Jepson & Jepson (No 8)
[2025] FedCFamC1F 146
•7 March 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Jepson & Jepson (No 8) [2025] FedCFamC1F 146
File number: SYC 2100 of 2016 Judgment of: MCCLELLAND DCJ Date of judgment: 7 March 2025 Catchwords: FAMILY LAW – PROPERTY – Application for an adjustment under s 79 of the Family Law Act 1975 (Cth) – Where the husband was the primary income earner and the wife was the primary caregiver for the parties’ children – Issues of credit – Non-disclosure – Where the wife failed to provide items of jewellery for valuation – Where the wife has returned to the workforce but the husband has remained unemployed – Where the wife’s inheritance and superannuation must be treated as a post-separation asset – Financial orders made for payment of monies to the husband and for the wife to retain her property.
FAMILY LAW – ADDBACKS – Exception not the rule –Whether legal fees of criminal proceedings should be added back – Where the wife contends that the husband should have declared bankruptcy – Where the husband was in his right to defend criminal proceedings – Where the legal expenses were reasonably incurred – Where the husband’s expenditure on legal fees was neither wasteful, reckless or wonton – Where an addback is sought due to the asserted “loss of businesses” – Where the wife’s allegations that the husband engaged in dishonest and illegal conduct does not satisfy the burden of proof – Where the husband contends that the wife’s reckless conduct led to a significant reduction in the sale price of the former matrimonial home – Where the husband asserts that the wife provided information to a journalist knowing it would create adverse media publicity and diminish the sale price of the property – Where any reduction could not be accurately quantified – Finding some items be added back with the balance to be considered under s 75(2)(o) of the Family Law Act 1975 (Cth).
FAMILY LAW – RESTITUTION – Associated jurisdiction of the Court – Where the wife sold two motor vehicles belonging to the second respondent at the time of the sale – Where the Court does not accept the wife’s account of the sale price – Where there is a lacuna in the evidence regarding the advertisement of the motor vehicles for sale – Consideration of Armory v Delamirie (1722) 1 Strange 505 [93 ER 664] – Facilitation principle – Wife to pay the second respondent $130,000 as compensation.
Legislation: Bankruptcy Act 1966 (Cth) s 77
Corporations Act 2001 (Cth) s 206F
Evidence Act 1995 (Cth) ss 60, 69, 136, 140
Family Law Act 1975 (Cth) ss 75(2), 79, 106A
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 29, 43
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) pt 7.1, r 8.04
Kopsen, Hugh PK and Robyn Carroll, “The Importance of Full and Frank Disclosure in Family Law Financial Proceedings and the Many Consequences of Non-Disclosure” (2017) 45 Federal Law Review 97
Cases cited: Akbar & Gandega (2023) 382 FLR 170; [2023] FedCFamC1A 174
Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union [2021] FCA 920
Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2024] FCAFC 19
Berry v CCL Secure Pty Ltd (2020) 271 CLR 151; [2020] HCA 27
Bevan & Bevan (2013) 49 Fam LR 387; [2013] FamCAFC 116
Bircher & Bircher (2016) FLC 93-721; [2016] FamCAFC 123
Bishop & Bishop (2013) FLC 93-553; [2013] FamCAFC 138
Bonnici and Bonnici (1992) FLC 92-272; [1991] FamCA 86
Boulton & Boulton (2024) FLC 94-202; [2024] FedCFamC1A 132
C & C [1998] FamCA 143
Calder & Calder (2016) FLC 93-691; [2016] FamCAFC 36
Calvin v McTier (2017) FLC 93-785; [2017] FamCAFC 125
Cessnock City Council v 123 259 932 Pty Ltd (2024) 418 ALR 304; [2024] HCA 17
Clauson and Clauson (1995) FLC 92-595; [1995] FamCA 10
Clives and Clives (2008) FLC 93-385; [2008] FamCAFC 172
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
DJM and JLM (1998) FLC 92-816; [1998] FamCA 97
Dovgan & Dovgan [2021] FamCA 306
Franklin & Franklin [2010] FamCAFC 131
Efthimiadis and Efthimiadis (1993) FLC 92-361; [1993] FamCA 15
Elgabri & Elgabri [2009] FamCA 227
Hawkins & Hawkins [2016] FamCA 440
Hewitt & Corbett [2016] FCCA 776
Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143; [2003] FamCA 395
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Lardil, Kaiadilt, Yangkaal, Gangalidda Peoples v Queensland [2000] FCA 1548
Lenehan and Lenehan (1987) FLC 91-814; [1987] FamCA 8
Line and Line (1997) FLC 92-729; [1996] FamCA 145
Lovine & Connor (2012) FLC 93-515; [2012] FamCAFC 168
Makita (Australia) Pty Ltd v Sprowles (2001) 52 NSWLR 705; [2021] NSWCA 305
Mallet and Mallet (1984) 156 CLR 605; [1984] HCA 21
Minister for Immigration and Citizenship v SZNVW (2010) 183 FCR 575; [2010] FCAFC 41
Mistle & Mistle [2010] FamCA 29
Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17
Omacini and Omacini (2005) FLC 93-218; [2005] FamCA 195
Perna & Perna [2024] FedCFamC1A 183
Petruski & Balewa (2013) 49 Fam LR 116; [2013] FamCAFC 15
Re Wakim; Ex parte McNally; Re Wakim; Ex parte Darvall; Re Brown; Ex parte Amann (1999) 198 CLR 511; [1999] HCA 27
Redland City Council v Kozik (2024) 98 ALJR 544; [2024] HCA 7
Teal & Teal [2010] FamCAFC 120
TJ (on behalf of the Yindjibarndi People) v Western Australia (No 3) [2015] FCA 1359
Tomasetti and Tomasetti (2000) FLC 93-023; [2000] FamCA 314
Townsend and Townsend (1995) FLC 92-569; [1994] FamCA 144
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Schaars v Schaars [2023] FedCFamC1F 12
Schirmer and Sharpe (2005) FLC 93-213; [2005] FamCA 40
Shepherd v Griffiths and Jones (1985) 8 FCR 464; [1985] FCA 555
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51
Van der Linden & Kordell [2010] FamCAFC 157
Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14
Watton v MacTaggart [2020] NSWSC 1233
Zao & Lee [2019] FamCAFC 169
Division: Division 1 First Instance Number of paragraphs: 314 Date of hearing: 1–5 July 2024; 18 July 2024 Place: Sydney Solicitor for the Applicant: Mr White, Powe & White Family Lawyers Counsel for the First Respondent: Mr Watkins (direct brief) Counsel for the Second Respondent: Mr Butters (direct brief) ORDERS
SYC 2100 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR JEPSON
Applicant
AND: MS JEPSON
First Respondent
MS B JEPSON
Second Respondent
ORDER MADE BY:
MCCLELLAND DCJ
DATE OF ORDER:
7 MARCH 2025
THE COURT ORDERS THAT:
1.All previous orders are hereby discharged.
2.Within 28 days of the date of these orders, the parties are to take all steps necessary to direct JJ Lawyers to pay to Mr Jepson (“the applicant”) the balance of the net sale proceeds of the property situated at L Street, Suburb P in the amount of $1,214,541.
3.Within 28 days of the date of these orders, Ms Jepson (“the first respondent”) is to pay the further amount of $456,609 to the applicant.
4.Within 28 days of the date of these orders, the first respondent is to pay the amount of $130,000 to Ms B Jepson.
5.Within 7 days of the date of these orders, the first respondent is to do all acts and things necessary to assign to the applicant any and all life insurance policies, total and permanent disability insurance policies, or any other policy that the first respondent has in her name which covers the applicant.
6.Except as otherwise set out in these orders, the parties have the sole right, title and interest in any other property which is at the date hereof in their possession, title or name and they shall be solely liable for and indemnify the other against any and all liabilities that stand in their name, title or possession.
7.Each party must do all acts and things, give all consent and execute all documents and writings necessary to give effect to the orders herein.
8.In the event that either party refuses or neglects to execute any deed or instrument, a Judicial Registrar or such other empowered person of the Federal Circuit and Family Court of Australia or such other Court with jurisdiction, 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.
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 the pseudonym Jepson & Jepson has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ
INTRODUCTION
These are property proceedings between the applicant, Mr Jepson (“the husband”), and the first respondent, Ms Jepson (“the wife”), following the dissolution of their marriage. The second respondent, Ms B Jepson (“the second respondent”), is the applicant’s mother. She has provided substantial support to the parties during their marriage, and to the husband in the post‑separation period, including by providing a stable home for him in which he continues to reside. The second respondent has also assisted the applicant to pay his legal fees for these proceedings, as well as proceedings commenced in a separate jurisdiction.
This matter has a protracted history, marked by numerous legal proceedings and significant disputes, including the appointment of receivers to sell the former matrimonial home and applications for a partial property distribution to pay legal fees and adjournment of the trial. Regrettably, issues of non-disclosure and credit have resulted in inefficiencies that have significantly impacted the Court’s assessment of the parties’ contributions and the overall financial position of the marital estate.
I have determined that the parties’ assets are to be divided equally and that the wife will retain 100 per cent of a second pool, comprising of her post-separation inheritance and superannuation. In facilitating this division, the husband will be awarded the proceeds of sale from the former matrimonial home and an additional lump sum payment from the wife, and, in turn, the wife will retain her property.
BACKGROUND
In 1962, the husband was born. He is currently 62 years of age.
In 1963, the wife was born. She is currently 61 years of age.
The second respondent, the husband’s mother, was born in 1937. She is currently 87 years of age.
Prior to the commencement of the parties’ relationship, the husband was a professional, and the wife was employed in real estate. The husband began developing an interest in collecting valuable items as a means of long-term investment.
The parties commenced cohabitation in 1997 at LL Street, Suburb MM. At this time, the husband owned a number of business interests including an interest in NN Pty Ltd, OO Pty Ltd and interests in valuable items. The husband also had an interest in three companies and three properties, being: PP Street, Suburb QQ; RR Street, Suburb SS; and TT Street in Suburb UU. The wife owned Motor Vehicle 5 and had an interest in a property located at VV Street, Suburb WW, which was purchased in 1994.
The parties married in 1998 and had two children, Mr XX, born in 1999, and Ms YY, born in 2001. During the course of the marriage, the husband was a businessman and the primary income earner. The wife was a homemaker although she did some paid work assisting with administrative matters arising from the properties.
According to the husband, the parties separated in 2011. On the evidence of the wife, the parties separated in November 2015 and divorced in 2018. However, the wife accepts that in early 2012, she knew that “the marriage was over” (Wife’s affidavit filed 9 October 2023, paragraph 108).
The husband has since re-partnered with Ms ZZ. The husband and Ms ZZ commenced a relationship in 2015. The wife has not re-partnered.
In 1999, the husband entered into a loan agreement with his mother, the second respondent. It is contended that this was to enable the husband and wife to invest in various businesses and real estate opportunities.
In 1999, AB Company was incorporated. The wife says that she was appointed director and secretary in 2000. In 2008, an ASIC form was signed changing the name of the company to K Pty Ltd. The wife contends that the signature on the ASIC form is not hers (Wife’s affidavit filed 9 October 2023, paragraph 283). It is accepted that K Pty Ltd is a shelf company with assets of $1. The parties have agreed to remove K Pty Ltd as a party to the proceedings.
The second respondent claims that between mid-2011 and late 2012, she provided loans to K Pty Ltd totalling $928,000. She accepts that recovery of those monies is statute barred but both the husband and the second respondent contend the monies advanced by the second respondent are a significant contribution by the husband.
Sometime in 2000, the husband acquired an interest in AC Pty Ltd, AC Nominees and AC Australia Pty Ltd.
In 2002, the husband acquired a business called AF Pty Ltd.
In 2003, the parties sold the husband’s property at Suburb QQ and the wife’s property at Suburb WW. At about that time the parties purchased AG Street, Suburb WW.
