·The late 2020 variation was another useful bit of timing for the husband – a document created just days after the wife brought her December 2020 application for interim spouse maintenance, money for legals and the sale of the Suburb E property in default;
·The husband provided no evidence about his parents’ financial position at the time they made the advances;
·There are no bank statements in evidence showing money coming from their accounts;
·The husband does not seek orders for the sale of any properties and his parents be paid;
·There is no evidence before me that the loan and variations are valid and enforceable in Country B or enforceable in Australia; and
·The two cash ‘repayments’ made overseas of US$451 and US$211 in December 2017 and 2018, whilst he was on holidays with his parents, do nothing to convince me that the loans are real. They are just more documents created at some independently unverifiable time trying to cover the loans in legitimacy.
For those reason, Item 21 will not be included in the balance sheet.
Loan 2 –October 2016, varied December 2020
The wife deposed (without challenge) that she was sent a draft balance sheet by the husband’s solicitor on 21 August 2020, wherein the husband asserted that his loan to parents was then $3,864,715. The wife asked for an explanation how the loan had increased by about $1 million in a few months.
Five weeks later, so perhaps end of September 2020, the husband replied and referred to a USD$1 million loan facility with his parents on October 2016.
It seems the husband forgot or otherwise overlooked such a substantial loaned when he filed his financial statement and affidavit on 19 May 2020 and asserted a debt to his parents of $2.945 million.
There is no suggestion that any repayments had been made with respect to loan 1 (the 2014 loan and 2016 variation) by the time of the USD $1 million loan of October 2016.
On the topic of repayments, the husband’s evidence is that in late 2017 he re-paid USD$451 (four hundred and fifty-one dollars) in cash to his parents when on holidays overseas, and, on 31 December 2018 paid USD$211 (two hundred and eleven dollars) in cash to his parents when on holidays overseas. Whilst on holidays, the husband said he was given written receipts for the cash payments and then kept the receipts for less than USD $700 in the safety deposit box.
The next payments asserted by the husband seem to be the ones I have already dealt with previously with respect to his parents’ texts of demand for “100%” repayment in May 2020 just after the wife sought interim orders about Suburb E and asset preservation orders.
The husband’s evidence about the 2016 loan agreement and variation is set out at paragraphs 49 to 51 of his affidavit, plus corresponding annexures. This evidence too is limited.
The husband deposed he entered into this loan with is parents in October 2016 for USD $1million and was to mature in late 2020 with interest of 0.01%. The loan amount was to be repaid at maturity as a lump sum payment unless the lenders requested earlier payment. A penalty clause of 0.02% applied to late payments as well as interest.
That 2016 loan was subject to variation in late 2020. The loan maturity was extended to late 2022 – now lapsed – and interest from 1 January 2021 would be 3%. The husband concluded this topic with:
There is an outstanding amount of $429,303 USD and . and at the exchanged rate of $1 USD to $1.53 as of 28 July 2024, an amount of $659,832 AUD plus interest on the 2016 Loan Agreement.
(Husband’s affidavit filed 9 August 2024, paragraph 51)
I will not repeat a summary of the husband’s cross-examination on this loan as it is in very similar terms as set out for the 2014 loan and variations above. Suffice to say: there is no evidence in his affidavit about any discussions with the wife or his parents about the 2016 loan terms, maturity, quantum, affordability, and so on, and no discussion with his parents about the 2020 variation; he had not made any payments on Loan 1 by the time of the 2016 Loan 2; and, there is no evidence before the court about enforceability of the Country B loan in Australia.
The late 2020 variation was the subject of similar cross-examination and answers – a Country B document, where Country B law applied, and the only thing that changed was the interest rate from 1 January 2021.
This late 2020 variation was also entered into just a few days after the wife’s 14 December 2020 application where she sought lump sum spouse maintenance and legal fees, and sale of the Suburb E property in default. Again, the husband said he could not see a “correlation” between the variation and wife’s application.
Loan 2 discussion
I accept the wife’s evidence that the first she knew of this loan was when the husband told her about it by a letter of later September 2020 after she asked how the loan had increased by about $1 million in a few months. Again, my credit finding factors here, and apart from that, I cannot accept “she knew all about them” when he did not depose to a single conversation with her (or his parents) on the topic in his evidence-in-chief, knowing full well the wife had been disputing their veracity for four years.
