Jong and Yeng and Ors (No 2)

[2012] FamCA 585

FAMILY COURT OF AUSTRALIA

JONG & YENG AND ORS (NO. 2) [2012] FamCA 585

FAMILY LAW – PROPERTY –Settlement in relation to marriage – Contributions – Where the husband and wife have both made direct and indirect financial contributions – Where overall contributions are assessed as equal – Where the financial affairs of the husband and wife and the wife’s parents have been enmeshed - Where it is inappropriate to make an adjustment in consideration of the relevant matters under section 75(2) – Just and equitable – Equal distribution of property.

Family Law Act 1975 (Cth) – s 79, s 75(2), s 81
Corporations Act 2001 (Cth) – s 601AH

Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693
Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414
Ferraro and Ferraro (1993) FLC 92-335
Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355
Lee Steere and Lee Steere (1985) FLC 91-626

APPLICANT: Ms Jong

RESPONDENT: Mr Yeng

2^ND RESPONDENT: W Holdings Pty Ltd

3^RD RESPONDENT: K Enterprises Pty Ltd

4^TH RESPONDENT: Mr H Jong

5^TH RESPONDENT: B Pty Ltd

FILE NUMBER: SYC 3007 of 2008

DATE DELIVERED: 26 July 2012

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Johnston J

HEARING DATE: 15, 16, 17 and 20 February 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Bell

SOLICITOR FOR THE APPLICANT: James Lee Solicitors

COUNSEL FOR THE RESPONDENT: Mr Cohen

SOLICITOR FOR THE RESPONDENT: Cambridge Lawyers

COUNSEL FOR THE 2^ND, 3^RD, & 4^TH RESPONDENTS:
Mr Campton

SOLICITOR FOR THE 2^ND, 3^RD & 4^TH RESPONDENTS:
James Tung & Co

FOR THE 5^TH RESPONDENT: No appearance

Orders

1. That not later than 21 September 2012 the wife shall pay to the husband the sum of $66 500 and do all things to discharge the mortgage on Property E1 New South Wales.

2. That in the event that the wife fails to comply with the above order she shall forthwith do all things and sign all documents necessary to sell the said property for the best price reasonably able to be obtained. 

3. That the proceeds of sale of the above property be paid as follows:

   (a)To discharge the mortgage thereon;

   (b)To pay the wife’s credit card debt in the amount of $28 000; and

   (c)To pay the balance as follows:

   i)         54.14 percent to the wife; and

   ii)        45.86 percent to the husband

4. That pursuant to s 79 of the Family Law Act 1975 each of the husband and the wife be declared the sole owner of all other property and superannuation in their possession and/or control respectively.

5. That the above orders not commence operation until 15 August 2012.

6. That the husband and the wife have leave to relist these proceedings before Johnston J at any time not later than 14 August 2012 for further submissions in relation only to the form of the orders.

7. That both parties have leave to relist these proceedings on 14 days notice in relation to the implementation of the orders.

8. That all exhibits be released.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jong & Yeng has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 3007 of 2008

Ms Jong

Applicant

And

Mr Yeng

Respondent

And

W Holdings Pty Ltd

2^nd Respondent

And

K Enterprises Pty Ltd  

3^rd Respondent

And

Mr H Jong

4^th Respondent

And

B Pty Ltd

5^th Respondent

REASONS FOR JUDGMENT

1. These are final property proceedings.  There are a number of parties to the proceedings.  In addition to the previously married parties Ms Jong and Mr Yeng, there are several other parties.  For convenience I shall refer to Ms Jong and Mr Yeng as “the wife” and “the husband”.

2. The second respondent is a corporation called W Holdings Pty Ltd.  The shares in this corporation are owned by the wife’s parents.  The directors are the wife’s father, Mr H Jong and the wife’s brother S Jong.

3. The third respondent is a corporation K Enterprises Pty Ltd .  This corporation is owned by the wife’s brother A Jong and his wife G Jong.  They are its directors.

4. The fourth respondent is the wife’s father Mr H Jong.  On 15 February 2012 the husband sought leave to withdraw all claims against this respondent.  I made an order that day granting such leave and dismissing all the husband’s claims against this respondent.  At that point he ceased to be a party in the proceedings.

5. The fifth respondent is a corporation called B Pty Ltd. The shares in this corporation are owned by the husband and the wife equally. The corporation was deregistered after strike off proceedings in January 2008. On 15 February 2012 I made an order to the effect that pursuant to s 601AH of the Corporations Act 2001 (Cth) (“the Corporations Act”) the registration of this corporation be re-instated. The purpose of this order was to enable the assets of this corporation to be returned to its ownership by way of operation of the relevant provisions of the Corporations Act.

6. The husband claimed that he had been wronged by the other respondents and for this reason joined them in these proceedings.  It was argued on his behalf that the claim that he was making against other respondents should be heard as part of these proceedings.  This was submitted to be on the basis that the matters in dispute would fall within the principles under which this Court would have accrued jurisdiction and could therefore determine that aspect of the dispute. 

