Judd and Cornell-Judd

FAMILY COURT OF AUSTRALIA

JUDD & CORNELL-JUDD

[2016] FamCA 390

FAMILY LAW – PROPERTY – Settlement in relation to marriage – Whether it is just and equitable – Identifying the existing interests – Where satisfied there is an outstanding joint liability to the wife’s father – Financial and non-financial contributions – Indirect financial contributions by the wife’s parents – Not satisfied the husband contributed financially by way of an inheritance as he contends– Husband’s conduct resulted in a diminution of the parties’ property pool to payments of debts – Where the wife has the future care and control of the children – Husband has greater income earning capacity and financial resources – Payment of child support uncertain – Husband’s non-disclosure – Greater contributions by the wife and further adjustment in favour of the wife.

Family Law Act 1975 (Cth) s 75, 79

Bevan & Bevan [2013] FamCAFC 116
Jones v Dunkel (1959) 101 CLR 298
Kannis & Kannis [2002] FamCA 1150; (2003) FLC 93-135
Stanford v Stanford (2012) 247 CLR 108
Weir & Weir (1992) FLC 92-338

APPLICANT:

Ms Judd

RESPONDENT:

Mr Cornell-Judd

FILE NUMBER:

PAC

2710

2012

DATE DELIVERED:

19 May 2016

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Parramatta

JUDGMENT OF:

Hannam J

HEARING DATE:

11, 12, 13 January 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Ms Harris

SOLICITOR FOR THE APPLICANT:

Matthews Folbigg Pty Ltd

RESPONDENT – LITIGANT IN PERSON:

Mr Cornell-Judd

Orders

The asset pool comprised of the monies held in a controlled money account with Matthews Folbigg and the funds held in the joint CBA account number … (‘the CBA joint account’) be distributed as follows:
(a) The sum of $188,230.50 to the wife;
(b) The balance to the husband.
The husband and wife each do all acts and things to authorise upon distribution of funds pursuant to Order 1 the closure of the CBA joint account.
The wife indemnify the husband and keep him indemnified in relation to any and all monies outstanding to Mr B.
The wife pay Mr B $80,000 in repayment of the outstanding loan.
The husband indemnify the wife and keep her indemnified in relation to:
(a)       Any and all liability in his name including any monies owed to C Pty Ltd;
(b)       Any liability attaching to any business in which the husband has an interest.
(c)       Any liability in the sole name of the husband.
Each party shall otherwise retain the assets and liability in their respective names.
The husband is to take all action to close any overseas account in the sole name of the wife or in the wife’s name previously operated by him within 28 days and is to provide proof to the wife’s legal representative within seven (7) days of doing so.
That in the event that either party refuses or neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to section 106A, 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 of the deed or instrument.
All outstanding applications and cross-applications are dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Judd & Cornell-Judd 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 PARRAMATTA

FILE NUMBER:

Ms Judd

Applicant

And

Mr Cornell-Judd

Respondent

REASONS FOR JUDGMENT

Introduction

Following the breakdown of their relationship of almost 10 years the parties were unable to reach agreement about the future parenting arrangements of their children and a fair distribution of their property. In the course of submissions following a contested hearing the husband consented to the parenting orders proposed by the wife, but the property dispute remains to be resolved.
This judgment concerns the competing property applications. The wife’s proposed orders would see her receive the vast majority of the parties’ remaining assets. The husband’s position is not entirely clear, even in final submissions, but it appears that he contends that a just property settlement would see him receive either the entirety of the remaining assets or that a small amount be paid to the wife.
Each party seeks an adjustment of the parties’ property interests. I am to make such an adjustment if it is just and equitable to do so.