I am satisfied this loan and variation is a contrivance designed to frustrate the wife’s claim to a property adjustment. I am well satisfied because of the combination of the following matters:
·It is incredulous for the husband to have forgotten or otherwise overlooked the USD $1 million 2016 Loan when he filed his financial statement and affidavit on 19 May 2020 and asserted a debt to his parents of $2.945 million;
·It is a matter for imagination not reality that the husband, with limited income, would be loaned USD$1 million more in October 2016 (before their move to Australia), when he had not made any repayments against the 2014 loan. The husband’s words, amplify the point, “We […] moved to Australia, and it’s unrealistic to expect to get a high-paid job …” – yet if I accept his case, he was then USD $1 million more in debt to his parents;
·The same issues with the original documents arise here as for the 2014 loan and variation documents;
·Not a single discussion is deposed to by the husband with the wife or his parents in his affidavit with respect to the loan pre-dating separation – and that is in circumstances where he has well known the loans have been in issue for 4 years;
·The loan quantum and repayment terms in this loan and variations are fanciful for the same reasons as the 2014 loan;
·The late 2020 variation was more useful timing for the husband – a document created just days after the wife brought her December 2020 application for interim spouse maintenance, money for legals and the sale of the Suburb E property in default;
·Like the 2014 loan, the husband provided no evidence about his parents’ financial position at the time they made the advances, and, there are no bank statements in evidence showing money coming from their accounts;
·The husband does not seek orders for the sale of any properties and his parents be paid;
·There is no evidence before me that this loan and variations are valid and enforceable in Country B or enforceable in Australia;
·The same conclusion about the two meagre repayments apply here as for the 2014 loan; and
·This loan has matured and the lenders have done nothing to protect their interests.
For those reason, Item 22 will not be included in the balance sheet.
Items 23 and 24 – post-separation loans said to arise between the husband and his parents in 2021, and the husband and his brother in 2022
Loan 3 - 2021 loan with his parents
What the husband said about the 2021 loan with his parents is contained in paragraph 52 and 53 of his affidavit filed 9 August 2024. It is limited in substance.
Plainly the loan is post-separation and there is no suggestion the wife’s consent was sought or the matter was discussed with her.
The husband deposed that on 4 October 2021, he entered into a loan agreement with his parents for USD $250,000 with a maturity date of 31 December 2023 - now lapsed - and an interest rate of 3% per annum. If the loan was not repaid, penalty interest of 0.02 per cent applied.
The loan was to be repaid in full on maturity or earlier request by his parents. He concluded:
I estimate that there is an outstanding amount of $220.000 USD and at the exchange rate of $l USD to $1.53 AUD as of 18 July 2024, an amount of $335,008.30
(Husband’s affidavit filed 9 August 2024, paragraph 53)
The cross-examination was in similar terms to the cross-examination on the earlier loans (e.g. Country B law applied). But for this one, the husband also accepted:
(a)he was not employed at the time of contract; and,
(b)he was owing (on his case) about AUD $3 million when he borrowed another USD$250,000.
Loan 3 – discussion
Many of my conclusions with respect to Loans 1 and 2 apply here: no discussions deposed to with his parents or brother; no original documents; the fanciful nature of the quantum for a third loan when little had been paid against the earlier two; no evidence about his parents’ financial position at the time they made the advances; no bank statements in evidence showing money coming from their accounts; the husband does not seek orders for the sale of any properties and his parents be paid; no evidence that the loan is valid and enforceable in Country B or enforceable in Australia; and, the same conclusion about the two repayments apply here.
This loan has also matured and no action has been taken by the husband’s parents to do anything about that, although the husband would probably say the 0.02 per cent interest “for each calendar day” in arrears would apply. But that means the husband’s indebtedness is just increasing with no means to repay all loans even if all properties were sold. His parents would still be short changed if all properties were sold.
The husband has also failed to satisfy me that this alleged loan was used to meet any court orders or legal fees – saying it is so, does not make it so.
For the reasons in the last three paragraphs, I find this post-separation loan is a contrivance and item 23 will not be included in the balance sheet.
Loan 4 - 2022 Loan with the brother
The husband’s evidence on this topic is at paragraphs 57 to 62 of his affidavit filed 9 August 2024. The husband did not read Annexure 22 to his affidavit, thus the purported loan documentation is not in evidence before me.
The husband said that in September 2022, he entered into a loan agreement with his brother Mr T for EURO $150,000, with interest of five per cent and a maturity date of September 2025. He said most of the funds were received into his CBA …72 account and one amount was transferred to a CBA account …38. The husband concluded this passage of evidence saying:
I estimate the interest accrued to be in the amount of 5,000 EURO.
I estimate the outstanding loan amount to be 1 00.500 EURO exchanged at 1 EURO to $1.66 AUD as of 28 July 2024 to an amount of $166,351.12
(Affidavit of [Mr Goncharov] filed 9 August 2024, paragraphs 61 and 62)
The husband does not set out any discussions he had with Mr T about this loan nor any discussion with his brother with respect to his ability to service the loan given all his other borrowings (on his case).
Item 10 on the Balance sheet is said to be the fruits of some of this loaned money ($99,825) although there are no documents to support this. He also said – without any substantiation – that the liability at item 24 (-$165,825) needed to go into the pool because it gave rise to the asset.
The husband agreed in cross-examination that:
(a)he has not provided Mr T’s bank statement to support that he (Mr T) was the source of any payments; and
(b)his brother has not furnished the court with an affidavit.