Also in 2003, the parties purchased the former matrimonial home located at L Street, Suburb P for $4 million. It is contended that $1,584,000 was borrowed from the second respondent, that a loan was secured by way of mortgage from Y Company in the sum of $2.2 million and that the balance of the purchase price and stamp duty was paid by the husband’s company (Exhibit V).
In 2004, NN Pty Ltd was sold.
In 2005, the parties purchased V Street, Suburb U.
According to the evidence of the wife, in 2007, valuable items were delivered during the night over a period of a few days to the Suburb P property and stored in a garage (Wife’s affidavit filed 9 October 2023, paragraph 90). There is a significant controversy as to what has happened to the items.
In 2010, the wife’s father, Mr HH, was diagnosed with a serious medical condition. He unfortunately passed away in 2011.
The wife attests that in 2010, the husband made an application in her name for a total and permanent disability insurance policy.
The husband claims that in 2012, the Office of State Revenue made an adverse assessment against him with respect to grouping activities, thus generating a debt of $4.3 million (Husband’s affidavit filed 6 October 2023, paragraph 75). He contends that the adverse assessment was effectively payback for the failure to agree to sell the Suburb MM property to a company controlled by a corrupt Minister in the then State Government (Husband’s affidavit filed 6 October 2023, paragraphs 57–65).
In mid-2013, AW Bank appointed receivers.
In around mid-2013, the wife alleges that the husband asked her to sign papers that would allow him to borrow money against Suburb P. The wife says that the husband conceded to “[k]iting cheques between the banks” and, furthermore, that he told her they “owe the bank millions” (Wife’s affidavit filed 9 October 2023, paragraph 110). Following that conversation, the wife says she clarified what “cheque kiting” was with a member of the husband’s staff. The husband denies that he knowingly signed cheques that he knew would ultimately be dishonoured.
In early 2013, the husband attended a mental health clinic and remained there for approximately six weeks (Transcript 2 July 2024, p.37 lines 41–43). At this point, the parties’ children were 14 and 12 years old. The husband returned from the clinic in late 2013.
In late 2013, the following properties were sold (Wife’s affidavit filed 9 October 2023, paragraph 128):
(a)AH Street, Suburb AJ, SA
(b)AK Street, Suburb AL, QLD
(c)AG Street, Suburb WW, NSW
(d)AM Street, Suburb AN, NSW
The wife contends that in early 2014, the husband purported to remove the wife’s mother, Ms GG, as trustee of the AO Trust (Wife’s affidavit filed 9 October 2023, paragraph 63). Similarly, the wife contends that in mid-2014, the husband removed the wife’s sister as trustee of Mr HH Trust, and replaced her with himself (Wife’s affidavit filed 9 October 2023, paragraph 62).
Between early March and late March 2014, monies totalling the sum of $69,500 were transferred from Super Fund 1 (Wife’s affidavit filed 9 October 2023, paragraph 129). In mid‑2014, a sum of $53,500 was deposited into a Y Company account (Wife’s affidavit filed 9 October 2023, paragraph 130).
The wife claims that, in or around late 2014 or early 2015, the husband removed assets from the garage at the Suburb P property. This is denied by the husband. The parties’ respective contentions in respect to this issue are addressed subsequently in this judgment.
Between 2014 and 2016, the second respondent took over the payments of her grandchildren’s school fees at the request of the parties (Second respondent’s affidavit filed 23 October 2024, paragraph 39). The husband contends this is a significant contribution attributable to him.
In 2015, the husband signed a Statement of Affairs and received a letter from AP Company enclosing a notice requiring the husband to produce books and records and attend an interview pursuant to s 77 of the Bankruptcy Act 1966 (Cth).
In 2016, the wife sold two motor vehicles for $120,000 in cash. There is significant controversy in respect to the nature of the sale that will subsequently be considered.
The husband obtained an Apprehended Domestic Violence Order (“ADVO”) against the wife in early 2016. A provisional ADVO was also taken out against the wife the following month in 2016.
In early 2016, the husband and his partner, Ms ZZ, took residence in the Suburb P property. The husband and second respondent assert that it was at this point they discovered that the collection of assets and motor vehicles were missing.
In early 2016, a letter was sent from the husband’s solicitor to an agent asserting that they had “grave concerns” as to the mental capacity of the wife to enter into a legally binding contract and to provide a written undertaking that the Suburb P property be withdrawn from sale (Wife’s affidavit filed 9 October 2023, paragraph 146).
The following month in 2016, the wife commenced proceedings in the Supreme Court of New South Wales. Orders were made in early 2016 providing for the wife to live in the Suburb P property until completion of its sale and for the husband to live in the Suburb U property until completion of its sale. Trustees were also appointed to sell the Suburb P and Suburb U properties. Since Suburb P was put on the market, various offers, including those in the sum of $9 million and $10 million, were made in 2016, but the sale was not finalised until 2021. The property was ultimately sold for $4,825,000.
The trustees for sale of that property rendered a substantial account for their service and subsequently became a party to the proceedings, seeking payment of their fees before distribution of the marital assets. As a result of court-assisted mediation, the parties resolved the matter with the trustees whose debt has been satisfied. Both parties initially blamed the other for complications and delay in the sale of the Suburb P property. Further, they claimed diminution in the sale price and the incurring of the substantial fees of the trustees was due to the fault of the other. The wife, however, resiled from that claim but it was pressed by the husband. The parties’ respective contentions in respect to this issue are the subject of further consideration below.
On 7 April 2016, the husband filed his Initiating Application in the Family Court of Australia (“the Family Court”), as it was then known.
The Supreme Court proceedings were transferred to the Family Court in June 2016.
In late 2016, the Suburb U property was sold for $1,595,000.
In early 2016, Supreme Court Orders were made appointing trustees to sell the parties property at Suburb U and Suburb P. Those orders also provided that the wife was to remain living at Suburb P and the husband was to live at Suburb U until the properties were sold.
In early 2017, the wife made a complaint to the Financial Ombudsman Service in relation to Y Company, firstly contending that her address has been changed without her knowledge and that all of her attempts to correspond with Y Company were being rejected. Secondly, the wife complained that she had no knowledge about the loan in the sum of $600,000 that was attached to her mortgage in 2007. The wife’s allegations in respect to that issue are further considered below.
In late 2017, the husband was arrested and charged with criminal offences. The husband categorically denies the allegations made against him and says that they are based on false statements (Husband’s affidavit filed 6 October 2023, paragraph 139).
In late 2017, the receivers conducted an auction of Suburb P. A Contract for Sale was exchanged for the sale price of $4.2 million. However, the Contract for Sale was rescinded after an Application in a Case was filed by the husband in the Family Court and orders were made by Loughnan J on 14 November 2017 that the receivers shall not be permitted to sell Suburb P without the written consent of the husband and wife. Those orders also provided for the husband’s mother, the company K Pty Ltd, and C Pty Ltd – being the wife’s former solicitors, were joined as respondents.
In 2018, the husband was charged with further offences.
In mid-2018, the wife contends that ASIC issued a Notice of Disqualification pursuant to s 206F of the Corporations Act 2001 (Cth) to the husband, restraining him from managing corporations for a number of years (Wife’s affidavit filed 9 October 2023, paragraph 291).
In 2020, bankruptcy proceedings were brought against the husband by AW Bank in the Federal Court of Australia (Husband’s affidavit filed 6 October 2023, paragraph 146). These proceedings were settled in 2022 and AW Bank released $14 million of guarantees that the husband had given (Husband’s affidavit filed 6 October 2023, paragraph 148). The husband’s solicitors also withdrew their cross claim.
The Suburb P property was sold for $4,825,000 in early 2021. The net proceeds of sale are currently held in a trust account (Husband’s affidavit filed 6 October 2023, paragraph 147).
In mid-2021, the wife entered into a deed of settlement with Y Company and received $2,070,000. Those monies were applied towards the purchase of EE Street, Suburb FF for $1,900,000 (Wife’s affidavit filed 9 October 2023, paragraph 329).
On 22 March 2023, I ordered the husband and second respondent to provide an “inventory of [valuable items]” owned by them that is currently held by the New South Wales Police Force (Orders 5 and 6). Both parties deny that they have any interest in any assets currently held by New South Wales police.
In 2023, a referee completed a report that determined the appropriate costs of the trustees for sale of the Suburb P and Suburb U properties to be in the sum of $542,246. The referee report itself cost $41,525. The cost of the report was paid from the monies held in the trust account.
Consent orders were made on 9 March 2024 between the wife, trustees for sale and the husband that provided for the trustees for sale to receive $542,246 for the work undertaken from the time of their appointment to the time in which the orders were entered into. That debt has been paid and the trustees were subsequently removed as parties to the proceedings.
DOCUMENTS RELIED UPON
The husband relies upon the following documents:
·Case Outline filed 20 October 2023;
·Amended proposed orders sought received 18 July 2024 (Exhibit R);
·Affidavit of Mr Jepson filed 6 October 2023;
·Financial Statement of Mr Jepson filed 20 October 2023;
·Affidavit of Ms ZZ filed 6 October 2023;
·Affidavit of Mr AQ filed 3 October 2023;
·Affidavit of Mr AR filed 16 October 2023; and
·Tender bundle.
The wife relies upon the following documents:
·Amended Case Outline filed 28 June 2024;
·Amended Response to Initiating Application filed 11 December 2023;
·Affidavit of Ms Jepson filed 9 October 2023;
·Updating affidavit of Ms Jepson filed 27 June 2024 (first sentence of paragraph 8 and paragraphs 9 and 10);
·Financial Statement filed 23 May 2024;
·Affidavit of Mr DD filed 15 April 2021;
·Written submissions received 18 July 2024; and
·Tender bundle.
The second respondent relies upon the following documents:
·Case Outline filed 22 October 2023;
·Amended Response to Final Orders filed 22 October 2023; and
·Affidavit of Ms B Jepson filed 23 October 2024.
PROPOSED ORDERS
The husband seeks that the Court make orders in the following terms (Exhibit R):
1.[MR JEPSON] (the “husband”) is declared the sole owner of and he shall otherwise be entitled to retain all of the monies held [by JJ Lawyers] on behalf of the wife or otherwise held by them on behalf of the parties following the sale of [L Street] [Suburb P] in the State of New South Wales.
2. These Orders are sufficient authority for [JJ Lawyers] to pay the whole of the monies held on behalf of [MS JEPSON] (the “wife”) and [MR JEPSON ](the “husband”), following the sale of [L Street], [Suburb P] in the State of New South Wales to Powe and White Family Lawyers on behalf of the husband.
3. The husband is granted leave to provide a copy of these Orders to [JJ Lawyers] necessary to authorise them to make payment in accordance with Order 1.
4.Within seven days, the wife is to pay to Powe and White Lawyers on behalf of the husband the sum of $507,000.
5. Within 35 days of the making of these orders:
(a) The wife is to do all acts and things necessary and sign such documents as required to transfer her absolute right, title and interest to the husband in [EE Street] [Suburb FF] (the “property”); and
(b) The wife is to do all acts and things necessary to discharge any encumbrance that may encumber the said property at the time of the transfer.
6. The wife be and is hereby restrained from encumbering the property.
7.As and from the earlier of 35 days from the making of these Orders or the time that Order 3(a) is effected, the husband shall have exclusive use and occupation of the said property and he shall indemnify the wife against any and all liability owing with respect to the said property.
8.Within 7 days from the date of these Orders, the wife is [to] do all acts and things necessary to assign to the husband any and all life insurance polices [sic], total and permanent disability insurance police [sic] or such other policy which the wife has in her name but such police [sic] covers the husband in any way.
9.Except as otherwise set out in this Orders, the parties have the sole right, title and interest in any other property which is at the date hereof in their possession, title or name and they shall be solely liable for and indemnify the other against any and all liabilities that stand in their name, title or possession.
10. Each party must do all acts and things and give all consents and execute all documents and writings necessary to give effect to the orders made herein.