7. On 16 February 2012 I determined that the husband’s application in this regard be dismissed and made orders to this effect.  On that occasion I also gave ex tempore reasons for dismissing that application.  I have engrossed those reasons and will not repeat them here.

8. Upon making the above orders dismissing the husband’s application against the second and third respondents I was informed that the second and third respondents would not be participating in the family law property proceedings.  Accordingly, Mr Campton was excused and since that time these proceedings have been conducted only between the husband and the wife.

9. I note that there has not been an appeal filed against my orders of 15 and 16 February 2012.

Applications

1. The wife sought orders to the following effect:

   ·That the husband forthwith do all things and sign all documents necessary to transfer to the wife his shares in the corporation B Pty Ltd ACN … 362 and to resign as a director therefrom. 

   ·Further or other orders.

   ·That the husband pay the wife’s costs of these proceedings.

   OR in the alternative

   ·That the husband take all steps and give all cooperation necessary to transfer or to facilitate the transfer of any interest of or incidental to B Pty Ltd ACN … 362 in the following properties to the wife or her nominee or as she may direct:

   (a)Property D, Sydney

   (b)Property CA, Sydney

   (c)Property CB, Sydney

   ·That the parties take all steps necessary as soon as reasonably practicable to cause the valuation of their respective real estate, corporate and other financial interests and cause payment to the wife of 70 percent thereof and to the husband 30 percent thereof or division in their favour of such assets or in such percentage as the Court determines.

   ·That the parties to repay to the wife’s parents as they direct such indebtedness plus interest under the Rules or such amount and or such terms assets in the amount of $480 000 as the Court determines.

   ·Further or other orders.

   ·That the husband pay the wife’s costs of these proceedings.

2. On the other hand the husband sought what were described as mirror orders.  I take this to mean:

   ·Orders to the effect that the wife transfer her shares in the corporation B Pty Ltd to the husband and resign as a director therefrom.

   ·That the wife indemnify the husband in respect of any liabilities owing by the husband and wife to the wife’s parents.

   ·That the wife pay the husband’s costs of these proceedings.

   OR in the alternative

   ·That the wife take all steps and give all cooperation necessary to transfer or to facilitate the transfer of any interest of or incidental to B Pty Ltd ACN … 362 in the following properties to the husband or his nominee or as he may direct:

   (a)       Property D, Sydney

   (b)Property CA, Sydney

   (c)Property CB, Sydney

   ·That the parties take all steps necessary as soon as reasonably practicable to cause the valuation of their respective real estate, corporate and other financial interests and cause payment to the husband of 70 percent thereof and to the wife 30 percent thereof or division in their favour of such assets or in such percentage as the Court determines.

   ·Further or other orders.

   ·That the wife  pay the husband’s costs of these proceedings.

Background

1. The wife, 50 years of age and the husband, 62 years of age commenced cohabiting in 1981 and married in 1982.  They separated in late 2006 and their divorce became final in September 2008.

2. There are four children of the marriage, all now adults.  They are J who is 26 years of age, H who is 22 years of age, P who is 20 years of age and L who is 18 years of age.

3. The wife had come to Australia with her family in 1977.  The husband came to Australia in approximately 1978. He had worked in education in Korea.  The parties met in 1978.

4. From 1978 to approximately 1992, the husband worked for an organisation in receiving and later as a supervisor. 

5. In approximately 1981, the parties commenced living together in Suburb M, Sydney. 

6. At the time they commenced cohabiting, neither the husband nor the wife had any assets of substantial value.  They moved to Suburb A, Sydney in approximately 1982.

7. As indicated above, the husband and wife married in 1982. 

8. In 1982 they established a business importing products from Korea.  They set up a company for this purpose called B Pty Ltd.  They were each shareholders and directors of this company.

9. In approximately 1983, the husband and wife purchased Property N, Sydney, for $63 000.  They borrowed $3500 from the wife’s mother and approximately $40 000 from the State Bank.  The balance of approximately $20 000 was provided from the husband’s savings from his personal bank account.  The wife said that the loan from her mother has not been repaid.

10. In approximately 1984, the husband’s mother and two brothers arrived from Korea to live with the husband and wife.  The wife said that they did not make financial contributions to living costs.

11. In 1986, J was born. 

12. In 1987, the husband and wife sold the Property N for an amount between $115 000 and $120 000.  They then moved into the wife’s parents’ house.  The wife said that her parents paid the household bills and that the husband and wife paid for their own food, clothes and for their children’s expenses.  

13. In 1987, the husband and wife purchased Property X, Sydney as vacant land for approximately $85 000.  They used the $70 000 from the sale proceeds from Property N and money from their business account to fund the purchase.  A house was then constructed on the land funded by a loan of $46 000 from Westpac Banking Corporation (“Westpac”).

14. In 1989, H was born. 

15. The wife said that she borrowed $25 520 from her mother in approximately 1990 to import product from Nothern Europe.  She found the product difficult to sell and said she has not repaid her mother.