Loan 4 discussion
Many of my conclusions with respect to Loans 1, 2 and 3 apply here: no discussions deposed to with his brother; no original documents; no evidence about his brother’s financial position at the time he made the advances; no bank statements in evidence showing money coming from the brother; the husband does not seek orders for the sale of any properties and his brother be paid; and, no evidence that the loan is valid and enforceable in Country B or enforceable in Australia.
On the last point, there is some evidence that the brother lives overseas and if so, there is no evidence before me what rights of enforcement he has from that country.
There is no evidence, other than bald assertion from the husband (which I do not accept), that the source of monies in the bank account at item 10 is from this loan – a loan which I consider a contrivance in any event.
For the reasons in the last three paragraphs, Item 24 will not be included in the pool, but item 10 will be.
Item 25 - Interest and Penalties Accrued on 2014, 2016 and 2021 Loan Agreement with Mr C Goncharov & Ms D Goncharova”.
It follows that given I have found the loans to be a contrivance, the interest and penalties fall away too. It is also the case, using the husband’s counsel’s appropriate concession in submissions that there are not “any detailed calculations, your Honour, and I concede that, regarding how much in terms of penalties and interest has been incurred.”
For those reasons, Item 25 will not be included in the balance sheet.
The Balance Sheet
Accordingly, I find the pool to be as follows:
Ownership Description Value ASSETS Joint U Street, Suburb E, NSW $2,385,000 Joint W Street, City P, Country B $170,720 Husband X Street, Suburb H, Country B $68,390 Husband V Street, Suburb H, Country B, house and block of land $429,163 Husband 15% share in F Company $339,450 Husband 15% share in G Company $542,485 Husband Motor Vehicle 1 $8,000 Husband CBA Account ending …38 $258 Husband CBA Account ending …57 $26,011 Husband CBA EURO Foreign currency Account ending …27 60,500 EURO @1.61 $99,825 Husband CBA USD Foreign currency Account ending …35 $NIL Husband R Bank Account ending …64 $6 Wife CBA Account ending …18 $100 Wife CBA Account ending …27 $373 Wife CBA Account #8820 $2,906 Total $4,072,687 ADDBACKS Husband Funds transferred to Country B in May 2020 $317,000 Husband Cash withdrawn from ANZ acc in 2020 $100,000 Husband Cash withdrawn from R Bank acc in 2020 $50,000 Total $467,000 SUPERANNUATION Husband Super Fund 2 $25,968 Wife Super Fund 1 $19,367 Total $45,335 Total (exclusive of superannuation) $4,539,687 Total (inclusive of superannuation) $4,585,022 SHOULD AN ORDER ALTERING PROPERTY INTERESTS BE MADE
This case has been conducted on the basis that it is just and equitable to make some form of adjustment (Fielding and Nichol [2014] FCWA 77 at [43]). In the circumstances of this case, what was said in Stanford at [42] applies with equal measure here:
42.…the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife.
Accordingly, I find it is just and equitable that I make a property settlement order.
CONTRIBUTIONS
Once a marriage dissolves and the parties’ rights and entitlements under Pt VIII of the Act fall to be determined, all of their financial, non-financial and homemaker contributions pertaining to the relationship – whether made before, during or after it – are intrinsic to the discretionary relief granted. That is because their rights are premised upon the existence of the marriage (or the de facto relationship) regardless of when their property was acquired (see Kowalski and Kowalski (1993) FLC 92-342 at 79,630-79,631; W v W (1997) FLC 92-723 at 83,769-83,771; G and G (2000) FLC 93-043 at 87,673-87,674; Maine & Maine (2016) 56 Fam LR 500 at [21]).
The Court is thus required to assess the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation (see for example: Dickons & Dickons (2012) 50 Fam LR 244 at [14]; Jabour & Jabour (2019) FLC 93-898 (“Jabour”) at [61]).
Dovgan & Dovgan [2021] FamCA 306 at [347] restates the need to holistically assess contributions, and that “all contributions must be weighed collectively and so it is an error to segment or compartmentalise the various contributions and weigh one against the remainder”; see also Fields & Smith [2015] FamCAFC 57. Similarly, the Full Court in Perrin & Perrin(No 2) [2018] FamCAFC 122 cited at [57]–[58] with approval, the decision in Babett & Falconer (2015) FLC 98-067 at [44]:
… the nature of the s 79 inquiry is, in essence, a broad discretionary assessment, which is neither an accounting nor mathematical exercise and which, effectively as a corollary, requires a "broad-brush approach".
(Citations omitted)
Whilst I use traditional, temporal contribution headings below, I do so simply to assist in identifying the myriad of contributions made by the parties. I then holistically assess all contributions.
Initial contributions
At the start of the relationship, the husband owned an apartment at X Street, Suburb H “[X Street Property]” which he had bought in late 1998 with a monetary gift from his parents. The husband has not favoured me with evidence of the exchange rate at that point so he leaves me guessing what that might be in Australian dollars at that time. The wife said the husband told her at the time of marriage it was worth about $12,000. I do not know what currency that is. If AUD, then it is curious he would use AUD to express a value when the parties were living in Country B in 2004 and did not come to Australia for a decade. In any event, the husband denied the conversion.