11.In the event that either party refuses or neglects to execute any deed or instrument, a Judicial Registrar or such other empowered person of the Federal Circuit Court and Family Court of Australia or such other Court with jurisdiction, be appointed pursuant to section 106A of the Family Law Act 1975, 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.
12. Costs.
(Emphasis in original)
By her Amended Response to Initiating Application filed 11 December 2023, the wife seeks that the Court make orders in the following terms:
1. That within 14 days the applicant and the first respondent do all such acts and execute all such authorities as are necessary to authorise [Mr W], Solicitor, to pay the funds held by him in the [BB Lawyers] Trust Account to [Ms Jepson].
2. That each party be declared the sole legal and beneficial owner of all real property personal, motor vehicles, [i]nsurance policies, furniture and furnishings in their respective possessions as at the time of making these orders[.]
By her Case Outline (Annexure “A”), the second respondent seeks that the Court make orders in the following terms:
[Definitions omitted]
Repayment of Loan
1 On or before the Due Date, the Applicant will do all acts and things and sign all documents necessary to pay the Second Respondent as follows:
1.1 Pursuant to the loan deed between the Applicant and Second Respondent dated […] 1999, amounts as follows:
(a) As to $1,401,348.17, being the principal amount owed; and
(b) As to $641,734.27 in interest.
2 The Monies Owed will be paid in priority to any property division due and payable to the Applicant directly.
3 In the event the Applicant fails to comply with Order 1 by the Due Date, then interest on the Monies Owed is payable by the Applicant which will compound daily at the rate fixed from time to time by the Federal Circuit and Family Court of Australia Rules from the Due Date to the date of payment.
4 In the event the Applicant fails to comply with Order 1 within two weeks of the Due Date, then the Parties will do all things and sign all documents necessary to comply with Orders 9 and 17 inclusive.
Personal Property
5 Within 10 days of the date of the making of these Orders, the First Respondent will do all acts and things necessary to deliver the Personal Property to the Second Respondent and for the purposes of this Order:
5.1 The First Respondent will, within 48 hours of these Orders being made, send written confirmation of the Personal Property which will be made available pursuant to this Order, NOTING THAT in the event Personal Property is not returned the payments set out in Order 7 all due and payable;
5.2 The Second Respondent will nominate a removalist to facilitate the collection and delivery of items from the First Respondent to the Second Respondent;
5.3 Within 14 days of making of the Orders, the Second Respondent with provide to the First Respondent three proposed dates when the removalist are available to collect the items from the First Respondent’s possession;
5.4 That within 24 hours of receipt of the available dates from the Second Respondent, the First Respondent will select a date suitable to the removalist for the collection of the Personal Property (as set out in annexure “A”), and in the event none of the dates are suitable to the First Respondent personally she with take all steps to instruct a third party to facilitate the removalist collecting the items;
5.5 The First Respondent will be responsible for payment of the removalist's costs and in the event the Second Respondent is required to meet any of the costs of the removalist at first instance the First Respondent will reimburse the Second Respondent within 7 days of being provided with a tax invoice.
6 Pending the First Respondent’s compliance with Order 5, the First Respondent will use her best endeavours to keep and maintain all items referred to in this Order 5 in good order and condition, fair wear and tear excepted up to the point the items leave the possession of the First Respondent;
7 In the event that the First Respondent fails to comply with Order 5 by the Due Date, then the First Respondent will do all acts and things and sign all documents necessary to pay the Second Respondent as she may direct in writing as follows:
7.1 to the sum of $70,000 for the [Instrument];
7.2 In relation to the [Motor Vehicles] as follows:
(a) The sum of $230,000 for [Motor Vehicle 1];
(b) to the sum of $230,000 for [Motor Vehicle 2];
7.3 to the sum of $505,288 being the value of the [valuable] Collection [of assets]; and
7.4 to the sum of $12,075, being the balance of the Personal Property not otherwise covered by Order 7.1 and 7.2.
8 In the event the First Respondent fails to comply with Order 7 within two (2) weeks of the Due Date then the First Respondent will do all acts and things and sign all documents necessary to comply with Orders 9 and 17 inclusive.
Default Sale and Payment
9 In the event the Parties fail to comply with Order 1 and/or Order 7 within two weeks of the Due Date then the Second Respondent be appointed at trustee (“Trustee”) to effect the sale of the [Suburb FF] Property and such appointment is made pursuant to section 80(1)(e) of the Family Law Act 1975.
10 The [Suburb FF] Property is vested in the Trustee subject to any encumbrances affecting the entirety of the [Suburb FF] Property, but free from encumbrances, if any, affecting any undivided share or shares in the [Suburb FF] Property, to be held by the Trustee for sale.
11 The Trustee has the sole conduct of the sale of the [Suburb FF] Property, and is authorised to instruct an agent or auctioneer or both for that purpose.
12 The Trustees has power to offer the [Suburb FF] Property for sale and to sell the [Suburb FF] Property by public auction with power to fix a reserve price, or alternatively, have power to sell the [Suburb FF] Property by private treaty at the best available price.
13 That within fifty six (56) days after the day on which these Orders are made the First Respondent must remove from the [Suburb FF] Property all vehicles, rubbish, and chattels that have not vested in the Second Respondent (Personal Property) and deliver up vacant possession of the [Suburb FF] Property, together with all keys and security codes for all buildings and improvements on the [Suburb FF] Property, to the Trustee.
14 If the First Respondent fails to comply with Order 13 the Trustee may remove and dispose of any remaining items as they see fit within twenty eight (28) days after the Trustee gains possession of the [Suburb FF] Property.
15 Pending the sale of the [Suburb FF] Property pursuant to these Orders, the First Respondent with be solely responsible for paying all outgoings as and when they fall due that are associated with the [Suburb FF] Property including but not limited to all loan payments relating to the Mortgage, statutory rates and charges, utilities and insurances and keeping the [Suburb FF] Property in a good state of repair.
16 The First Respondent also indemnifies and keeps indemnified the Second Respondent in respect of any and all liabilities, both past and present, in relation to the [Suburb FF] Property, whenever and howsoever arising.
17 The proceeds of sale of the [Suburb FF] Property be paid in the following priority:
17.1 Council rates, water rates, vendor’s duty, land tax and any other statutory duties or charges, if any, as required on settlement for the sale of the [Suburb FF] Property;
17.2 Sale agent’s commission and expenses;
17.3 Amounts necessary to discharge the mortgage registered on the title of the [Suburb FF] Property;
17.4 The costs and disbursements of the conveyancer or solicitor acting on the sale;
17.5 The following monies to the Second Respondent as she may direct in writing:
(a) The Monies Owed;
(b) In the event the First Respondent fails to comply with Order 5, the amount particularised at Order 7, being:
(1) As to $70,000 for the [instrument];
(2) In relation to the [Motor Vehicles] as follows:
(A) As to $230,000 for [Motor Vehicle 1]; and
(B) As to $230,000 for [Motor Vehicle 2];
(3) As to $12,075, being the balance of the Personal Property not otherwise covered by Order 7.1 and 7.2;
(c) From the costs of disposal (if any) of any personal property remaining at the [Suburb FF] Property after the time has expired by which the First Respondent is required to deliver up vacant possession of the [Suburb FF] Property in accordance with Order 14;
(d) Storage fees (if any) of any personal property remaining at the [Suburb FF] Property after the time has expired by which the First Respondent is required to deliver up vacant possession of the [Suburb FF] Property in accordance with Order 14; and
(e) The balance of the proceeds to the Parties as they may direct.
Enforcement
18 In the event that either party refuses or neglects to execute any deed or instrument necessary to give effect to these Orders then the Registrar of the Court is appointed pursuant to Section 106A of the Family Law Act, to execute such deed or instrument in the name of such party and to do all things necessary to give validity and operation to the deed or instrument.
19 Each party be granted liberty to apply on seven (7) days’ notice regarding the implementation of these Orders.
Miscellaneous
20 The legal costs of the Second Respondent will be borne by the Parties in priority as determined by the Court and at capped at the sum of $50,000
21 All extant property applications be otherwise dismissed.
On 20 December 2023, counsel for the second respondent advised the Court that she accepted that certain monies she had advanced to the parties were statute barred but she pressed her claim for recovery of monies advanced to the parties in the sum of $417,624 (Transcript 1 July 2024, p.54 line 40 to p.55 line 14).
PROPERTY ADJUSTMENT – LEGAL PRINCIPLES
In circumstances where both parties contend that orders should be made for the adjustment of their property upon the breakdown of their marital relationship, the task before the Court is to make such orders as are appropriate, just and equitable having regard to the language of both s 79(1) and s 79(2) of the Family Law Act 1975 (Cth) (“the Act”).[1]
[1] Zao & Lee [2019] FamCAFC 169 at [48].
In exercising its discretion, the Court is required to take into account the matters set out in s 79(4) of the Act. Section 79(4) is divided into two limbs. The first limb is in respect to those matters set out in paragraphs (a) to (c), which deal with what are commonly known as the ‘contribution factors’. Contributions can, in turn, be direct or indirect, financial or non-financial contributions to the matrimonial property. The second limb is in respect to those matters set out in paragraphs (d) to (g), which primarily relate to the future needs of the parties but can include any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account.
The broad discretion conferred by s 79 of the Act is not, however, to be exercised “according to an unguided judicial discretion”.[2] The leading case of Hickey and Hickey and Attorney-General (Cth) (2003) FLC 93-143 at [39] (“Hickey”), provided useful guidance recommending that, in determining what orders are appropriate, just and equitable the preferred approach is to adhere to the following four steps:[3]
(1)Identify and determine the asset pool of the parties as at the date of the hearing (this necessarily involves identifying both the assets and liabilities);
(2)Identify and determine each of the parties’ financial and other contributions to the date of the hearing (this can include the financial contributions made before, during and after the marriage);
(3)Assess how future and other events may have a financial impact on either of the parties, such as their age, state of health, income and property or financial resources (known as the s 75(2) factors); and
(4)Step back and examine this formula-based reasoning against the history of the marriage, intangible considerations and other contingencies so as to consider whether the outcome represents a just and equitable result.
[2] Stanford v Stanford (2012) 247 CLR 108 at [38] (French CJ, Hayne, Kiefel and Bell JJ) (“Stanford”).
[3] Endorsed in Bevan & Bevan (2013) FLC 93-545 at [60]–[71] (The Court). See also Schaars v Schaars [2023] FedCFamC1F 12 at [21].
In identifying the parties’ asset pool, a joint balance sheet was provided to the Court and marked Exhibit Q. There are, however, several items that remain in dispute and my reasons will focus upon those items.
In undertaking the recognised second step of weighing the parties’ respective contributions, I am required to take into consideration the myriad of contributions including both parties’ initial contributions in a holistic fashion.[4] That is, in the exercise of discretion under s 79 of the Act, the Court is required to “weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation”.[5] Given their differing natures, it is not possible to assess contributions with mathematical precision so as to allow them to be weighed neatly against one another.[6] In reality, the “task is like comparing apples and oranges”.[7] All contributions must be weighed collectively rather than segmented or compartmentalised and each weighed against the remainder,[8] with the Court charged with moving from a qualitative to a quantitative assessment.[9]
[4] Dickons v Dickons [2012] FamCAFC 154 at [24] and [26] (“Dickons”). See also Jabour & Jabour (2019) FLC 93-898 at [86] (“Jabour”).
[5] Jabour at [60], citing Wallis & Manning (2017) FLC 93-759 at [20].
[6] Norbis v Norbis (1986) 161 CLR 513 at 522 (Mason and Deane JJ) (“Norbis”), as applied in Clives and Clives (2008) FLC 93-385 at [41], [44]–[45].
[7] Franklin & Franklin [2010] FamCAFC 131 at [177] (Boland and Thackray JJ).
[8] Jabour at [73]–[87], as applied in Horrigan & Horrigan [2020] FamCAFC 25 at [42]–[48].