16. The home on Property X was completed in approximately 1990 and the husband, the wife and the children moved in.

17. In 1992, P was born. 

18. In September 1992, the husband and wife sold the Property X for $600 000.

19. In October 1992, the husband and wife purchased a vacant block of land, Property T, Sydney for $355 000.  The parties lived with the wife’s parents while a house was being built on the property.

20. In approximately 1993, the husband and wife purchased Property U, Sydney  for $137 000 using the sale proceeds from the sale of their property at Property X.  The parties took out a mortgage with Westpac for $202 000.  The wife’s parents’ company W Holdings Pty Ltd then commenced constructing duplexes on the property.  The wife said that her father helped her and the husband to purchase building materials and to hire tradesmen at a reduced cost.  Her father also worked on the project.  The wife said that W Pty Ltd was not paid for this work. The wife also said that her mother loaned the parties a sum of $20 000 then a second sum of $10 000 to assist in funding the construction.

21. In 1993, L was born. 

22. In 1994, the parties’ corporation B Pty Ltd ceased trading but remained registered.

23. In approximately 1995, the husband and wife sold  Property U for $246 000 each.  They repaid the mortgage which was approximately $202 000.

24. In September 1995, B Pty Ltd and W Holdings Pty Ltd purchased Property D for $175 000 each as tenants in common in equal shares.  The two houses on the property were knocked down and five townhouses were built in their place.

25. Initially the husband and wife borrowed money from a Mr H Jong to put towards their share of the required $175 000.  When he requested the money to be repaid they borrowed $80 000 from the wife’s mother and $20 000 from the wife’s brother, A Jong. 

26. In June 1998, the husband and wife mortgaged Property T with the Commonwealth Bank for $601 000. 

27. In September 1998, K Enterprises Pty Ltd , (the company owned by the wife’s brother A Jong and his wife G Jong), B Pty Ltd and W Holdings Pty Ltd purchased Property CA and Property CB in Suburb C, Sydney for $355 000 and $270 000, respectively.  Each company held a third share of the properties.  The sources of the funding of these purchases was unclear to me.

28. In November 1998, four of the five townhouses at Property D were sold.  The remaining townhouse at Property D has been tenanted to the wife’s brother S Jong.

29. In early 2001, the construction of the home on Property T was completed and the husband, the wife and children commenced residing there.

30. In 2001, the husband and wife received funds of approximately $40 000 from an insurer for a car accident.  The wife said that they used these funds to pay their home loan.

31. While the parties were living at Property T the wife’s cousin’s son V lived with them and his parents paid the parties $250 per week for caring for him.

32. In August 2002, the husband and wife sold Property T for $1 850 000.  They received $1 260 000 in net sale proceeds.  They subsequently moved into a rental property in North Western Sydney .

33. In September 2002, the husband and wife purchased Property E in the wife’s name for $430 000 using part of the sale proceeds from Property T.  They planned to demolish the existing house and to build dual occupancy residences on the land.

34. In October 2002, the husband and wife exchanged contracts for the purchase of two units, Units O and Unit Q, off a plan in Suburb S, Sydney for $562 000 and $657 000 respectively.  Their son, J became the registered proprietor of Unit Q.

35. At Christmas 2002 the husband, wife and children had a holiday in Korea.

36. In early 2003, an amount of $120 000 was transferred from the husband’s and wife’s National Australia Bank (“NAB”) account to the husband’s Westpac bank account.  The wife said the transfer occurred without her knowledge or consent.  I shall refer to this again below.

37. In August 2003, the husband and wife purchased Property W, Sydney for $460 000.  They used $160 000 of the sale proceeds from Property T and took out a loan with NAB for $300 000.  

38. In approximately 2003, Ms HH, the daughter of Ms DM, a friend of the wife in Korea, came to live with the parties and her parents gave financial assistance to the husband and wife for this.

39. In approximately December 2005, the parties mortgaged the property at Property E with St George bank for a loan of $550 000.  They demolished the house on the property to build a dual occupancy (Property E1 and Property E2). 

40. In May 2006, the husband and wife and their son J settled their respective purchases at Unit O and Unit Q.  They used approximately $123 000 from the net proceeds of sale of Property T.  The parties borrowed $505 800 and their son J borrowed $591 000 both from Homeside Lending

41. Between May and August 2006, the husband withdrew a total of $595 000 from joint accounts comprising of $495 000 from the joint St George Bank account and $100 000 from the joint NAB account.

42. From May to September 2006, the husband paid to W Holdings Pty Ltd approximately $102 000 for construction costs.

43. On 1 November 2006, the parties separated.  The husband left the former matrimonial home.

44. In approximately February 2007, the husband lodged a caveat on Property E.  This was subsequently withdrawn.

45. In approximately March 2007, the wife lodged a caveat over the Property W. 

46. In January 2008, B Pty Ltd was deregistered.

47. In March 2008, Unit O and Unit Q were repossessed by the mortgagee.

48. In May 2008, Property E2, one of the dual occupancy properties built on Property E was sold.

49. In approximately mid 2008, the husband attempted to sell the property at Property W.

50. As indicated above, in September 2008, the parties divorced.

51. On 9 September 2008, the wife received a Lapsing Notice regarding the caveat lodged by her on Property W.  She thereafter commenced proceedings in the Supreme Court.