background

Mr Cornell-Judd (“the husband”) who is 49 and Ms Judd (“the wife”) who is 37 met in 1999 and began living together in late 2001 or early 2002 in a rented property. The wife had not previously been married, but the husband divorced in 2000 and had two teenage children from his first marriage. The parties had limited assets when they began living together and the wife knew little about the husband’s liabilities. It subsequently came to light that the husband had a significant liability for legal expenses associated with his previous family law matter. Initially both parties were employed full time though nothing further is known concerning financial matters prior to February 2003.
In February 2003 the wife purchased a property at D Street, Suburb E (“D Street”) for $260,000. A loan for almost the entire purchase price was secured by mortgages over D Street and the wife’s father’s home.
D Street was extensively renovated by the wife’s father after purchase and the parties moved into that property to live with the wife’s father after it was habitable. The parties made some mortgage repayments on this property.
It was agreed between the parties and the wife’s father that when D Street was sold, the wife’s father would receive $100,000 in recognition of his contribution to the improvement of that property.
In October 2003 a company F Pty Ltd was incorporated by the parties and a family trust established. F Pty Ltd is the trustee for the family trust. This company was set up to assist with both party’s tax arrangements, and initially the wife was a director of the company.
Another company G Pty Ltd was also utilised by the parties for the purposes of their financial affairs on the advice of the husband’s accountants.
G Pty Ltd borrowed $80,000 from the wife’s father and purchased a business. It is the wife’s contention that the parties jointly engaged in the venture while the husband contends that the business was entirely the wife’s enterprise and he had no involvement in it. This issue is dealt with later in these Reasons. In late 2003 the wife ceased her employment in the public service and began running the business.
Although the husband provides no evidence of his employment or income at any time, from at least 2004 he was not engaged in full time employment but undertook some work for which he was paid a commission. Bank accounts in the name of G Pty Ltd were used by the husband for the purpose of depositing commission payments. The husband deposited payments totalling $337,419.49 between 2004 and 2007 into the G Pty Ltd account. As these payments were deposited into G Pty Ltd’s account the Child Support Agency was not aware of the totality of the husband’s income for the purposes of assessing child support for the children of his first marriage.
In January 2004 a European car was purchased for $35,000 in the name of the wife financed by a loan from a finance company. This expense was included in G Pty Ltd’s tax return for 2004.
In February 2004 the husband had an accident when driving the car. He was charged with a mid-range drink driving offence and negligent driving. As a result, the insurance company refused to pay out on a claim in respect of the car, which was written off in the accident. This resulted in significant financial loss to the parties. The wife signed an authority with the finance company to allow the husband to negotiate about the loan repayments for this car. Although the husband contends that he personally and through G Pty Ltd paid the loan repayments for the car after the accident, a significant sum was unpaid, although the wife was unaware of this underpayment at the time.
The parties’ first child, H, was born in 2005. The husband claims that the wife suffered from postnatal depression and that he assumed primary care of the child. This is a matter of dispute dealt with later in these Reasons.
In October 2005 default judgment for $30,163.74 was entered against the husband for his former solicitors relating to unpaid legal fees with respect to his previous family law matter. The husband did not pay this debt and as a result $21,877.50 in interest accrued over time. This debt was not paid until 2012 after the parties had separated, from the joint assets of the parties.
The husband asserts that “in about late 2005” he inherited the sum of $380,000 from his “auntie [Ms I]” which he used to purchase a share portfolio in the wife’s name, shares in Asia and for the purchase of properties at 2 and 3 D Street, Suburb E. All of the matters related to this inheritance are disputed by the wife and are dealt with later in these Reasons.
In June 2006 the company F Pty Ltd purchased 2 D Street and 3 D Street Suburb E (“2 and 3 D Street”). Both properties were encumbered. The properties were leased and the income received from rent was applied to the mortgage and outgoings. The wife’s father also carried out improvements to the these properties. The company generally paid for the materials and the wife’s father provided the labour. The wife’s father was not paid for his labour in carrying out these improvements.
The husband established a share trading account in the wife’s name in 2006 which he solely operated.