[9] Mallet and Mallet (1984) 156 CLR 605 at 625 (Mason J); Teal & Teal [2010] FamCAFC 120 at [36]; Van der Linden & Kordell [2010] FamCAFC 157 at [90].
In undertaking the third step, that is, the task of assessing the parties’ future needs, the Full Court has cautioned against a tendency “to assess s 75(2) factors in percentage terms without considering its real impact” and that it “is the real impact in money terms which is ultimately the critical issue”.[10]
[10] Clauson and Clauson (1995) FLC 92-595 at 81,911, as applied in Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 at [48].
In undertaking the fourth stage referred to in Hickey, it has been said that what is a “just and equitable” outcome “does not admit of exhaustive definition”, nor is it “possible to chart its metes and bounds”.[11] It is important to recognise that “the whole is not necessarily the sum of its component parts, and at the very least one has to stand back, at the end, and look at the final result, to ensure that the cumulative process has not produced a manifestly unjust result”.[12]
[11] Stanford at [36].
[12] Tomasetti and Tomasetti (2000) FLC 93-023 at [114].
It is to be appreciated that the exercise of the broad discretion given to the Court pursuant to s 79 of the Act “‘inevitably involves value judgments and matters of impression’, and accordingly it cannot be treated as ‘a mathematical exercise’”.[13]
CONSIDERATION
[13] Petruski & Balewa (2013) 49 Fam LR 116 at [49], citing Lovine & Connor (2012) FLC 93-515 at [40]–[41].
Factual findings
The husband and wife have each helpfully provided to the Court a summary of factual findings that they contend are relevant to the determination of the controversies in these proceedings. I have considered each of those contentions of fact and will refer to them to the extent that a factual finding is necessary and has impacted my decision as to the orders I have made in these proceedings.
The wife’s credibility
The mother was a poor witness. Her answers were frequently non-responsive and self-serving. Most significantly, however, I am satisfied she gave deliberately false evidence to the Court in respect to the sale of two motor vehicles that had been constructed by the husband from parts taken from motor vehicles previously owned by his father and also from motor vehicles and parts acquired by the husband.
Because of the impact that the wife’s false testimony has had on my assessment of her credibility, it is convenient to deal with that issue at this point of my reasons.
The evidence of the second respondent in respect to her acquisition of the motor vehicles is set out at paragraphs 78–87 of her affidavit, as follows:
[…] [the husband’s father] collected [motor vehicles] and when I met him in or about 1956, he had a [motor vehicle]. He restored several other [motor vehicles] during our marriage. It was from this that [Mr Jepson] developed his interest in [motor vehicles] and over the years he purchased around 8 [vehicles].
[Mr Jepson’s] interest in [motor vehicles] was very much influenced by [his father]. I cannot remember the exact date, but I remember that [Mr Jepson] told me sometime after [his father] passed away, “I purchased two [motor vehicles], they are in pretty bad nick, but I think with the parts from Dad’s old [vehicles], I can restore them a bit”. This made me happy that my husband’s passion had passed to my son.
[Mr Jepson] then purchased old [parts] and difficult to obtain […] parts: he used […] engines and many parts from [his father’s] collection to restore these two [motor vehicles] along with the assistance of [Mr AS]. As [Mr Jepson] used a lot of the parts from [his father’s] old [motor vehicles], we considered that the [vehicles] were a family asset, and [Mr Jepson] and I had a 50% share in them.
When the [motor vehicles] were restored, [Mr Jepson] did not register them to be roadworthy as they were more sentimental and collectibles than anything.
In […] 2013, [Mr Jepson] wanted to sell me his share of the [motor vehicles]. We agreed to sell the [vehicles] at $100,000 each as we believed this to be the value of them at the time. I did not pay him any money but instead, [Mr Jepson] told me, “the [motor vehicles] will be security for the money I owe you.” …
[Paragraphs 83–85 omitted]
I do not believe that [Ms Jepson] sold the [motor vehicles]. This is because the [vehicles] are not so much vehicles as they are collectibles; their value is informed by the proper registration and historical documentation. The [motor vehicles] are in my name and are now noted by [AT Group] as stolen worldwide; I deny that any purchaser who knows anything about the [motor vehicles] would want to purchase them.
After we discovered that the [motor vehicles] were stolen, [Mr Jepson] told me “I told [Mr AS] about the [motor vehicles]. He was shocked at how low they sold for”. [Mr AS] is a world-renowned expert on [this brand of motor vehicle] and he knew my [vehicles] very well because he previously helped [Mr Jepson] with their restoration as deposed above.
The receipt for the purchase of the motor vehicles dated 2013 is Exhibit P in the proceedings. It reads as follows:
Received from [Ms B Jepson] of [address] $200,000
[particulars of the motor vehicles]
as full and final payment from all encumbrances.
(As per the original)
I accept that the title of the motor vehicles passed to the second respondent in 2013.
The wife attests, at paragraph 177 of her affidavit, that she sold the two motor vehicles in 2016 for $120,000. Her evidence in that paragraph and during the course of the proceedings was that she buried that cash under the Suburb P property and accessed it as required to meet her living expenses (Transcript 3 July 2024, p.95 lines 4–5).
In summary, the wife’s evidence in respect to the sale of the motor vehicles was that in 2016 she received $120,000 in cash for the purchase of the motor vehicles from two strangers whose names she did not record and who had appeared at the gate of her property (Transcript 3 July 2024, p.90 lines 45–47, with reference to the wife’s affidavit filed 9 October 2023, paragraph 352).
This was in circumstances where there is no evidence that the motor vehicles were advertised for sale and there is a lacuna in evidence as to how the buyers knew about the vehicles. The wife, nonetheless, sufficiently trusted these two strangers such that she received the $120,000 apparently without fear that they may rob her of the cash.
Adding to the implausibility of the wife’s account is what she did with the cash she says she received. The wife stated she buried the cash under the house in a Tupperware container, covering it with rocks and a slab, which she accessed from time to time by going under the house and digging up the money before re-burying it again (Transcript 4 July 2024, p.98 lines 10–31). Her justification for doing this was her reluctance to deposit the funds into a bank account. This explanation is, however, inconsistent with evidence that she did in fact deposit other amounts of cash into a bank account during the period (Transcript 4 July 2024, p.98 lines 45–47).
Further, while seeking to corroborate the implausible story that she buried the funds under her house by referring to a police officer being present when she dug up the funds (Transcript 3 July 2024, p.95 lines 17–21), the wife failed to call that person to give evidence in the proceedings.
Accordingly, in circumstances where – despite police inquiry – the motor vehicles have not been located since 2016, I accept that the probability is that the motor vehicles have been sold but I do not accept the wife’s evidence as to the sale price that she received or that it represented the fair market value of the vehicles.
I do not accept the wife’s evidence that the motor vehicles have been sold for the value that she states in her evidence.
The wife’s credibility is further undermined by her assertion at paragraph 307 of her affidavit that she only became aware of a $600,000 loan taken out from Y Company, in her name, in 2016. That evidence is inconsistent with other loan documentation that the wife signed in respect to the loan in 2007 (Exhibit H). As I will subsequently explain, the wife’s prevarication in responding to questions about her signature on those documents and her failure to, in many instances, give direct answers, leads me to conclude that the documents were in fact signed by the wife and confirm her knowledge of the loan in 2007 and not 2016 as she attests in her affidavit.
The wife also gave implausible evidence in relation to the use of burner phones. At paragraph 426 of her affidavit, the wife attested: “[i]n early 2016 I was instructed to obtain burner phones by the Police”, with the implied purpose being to communicate with police. During the course of the wife’s cross-examination by the solicitor for the husband, it became apparent that the wife was not just using the burner phones to communicate with police, lawyers, and her family and friends as she had initially contended. What she was doing, which she failed to disclose, was contacting a reporter to provide damaging information about the husband and his entities.
Finally, I will subsequently explain why the wife’s failure to provide adequate disclosure has also impacted upon my assessment of her credibility.
The husband’s credibility
The husband was an articulate witness, but I also have concerns in respect to his credibility and, in particular, his tendency to give self-serving evidence. In that respect, in responding to questions relating to allegations that had been made against him as set out in the wife’s affidavit, the father initially said that he was not sure if he had read the wife’s affidavit. When asked by counsel to confirm, he said “I don’t think I read it”. When pressed on this matter I asked him for an explanation as to why he had not read the wife’s affidavit, he backtracked by stating “I’ve skimmed it” (Transcript 1 July 2023, p.23 line 20).
His initial assertion to the effect that he had not read the wife’s affidavit is implausible particularly given the instructions that he provided to his legal advisers seeking to subpoena the personnel records of a police officer who the wife attested was primarily involved in the investigation of alleged criminal activity engaged in by the husband.
Moreover, at paragraph 156 of his affidavit, the husband attested to owing $500,000 in legal fees to his former solicitor, Mr DD, but that liability was not included in his October 2023 Financial Statement.
The father also attested that the second respondent, his mother, had insufficient funds to support him since early 2022 (Transcript 1 July 2024, p.46 lines 11–21, referring to the husband’s affidavit filed 6 October 2023, paragraph 226). This is inconsistent, however, with the cost disclosure notices provided by his solicitors which indicate that the second respondent made payments on behalf of the husband.[14]
[14] See Costs Notices filed on 7 November 2022, 9 March 2023 and 9 November 2023.
In his trial affidavit, the husband stated that the criminal charges that have been brought against him were subject to a “No Bill application” as the police could not “make out the offences as charged” (paragraph 143). During cross-examination, however, the husband admitted that this had already been rejected (Transcript 1 July 2024, p.43 lines 39–40).
Treatment of the parties’ evidence in the context of credibility concerns
As a result of my concerns regarding the credibility of both the husband and wife, I have not accepted their evidence in respect to matters of controversy unless it is verified by independent and admissible documentary evidence. Where evidence of that nature is not available, I have determined that the party making the allegation has failed to establish the existence of that fact to the evidentiary standard set out in s 140 of the Evidence Act 1995 (Cth) (“Evidence Act”).
Is it just and equitable to make a property adjustment?
Counsel for the wife contended that in the circumstances of this case, it would not be just and equitable to make any property adjustment order and rather, the Court should make a declaration that monies held in respect to the proceeds of sale of the Suburb P property should be paid to the wife (Transcript 18 July 2024, p.93 lines 28–32).
That submission was made on the basis of three essential contentions. Firstly, it was contended that the Court would have regard to the husband’s mismanagement of the corporate entities that he initially contributed to the parties’ property which includes – according to the wife – both fraudulent and illegal activity. Secondly, that the wife’s property where she currently resides, being EE Street, Suburb FF, has been acquired as a result of a settlement that the wife made with Y Company wherein she was paid in total the sum of $2,180,000. Thirdly, additional monies that the wife has available to her were gained from her post-separation income, superannuation that she received in respect to her post-separation employment, and the receipt of an inheritance post-relationship.
It is convenient at this point to set out why, on the basis of evidence that she has presented, the wife has not satisfied me on the balance of probabilities and to the extent required by s 140(2) of the Evidence Act, that the husband has engaged in fraudulent and illegal activities.
The wife sets out the relevant allegations she makes regarding the husband’s misconduct in a document entitled “wife’s asserted facts” (Exhibit T).
Firstly, counsel for the wife refers to the husband’s affidavit in contending that the husband’s business interests were valued between $36 to $60 million before 2013 (Transcript 18 July 2024, p.77 lines 44–47, referring to husband’s affidavit filed 6 October 2023, paragraphs 42–44). It is to be noted, however, that the husband contended that the businesses were owned jointly with his mother.
The wife contends that the husband engaged in fraudulent activities, including writing fraudulent cheques in 2013. She contended that the husband admitted to “cheque kiting”.
The wife contends that the husband’s mismanagement of his business interests, including by engaging in illegal activity, led to AW Bank appointing a liquidator in mid-2013, to manage the husband’s businesses, including AU Company and AV Ltd and leading to debts in the sum of approximately $39.4 million.