The property was valued in 2022 at AUD $68,390.
The husband also purchased a block of land at V Street, Suburb H “[V Street Property]” in mid-2002 with a monetary gift from his parents. Again, he puts on no historical currency evidence what that meant in Australian dollars. The wife contended the husband told her, “Its value is approximately $15,000.” The husband denied the conversation. I make the same observations about currency here as for the X Street Property above.
The parties are in dispute whether the husband brought just the block of land to the marriage or the land with a house. The husband annexes an order dated mid- 002 from the local authority permitting the build. He says construction commenced on in late 2002 with a gift from his parents; again, he puts on no evidence what that means in Australia dollars. It is not for me to go searching for such evidence and would be entirely inappropriate for me to, say, google search exchange rates; it is for the parties to evidence their respective cases. The husband deposed that construction was completed in late 2003 and the relevant municipal enterprise issued a Technical Survey Certificate which is annexed to his affidavit, along with other such certificates.
Ultimately, he says the family resided in the property between 2005 and 2014.
The wife said construction began on marriage and was financed from the parties’ incomes and assistance from the wife’s parents. She said the house was completed 2005-2006.
Whilst I am not persuaded by documents produced within the paternal family (e.g. the loan agreements and variations), on the strength of the external municipal and like documents, I conclude the house was constructed prior to the parties’ marriage.
The property was valued in 2022 at $429,163.
The day before marriage, the husband had a 5.5 per cent holding in the family company ‘G Company’ (paragraph 99(a) of his affidavit filed 9 August 2024). He also had a 12.08% shareholding in the family company ‘F Company’, both in Country B (paragraph 98(a)). Whilst the husband gives the number of shares and says they had “nominal value” he does not give any evidence of what that meant in Australian dollars. He thus makes it impossible to understand the value of these interests at the start of the relationship in a currency understood by the Court.
His interests in the companies were valued for trial, with the difficulties and limitations already mentioned. Doing the best I could on the evidence, I have determined those interests to now be worth $881,935, although the husband had fewer shares at the time of marriage than he did by 2021 when he divested himself of them.
Unfortunately, the way the husband has chosen to evidence his case – or not –makes it hard to understand the value of what he brought to the marriage, other than an apartment, house and land and a smaller parcel of shares than he held by early 2021, all of which find their way into the current pool.
The wife said she had some savings and was debt-free. She also deposed she had a share in a unit in Country B which was sold when her father died in May 2006. I do not know what that share was worth. She said the proceeds were applied to the family.
The parties have made it impossible to understand the value of what each brought to the relationship. The best I can do is to say the husband had more than the wife at the start of the relationship, and his assets find their way into the current pool.
During the relationship
Whilst the husband’s cross-examination of the wife sought to highlight the husband’s financial contributions and diminish the wife’s, the reality is that standing back, the parties plainly contributed the best they could over all spheres upon which contributions are assessed – the husband worked for remuneration when in Country B and provided care for the children when able. He said in cross-examination that he was employed by G Company (one of the family companies) from 2004 to 2014, but was also manager of G Company from 2000 to 2014 and was paid a salary as manager.
In Country B, the wife worked for remuneration in the paternal family companies for a period as an finance professional, but the length of time she worked there is in dispute – the wife said she worked there longer than the husband accepted, but he did accept that she received a salary from her employment. The wife also day traded and opened a business in 2006 and managed it to 2011. The wife took leave on the birth of the children and sourced medical care for the children and herself overseas on and off between 2009 to late 2011. The husband joined them on most, if not all, trips.
The wife said her father was generous to them at the start of his marriage, and they did not want for much. The husband largely denied this. I have no doubt the wife’s father did provide some support for them, because it is not unusual for parents to help out a young couple starting out. Ultimately, whatever support he provided came to an end in 2006 when the wife’s father died.
The parties’ finances were fortunate enough that they were able to source health care for Mr K, L and the wife abroad, primarily for two months at a time, and once for a stint of six months. Both children had considerable health challenges, as did the wife, and I accept the wife’s position that the lion’s share of that care fell to her. Or, as the husband deposed, “I acknowledge that [Ms Goncharova] provided primary care for the children and undertook a majority of the household chores including cooking, cleaning and washing”.
The flip side of that is the wife’s appropriate observation that the husband was busy managing the family companies.
The parties jointly purchased a property at W Street (''the [W Street Property]") in mid-2014. The husband said most was paid in cash, along with a modest government subsidy. He does not say the cash was a gift from his parents or a loan, as he was quick to do for other monies. Thus, I infer this cash was accumulated by the husband and wife.
Once in Australia, the parties have received transfers of monies from the wife’s mother and from the husband’s mother and father. I have already dealt with the loans asserted by the husband and found against him. In submissions, the husband said if the monies transferred by the husband’s parents were not loans, then they were gifts. But that is not how the husband ran his case since first raising loans in his affidavit and financial statement of May 2020 – he has been resolute ever since: the monies were loans from his parents. In any event, I am not persuaded the transfers from his parents are, in the alternate, gifts because I just have the bald assertion from the husband that the money was his parents – there are no bank statements to evidence the original source of funds and no evidence from his parents.