52. On 26 September 2008, orders were made in the Supreme Court allowing the caveat to remain over Property W on an interim basis.

53. On 16 June 2009, settlement took place of the sale of Property W.  The wife’s caveat on the property was withdrawn upon settlement.

54. On 28 April 2009, the wife filed an Application for Final Orders in this Court thereby commencing these proceedings.

55. On 7 October 2009, the husband filed a Response joining the second, third and fourth respondents to the proceedings.

Credit

1. I consider it appropriate to say something about the credit of each of the parties.

The wife

1. I have reservations about the reliability of some of the wife’s evidence.  Her affidavit contained considerable material but it was not a comprehensive history of the significant financial transactions of the parties.  In particular, in circumstances where the wife was completely in charge of the financial aspects of the parties’ affairs following separation, I would have expected to have been provided with much more detail over the period from then to the present time.  The absence of such detail has permitted the husband to make submissions to the effect that the wife has not given an account of how very large sums of money were spent over the relevant period.  The inference he pressed on the Court in these circumstances was that the wife has available to her an unquantified fund of money which she has not disclosed in these proceedings.

2. At times during her cross-examination the wife had difficulty giving answers that were responsive to the questions.  One must of course take account of the fact that English is not her first language and she did not have the facility of an interpreter.  But on many occasions in response to questions about detailed financial matters she simply said “can’t remember”.  On many of these occasions this was unconvincing.

The husband

1. The husband was an unimpressive witness, even taking account of the fact that he gave his evidence with the assistance of a Korean interpreter.  In particular his account of what he did with approximately $190 000 which he withdrew from his Westpac account in 2007 simply defied credulity.  I shall refer to this in some detail below. 

2. The husband failed to disclose the fact that he is currently married to a Korean woman Ms R.  At one point during his cross-examination he was presented with a document which was an invoice or financial account on which there had been written a Korean telephone number.  At first he denied that the telephone number was in fact the telephone number of his wife in Korea.  But when taken to this matter again the following day, and after conceding that Ms R was in fact his current wife, he conceded that the telephone number was her telephone number.  I shall refer to this matter again below.

1. In addition, in my view, the husband’s assertion that a Catholic priest, a friend in Korea, and his current wife Ms R between them provided him with airline tickets to enable him to fly between Australia and Korea and money to sustain him in Korea was incredible.  I have no hesitation in regarding these matters as untruths offered by him in an endeavour to conceal the fact that he had monies available to him, probably from an account in Korea, from which he has been able to fund his travel expenses between Australia and Korea, and his general living expenses.  I shall refer to these matters again below. 

2. Although I have reservations about the reliability of the wife’s evidence I have been even less impressed with that of the husband.  This has left me in a state of considerable uncertainty about significant areas of the evidence.

Issues

1. As indicated above, in early 2003 a cheque for $120 000 was drawn on the parties’ NAB account.  The husband opened an account in his own name with Westpac and deposited $20 000 into that account.  He also deposited the balance of $100 000 to a term deposit. 

2. I accept that this was done without the wife’s consent despite the husband asserting in his affidavit that the wife agreed to this transfer of funds. 

3. The wife said that the husband had said initially that his reason for withdrawing the cheque was to have funds to pay the rent on their residence at the time, in North Western Sydney.  The wife did not accept this explanation and they had an argument.  The wife said that the husband subsequently said that he had withdrawn the money because Property E had been purchased in her name only and that the car was also in her name.  She said that he said he felt “empty”.  The wife said that the husband promised her that he would use the money to pay the rent.

4. I accept this evidence from the wife.

5. The wife said that the husband did not account for approximately $50 000 of this money.  This was not clear.  In my view, the onus was on the wife to establish that the husband has had the use of this money and she has not done so.

6. The wife alleged that just before the parties separated, the husband withdrew at least $595 000 from joint accounts without her knowledge.

7. In January 2007 the husband transferred approximately $200 000 from the NAB account to his Westpac account.  On 24 January 2007 the husband withdrew $190 000 from his Westpac account by bank cheque and it is clear that the money ended up in Korea.  The husband’s evidence was most unsatisfactory in relation to this matter.  He said that over three years he had incurred business debts in Korea for goods supplied.  He said that he had not paid for the goods and that the $190 000 was expended on payment for such goods.  He said that he used a system available to pay debts in Korea by which you give a person in Australia cash or a bank cheque and the other person in Korea can receive the money.  He said that he gave the cheque to a male person whose name he did not know because he was told by a Mr HG to do so.  He said that he was given a phone number to ring and he did so, and was told where to meet the person.  He said that he was not given a receipt for handing over the bank cheque. 

8. As I indicated during the course of submissions, this explanation by the husband about the disposition of the bank cheque defies credulity.