The wife alleges that the husband obstructed the liquidation process by hiding assets from the liquidators. She further alleges that the husband attempted to sell the hidden assets, which were later seized by the police resulting in criminal charges being brought against the husband.
It is not in dispute that criminal charges have been filed against the husband.
The wife contends that further to the loss that has arisen from his mismanagement of his business interests, the husband has incurred $8.2 million in legal costs to avoid a $32 million claim by Y Company. She argues that these legal costs, along with those related to the criminal charges, constitute financial wastage by the husband to such an extent that it would not be just and equitable to make any property adjustment order. This is in circumstances where the majority of the parties’ assets are in the wife’s name.
In relation to the wife’s allegation that the husband engaged in writing fraudulent cheques, the wife relies upon paragraphs 109 to 211 of her affidavit, annexures to the affidavit of Mr DD filed on 15 April 2021 and an amended Crown Case Statement. It is assumed that the reference to paragraph 211 should in fact be to paragraph 112 of the wife’s affidavit.
The relevant evidence of the wife in those paragraphs is that in 2013, the following conversation transpired:
[Mr Jepson]:I have been kiting cheques between the banks
[Ms Jepson]:what does kiting cheques mean
[Mr Jepson]: I owe the banks millions
(As per the original)
The wife then sought to include evidence as to what she had been told “[k]iting cheques meant”, however, that portion of the wife’s affidavit was successfully objected to by the husband as it contained hearsay evidence.
I give that evidence of the wife little weight in circumstances where, as I have explained, I have concerns regarding the credibility of both the husband and the wife in respect to controversial facts and, therefore, I do not accept the testimony of either of those parties unless it is corroborated by independent documentary or other supporting evidence. It is otherwise not disputed that in mid-2013, a liquidator was appointed in respect to the husband’s corporate interests.
The second bundle of documents relied upon by the wife to support her allegations are annexed to the affidavit of Mr DD filed on 15 April 2021 (Exhibit U, commencing at page 42). The documents attached to the affidavit of Mr DD are indexed on page 51 of Exhibit U, which have been attached to this decision and marked Annexure “A”. That index is expanded by reference to the police index to the brief of evidence dated 2021 and the further police index to the brief of evidence dated 2020 (Mr DD’s affidavit filed 15 April 2021, pages 56–64 and pages 70–72 respectively).
Insofar as counsel for the wife has sought to separately refer to the amended Crown Case Statement, I observe that the statement which commences at page 124 of Exhibit U is already included in the annexures to the affidavit of Mr DD, with the amended Crown Statement being referred to at paragraph 20 of his affidavit. Accordingly, I will include my assessment of the weight that should be attributed to that document in the context of my analysis of the totality of the relevant documents and indexes attached to the affidavit of Mr DD.
At the outset, I make the obvious point that if a party wishes to establish that another party to the proceedings has engaged in serious criminal activity, they should comply with the rules of the Court. This includes ensuring that the evidence of individuals who are the source of the asserted facts provide affidavits in accordance with r 8.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). In that context, the trial directions that were made on 22 March 2023 required the wife to file and serve the affidavit evidence upon which she intended to rely on no later than 14 days prior to the hearing. In the absence of advance notice, the husband was clearly not in a position to require the persons who are referred to in the police brief to attend for cross-examination in respect to the allegations that they made against him.
The evidence was nonetheless admitted into evidence without objection or application being made pursuant to s 136 of the Evidence Act. This was in circumstances where, in the absence of notice being given by counsel for the wife at the time of tender, the purpose of the tender was to confirm the nature of the allegations that had been made against his client, rather than the truth of those allegations. In the absence of an application being made pursuant to s 136 of the Evidence Act, no order was made to limit the purpose of the affidavit of Mr DD including the annexures to the affidavit. Nevertheless, as I shall explain, I give the evidence little weight.
The first index dated 2021 refers to unsworn statements of police officers and civilian witnesses. With a few exceptions, none of those statements are attached to the police brief of evidence. The relevant information obtained from those statements is summarised in Crown Case statements which refer to the primary evidence. A summary of those facts is set out in the Crown Case Statement, being pages 73 and 74 of Mr DD’s affidavit, as follows:
Omitted to comply with Part XIVB of the Family Law Act 1975 (Cth)
The index to the police brief of 2020 refers to statements of police officers and other witnesses. Those statements are not attached to the affidavit of Mr DD.
When pressed as to the admissibility of the annexures to the affidavit of Mr DD as establishing the truth of those allegations, counsel for the wife indicated he relied upon s 60 of the Evidence Act. That section provides:
60 Exception: evidence relevant for a non-hearsay purpose
(1) The hearsay rule does not apply to evidence of a previous representation that is admitted because it is relevant for a purpose other than proof of an asserted fact.
(2)This section applies whether or not the person who made the representation had personal knowledge of the asserted fact (within the meaning of subsection 62(2)).
(Notes omitted)
The affidavit of Mr DD is included in the mother’s tender bundle (Exhibit U) and was admitted in the circumstances to which I have earlier referred. Counsel for the husband, however, clarified that the absence of objection was on the basis that the affidavit was tendered for a non-hearsay purpose. That is, to establish that the allegations had been made against the husband, but not for a hearsay purpose, that is, relying upon the truth of the content of the documentation.
I accept that the evidence contained in the wife’s tender bundle (Exhibit U) has been admitted into the proceedings for a non-hearsay purpose (s 60 of the Evidence Act). This is made clear in Australian Securities and Investments Commission v ACBF Funeral Plans Pty Ltd [2024] FCAFC 19 at [80], where the Full Court of the Federal Court of Australia stated:
The FSRC Transcript was admitted into evidence, without objection, as a record of the statements Mr Jones gave before the Royal Commission, and it is in evidence as such. Having been admitted into evidence, without objection, it is evidence in the proceeding, irrespective of whether any objection, if taken, would have succeeded: Frigger v Trenfield (No 3) [2023] FCAFC 49 at [393] (Allsop CJ, Anderson and Feutrill JJ). Pursuant to s 60(1) of the Evidence Act 1995 (Cth) (Evidence Act), being evidence as a record of what Mr Jones said during his examination before the FSRC, it is also admissible to prove the truth of the facts he asserted during that examination …
That is not the end of the matter, however. In Lardil, Kaiadilt, Yangkaal, Gangalidda Peoples v Queensland [2000] FCA 1548 (“Lardil”), Cooper J stated at [16]:
It is important to stress that s 60 is only concerned with the use of hearsay evidence which was admitted for the purposes specified in s 60. Section 60 is not concerned with the weight which is to be given to hearsay material which may, by the operation of s 60 be relied upon to prove the fact intended to be asserted by the representation. Notwithstanding the operation of s 60 of the Act, and even where s 136 of the Act is not invoked, the weight to be accorded to any particular evidence remains a matter for the court before which the evidence is adduced: Quick v Stoland at 375 - 376; Welsh at 369, 371. Once admitted, it is to be given such weight as the circumstances warrant: Walker v Walker (1937) 57 CLR 630 at 635, 636, 638.
That statement of principle was referred to, with approval by the Full Court of the Federal Court of Australia in Minister for Immigration and Citizenship v SZNVW (2010) 183 FCR 575 at [57].
I give little weight to the evidence attached to the affidavit of Mr DD in circumstances where it is effectively second-hand hearsay. That is, the evidence is essentially based upon a prosecuting officer’s analysis of the evidence contained in statements that had been provided to the police, which are not attached to the affidavit.
As noted by Cooper J in Lardil at [17]:
Included in the circumstances to be considered in determining what weight should be given to the material, will be the circumstances in which the statement was made, whether or not that which was said was within the personal knowledge of the person making the statement, the likelihood or otherwise that the statement has been fabricated, whether the maker of the statement has been called to give evidence, and if so, the nature and effect of that evidence, including whether the maker has been cross-examined on the statement or generally, and whether the respondents have had a real opportunity to test the accuracy of the matters asserted in the report. These are not the only circumstances which need to be taken into account. Much will depend on the relevant circumstances identified in each particular proceeding. However, what needs to be kept clearly in mind is that s 60 of the Act does not endow hearsay evidence with any greater weight than the circumstances warrant; it merely means that there is some evidence of the fact asserted …
The unreliability of hearsay evidence where the statement maker is unavailable for cross-examination is well recognised. In Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union [2021] FCA 920 at [309], Katzmann J said in the context of evidence having been admitted pursuant to s 60 of the Evidence Act:
The hearsay rule precludes the admission into evidence of a previous representation to prove the truth of the asserted facts: Evidence Act 1995 (Cth), s 59(1). The rule does not apply, however, if the evidence is admitted because it is relevant for another purpose: Evidence Act, s 60. Presumably this was the reason no objection was taken to Murray’s evidence. At the same time, no direction was sought limiting the use of the evidence to a non-hearsay purpose. In the absence of such a direction, the evidence may be used for all relevant purposes: Welsh v R (1996) 90 A Crim R 364 at 369 (Hunt CJ at CL, Newman J and Bell AJ agreeing at 375). Even so, the weight that should be accorded to the evidence is another matter. Evidence can be unreliable and the reliability of hearsay evidence cannot be tested through cross-examination of the person who made the representation. As the High Court observed in Lee v The Queen (1998) 195 CLR 594 at [32], “[o]ne very important reason why the common law set its face against hearsay evidence was because otherwise the party against whom the evidence was led could not cross-examine the maker of the statement”. Second-hand hearsay is notoriously unreliable. The Australian Law Reform Commission remarked that “second hand hearsay is generally so unreliable that it should be inadmissible except where some guarantees of reliability can be shown together with a need for its admissibility”: Evidence (Interim), (Report No 26, ALRC, 1985), vol 1 at [678] …
In terms of paragraph 3 of the wife’s asserted facts, it is not in dispute that liquidators were appointed to AU Company and AV Ltd.
In terms of paragraphs 4 and 5 of the wife’s asserted facts, it is not in dispute that the husband has been charged with a number of criminal charges. The nature of those allegations are set out in the Crown Case Summary commencing at page 73 of the wife’s tender bundle, with the specific details of the charges referred to at pages 77–87 of the tender bundle. I give that document little weight in the absence of any direct evidence of the existence of the asserted facts set out in the Crown Case Summary: TJ (on behalf of the Yindjibarndi People) v Western Australia (No 3) [2015] FCA 1359 at [9]–[10].
For reasons which I subsequently explain, I do not accept that the legal funds expended by the husband in defence of the criminal allegations are “wastage”, such that he should be deprived of the opportunity to seek a property adjustment pursuant to s 79(4) of the Act.
At paragraph 6 of the wife’s asserted facts, the wife contends that “together with [Mr AX] [[a Y Company] agent] arranged to borrow $600,000 from [Y Company], fraudulently, and without the knowledge or consent of the wife”. Reference is made to paragraph 307 of the wife’s affidavit and also to what has been described as the Y Company’s KK Company Report, that commences at page 202 of Exhibit U.
At paragraph 307 of her affidavit, the wife asserts that in addition to Y Company failing to communicate with her, that she had no knowledge of the loan and “only became aware of it in 2016” when her solicitors, C Firm, and the police questioned her in relation to its origin. The wife’s evidence in that respect is inconsistent with her signature contained on several other documents associated with the loan (Exhibit H). In responding to questions during the course of cross-examination regarding her signature on documents relating to the loan at the time that it was taken out, the wife prevaricated in failing to respond directly to questions asked of her and, at best, her recollection as to whether she had signed relevant documents relating to the loan when it was taken out in 2007, was unclear. As a result, her evidence fails to satisfy me that she was in fact unaware of the existence of the loan when it was taken out in 2007.