The parties’ second child, a girl named J was born in 2006. The husband also asserts that the wife suffered from postnatal depression following the birth of this child, which is disputed by the wife and is dealt with later in these Reasons.
In early 2007, the husband was offered employment in Country K in Asia. The family went to Country K for a week in May 2007 to consider the offer and the husband accepted the position. The family moved to Country K in July 2007, when H was two and a half years old and J was seven months old.
The wife did not settle well in Country K and the husband regularly travelled for business to other countries in Asia. In 2008 wife became depressed and was also diagnosed with a physical medical condition, for which she commenced treatment. The husband claims that around this time he became the carer for his wife and the children and this issue is dealt with later in these Reasons.
In 2008, the parties married.
In April 2009 the family returned to live in Australia. The wife’s aunt, to whom she was apparently close, was diagnosed with a terminal illness and the wife preceded the rest of the family’s arrival in Australia by two weeks to spend some time with her aunt.
From July 2009 the husband commenced employment which required him to travel extensively to Asia and Country K and was absent from Sydney for months at a time. The wife resumed all responsibility for the care of the children from this time.
When the parties returned from Country K they decided to purchase a new family home. To raise the capital the wife sold D Street in September 2010 and although the wife’s father was to receive $100,000 from the proceeds he lent that sum back to the parties on a short term basis. The parties still however had insufficient funds for the property they wished to purchase so the wife’s mother assisted by lending them $200,000 which was secured by a mortgage over the wife’s mother’s own home. It was agreed that the parties would repay the principal and interest on the wife’s mother’s mortgage each month so that she would not suffer any financial loss.
With the $300,000 lent by the wife’s parents and a loan the parties purchased a property at Suburb L in October 2010. The wife and children moved into the Suburb L property and the husband continued to work overseas.
In early 2011 the parties took out further loans secured by 2 and 3 D Street and with these funds the parties repaid the wife’s father $50,000 of the $100,000 owing to him.
In April 2011 the wife became aware that the husband had formed a relationship when working abroad and the parties separated.
The properties at 2 and 3 D Street were sold in July 2011. The sale proceeds were applied to the discharge of mortgages and costs of sale and a partial repayment ($100,000) of the loan from the wife’s mother and $30,000 of the remaining $50,000 owed to the wife’s father. The parties continued to repay the wife’s mother’s loan and interest as agreed.
The wife applied for a child support assessment in August 2011 and the husband was assessed to pay $2,232.33 per month from September 2011 until November 2012.
The wife first became aware in November 2011 that the husband had not paid the debt to the finance company for the European car which he had written off, almost seven years previously. At that stage $12,054.03 was outstanding on the debt and interest was accumulating at a default rate. The debt was being pursued by a debt collection agency. The wife raised this issue with the husband in early 2012 and he told her that he would “work it out” with the finance company. However, this debt was not fully paid until orders were made in the proceedings in January 2014 and by that stage further interest had accumulated.
The wife and children moved out of the Suburb L property in December 2011 and moved into the wife’s father’s home. The Suburb L property was then leased and the rent was used to pay the mortgage, the loan to the wife’s mother and outgoings associated with the property.
The wife proposed that the Suburb L property be sold but the husband for some time did not agree with this course of action. Ultimately the property was sold in May 2013 after consent orders were made following the wife filing an application in these proceedings. After the payment of mortgages, the remainder of loans to the wife’s parents and some of the husband’s liabilities such as legal fees to his previous lawyer, the sum remaining in controlled monies from the sale for distribution between the parties is $203,471.00. This compromises almost the whole of the parties’ “asset pool” for distribution.
The husband made no payments in child support between April and August 2013 and in June 2014 his arrears with the Child Support Agency totalled $13,678.57. The Agency issued a departure prohibition order on the husband who was visiting Australia in July 2014 and he paid the outstanding arrears on 6 July 2014.
The wife has re-partnered and shortly prior to the hearing married her partner Mr M. Mr M and the wife purchased a property at the end of 2013 which they have extensively renovated with the assistance of the wife’s father. The property is fully encumbered and the wife and Mr M equally contribute to the mortgage payments. Mr M has a seven year old daughter from a previous relationship who spends substantial and significant time with him.