9. I have the view that it is more probable than not that the husband has sent this money to Korea and that he has been using it to live on.  I am all the more confident about this view because of the explanation given by the husband during cross-examination about how he has been able to fund his travel between Australia and Korea on a very considerable number of occasions, and also pay his living expenses.  The husband said that his wife in Korea had been funding the costs of his air travel by sending him E-tickets paid for by her.  As indicated above, he said that he has paid for his living expenses by money given to him by a friend in Korea and also by a Father in the Catholic Church in Korea who had been giving him pocket money.

10. I do not believe the husband about these matters.  I have referred above to some of the husband’s evidence about these matters.  During his cross-examination the husband was shown two documents each of which made reference to the Bank of China.  Each document appeared to be some sort of business record in either the Korean or perhaps Chinese language.  One of the documents contained the words in English “PASSBOOK NO” and a number of numerals appeared.  There was also reference to an “A/C …312”.  As indicated above, this document also contained a telephone number.  The husband was asked whether the telephone number was that of his wife in Korea and whether the document also had his wife’s name thereon.  Initially he denied that it was.  The following day the husband conceded that the telephone number was that of his wife in Korea. 

11. In my view the husband’s explanation about this whole issue was most unsatisfactory. 

12. On the other hand the husband was critical of the wife for using the entirety of the net proceeds of sale of the dual occupancy property, Property E2, which were approximately $550 000.  It was submitted on behalf of the husband that $300 000 should be added back to the pool of available property.

13. I do not propose to do so.  I accept that the wife has not given an adequate account of what happened to the money.  But, as was submitted on behalf of the wife, the husband left home in 2006 and has provided almost no assistance to the wife and children since that time.  It was submitted that in circumstances where the Court would be satisfied that the husband has had the use of $200 000 of the parties’ funds, it would be most unfair to add back any of the $550 000. 

14. I accept this submission.  Some of the money was used by the wife to repay her parents for money allegedly loaned by them.  I regard it to be more probable than not that most of the money has been used to fund the mortgage and living costs of the wife and children.

15. There was also an issue about whether a term deposit in an ANZ Bank account in the wife’s name with a balance of $84 000 was in fact the wife’s money.  The wife agreed that she had not disclosed the existence of this account in these proceedings.  But she said that she holds the money in this account in trust for Ms HH, her female boarder who is a student.  The wife said that it is a condition for this young person being able to continue her education in Australia that she has this money on deposit in the Bank.  I accept the wife’s evidence about this matter.

16. A further issue was the extent to which the wife’s parents have given assistance to the parties and to the children.

17. There were various limbs to this.  The wife said that between May 1998 and December 1999, a period of approximately 82 weeks, her mother gave her $300 per week, which would amount to a total of more than $24 000.  The wife also asserted that her parents had contributed in various ways to the development of the parties’ home on Property T, the overall value of their contributions having been approximately $250 000.  The wife also said that in approximately October 2001 she and the husband borrowed $60 000 from the wife’s parents to purchase a motor vehicle and that this loan has never been repaid.

18. In my view, these matters bring into focus some of the difficulties in this case which arise from the fact that the financial affairs of the husband, the wife and the wife’s parents have been enmeshed.  As I have indicated above, the wife’s parents did not file affidavits in these proceedings and they have chosen not to be parties.  And as I have also said, in my view, it is more probable than not that benefits have been flowing both ways between the families.  It is impossible to do an accounting of these matters and endeavour to arrive at who owes whom what in respect of their enmeshed affairs.

19. The final issue was really a part of the last issue but with a difference.  The wife asserted that the husband and wife owe her parents $80 000 and her brother $20 000.  This was said to be as a consequence of them having had to re-finance their original borrowing of $100 000 from SH Jong.  It is common ground that the parties’ corporation B Pty Ltd was to contribute $175 000 towards the joint venture with W Holdings Pty Ltd to purchase and develop Property D which it did.  The parties used $75 000 of their own funds and borrowed $100 000 from SH Jong.  When he asked for his loan to be repaid, the wife said that she and the husband borrowed the above-mentioned funds from her family and still owe the money.

20. My view about this is that any indebtedness by the corporation of the husband and the wife to the wife’s relatives or their corporations is a matter within the broader dispute.  For the reasons already given I do not propose to mix matters in dispute in the broader area with these proceedings.  I shall refer to the difficulties in this area again below.

The Applicable Law

1. Sub-section 79(1) of Family Law Act 1975 (Cth) (“the Act”) provides that in property settlement proceedings, the Court may make such order as it considers appropriate.

2. Sub-section 79(2) of the Act provides that the Court shall not make an order under the above sub-section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

3. There is a long-standing preferred approach to the determination of an application brought pursuant to the provisions of s 79. This involves four inter-related steps. Firstly, the Court should make findings about the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the Court should identify and assess the contributions of the parties within the meaning of ss 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the Court should identify and assess the relevant matters referred to in ss 79(4)(d), (e), (f) and (g), including, because of s 79(4)(e), the matters referred to in s 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the Court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case.