The document referred to as the “[Y Company] [KK Company] report” at paragraph 6 of the wife’s asserted facts was provided by KK Company on behalf of Y Company and is titled “Forensic Investigation – Lending Arrangement [dated] […] 2019”. The document is also referred to at Item 10 of the police “Brief Index” set out on page 97 of Exhibit U. The KK Company Report is itself 90 pages in length. Counsel for the wife accepts that the report has not been prepared in accordance with the provision regarding the admission of expert evidence as set out in Part 7.1 of the Rules but, nonetheless, seeks to rely on that report as a business record pursuant to s 69 of the Evidence Act. The report itself notes its own limitation at paragraphs 10 and 18, as follows:
[KK Company] does not warrant the accuracy or credibility of any of the information supplied to it.
…
We have not made internal or external inquiries to identify the internal processes undertaken or verify the completeness of the information and documentation supplied to us …
In considering the allegation made by the wife that her signature on a copy of a 2006 loan application for the sum of $600,000 had been forged, the unidentified author of the KK Company Report noted at paragraph 31 “[Y Company] and [AY Company] were unable to provide original documentation for the executed 2006 loan Agreement. Therefore, we were unable to determine whether [Ms Jepson’s] signature page in the Agreement was authentic”. It does not appear that the authors of the KK Company Report were provided with the documents contained in Exhibit H, that I accept were signed by the wife who was, at that point, using her married name. In particular, the documents set out in Exhibit H include: a “Home Loan Additional Application Form for Guarantors” signed and dated by the wife in early 2007, a Repayment Form signed and dated by the wife in mid-2007, a Borrower’s Acknowledgement also signed and dated by the wife in mid-2007, and a document entitled “Guarantee Details” signed and dated by the wife in mid-2007.
Clearly, if that documentation had been provided to the authors of the KK Company Report, they may have reached a conclusion different to that which they state in their report that the wife was the victim of fraudulent conduct by Mr AX, who was an agent acting on behalf of Y Company and/or the husband. Accordingly, for these reasons and the reasons that I referred to regarding the inherent unreliability of evidence where a person who is the source of the evidence or opinion is not available for cross-examination, I give the KK Company Report little weight.
I must consider the wife’s evidence in the context of s 140 of the Evidence Act, which provides that in determining whether a party has proved their case “on the balance of probabilities”, I must have regard to “the gravity of the matters alleged” (s 140(2)(c) of the Evidence Act). As a result of the limited weight that I give the evidence of the wife in respect to the serious allegations that she makes that the husband has engaged in fraudulent and criminal conduct and in circumstances where those allegations are denied by the husband, the wife has failed to satisfy me to the requisite standard that the husband has engaged in the conduct that she alleges.
I accept, however, the facts as asserted at paragraph 8 of the wife’s asserted facts that, as a result of complaint that she made to Y Company through the Financial Ombudsman Service, the wife ultimately received:
(a)Compensation in the amount of $180,000;
(b)Further compensation in the amount of $2 million; and
(c)A waiver by Y Company of the amount due to them, on the sale of Suburb P, in the amount of $913,267 (comprised of the principal $600,000) and accrued interest and payments in the sum of $313,267.
The receipt of that compensation and benefit is, for reasons which I subsequently explain, a significant contribution on the part of the wife. It is not, however, a fact that justifies a decision to decline the making of a property adjustment order pursuant to ss 79(2) and (4) of the Act.
In circumstances where, on the basis of the evidence she has presented in this case, the wife has failed to satisfy me that the husband has engaged in acts of impropriety, this case is in the category of cases described by the High Court in Stanford at [42] where it is just and equitable to make property adjustment orders pursuant to s 79(4) of the Act.
In particular, the husband and wife no longer live in a marital relationship and the husband has re-partnered. Common use of the matrimonial property by the parties is no longer expected. Save to the extent that monies are held in a controlled monies account pending conclusion of this litigation, existing property arrangements between the parties have ended by voluntary severance of the marital relationship. Neither party assumes that there will be joint management of the matrimonial property and both wish to move on with their lives independently of the other.
The balance sheet
Set out hereunder is the parties’ balance sheet tendered to the Court at the final hearing (Exhibit Q):
ASSETS
Ownership
Description
Wife’s value
Husband’s value
1
W
Proceeds of sale of L Street, Suburb P
$1,214,541
$1,214,541
2
W
EE Street, City Q
$1,725,000
$1,725,000
3
W
Claim to valuable items with NSW Police
NIL
$600,000
4
W
Furniture and Fittings, in storage
$118,000
$118,000
5
W
Jewellery and handbags
$91,000
$200,000
6
W
Wife’s Bank Account AZ Bank #…69
$507,754
$507,754
7
W
Motor Vehicle 6
$29,350
$29,350
8
W
Entitlement to Estate of Mr HH
$655,197
$655,197
9
H
Motor Vehicle 4
$3,500
$3,500
11
W
Recreational vehicle
NIL
$1,500
Total
$4,349,367
$5,036,527
ADDBACKS
12
H
Distribution to Husband 2024
$61,500
$61,500
13
H
Partial Property Division to Husband 2024
$140,000
$140,000
14
H
Partial Property Division to Second Respondent
NIL
NIL
15
H
Loss of businesses caused by husband’s dishonest and illegal conduct
$35,000,000
NIL
16
H
Dissipation by husband of Y Company account #…71
$888,904
NIL
17
W
Legal fees paid to C Firm by wife
NIL
$36,000
18
W
Legal fees paid to BA Lawyers by wife
NIL
$74,495
19
W
Legal fees to be paid to Mr BC
NIL
$147,415
20
W
Proceeds of sale of Motor Vehicle 1 and Motor Vehicle 2 by the wife
NIL
$120,000
21
W
Proceeds of sale of Motor Vehicle 7 by the wife
NIL
$35,000
22
W
Proceeds of sale of Motor Vehicle 8 by the wife
NIL
$15,000
23
W
Y Company monies directed by wife to her sister (First Deed)
NIL
$110,000
24
W
Reckless conduct reducing sale price of Suburb P (15%)
NIL
$850,000
25
W
Reckless conduct causing costs of trustees for sale
NIL
$542,246
Total
$36,090,404
$2,241,656
LIABILITIES
28
W
Outstanding legal fees C Firm
$300,000
NIL
29
W
Outstanding legal fees BA Lawyers
$350,000
NIL
30
Outstanding tax liability
$54,000
NIL
31
H
Monies owing to Ms B Jepson (less partial payment)
NIL
$260,000
Total
$704,000
$260,000
SUPERANNUATION
Member
Name of Fund
Wife’s value
Husband’s value
32
W
Super Fund 2
$35,858
$35,858
Total
$35,858
$35,858
The disputed items are therefore Items 3, 5, 11, 15––25 and 28–31. I will deal with each of those items seriatim under the subheading of assets, addbacks, and liabilities.
ASSETS (ITEMS 3, 5 AND 11)
Item 3 – Dispute over the $600,000 valuable collection confiscated by police
The husband contends that the wife has a right to claim the valuable collection confiscated by New South Wales police, which he values at $600,000. The claim is rejected by the wife.
By way of summary, the husband contends that a $600,000 Y Company loan taken in 2007 for purchasing assets as an investment establishes the wife’s entitlement to claim the assets. The husband argues that the assets were purchased and held in the wife’s name, making her eligible to claim ownership of the confiscated assets.
I note that the assets, have presumably – on the husband’s case – been stored now for approximately 18 years. There has been no professional valuation of the assets.
He asserts the amount of $600,000 should be included on the balance sheet as the value of a chose in action, which he contends the wife has an entitlement to pursue, the value of which corresponds to the amount borrowed in 2007 from Y Company for the purpose of purchasing the assets. He argues that this valuation reflects the original investment made by the parties and should be considered either an asset or a financial resource for the wife.
The husband claims that the $600,000 loan from Y Company was taken jointly by the parties in 2007 to purchase the assets as an investment. He states that the wife knowingly signed the loan application and related documents, including a personal guarantee and a joint letter confirming repayment terms.
The wife denies having any claim or entitlement to the collection of assets held by the police.
The wife contends that the $600,000 loan from Y Company was fraudulently obtained by the husband and his agent, Mr AX, without her knowledge or consent. She alleges that the husband forged her signature using a previous loan application from 2005 to secure the loan. Further, according to the wife, the loaned funds were not used for purchasing assets but were instead misappropriated by the husband for other purposes. She claims that in addition to forging her signature, the husband falsely stated to Y Company that the purpose of the loan was to provide a bond to review financial records of BD Business and that the loaned funds were diverted to the husband’s company rather than being used to purchase assets.
In circumstances where the payments received from Y Company underpin the purchase of the Suburb FF property, I do not separate that property from the general property pool of the parties by placing it in a separate property pool. I also accept the husband’s characterisation of the funds received from Y Company and, as such, I reject the wife’s argument that those funds should be placed in a separate pool for the purpose of assessment of contributions.
Nevertheless, irrespective of the appropriateness or otherwise of the wife’s conduct in making the complaint, it was the fact that she made the complaint to the Financial Ombudsman Service that laid the foundation for the subsequent negotiations that resulted in the settlement with Y Company. That effort on the part of the wife should be recognised as a contribution by her.
The question becomes whether I should also include the remaining items in a separate pool for the purpose of assessing contributions.
The parties have lived separately and apart since 2012 and have had separate financial lives in that period with the wife returning to the workforce and earning her own income. Comparatively, the husband has elected not to utilise his earning capacity. In those circumstances, it is, in my opinion, appropriate to exercise my discretion to include both Item 6, the wife’s bank account ending #69, and Item 8, the wife’s inheritance from her late father, in a separate pool as those items represent the balance of funds that the wife has received by way of post-separation inheritance. As observed by the Full Court in Bonnici and Bonnici (1992) FLC 92-272 at 79,020:
The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances. Such circumstances might include the care of the testator prior to death by the husband or wife as the case may be or other particular services to protect a property …
There was no evidence of any such special circumstances in this case.
For similar reasons, I also include, in the second pool, Item 32 being the wife’s superannuation entitlement, which has been earned solely due to her post-separation employment. As earlier noted, the husband had the opportunity to similarly utilise his earning capacity but elected not to do so.
ASSESSMENT OF CONTRIBUTIONS
The Court is required to make an assessment of the nature and quality of the totality of the parties’ contributions throughout the entirety of their relationship, together with their contributions in the period subsequent to their separation. In Dickons at [14], Jabour at [61] and Dovgan & Dovgan [2021] FamCA 306 at [347], which restates the need to holistically assess contributions following the case of Dickons, it has been explained 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”.
The solicitor-advocate for the husband acknowledged that the full extent of the husband’s initial contributions have not been valued but contend that they were much greater than those of the wife. This is not in dispute. The husband had substantial commercial interests in three companies, including BE Business, three properties at Suburb QQ, Suburb SS, and TT Street in Suburb UU. Comparatively, the wife had a property in Suburb WW and Motor Vehicle 5.
The wife contended that the husband’s superior initial contributions should be given little weight because they have been diminished by his mismanagement and financial losses caused during the marriage. In that respect, the wife contends that the husband engaged in reckless financial behaviour, including fraudulent activities which diminished the parties’ assets. I accept that in considering contributions, I must have regard to the use made of those contributions: Boulton & Boulton (2024) FLC 94-202 at [101]. In that context, the husband’s initial contributions have significantly diminished in significance as result of their dissipation through various events – however those events are characterised. However, the wife’s contention that there should be no adjustment of property in favour of the husband as result of his mismanagement and possibly fraudulent and illegal conduct in respect to his corporate entities, is based on a flawed premise which appears to require a finding that the husband has, by way of that conduct, negatively contributed to the parties’ assets. The Court has, however, long held that there is no room for such considerations in s 79(4)(a)–(b) of the Act: Bircher & Bircher (2016) FLC 93-721 at [86].