The wife works in social services. At the time of the proceedings she was working on a contract basis and this contract will continue until January 2017.
Pursuant to the parenting orders made by consent at the end of the trial (13 January 2016) the children live with their mother and spend one week with their father in school holidays three times per year, 11 days in the Christmas school holidays and any other time as agreed.
The father’s current circumstances are to some extent unknown. He re-partnered with Ms N from at least around April 2011 and continues to remain in a relationship with her. Ms N has not assumed any role in relation to the parties’ children and the father’s time with the children will occur in Australia under the orders.
THE MATTERS IN DISPUTE
Did the parties jointly manage their financial affairs prior to July 2007?
The husband says in his affidavit that up until the family moved to Country K in July 2007 and opened their first joint bank account, financial matters between he and the wife were kept separate, at her request. He maintains that the wife told him that he could do “whatever [he] wants” with his inheritance, but does not provide any other examples of the parties keeping their financial arrangements separate, except in relation to the business (which is dealt with below).
The wife’s position generally is that the parties’ financial affairs were controlled and directed by the husband from a fairly early stage in the relationship. It is also her case that from fairly early in the relationship income was applied and liabilities were assumed for the accumulation of property jointly. For example, although the property at D Street had been purchased by the wife each party made contributions to the mortgage after they moved into that property.
Further, the wife says that the companies G Pty Ltd and F Pty Ltd were, at the suggestion of the husband’s accountant, used by both of the parties as entities to further their joint financial arrangements. For example, the husband’s commissions were paid into G Pty Ltd’s bank account and the properties at 2 and 3 D Street were purchased through F Pty Ltd which was trustee for the family trust. The wife says that she did not use either of the companies for her sole financial purposes. Although she was signatory to some accounts, such as the G Pty Ltd account, she says that she signed whatever the husband told her to sign.
Although the husband maintains that he and the wife kept their financial affairs separate prior to July 2007, it is not in dispute that in June 2006, he established a loan in the wife’s name for his purposes of carrying out share trading. The wife says that although the account was in her name she did not authorise any of the trading on that account.
Although the husband contends in his affidavit that the parties kept their financial arrangements separate until July 2007, the tenor of his cross-examination of the wife suggests that he did manage financial matters for both parties up until separation. The wife confirmed in answer to the husband’s cross-examination that she trusted him with finances up until separation.
Although the husband says that he had “no interest or control of that company [G Pty Ltd]”, this was shown to be demonstrably incorrect when he was cross-examined. He agreed under cross-examination that it was at the suggestion of his accountant that the company was utilised, that he was intimately involved with all the transactions undertaken by G Pty Ltd since its inception, and that in November 2010 he provided extensive information to his accountant dating back to 2002 for the purposes of his accountant completing taxation returns for the company.
I am satisfied that the parties did not keep their financial arrangements separate prior to the move to Country K in July 2007 for the following reasons:-
First, in my view, the husband was a most unsatisfactory witness in a number of respects. In respect to parenting he inexplicably maintained his position up until final submissions against the weight of the evidence. He presented no evidence in relation to the arrangements for the children under the orders he proposed and did not challenge any of the wife’s evidence concerning issues of risk in his household. He did not seek to cross-examine the family consultant (whose recommendations did not support the husband’s position) and proposed an ill-considered and non-child-focussed arrangement whereby the children would be largely cared for a nanny in Country K and removed from their primary carer in Australia. He conceded on the first afternoon of his cross-examination that there was no benefit to the children in the scenario he proposed.
The husband also failed to produce documents under his control prior to the proceedings and continued to “discover” or “locate” documents right up until the close of the evidence. In my view, the late and protracted production of documents and maintenance of a hopeless position with respect to parenting orders were deliberate tactics engaged in to lengthen the proceedings and cause the wife unnecessary legal expenses.