4. This approach has been confirmed in numerous cases in this Court including for example Lee Steere and Lee Steere (1985) FLC 91-626; Ferraro and Ferraro (1993) FLC 92-335; Hickey and Hickey (2003) FLC 93-143; 30 Fam LR 355; Coghlan and Coghlan (2005) FLC 93-220; 32 Fam LR 414 and Clauson and Clauson (1995) FLC 92-595; 18 Fam LR 693.

Property available for division

1. The property available for division between the parties is as follows:-

$
1.         Property E1 registered in the wife’s name	645,000
2.         Property owned by B Pty Ltd at Property D (one half interest)	217,500
3.         One third interest in Property CB, owned by B Pty Ltd	205,000
4.         One third interest in Property CA, owned by B Pty Ltd	208,300
5.         Wife’s Toyota Corolla motor vehicle	15,000
6.         Wife’s Toyota Yaris motor vehicle	15,000
_____________
$1,305,800

1. There was agreement between the husand and the wife about these assets and the values as set out above.

2. In relation to liabilities, it was submitted on behalf of the wife, that a liability of $15 000 for a car loan for a motor vehicle which was purchased for the parties’ son L should be paid for by both the husband and the wife.  I do not agree.  This is because the husband’s consent to this loan was not sought by the wife.  I propose, therefore, to omit this loan from the liabilities so that the husband will not be required to assume any part of this liability.

3. On this basis the liabilities are as follows:-

$
1.         Mortgage on Property E1	500,000
2.         Wife’s credit card	28,000
_____________
$528,000
Surplus	$777,800

1. The husband has an interest in the AMP Retirement Savings Account with an agreed value of $14 000. 

2. Accordingly, the parties have net assets with a total value of $791 800.

Contributions

1. Neither party had any assets of significant value at the time they commenced their cohabitation. 

2. As indicated above, during the early years of the marriage the husband was working full time as a warehouse manager.  The parties also derived some income from their efforts in their import business.

3. The parties initially purchased a home and subsequently became involved in residential property development.  They were both involved in this.

4. After the husband ceased working as a warehouse manager in approximately 1992 the main source of the family’s income was profit from their property development activities.  Between 1992 and 2002 the husband worked long hours, up to twelve hours a day, often six or seven days per week including public holidays.

5. So they have both made direct and indirect financial contributions to their property.

6. They have also both worked hard in relation to the welfare of their family unit.  The wife said that from the time of the parties’ marriage she has performed most of the domestic duties.  I accept this.  She has also been the children’s primary parent.

7. But the husband has also made significant contributions to the family’s welfare and as a parent.  He said that he did the home maintenance, gardening and lawn mowing.  He also said that he was the parent who primarily assisted the children with their homework and their education.  He said that he took the children to school regularly.  These assertions were not in issue.  Given that the husband had been in education in Korea one would expect him to have an interest in education and obviously he has had relevant experience in the area.  So, despite the generally poor view which I have about his reliability and truthfulness, I accept his evidence about these matters.

8. There have been significant contributions by the wife’s parents to the parties’ welfare.  The wife’s parents paid the costs of the parties’ wedding reception.  As indicated above, over many years, the husband and wife and children lived in the home of the wife’s parents rent-free.  This has enabled them to conserve funds which have therefore been able to be used towards acquisition of properties and, renovation and development of properties.

9. And it is the case that the husband’s mother and two brothers lived with the parties in Property N for a period from 1984 without paying any rent.

10. But these contributions have not all been one way.

11. The husband has undertaken work for the wife’s parents’ corporation W Holdings Pty Ltd over many years.  This corporation has undertaken property development activities over many years.  There was apparently considerable dispute about the extent to which the husband had done work for this corporation.

12. On the one hand the husband would have the Court believe that he had been the person central to the management and operation of the activities of W Holdings Pty Ltd.  On the other hand the position of the wife, her parents and her brother S Jong appeared to be that the husband had little to do with the operations of W Holdings Pty Ltd, this corporation in reality having been managed by the wife’s father and brother.

13. As I have indicated previously, a real difficulty in these proceedings has arisen because the financial affairs of the husband and wife have been enmeshed with those of the wife’s parents and to an extent those of her brother.  To make matters even more difficult, as I have also indicated above, the wife did not put before the Court any evidence by these members of her extended family.

14. This was a most unsatisfactory situation.  As indicated above, I decided that this Court could not entertain any ventilation of a dispute which the husband appears to have with the corporation W Holdings Pty Ltd, the wife’s father and, the corporation of the wife’s brother A Jong and his wife.

15. On the basis of the somewhat limited material before the Court, it appears to be more probable than not that the husband has made contributions for the benefit of the wife’s parents through work done by him for their corporation W Holdings.  And it is also clear that there have been benefits at least to some of the property development projects of the husband and the wife provided by the corporation W Holdings Pty Ltd.  But because of the dearth of any material from the wife’s extended family members, and the poor view I have about much of the wife’s evidence, it remains unclear whether contributions made by the wife’s parents and to an extent by W Holdings to the advantage of the husband, the wife and their family have been offset by countervailing contributions to them and their property development activities by the husband and the wife.