Assessment of contributions in respect to the first pool of assets, being all items other than Items 6, 8 and 32
Despite the ultimate failure of his business, I am satisfied that, during the course of the parties’ relationship, the husband ran or operated a number of corporate entities, and while those corporate assets have been dissipated as a result of events that have occurred, there is no question that they provided a substantial income stream to the parties who enjoyed a high standard of living during the course of their intact relationship. Income generated from those entities also provided a significant portion of funds towards the purchase of the Suburb P property, the proceeds of sale of which, is the second most significant item on the balance sheet.
I am satisfied that the second respondent supplied $1,584,000 to the parties for the purchase of the Suburb P property, a loan that has never been repaid (Second respondent’s affidavit filed 22 October 2024, paragraph 45.1). This was done by way of a loan to K Pty Ltd, which was a company owned and controlled by the wife. That loan will never be repaid in circumstances where K Pty Ltd is now a shelf company with assets valued at $1.
In so deciding, I have had regard to the evidence of the second respondent set out at paragraph 45 of her affidavit wherein she states:
… since the 1999 Loan Agreement and to date I have made the following payments to the Parties and their companies:
45.1 $1,584,199.55 in total to [K Pty Ltd] (formerly [AB Company Pty Ltd]), which includes the principal and interest of 5% in accordance with the 1999 Loan Agreement …
The second respondent was not cross-examined in respect to that issue and the payments made to her by K Pty Ltd is confirmed by Annexure “M” to her affidavit.
While the wife, as the sole director, secretary and only shareholder of the company, denied such payments (Wife’s affidavit filed 9 October 2023, paragraph 297), her evidence was particularly unsatisfactory (Transcript 3 July 2024, p.17 line 8 to p.21 line 23). In responding to questions from the solicitor-advocate for the husband, the wife acknowledged that the purchase price of the Suburb P property was $4 million. She further acknowledged that $2.2 million was provided by way of a loan from Y Company, leaving a shortfall of $1.8 million. The wife’s assertion that that the amount of $1.8 million was made up from the proceeds of sale of Suburb WW and Suburb QQ does not explain the source of $1.8 million. In that respect, the wife accepted that the Suburb QQ property was sold in 2003 for $660,000 and that in 2003, the Suburb WW property was sold for $294,000 totalling $954,000. That is, even on the basis of the wife’s evidence, there was a shortfall of $846,000 that needed to be made up to purchase the Suburb P property.
The wife’s assertion that the shortfall was made up by the sale of other unknown properties which she has not identified despite having considerable time to prepare her evidence in respect to this case renders that evidence, in my view, to be implausible.
Accordingly, I accept the evidence of the husband and the second respondent that the second respondent contributed $1,584,000 million towards the purchase of the Suburb P property and that the balance was paid by the husband’s company (Exhibit V). Those amounts were clearly significant contributions made by the husband and on the husband’s behalf by the second respondent.
In final submissions, counsel for the wife did not concede that the second respondent had met the school fees of the children other than from 2014 or 2015 (Transcript 18 July 2024, p.86 lines 41–42). However, the second respondent was not challenged in cross-examination about supplying support to the parties’ children, including in respect to paying home contents and motor vehicle insurances, paying $218,566 towards life insurance policies for the husband, and supplying $121,000 to the trustees for sale of the Suburb P property to defray accumulated mortgage repayments (Transcript 18 July 2024, p.49 lines 27–34).
I accept that these advancements by the second respondent were a substantial contribution by her to the parties which is credited as a contribution by the husband.
More generally, the evidence satisfies me that the husband was the primary breadwinner, managing a number of corporate entities that generated income for the family. Whereas the wife’s contributions were primarily non-financial, focusing on homemaking and child rearing of the parties’ children, Mr XX and Ms YY. The wife did not work in paid employment during the course of the parties’ marriage although she received a wage of $1,500 per week from one of the husband’s companies (Transcript 3 July 2024, p.13 lines 43–45).
I am satisfied that the wife also managed the parties’ investment properties and maintained the separate properties that they lived in and spent weekend and holiday time in. I am further satisfied that the wife supported the husband’s career, enabling him to spend significant time at work while she took care of matters on the home front.
In terms of post-separation contributions, the husband contends that he has engaged in a substantial amount of work attempting to preserve the remaining assets and defending the parties’ marital property against claims that have been made against him and his corporate interests. In that respect, he contends that his efforts to resolve the dispute with his creditors, including AW Bank, were necessary to protect the parties’ financial position. I have not given weight to the husband’s submissions. While the wife has failed to present sufficient evidence to satisfy me that the husband has engaged in fraudulent and other illegal conduct, because of the doubts I have regarding the credibility of both parties, I am unable to find, as a matter of probability, that the husband did not engage in that conduct. In other words, I am not satisfied that the husband’s financial misfortunes and subsequent litigation have not been a consequence of his own conduct. I do not, therefore, give weight to his submissions that his actions in defending that litigation has been a post-separation contribution to the parties assets. Thus, there is essentially a stalemate in respect to the evidence presented by the prospective parties as to the propriety of the husband’s conduct during the course of his management of his business interests.
Nevertheless, I am satisfied that the wife has made significant contributions in the post‑separation period and, as a consequence, the superior initial contributions of the husband and the contributions to the parties property made by the second respondent are offset by the wife’s post-separation contributions. This includes the work she undertook in respect to maintaining the parties’ properties and the successful efforts she made to obtain compensation from Y Company (particularised at [129] of this judgment).
In short, there is an equality of contributions both direct and indirect in respect to the first pool of assets which, with the removal of Items 6, 8 and 32, leaves a balance – to be adjusted on a 50/50 basis – of $3,752,301.
Contributions in respect to the second pool of assets (Items 6, 8, and 32)
In circumstances where the husband has made no contribution to the second pool of assets, containing Items 6, 8 and 32, I determined that it is just and equitable that the property adjustment orders I make provide for the wife to retain 100 per cent of those amounts which totals $1,198,809.
Relevant s 75(2) factors pursuant to s 79(4)(e) of the Act
Subsection (2)(a) – the age and state of health of each of the parties
Both parties are in their 60’s. The wife is a healthcare professional. The husband has not worked in the post-separation period. He attested that this is due to stress and anxiety associated with the extensive litigation that he has been engaged in and the time that it has occupied (Transcript 2 July 2024, p.22 lines 5–6). There has been, however, no evidence that would satisfy the Court that the husband suffers from any ongoing mental health concerns. The husband, who, in giving evidence was highly articulate, acknowledged that he has an earning capacity although, depending on the outcome of criminal proceedings against him, that capacity may be limited. I note that neither party contended that this consideration would result in an adjustment of property one way or the other.
Subsection (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
I have earlier set out my findings in respect to the property of the parties. Relevant to this consideration, an issue that has arisen in the proceedings has been the extent to which the second respondent is a financial resource of the husband. I am satisfied that the second respondent has paid a substantial amount in legal fees on the part of the husband and while, no doubt, funds so expended have considerably reduced her wealth, she is nonetheless in a position where she has and continues to provide accommodation for the husband.
Subsection (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
This consideration is not relevant.
Subsections (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
This consideration is not relevant.
Subsection (2)(f) – the eligibility of either party for a pension, allowance or benefit under any law of the Commonwealth, of a State or Territory or of another country; or any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia; and the rate of any such pension, allowance or benefit being paid to either party
Both the husband and the second respondent attested that they are in receipt of social security benefits, however, neither party has contended that is a relevant consideration in respect to the making of property adjustment orders.
Subsection (2)(g) – where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable
The parties enjoyed a high standard of living during the course of their intact relationship. Regrettably, as a result of the dissipation of their assets through the resources they have both applied to the extensive litigation in which they have been engaged, their ability to maintain that standard of living has been significantly reduced.
The querulous disposition of both parties has been to the advantage of their legal representatives but not themselves. In the absence of evidence that I acknowledge may possibly be presented in the context of an argument for costs, it appears to me that both parties must accept responsibility for engaging in the extensive and counter-productive litigation that is a characteristic of their dispute rather than taking the many opportunities offered by the Court for them to achieve a sensible and reasonable resolution of their dispute.
Subsection (2)(h) – the extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income
This is not a relevant consideration.
Subsection (2)(ha) – the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant
Insofar as the substantial portion of each parties’ total liabilities consists of outstanding legal fees – that is ultimately a consequence of their litigious campaigns against the other. The debts that they respectively have do not, in my opinion, justify an adjustment in favour or against either party.
According to the orders I make, the liabilities of each party will fall to the party who has responsibility to satisfy that liability. For reasons which I subsequently explain, this includes an obligation for the wife to compensate the second respondent for the sale of the two motor vehicles which I have found to be the property of the second respondent.
Subsection (2)(j) – the extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party
I have earlier noted and had regard to the efforts of the wife in home maintenance and in respect to the care and nurturing of the parties’ children. I have noted that her role in doing so enabled the husband to focus on his business responsibilities. Having earlier noted and considered the wife’s contribution in that respect, I do not here double count that contribution pursuant to s 75(2) of the Act.
Subsection (2)(k) – the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
To her considerable credit, despite the extensive period that the wife had out of the paid workforce during the course of the parties’ intact relationship, she has returned to the workforce as a healthcare professional subsequent to the parties’ separation. It was not contended by the wife, however, that this is a relevant consideration.
Subsection (2)(l) – the need to protect a party who wishes to continue that party’s role as a parent
This is not a relevant consideration.
Subsection (2)(m) – if either party is cohabiting with another person – the financial circumstances relating to the cohabitation
I have earlier noted that the husband is residing with the second respondent who is not requiring the husband to pay any rent, and I do not double count that fact as an additional consideration under this sub-section.
Subsection (2)(n) – the terms of any order made or proposed to be made under section 79 in relation to the property of the parties; or vested bankruptcy property in relation to a bankrupt party
This is not a relevant consideration.
Subsection (2)(naa) – the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to a party to the marriage; or a person who is a party to a de facto relationship with a party to the marriage; or the property of or vested bankruptcy property in relation to a person covered by the categories aforementioned
This is not a relevant consideration.
Subsection (2)(na) – any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
This is not a relevant consideration.
Subsection (2)(o) – any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
I have previously dealt with each of the parties’ contentions that, in the event of my failing to include an item as an addback on the balance sheet, in accordance with the primary contention, I should have regard to the parties’ conduct as a relevant consideration under s 75(2)(o) of the Act. I have explained why, other than in one respect, I do not intend to take that course.
The conduct I do take into consideration is the failure by the wife to comply with court orders to have her jewellery valued by a single expert valuer. As previously noted, I have included an amount on the balance sheet as proposed by the wife, as an admission against interest. I do however have regard to the fact that the Court has been unable to accurately value those items with the assistance of a single expert valuer as result of the wife’s conduct.
Subsections (2)(p) and (q) – the terms of any financial agreement and any Part VIIIAB financial agreement that is binding on the parties to the marriage
This consideration is not relevant.
Evaluation of s 75(2) factors
The relevant s 75(2) factor that I have regarded as being relevant to the property adjustment orders that I make is the fact that the second respondent is a significant financial resource for the husband. That consideration, however, is offset by the fact that the wife has failed to comply with orders to have items of jewellery valued by an independent valuer.
Accordingly, I do not make any further adjustment pursuant to s 75(2) of the Act.
OVERALL EVALUATION
For reasons that I have previously explained, the wife will retain the entirety of the second pool of assets totalling $1,198,809.
The parties will share equally in the first pool of assets totalling $3,752,301.
The husband currently has Motor Vehicle 4, totalling $3,500 in value. He has also had the benefit of funds that have been included as addbacks, being Items 12 and 13, with a combined value of $201,500. This brings the total amount to $205,000.
According to the property adjustment order that I make, he will be entitled to receive property totalling $1,876,150. Noting that he has had the benefit of property totalling $205,000, he is entitled to receive an additional $1,671,150.
This can be satisfied by an order requiring the total of the proceeds remaining in the controlled monies account, from the sale of the Suburb P property, to be paid to the husband which is the amount of $1,214,541. The wife will also be required to make a cash payment to the husband within 28 days of these orders in the amount of $456,609.