Further, the husband’s affidavit was riddled with errors to the point of being misleading and when cross-examining the wife and in submissions he constantly misstated the content of documents or undisputed evidence.
Under cross-examination the husband was particularly evasive and on many occasions had to be directed to answer the question asked. He persistently obfuscated and on many occasions only when faced with evidence which was inconsistent with his account did he reluctantly agree that he was incorrect. For example the husband said in his affidavit that the wife had destroyed all of his documents prior to April 2011. He then conceded that this was “not entirely accurate” and ultimately agreed that the statement was incorrect.
Most of the significant matters in the husband’s case which were proven to be incorrect reflected adversely upon the wife or favoured the husband. Even in respect of matters which are not in the wife’s knowledge, such as his current superannuation balance and bank balances at the time of completion of his Financial Statement the husband was found to be inaccurate and the inaccuracy favoured his position, by understating his entitlements.
In other cases the husband maintained a position adverse to the wife even though there was no evidence to support it. For example the husband asserted that the wife was suffering from various mental health conditions including depression, bipolar disorder, “was manic” and that she did not “function well” which resulted in him becoming the children’s primary caregiver. The husband persisted under cross-examination in suggesting that his concerns about the wife’s health presented a risk to the children, even though he did not provide any evidence of the wife’s mental conditions and incapacity, and under the parenting orders he agreed to, the wife was to have sole parental responsibility for the children and they are to live with her.
In making negative findings about the husband’s credit I also take into account his admission of dishonesty when he agreed that as significant payments of commission were deposited into a company account between 2004 and 2007, the Child Support Agency was not aware of the totality of his income for the purposes of assessing child support for the children of his first marriage.
Further, as detailed later in these Reasons, I am satisfied that the husband has failed to make full and frank disclosure of financial matters in these proceedings, a matter which was ultimately conceded by him[1].
[1] Transcript 13 January 2016, p. 10.10.
The vast majority of the documents in the proceedings support the contentions made by the wife and are inconsistent with contentions made by the husband. For example, the husband contended that he purchased the properties at 2 and 3 D Street, whereas the only document available in relation to ownership of that property (a later contract of sale) lists the company F Pty Ltd as the registered proprietor, consistent with the wife’s evidence. Central to the husband’s contention about his entitlement is his contention that he received an inheritance in “late 2005”, but his own Financial Questionnaire completed in September 2013 states that his $380,000 inheritance was a contribution that he made to the parties’ assets “at commencement of cohabitation”, many years before 2005.
In addition to these findings concerning credit the husband also made many concessions under cross-examination that were consistent with the wife’s position.
Although it may be the case that the parties had not operated a joint bank account prior to moving to Country K in 2007, many concessions made by the husband under cross-examination confirmed that the parties intermingled their finances and operated in a joint fashion with respect to the accumulation of property. The incorporation and utilisation of the companies G Pty Ltd and F Pty Ltd, the joint contributions to the mortgage at 1 D Street which was registered in the wife’s name and the establishment by the husband of the loan in the wife’s name for the purposes of share trading are all examples of the joint conduct of the parties’ financial affairs.
I am also satisfied that the parties’ joint financial affairs were controlled and directed by the husband from a fairly early stage in the relationship as contended by the wife. In respect of these matters the husband made concessions consistent with the wife’s evidence about the incorporation, utilisation and control of the company G Pty Ltd. The husband did not challenge the wife’s evidence that although she was a signatory to some accounts and director of companies, she signed whatever the husband told her to sign. He also agreed that while the wife was the sole director and shareholder of G Pty Ltd he was “intimately involved in all transactions involving the company from its inception”. On his own evidence he also assumed responsibility for the debt to the finance company in relation to the European car and established loans in the wife’s name for the purpose of carrying out share trading.