What do I make of the transfers of monies once the parties were in Australia? The parties are agreed that to get money out of Country B it had to be transferred by someone else; or put simply, you cannot transfer your own money out of Country B to yourself. So, for example, when the wife said her mother transferred them $300,000 to help purchase the Suburb E property, the husband said that was their savings and they just utilised the wife’s mother as the vehicle to affect the transfer of the husband’s and wife’s savings. Similarly, the wife says that the transfers of monies from the husband’s father or mother was the husband’s and wife’s accumulated savings, and the husband’s parents were the vehicles to affect the husband’s and wife’s monies leaving Country B and coming to Australia.
True there are bank statements showing money coming to Australia, but that does not establish that the money transferred by the wife’s mother was the wife’s mother’s money, or the money transferred by the husband’s mother and father was their money. For example, neither party has disclosed their parents’ bank accounts in Country B; that said, that may have been hard for the wife to do, given her father died some time ago, and her mother not long before separation. The husband also did not disclose any family business bank accounts, which might have shown money came from there by way of dividend or the like, or, on his case, bank statements showing no payments at all. I infer that if the business bank accounts showed no transfers which led to or ultimately led to the husband, then the husband would have been quick to put that on.
The lack of evidence does not allow for positive findings that the money transferred by the wife’s mother, was the wife’s mother’s money, nor the money transferred by the husband’s parents was his parents’ money. In short, the wife has failed to discharge the onus on her with respect to the $300,000 said to be from her mother, and the husband has failed to discharge the onus on him with respect to monies said to have been sourced from his parents.
Instead, by the time of the transfers of monies allowing for the purchase of the Suburb E property at the end of 2016 for $1.775 million, the parties had been together for 12 years and both had worked hard. They had been able to spend periods of time, primarily overseas, sourcing medical care for the children and the wife and had holidays abroad. They jointly bought a property mainly with cash in mid-2014. On all accounts, they lived comfortable lives. Therefore, on balance, I find that the monies transferred from Country B using the wife’s mother and the husband’s parents were the parties’ funds accumulated over more than a decade of work for renumeration. I also conclude it more likely than not that the husband received benefits from the family business after the parties came to Australia; it would have been easy for the husband to demonstrate the contrary proposition by company bank statements or the like, but he did not.
I reject the husband’s submission that because the wife “was also focused on running a company for several years, day trading, and obviously necessarily looking after the children at various times, that it is – on the balance of probabilities, your Honour, it is less likely that she did have any great detailed knowledge of the level of savings”. I reject that submission; it does not flow as a matter of logic. If it were so, then the husband too would have limited knowledge of their savings because he was busy running the companies. I also reject a submission early in the trial that the wife could not know much about the paternal business in which she worked as something akin to an internal finance professional, because she was breastfeeding. The wife – with a tertiary qualification – struck me as a capable woman able to do a number of things in a day and keep tabs on their finances and the business. However, the submission did highlight the various contributions made by the wife during the relationship.
Once in Australia, the parties have been in paid employment at various times but earning modest amounts. I do not accept the husband’s evidence that whilst remaining a shareholder in the family businesses from migration to Australia in 2016 up to separation, that he received not a single monetary benefit from his shareholdings; that tests credulity. Rather, both parties conducted themselves in a way that their financial circumstances were not dire – the husband chose to study and worked here and there, and the wife took on part-time jobs and studied as well. There is much force in the wife’s counsel’s submission, which I accept:
… these two parties come to Australia with their two children, and neither of them appears to be employed full time during the course of their marriage. Because there is an expectation – the inference to be drawn is there is an expectation that they’re going to receive benefits from the [Country B] companies.
Apart from the loans asserted by him, the husband deposed he received gifts from his family totalling $300,000 from November 2014 to April 2019. All I have is the father’s bald assertion that was so, with no documents to verify this was the case. Without anything to verify his claim, I am not prepared to accept this. Separately, it is also not clear why some monies said to be from his parents are loans and others are gifts.
Late in the relationship, the wife’s mother died in 2018 and she inherited two properties which she later sold post-separation for $344,000 and $27,000. She said other chattels bequeathed to her were not received by her.
Post-separation
It has been five years since separation, with the husband remaining in the unencumbered Suburb E property, but meeting its costs. The wife has rented since August 2019 paying $1,560 per fortnight in rent at least at the start of separation. The husband provided some modest financial support to the wife and thus the children upon separation in August 2019 on the wife’s case, and September 2019 on the husband’s case, but that stopped when a temporary ADVO was made for the wife’s protection against the husband in late 2019. Further financial support was only provided by the husband when the court ordered he do so.
After an unsuccessful trial of 50-50 shared parenting, L has primarily lived with the mother. She spends two nights a fortnight with the father and seven consecutive days each holiday period. Mr K does his own thing, which is hardly surprising given his age. The evidence tends to the view that he has primarily lived with the father post separation. He is now 20 years old.