This can be met by the wife from her AZ Bank account ending #69 which, as at the date of hearing, had funds in the sum of $507,754.
This will leave the wife with an unencumbered property in which to live and cash reserves of a little over $50,000, together with additional funds she will receive by way of an entitlement to inheritance.
The husband will receive the amount to which I have referred which, subject to him electing to utilise his earning capacity, would be a substantial deposit on a property should he wish to obtain independent accommodation.
I consider this outcome to be appropriate, just and equitable having regard to the provisions of s 79(4) of the Act.
THE HUSBAND’S LIFE INSURANCE POLICY
While it was not included in the balance sheet, the husband has sought that a life insurance policy in respect to himself that was taken out in the name of the wife be transferred to him.
The proposition that it would be just and equitable to do so was put to the wife in cross‑examination. The wife prevaricated in response to questions concerning that issue but ultimately said that she would not do so in circumstances where it was her understanding that the policy no longer existed (Transcript 4 July 2024, p.69 lines 20–26).
I was not addressed on the issue of transfer by counsel for the wife, however, in circumstances where the annual fee in respect to that policy have been met by the husband or the second respondent on his behalf, I determine that it is just and equitable that the wife is directed to transfer to the policy to the husband.
This does not cause prejudice to the wife in circumstances where she has not factored in the existence of the policy to the assessment of the assets of the parties or the relief she is seeking.
CLAIMS BY THE SECOND RESPONDENT
Claim for refund of monies
In interim proceedings, on 20 December 2023, the second respondent advised the Court that, having regard to relevant limitation periods, her claim in respect to the repayment of funds advanced to the parties was reduced to $417,624. A notation was made on orders of that date to that effect.
For reasons which I have earlier set out, I am not satisfied that any monies that I have found were advanced by the second respondent to the parties and/or the husband are repayable pursuant to a legally enforceable arrangement. I will not therefore make orders for that amount to be paid to the second respondent by either party.
Motor Vehicle 1 and Motor Vehicle 2
Further, other than in respect to Motor Vehicle 1 and Motor Vehicle 2, I am not satisfied that the wife has converted any property of the second respondent for her own use.
I am satisfied, however, that the wife sold the motor vehicles which were, at the time of the sale, owned by the second respondent.
The second respondent seeks orders for the return of the motor vehicles and in the absence of that occurring, to be compensated for the loss she has sustained. In circumstances where, for reasons that I have set out, I am satisfied that the wife has sold the motor vehicles, it is appropriate that orders be made requiring the wife to compensate the second respondent for the loss she has sustained.
I am satisfied that I have the power to do so pursuant to the Court’s associated jurisdiction. In that respect, s 29 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCOA Act”) provides:
29 Jurisdiction in associated matters
To the extent that the Constitution permits, jurisdiction is conferred on the Federal Circuit and Family Court of Australia (Division 1) in respect of matters not otherwise within its jurisdiction that are associated with matters in which the jurisdiction of the Federal Circuit and Family Court of Australia (Division 1) is invoked.
Of additional relevance is s 43 of the FCFCOA Act which provides:
43 Determination of matter completely and finally
In every matter before the Federal Circuit and Family Court of Australia (Division 1), the Court must grant, either:
(a) absolutely; or
(b) on such terms and conditions as the Court thinks just;
all remedies to which any of the parties appears to be entitled in respect of a legal or equitable claim properly brought forward by a party in the matter, so that, as far as possible:
(c) all matters in controversy between the parties may be completely and finally determined; and
(d)all multiplicity of proceedings concerning any of those matters may be avoided.
As noted by the Full Court in Akbar & Gandega (2023) 67 Fam LR 593 at [29] (“Akbar”):
… when federal law, like the Act, confers original jurisdiction on a federal court in respect of a “matter” – such as the matrimonial cause concerning the adjustment of spouses’ property interests – the jurisdiction extends to authorise the determination of the whole “matter”, the entire resolution of which controversy may entail the consideration and application of both federal and State law (Valceski v Valceski [2007] NSWSC 440; 70 NSWLR 36 at [38]).
In Akbar at [30], the Full Court applied the principles adumbrated in Re Wakim; Ex parte McNally; Re Wakim; Ex parte Darvall; Re Brown; Ex parte Amann (1999) 198 CLR 51 at [140], to determine whether the Court had jurisdiction to grant relief in respect to a common law claim for damages. That paragraph provides:
In Fencott it was said that ‘‘in the end, it is a matter of impression and of practical judgment whether a non-federal claim and a federal claim joined in a proceeding are within the scope of one controversy and thus within the ambit of a matter.’’ The references to ‘‘impression’’ and ‘‘practical judgment’’ cannot be understood, however, as stating a test that is to be applied. Considerations of impression and practical judgment are relevant because the question of jurisdiction usually arises before evidence is adduced and often before the pleadings are complete. Necessarily, then, the question will have to be decided on limited information. But the question is not at large. What is a single controversy ‘‘depends on what the parties have done, the relationships between or among them and the laws which attach rights or liabilities to their conduct and relationships’’. There is but a single matter if different claims arise out of ‘‘common transactions and facts’’ or ‘‘a common substratum of facts’’, notwithstanding that the facts upon which the claims depend ‘‘do not wholly coincide’’. So, too, there is but one matter where different claims are so related that the determination of one is essential to the determination of the other, as, for example, in the case of third-party proceedings or where there are alternative claims for the same damage and the determination of one will either render the other otiose or necessitate its determination. Conversely, claims which are ‘‘completely disparate’’, ‘‘completely separate and distinct’’ or ‘‘distinct and unrelated’’ are not part of the same matter.
In this case, it has been necessary to determine the ownership of the motor vehicles to determine whether they (or, more accurately, proceeds from their sale) form part of the matrimonial property pool. Accordingly, the second respondent’s claim for loss as a result of the sale of those motor vehicles falls within the common substratum of fact relating to that determination. I therefore have jurisdiction to determine the second respondent’s claim for loss as a result of the sale of the motor vehicles.
In the circumstances of this case, the second respondent is, in my opinion, entitled to restitution as recently described by the High Court in Redland City Council v Kozik (2024) 98 ALJR 544 at [60] (“Kozic”), as follows:
The common law of restitution developed out of and is informed by the principles which underlay the form of action known as indebitatus assumpsit “for money had and received” by the defendant to the use of the plaintiff expounded in Moses v Macferlan. Lord Mansfield there described the action as one for the “refund” of money pursuant to a “debt” which “the law implies” and which was “founded in the equity of the plaintiff's case”. He said that the “gist” of the action was that “the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money”.
(Footnotes omitted)
The question becomes what is the appropriate amount of compensation that should be paid to the second respondent. In that respect, I observe that the law allows a “degree of flexibility” consistent with principles of fairness and equity: Kozik at [70].
In this case, the wife has – through the sale of the motor vehicles – deprived the second respondent of the opportunity of establishing the fair market value of those motor vehicles. The second respondent nonetheless contends that that value is $200,000, being the agreed purchase price between herself and her son, the applicant husband (Exhibit P).
In Berry v CCL Secure Pty Ltd (2020) 271 CLR 151, Bell, Keane and Nettle JJ said at [29]:
While a claimant bears the legal burden of establishing the amount of its loss or damage, the nature and circumstances of the wrongdoer’s conduct may support an inference or presumption that shifts the evidentiary burden. That accords with the principle encapsulated in Armory v Delamirie that, where a wrongdoer has destroyed or failed to produce evidence which the innocent party requires to show how much he or she has lost, it is just that the wrongdoer should suffer the resulting uncertainty. Hence, in that case, since the defendant by his wrongful conversion of the plaintiff’s stones, and failure to produce them at trial, had made it impossible for the plaintiff to prove the quality of them, the stones were presumed to be of the highest quality and value.
(Footnotes omitted)
This is also consistent with the facilitation principle, whereby a party is “assisted in proof by reasonable inferences where a defendant’s breach has resulted in difficulties or impossibilities of proof of loss or damage” (see the recent High Court decision of Cessnock City Council v 123 259 932 Pty Ltd (2024) 418 ALR 304 at [127] (“Cessnock”)). In other words, the principle “facilitates” the discharge of a party’s legal onus of proof of loss in circumstances where the other party’s wrongdoing – in this case, that party being the wife – “has resulted in uncertainty regarding the quantum of loss” (Cessnock at [129]).
In the circumstances of this case, the burden has shifted to the wife to disprove that the fair market value of the motor vehicles was not that agreed to by the husband and the second respondent as reflected in Exhibit P.
I note, however, that by orders made on 29 May 2024, Altobelli J ordered that the husband and second respondent were to receive $140,000 each by way of partial property settlement from the controlled monies, representing the balance of the proceeds of sale of the Suburb P property.
In circumstances where I have made orders for an equal (50/50) division of the parties’ property contained in what I have described as the first pool of assets, which includes the controlled monies, I determine that the second respondent has effectively been paid 50 per cent of that partial property distribution by the wife, representing the amount of $70,000. Accordingly, noting the allowance of flexibility to which I have earlier referred, the orders I make will provide for the wife to pay from monies that she receives after distribution of the property of the parties, the sum of $130,000 to the second respondent.
Claim for declaration of ownership of assets by the second respondent
In circumstances where neither of the parties to the marriage contend that assets previously in the possession of the second respondent should be included on the balance sheet, it is unnecessary to determine whether the second respondent was, or is, the owner of the assets referred to at Annexure “C” of her Case Outline Document.
Accordingly, the matter does not fall for determination pursuant to the Court’s associated jurisdiction (Akbar at [33]–[36]) and I do not further consider that issue.
ORDERS
To facilitate an equal division of the assets, I will make an order that the parties are to take all necessary steps to pay the balance of the net sale proceeds of the Suburb P property, in the sum of $1,214,541, to the husband; and that wife pay an additional amount of $456,609 to the husband within 28 days.
In turn, the wife will retain her current residence in Suburb FF, the balance of funds in her account ending #69, her inheritance, and her superannuation.
The next order I make is that the wife pay the second respondent the sum of $130,000 as compensation for the loss she sustained when the motor vehicles, which were the second respondent’s property at the time, were sold by the wife. That amount is to be paid by the wife from her own funds, consequent upon the settlement adjustment that is made by these orders.
The fourth order that I make ensures that the husband is assigned any and all life insurance policies, total and permanent disability insurance policies, or any other policy that the wife has in her name which covers the husband.
The orders will also provide that each party retains their respective interests in property currently in their possession and that they will be responsible for liabilities in their sole name.
Finally, I will make an order pursuant to s 106A of the Act in the event that either party fails to comply with these orders.
I certify that the preceding three hundred and fourteen (314) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland. Associate:
Dated: 7 March 2025
ANNEXURE A: “INDEX” TO MR DD’S AFFIDAVIT FILED 15 APRIL 2021
Date Description 1 Early 2021 Chronology – Valuables criminal proceedings 2 Late 2017 CAN and Facts Sheet 3 Mid 2020 Notice of Prosecution Case 4 Early 2021 Index to the brief of evidence 5 Early 2021 Chronology – Cheque criminal proceedings 6 Late 2020 Index to brief al evidence 7 Early 2021 Amended Crown Case Statement 8 Early 2021 Amended indictment 9 December 2020 Historical company search – AD Nominees 10 December 2020 Historical company search – AE Business 11 December 2020 Historical company search – AC Pty Ltd 12 December 2020 Historical company search – BH Business 13 April 2021 Historical company search – K Pty Ltd 14 December 2020 Historical company search – BJ Business 15 Mid 2020 Creditor’s Petition 16 Early December 2020,
Late December 2020,
Mid-February 2021,
Late February 2021,
Late February 2021,
Early April 2021Correspondence with the Receivers 17 Early April 2021 Email from Ms BK 18 February 2021 Transfer forms for Motor Vehicle 4 19 April 2021 P School fees statement
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