The Business

It is the husband’s case that the business run by the wife in 2003 to 2004 was entirely her own enterprise and that he had no involvement in it and did not know any details about the financial arrangements for it. He contends that the wife should bear responsibility for the failure of that business and any ongoing liability as a result. Specifically he denies responsibility for the $80,000 loan from the wife’s father, the entirety of which is still outstanding and he submits it should not be brought into account in the property settlement as this would be “unfair” to him.
As noted above, it is the wife’s position that the parties’ financial affairs were controlled and directed by the husband from an early stage in the relationship. Although she was responsible for most of the management of the business, she says that the venture formed part of the couple’s financial arrangements organised by the husband.
In his affidavit, the husband says that the wife proposed “follow[ing] [her] dream to open a [business]”. He says that he advised the wife in around October/November 2003 that the business she had located was not a good proposition on the basis of “the financials” he had looked at, on her request. He says that the wife said to him “this is what I want to do, if I fail at least I gave it a try. I am going to borrow the money from Pappa [her father] to buy the [business]. It’s my dream and nothing to do with you. I want to keep our businesses separated”.
The husband initially said that he was not involved with any discussions with the wife’s father regarding any loan and that the wife was the sole director and shareholder of the company G Pty Ltd [through which the business was purchased]. He says that he did not have any interest or control of that company or the business and was not a signatory on the company’s bank accounts. He initially said that he did not have any knowledge of the terms of any loan though he was aware through a conversation with the wife’s father that the wife’s father was going to lend the wife the money for the business.
As previously indicated, the husband made significant concessions under cross-examination about his role in the affairs of the company G Pty Ltd. He also agreed that the $80,000 that was paid for the business created a subsequent loss for G Pty Ltd on the sale of the business which was able to be used to assist the tax position of the company as that loss was carried forward. Despite this concession he continued to maintain that he knew nothing of the $80,000 loan for the business and was not “involved” in the loan in any way. After extensive cross-examination on the topic he ultimately conceded that he did know about the loan for the purchase of the business at the time it was made.
The husband says in his affidavit that he had nothing to do with the day-to-day management of the business except that he helped clean and paint it. However, he also says that in the mornings he and the wife commuted together to work and he helped set up the business. In the evenings he helped the wife close the business. The husband says that by July [2004] the business was not performing well and that he helped pay the rent from his commission. He says that in late 2004 the wife said she was going to close the business and walk away from it.
The husband gives no evidence in relation to the repayment loan from the wife’s father for the business except to say that he was aware that the wife “made some payment to [her father] from her house keeping money at the rate of $50 per month in about 2005 and 2006”. He says that in 2009 when the wife’s father visited them in Country K the wife’s father told him that the debt was written off “ages ago”.
The husband’s contention that the business was entirely the wife’s venture and that he had little or no knowledge about the financial arrangements associated with it changed somewhat under cross-examination. He agreed for example that he negotiated and looked at the “financials” in relation to the purchase of the business and conceded that in a Financial Questionnaire filed in the proceedings dated 15 September 2013 he stated “I supported [Ms Judd’s] failed [business] by paying for rent and supplies”.
The wife lists the $80,000 loan to her father for the business as a matrimonial liability. She says that in late 2003 when she was still working for the public service, the husband did not have permanent employment and she proposed that they set up a business. She thought her father would be happy to support the venture and that the husband agreed to it.
The wife says that she found the business and that her father agreed to lend the parties $80,000 to purchase the business. A document on the letterhead of G Pty Ltd dated 1 November 2003 sets out the following
Pappa, please find the following items that I would like to borrow money from you to begin operation at “[the Business]”
[items totalling $80,000 are set out]
If you approve this amount, I personally guarantee to repay the money plus interest each month according to your Suncorp bank statement.