16. At the end of the day, as it were, I have to do the best I can in all these difficult circumstances to assess relevant contributions.  Because of all the difficulties, I propose to take a broad view of the relevant contributions.

17. What is clear is that the parties had cohabited over a long period and their marriage produced four children.  Both parties worked hard in their various capacities for the purpose of doing the best they could to provide their family with an appropriate standard of living.  They have done well in this regard.

18. Taking this broad approach, in my view, it is appropriate for the Court to arrive at a finding that up to the time when the parties separated, their contributions overall have been equal.  Interestingly, this is the position which each learned counsel submitted would be appropriate.

19. However, counsel differed in their submissions about the ultimate finding which the Court should make in its assessment of contributions to the time of the hearing.  On the one hand, it was submitted on behalf of the wife that the wife’s contributions have been significantly greater than those of the husband since separation.  This was said to be on the basis that the husband left the wife in a position where she has been almost solely responsible for the funding of the needs of, and for the physical and emotional care of, the children since the parties’ separation in November 2006, a period of more than five years.  In addition, it was submitted that the husband left it to the wife to arrange for the completion of the dual occupancy development which they had been undertaking at Property E.  It was submitted that in these circumstances it would be unfair to the wife not to make a finding at least to some extent in her favour about the overall contributions of the parties up to the time of hearing.

20. On the other hand, it was submitted on behalf of the husband that the Court should assess the parties’ contributions overall to the time of hearing as having been equal.  This was on the basis that although the husband has had little to do with the children since separation, the wife has had the benefit of living Property E1 and she has had the benefit of the money produced from the sale of the Property E2.

21. Taking a broad view of relevant matters following separation, the picture I have is of a wife who has had to undertake virtually the entirety of the care of the children since separation including the financial responsibility for them.  True it is that the wife has had the benefit of the home, but she has also had to arrange for its completion and particularly also for the completion of Property E2 for the purposes of its sale.  The husband would have the Court believe that little effort had been involved in this.  In my view, such would understate the effort involved.

22. Having said this, the wife has also had the use of the entirety of the net funds produced by the sale of the property adjoining the home, namely Property E2 in which the wife and children are living, an amount of approximately $550 000.

1. In these circumstances, in my view, the appropriate assessment of the parties contributions overall is that they have been equal.

Sub-section 75(2) Matters

1. The husband is 62 years of age and he is in good health.

2. He has not been working for some years.  He has a tertiary qualification from a University in Korea, and some experience, now a very long time ago, working in education in Korea.  As indicated above, he was employed as a central warehouse manager.  And for most of the marriage as I have said he undertook residential property development.

3. But since the parties’ separation, now more than five years ago, the husband has spent approximately half his time living in Korea.  Apparently he has not been engaged in income-producing employment.  He said that it was cheaper for him to live in Korea than in Sydney.

4. In his financial statement the husband indicated that he was not in receipt of any income.  During his cross-examination he was asked in effect how he was able to fund his travel expenses and living costs.  I have already indicated that I do not accept that he lives from the charity of others.  As I have indicated, I regard it as being more probable than not that he has moved funds to Korea and has been using those funds to pay his expenses.  I have not been able to quantify the amount of money it is likely that he has in Korea.

5. Having said all of this, and particularly having regard to the husband’s age and the fact that he has been unemployed for the past five years, I would regard the husband as having some modest earning capacity.  He does not have much facility in the English language.

6. I am not aware of any detailed estimated living expenses of the husband.  As I have said, I understand that he has been living with his current Korean wife in Korea although he indicated that their marriage has broken down.  He said that he has a relationship with another Korean woman whom he is hoping to be able to bring to Australia under his sponsorship.  I am not aware what the financial arrangements are between them.

7. On the other hand, the wife is 50 years of age and in good health.

8. The wife has been working as a specialised instructor for some time in excess of a year.  Depending on availability of work she is able to earn between $700 and $800 per week.  On all current indications I would regard the wife to have the capacity to earn income at approximately this rate for some years.

9. Some, but not all, of the wife’s necessary weekly expenses are set out in her financial statement.  The major part of her weekly expenditure is in endeavouring to pay the mortgage repayments in respect of the home at Property E1 and other indebtedness.

10. It was submitted on behalf of the wife that upon a consideration of the relevant matters under s 75(2) of the Act the Court would not make any set-off of available property taking account of such matters. There was no strong submission on behalf of the husband which would challenge this.

11. In my view the differences between the parties really come down to the fact that the wife is significantly younger than the husband and that she is working.  All other things being equal she would be expected to have more income earning years available to her than the husband.

12. But the husband appears to have been living with his current wife in Korea assisted by her and he now says that he has a relationship with another Korean woman.  Yet as I have said, he did not disclose these matters to the Court let alone any details about whatever his living arrangements have been with these women.  Nor has he given any proper accounting to the wife or to this Court in respect of significant amounts of money that he appears to have had the benefit of.  I have no confidence that this Court is aware of the true state of his financial circumstances.