The wife also had the benefit of proceeds from the sale of the two properties inherited by her in 2018 and sold in the post separation period, some cash from a term deposit and cash and jewellery in safety deposit box, as well as money orders made by other judges in her favour. I will deal with those under s75(2) as the husband asked me to do.
Evaluation of contributions
The husband said if I found the monies from his parents and brother were loans and included them in the balance sheet, then contributions would be “approximately equal”. Respectfully, that seems to overlook the husband’s initial contributions as part of the holistic assessment. Even though I have no idea what they were worth then, the shares (a parcel increased during the relationship) and two properties find their way into this pool at a not inconsiderable value.
However, the husband then said if I did not find the transfers to be loans, but found the monies coming from Country B were gifts, donations, payments or the like from the paternal side of the ledger, then contributions overall would be assessed at 90 per cent to him. Respectfully, that overinflates direct financial contributions. The husband’s submissions on contributions were focused on the earnings of the husband; “the respondent was the one working for the company, the respondent was the one running one of the companies. He had the shareholdings…”. Whilst all of that is true, it would be erroneous to look at the husband’s earnings and then compare the other contributions against them (Jabour at [61]).
Further, section 79(4)(a), (b) and (c) afford no priority or greater weight to financial contributions over other kinds. In addition, the High Court said long ago that homemaker contributions must be given real value and not some token lip service (Mallett & Mallett (1984) 156 CLR 605 (“Mallett”) at [609],[623],[636] and [646]; Ferraro & Ferraro (1993) FLC 92‑335). When together, the parties lived their lives as they did and no detailed accounting of direct financial contributions is required (Harris & Harris (1991) FLC 92-254; Bulow & Bulow (2019) FLC 93-885).
If I found the monies coming from Country B were the parties’ own funds then Counsel for the husband said (after initially saying 90 percent and then clarifying) “my submission would be that it would be approximately 50 per cent, and that would account for both the parties arranging their marriage the way they saw fit …”. Again, this seems to overlook the husband’s initial contributions within an holistic assessment.
The wife acknowledged the husband had more at the start of their relationship but said that when looking holistically, then contributions overall are relatively equal. That is on the basis I found the loans to be a sham.
Alternately, if I found the money had flowed primarily from the husband’s family, then it was said a just and equitable outcome would be for the husband to retain all the Country B properties, and for the Australian properties to be divided equally between the parties.
I have found against the husband on the loan/gift issue. Both parties submitted contributions were therefore approximately or relatively equal. I am not bound by those positions (U v U (2002) 211 CLR 238 at [80]), but must give the parties the opportunity to be heard on something which is outside what they could have been contemplating. In this matter, both counsel used adverbs such as “approximately” and “relatively” qualifying the concept of “equal”, which says to me each acknowledged give or take in the assessment of contributions. It also must be said that the wife faced a case which saw the husband arguing for a contributions assessment in his favour of up to 90 per cent.
When I stand back and look holistically, the parties each contributed as best they could over the many spheres over which contributions are assessed – they worked and raised children with health challenges, the husband was the main but not sole breadwinner and the wife the main but not sole carer of the children and the household. But it remains that in and along with all they did, the husband brought assets to the relationship which now find themselves in the pool at a goodly value (but noting the husband had fewer shares on marriage). That is not to say that the husband ought receive a contributions assessment in proportion to that, because that would not do justice to all of the parties other contributions assessed on a holistic basis.
Standing back, I assess contributions to be in favour of the husband as 55 per cent to him and 45 percent to the wife. That is a 10 per cent differential which is $458,502.20.
Sections 79(4)(d)-(g)
I deal with s 79(4)(e) of the Act below; i.e., the matters referred to in s 75(2) so far as they are relevant.
Otherwise, the orders proposed by the parties do not effect the earning capacity of either party to the marriage (s 79(4)(d)) nor is there any other order made under the Act affecting a party to the marriage or a child of the marriage (s 79(f)). The husband now pays child support and there is a Commonwealth agency that will assist with that going forward (s 79(4)(g)). Nothing turns on these matters.
Section 75(2) Factors
The wife sought a 10 per cent adjustment in her favour for s 75(2) factors, whereas Counsel for the husband said there were no s 75(2) considerations, which would cause me to make an adjustment in either party’s favour.
I turn to the s75(2) subsections where submissions were made.
Subsection 75(2)(a) – the age and state of health of each of the parties
The parties are 45 and 42 years old and there is no evidence before me of on-going health difficulties. Nothing turns on this.
Subsection 75(2)(b) – the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
The wife earns $56,000 per annum gross (although the husband says $69,160) in a service industry and she says she is earning the “top hourly rate for permanent employees being $35 (which I currently earn)”. She thus says her “earning capacity has been maxed”.
The husband started work as a finance professional in 2023 and is earning approximately $110,000.00 per annum inclusive of tax.