Thank you for supporting me, love always [Ms Judd].
In handwriting the words “paid 10-12-03” are written. Bank records evidencing the payment to G Pty Ltd in this sum are also annexed to the wife’s affidavit.
The wife says that at the time the business was purchased through G Pty Ltd the husband was also using this company as his business entity. Bank records confirm that the husband’s commissions were deposited into this account.
The wife says that the business was open six days a week between 7.30am and 4.30pm. She describes herself as the ‘manager’ and says that the husband came with her in the morning and assisted going to work. She says that when she became pregnant in about April 2004 and suffered from severe morning sickness and as the business was “very slow” the husband negotiated a reduction in the rent with the landlord. She says that when they ceased trading by about September/October 2004 there were no significant debts except for the loan to her father, the whole of which remains outstanding. The wife denied that she and the husband did not speak about the $80,000 loan and said that although there was no urgency to repaying it, it was “always in the background”.
Under cross-examination the wife confirmed that she borrowed $80,000 from her father to start the business. When asked to describe the husband’s role in the business she said that he arranged for an initial appointment with an accountant, set up the company G Pty Ltd and arranged for the purchase of the business under this name. She also said that the husband was at meetings with brokers in relation to the purchase of the business and actively worked in it. The wife denied that the husband was strongly opposed to the business or that she said it was “hers” and that he should stay out of it. She said that the guarantee for the loan from her father came from G Pty Ltd.
In his affidavit the wife’s father says that in late 2003 the wife and husband asked him if he would help them to pay for a business. He says that he went with them to have a look at the business and agreed to lend them $80,000. He withdrew the money from a redraw facility that he had on his mortgage and that the husband was present when his daughter signed the document on G Pty Ltd letterhead dated 1 December 2003. He says that the husband said words to the effect of “I am the manager of the company [G Pty Ltd]”. The wife’s father says that he has never been repaid the money nor did the husband or wife make any interest repayments to his loan account as agreed.
Under cross-examination the wife’s father remained firm about all aspects of his evidence. He also said that on many occasions the husband told him that he would repay the loan up until the time that the family moved in Country K. The tenor of his evidence is that he still has an expectation that he will be repaid.
I am satisfied that the business was a joint enterprise of the parties and that the $80,000 loan from the wife’s father should be brought into account in the property settlement as a joint liability for the following reasons:-
On the basis of my findings in relation to the husband’s credit generally, referred to earlier in these Reasons, I prefer the wife’s evidence to the husband’s, where it differs.
Further, the husband made many concessions under cross-examination that were consistent with the wife’s contentions and inconsistent with his evidence that he had no involvement in the business and did not know any details about the financial arrangements for it including the loan.
So far as the husband’s actual involvement in the business is concerned, on his own evidence he examined the accounts of the business prior to purchase, helped in preparation for its opening, helped to open in the mornings and helped the wife with the closure of the business in the afternoon. He also conceded so far as the financial arrangements were concerned that he helped pay the rent from his commission and paid for stock.
The husband also conceded that in November 2010 after he had become the sole director and shareholder of G Pty Ltd, he was able to provide his accountant with detailed information concerning the costs and expenses of the company including the utilisation of the $80,000 to purchase the business which was owned by the company. Finally, in light of my findings about the intermingling of the parties’ financial arrangements from an early stage in their relationship and rejection of the husband’s evidence that the parties kept their financial arrangements separate, together with my finding that the husband directed and controlled the parties’ financial arrangements, I am satisfied that the husband was well aware of the financial arrangements in relation to the business including the $80,000 loan from the wife’s father. I am also satisfied that the parties approached the business venture as a joint enterprise from which it was hoped they would both benefit. Indeed, some benefit did flow to the parties including through the improvement of the tax position of their company G Pty Ltd.