13. In all these circumstances, in my view, it is not appropriate for there to be any adjustment of the asset position as found based on contributions, taking account of the relevant matters under s 75(2) of the Act.

Conclusion and Fourth Step

1. As I have said the parties have property and superannuation with a net value of $791 800.  As I have also indicated, in my view, it is just and equitable that they enjoy these assets in equal shares. 

2. There was a strong submission on behalf of the wife that the Court should make an order to the effect that the husband transfer his interest in the parties’ corporation B Pty Ltd to the wife. It was submitted that firstly this would be just and equitable but secondly that there was an additional virtue in such an order. This was said to be that this would in effect close off any possibility of further litigation between the parties along the lines of that which the husband endeavoured to bring in these proceedings involving the claim he asserted against the companies of the wife’s parents and brother. It was submitted that such an order would serve the interests of s 81 of the Act, namely to make such orders as would finally determine the financial relationships between the parties and avoid further proceedings between them.

3. I just pause to make the observation that s 81 of the Act is a duty not a head of power. Obviously the Court strives as far as practicable to endeavour to fulfil such duty. But there are some cases where the Court is unable to fulfil this duty.

4. There are a couple of reasons why I find myself unable to make an order to the effect that the husband transfer his interest in the corporation B Pty Ltd to the wife.  Firstly, the value of the company’s assets being the properties identified in the pool of available property above, is well in excess of 50 percent of the value of the total property and superannuation in the pool.  But there is also another reason.  This is that, in my view, if the Court was to order the husband to transfer his interest in the corporation to the wife, this would have the effect of either removing from him, or making it very difficult for him, to bring any claim he might have in equity against the corporations of the wife’s parents and brother.  In my view, such a result would be unfair to him. 

5. And I would not consider it fair to require the wife to transfer her interest in the corporation to the husband for the first part of the above reasons.

6. There was also no evidence before me about what the taxation implications might be, if any, of requiring the parties to transfer their interests in the corporation B Pty Ltd or its assets to one or other of them. 

7. So far as making any other orders which might have the effect of resulting in the parties enjoying other than their legal interests in the corporation B Pty Ltd I am most reluctant to do so.  As I have observed above, the parties managed their financial affairs in a manner which involved enmeshment of their affairs with those of the wife’s parents.  In my view, in these circumstances, they cannot reasonably expect this Court, given its jurisdiction in respect of matrimonial causes, to unwind as it were, the entirety of the consequences of such enmeshment.

8. Doing the best that I can in these difficult circumstances, in my view the appropriate, just and equitable order is to leave the parties with their interests and rights as shareholders of their corporation B Pty Ltd.  Having said this, it is to be hoped that once the disputation about the matrimonial property is brought to an end by the orders which I propose to make in these proceedings, the parties might see the good sense of not becoming involved in further litigation between themselves and others.  If necessary they will have to cause their corporation to be wound up.

9. As I have said, the parties are to share equally the available property and superannuation.  Half of this ($791 800) is $395 900. 

10. The corporation B Pty Ltd has a value of $630 800.  This value is reflected in its interests in the properties at Suburb D and Suburb C.  One half of this is $315 400.   

11. On the basis that the wife is to retain her half interest in the corporation the value of this to her would be $315 400.  She has other property in the form of the two motor vehicles which is another $30 000.  Accordingly, she will have property with a value of $345 400 ($315 400 + $30 000 = $345 400).  But the wife also has a liability in the form of her credit card debt of $28 000.  So she would have net property with a value of $317 400 ($345 400 - $28 000 = $317 400).  In order to achieve property with a value of $395 900 the wife would need an additional payment of $78 500 ($395 900 - $317 400 = $78 500).  Such a payment could only come from the sale of Property E1, or the wife would retain such value in it if she was to pay the husband for his interest therein.

12. On the other hand the husband is to have property with a value of $395 900.  On the basis that he would retain his interest in the corporation B Pty Ltd, this would be $315 400.  But the husband also has superannuation with a value of $14 000.  He would then have property and superannuation with a value of $329 400.  In order to achieve property with a value of $395 900 he would need additional property with a value of $66 500 ($395 900 - $329 400 = $66 500).  This would come from the net proceeds of sale of Property E1, or a payment from the wife.

13. As indicated above Rydalmere has a value of $645 000.  But it also has a mortgage secured upon it of $500 000.  Accordingly the equity is $145 000.

14. A payment of $78 500 to the wife would represent 54.14 percent of the equity.  A payment of $66 500 to the husband would represent 45.86 percent of the equity.

15. Although clearly it would have been preferable to be making orders which would have entitled each party to specific items of the assets of their corporation B Ltd Pty, in the circumstances to which I have referred I have been unable to do this.  Nevertheless, in my view the orders I propose will be just and equitable and appropriate in all these difficult circumstances.

I certify that the preceding one hundred and fifty-four (154) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 26 July 2012.

Associate:     

Date:              26 July 2012