It would be a matter of common knowledge and commonsense that, on balance, the husband has greater career and earning prospects available to him in his profession going forward, than the wife in the service industry.
In his Outline, the husband had mounted a case that the wife’s use of post-separation funds warranted an addback for wastage. By the time of submissions, he said, “[t]he part in my outline that deals with add-backs and wastage, my submission is not that they should be taken into account as add-backs and wastage, your Honour, but it is just that they’re a factor for section 72” (meaning s 75(2)).
A property inherited by the wife was sold in late 2019, realising $27,000 and she also took USD$33,615 and jewellery sold for $7,000 from the safety deposit box in late 2019 for her living expenses and those of the children when with her. In March 2020 the wife also transferred $24,493 in a term deposit to an account in her name; this was the start of COVID and the wife lost her job. The husband had stopped financial support in November 2019 and the wife was yet to receive the benefit of court orders for financial support. The husband did not pay child support until 2023.
I also accept the wife spent the sale proceeds from the other Country B property she inherited on living expenses, costs of sale of the property, legal expenses and other expenses. The reality is living costs money, children cost money and after late 2019 (the ADVO) the husband only provided financial support when ordered to do so. He has remained in the unencumbered former matrimonial home since separation in 2019.
The wife also had the benefit of a lump sum spouse maintenance order, meaning an earlier judge was satisfied she had the requisite need (s 72 of the Act) as well a partial property order.
The wife deposed that of the monies received from the start of the proceedings to her trial affidavit four and a half years later:
… I used $20,000 to set up my business as deposed in paragraph 238 hereof.
Of the remaining $501,000 I spent about $185,000 on rent (averaging $800 per week for the 231 weeks). The remainder of $336,424 (or $1,450 per week) used on my and the children’s living expenses in the circumstances where until 2023 the father provided no child support.
The wife then deposed to the costs she covered for the children’s medical and health needs, education and extra-curricular expenses for both, other specific education costs and even covering the costs of Mr K’s commute between the mother’s and father’s houses.
There was no cross-examination of the wife which would yield to any conclusion that she spent money in an extravagant or profligate manner. The funds have been spent; the resources have been expended.
The husband has $150,000 in cash “somewhere in Australia”.
Both parties have the financial resource of superannuation but in the most modest of amounts.
Overall, this subsection favours the wife. The husband will walk away with $150,000 and the most valuable asset a party can have – an ability to earn an income in what is just the start of his professional career (In the Marriage of Woolley (1981) 6 Fam LR 577 at [588]). Conversely, I accept the wife’s prospects of career and income growth in her industry are limited.
Subsection 75(2)(c) – whether either party has the care or control of a child of the marriage who has not attained the age of 18 years
It is common ground L lives primarily with her mother. The husband only started paying child support in 2023. He says he now pays $896 per month (about $207 per week) and covers the costs of tutoring in the amount of $80 per week and medical expenses. I do not know if this $80 is paid to the wife, or covers costs when L is in his care. Nothing really turns on that $80 in any event.
L is 13 years old and spends limited time with her father. That means the vast bulk of the care and control of the child falls to the wife and will for the next five years until she attains her majority. This matter favours the wife.
Subsections 75(2)(d) and (e) – commitments of each of the parties that are necessary to enable the party to support himself or herself, and a child or another person that the party has a duty to maintain; and the responsibilities of either party to support any other person
The husband submitted, “the respondent will only have that ability to maintain himself if he’s provided with a significant portion of the pool, whereas in my submission, the applicant has and has had that ability to realise those assets and maintain herself”. This submission dovetails back to the analysis of the husband’s submission about the wife’s access to savings and the proceeds of inherited property as post-separation financial resources above. Her access to those funds was also in circumstances where the husband voluntarily paid little by way of financial support until ordered by the court.
I do not accept the submission which seems to say the wife had funds to support herself post separation so the husband should get most of the pool so he can now too. Property proceedings are not about evening up access to funds or social engineering (Waters & Jurek (1995) FLC 92-635 at 82,376 (“Waters & Jurek”); Wilson J in Mallett at [18]).
Both parties have ongoing commitments to support themselves and their children when with them, albeit Mr K is over 18. Nothing turns on this.
The husband also submitted that he has loans owing to his brother and parents irrespective of what I find. That is a matter for him. I found the loans were a fiction. The husband’s claimed pre-separation repayments of less than USD $700 on loans dating back to 2014 (and two now lapsed), are hardly actions of someone labouring under the weight of financial obligation.
Subsection 75(2)(m) – if either party is cohabiting with another person—the financial circumstances relating to the cohabitation
The husband says he has not re-partnered.
The wife lives with Mr Z. She rented a room in his house from early to mid-2020 when she received $70,000 ordered by the court and could secure her own accommodation. By the end of 2021 their friendship developed into a relationship.
Mr Z too is facing the challenges of his own separation. Two recent tax returns indicate a taxable income of NIL and $44,249. The wife’s financial statement indicates modest circumstances of cohabitation.
The husband did not ask the wife any questions about the financial circumstances of cohabitation.
Nothing turns on this.
Subsection 75(2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
The husband’s conduct in this matter has been poor. However, I have taken up the consequences of much of that conduct in the pool and will not double count it here. For example:
(a)The husband’s transfer of $317,000 to his parents in Country B and keeping $150,000 in cash “somewhere in Australia” have been added back;
(b)The husband would not join with the wife and seek updated valuations for the Country B real properties. I have dealt with that issue already and will not re-count it here;
(c)The husband’s conduct in divesting himself of the long-held company shares and consequent inability to secure information finds its way into the pool;
(d)The arrant nonsense about not being able to get the original loan documents unless it suited him is one of the many reasons I have found against him on the loan agreements.
Nothing else arises under this sub-section.
Evaluation of s 75(2) factors
The husband walks away with income earning capacity from a profession in which he has career and income prospects above that of the wife. The husband commenced his position in 2023 and is earning $110,000 inclusive of tax. The wife has most of the care and control of L for the next five years, although the L factor is not a weighty one given L is at an age where she will be individuating from her parents and likely gravitating more to friends.
Those factors, in particular, the husband’s career and income prospects mean an adjustment is warranted in the wife’s favour and that will be 10 per cent. Ten per cent is $458,502, or a differential of 20 per cent being $917,004.
On balance, the husband’s new profession will see him earn that 10 per cent in a few years. The wife will not (Best & Best (1993) FLC 92-418; Waters & Jurek).
WHAT PROPERTY ORDER IS APPROPRIATE TO ACHIEVE A JUST AND EQUITABLE OUTCOME?
Overall, the parties’ property pool of $4,585,022 will be divided 55 per cent to the wife and 45 per cent to the husband.
In money terms that is rounded to $2,521,762 to the wife and $2,063,260 to the husband. The differential of 10 per cent equates to $458,502.
I consider this a just and equitable outcome in the circumstances of this case.
Orders
The wife says she has no interest in going to Country B and does not want any property there. Both of her parents have died.
The husband’s parents are still in Country B and the company is still in operation. The husband wants all properties in Country B and the Suburb E property. He says the wife should walk away with what she has received in court ordered money and her meagre savings and superannuation. His Outline refers to a 65-35 adjustment in his favour, but that is on his negative pool so is rather meaningless.
I will order the husband retain all properties and assets in Country B and all assets and superannuation in his name. The wife will transfer her interest in W Street, City P, Country B to the husband. I do so, because the husband has connections there and he wanted those properties and the wife does not.
The wife will keep the Suburb E property. I do not consider it just and equitable that one party have all the real properties and the other none (as the husband sought).
The wife will receive:
(a)U Street, Suburb E NSW $2,385,000
(b)CBA Account ending …18 $100
(c)CBA Account ending …27 $373
(d)CBA Account ending …20 $2,906
(e)Super Fund 1 $19,367
The value of the items the wife has is $2,407,746. Fifty-five per cent of the pool is rounded to $2,521,762, meaning the wife is short $114,016 on her entitlement. If the wife then receives the EURO account of $99,825 that then brings her very close to 55%.
The husband will receive:
(a)All of W Street, City P $170,720
(b)X Street, Suburb H $68,390
(c)V Street, Suburb H house and block of land $429,163
(d)15% share in F Company $339,450
(e)15% share in G Company $542,485
(f)Motor Vehicle 1 $8,000
(g)CBA Account ending …38 $258
(h)CBA Account ending …57 $26,011
(i)CBA USD Foreign currency Account ending …35 $NIL
(j)R Bank Account ending …64 $6
(k)Funds transferred to Country B $317,000
(l)Cash somewhere in Australia $150,000
(m)Super Fund 2 $25,968
The value of the items the husband has is $2,077,451. Forty-five per cent of the pool is rounded to $2,063,260, meaning the husband has in his hands just over his entitlement.
In the interests of finality (s 81 of the Act) I will not require the husband to pay the relatively small difference to the wife of just o $14,000 because: (a) it is cleaner to let things fall as I have determined; (b) I am circumspect that now the matter is out of the court’s glare he will do so over such a relatively small amount; and, (c) if he does not, I do not see point in exposing the wife to the costs of chasing this modest amount of money.
The parties had different regimes for the timing of transfers of properties. The wife sought 30 days for the transfer of the Suburb E property to her and the husband said 60 days. It is an unencumbered property and should be a straightforward process. I will order the transfer of the Suburb E property occur within 30 days.
Both parties sought 60 days for the transfer of the Country property to the husband, but the wife said the 60 days commenced when the husband transfers the EURO account to her, whereas the husband said 60 days from the date of this Order. I will make orders using the wife's timing. That offers some security for the wife and enticement for the husband to do as ordered – i.e., he does not get the wife's interest in the Country B property until the wife gets the EURO account monies.
I consider this outcome is just and equitable.
I certify that the preceding two hundred and eighty-one (281) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Brasch. Associate:
Dated: 26 November 2024
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