The husband’s inheritance

It is central to the husband’s contention about his entitlement based on contributions that he inherited the sum of $380,000 from his “Ms I” which he used to purchase a share portfolio in the wife’s name, shares in Asia and the properties at 2 and 3 D Street. He contends that in this way he made a significant contribution to the property accumulated by the parties and the welfare of the family.
In the course of submissions the husband conceded that the only evidence of the inheritance is his assertion that he received it and the wife’s “agreement” about this issue. The wife’s agreement about the inheritance, according to the husband is contained in an email exchange between the parties.
In an email in January 2014 when the husband was attempting to negotiate spending time with the children he wrote the following:
Remind me what your conditions [to see the children] were. Oh that’s right – give you all of [Ms I’s] money. Disgraceful [Ms Judd].
The wife wrote in response:
[Ms I] would be horrified with your behaviour. All her money has gone with all your time being redundant and investing your time in other businesses.
There is no other evidence from the wife concerning her knowledge of an inheritance received by the husband nor was she cross-examined about it.
Although there does not seem to be any dispute that at some point the husband received some money from his aunt, Ms I, in his affidavit he states that he received the inheritance in “about late 2005” and that he invested it as follows:
·Purchasing 2 and 3 D Street.
·Purchasing shares for $236,000 “in Australia” in the wife’s name.
·Purchasing $100,000 worth of shares in Asia in 2007 in joint names.
Under cross-examination the husband conceded that there was no evidence in his case to support his assertion that he received an inheritance, when he received it, or how much he received. He agreed that he could have carried out a probate search to provide relevant evidence. The husband was vague under cross-examination about when he says he received the inheritance stating that he was “not entirely sure” that it was in 2005. He said he “believed” that he was paid by cheque which he deposited into a bank account but had no record in relation to that deposit. He then said he “suspected” the cheque was paid into G Pty Ltd’s account but agreed that there is no record in the bank documents that he produced relating to G Pty Ltd that recorded the deposit.
The husband was also shown a Financial Questionnaire completed by him on 5 September 2013 which he said was accurate. In that document he stated that his $380,000 inheritance from Ms I was a contribution he made to the parties’ assets “at commencement of cohabitation [that is late 2001or 2002]”.
The husband does not explain how the investments which total $486,000 could have been made from $380,000 inheritance nor is there any evidence in support of his contention that he made these investments with his inherited money.

Purchase of 2 and 3 D Street

The parties’ evidence about the purchase of 2 and 3 D Street is significantly different. Neither party provides any documentary evidence about the purchase of these properties but the wife says that the properties were purchased by the company F Pty Ltd (as trustee for a family trust) and that they were fully encumbered. In my view, as the husband has been the sole director of that company since September 2010, it would be expected that he would provide documentary evidence of transactions entered into by that company.
The husband says the following. “I invested the money as follows: Purchase of [2 and 3 D Street] for $550,000 (plus stamp duty and expenses) with a mortgage of $400,000 from BankWest in June 2006.” The meaning of these words in my view is ambiguous but it can be inferred that the husband contends that he purchased these properties in his own name. However, the contracts for the subsequent sale of these properties identify the vendor as F Pty Ltd and it was subsequently not in issue that F Pty Ltd was the registered proprietor.
The husband was cross-examined about his contention that he contributed $150,000 to the purchase of the properties, which he conceded he did not state in his affidavit, but could be inferred. He agreed that if he had put money towards the purchase of these properties it must have been by way of a loan to F Pty Ltd and the evidence of that loan would appear in the accounts of that company. He then said that he did not think accounts had ever been prepared for the company. He was extensively cross-examined about information he had given to his accountant for the preparation of those accounts but maintained that accounts had not ever been prepared. Ultimately, he agreed that there was no evidence of any money being contributed by him towards of the purchase of those properties other than his statement to that effect in his affidavit.

The parties agree that the properties were sold in May 2011 (with settlement in July 2011) and that the sale proceeds were applied to discharge the mortgages and to partially repay the parties’ loans from the wife’s parents. The wife says that these payments exhausted the entirety of the sale proceeds while the husband claims that there was a surplus of about $70,000 which was paid “to our joint account which [the wife] spent”.
Although neither of the parties annexes to their respective affidavits complete documentation in relation to any of these transactions the wife does annex bank records from a joint bank account at the relevant period. That account records that the parties received two cheques and direct credits totalling $218,899.20 from the sale of 2 and 3 D Street on 22 July 2011. A few days’ later two transfers totalling $150,000 were made to the wife’s mother, $30,000 was transferred to the wife’s father and sums totalling $38,899.92 were transferred to the mortgage on the Suburb L home. These payments exhausted all of the proceeds of sale. There is no evidence to support the husband’s contention that following the payment of all outstanding debts associated with the sale the parties received about $70,000 which the wife spent.

The share trading account

The husband next contends that he invested $236,000 of his $380,000 inheritance by purchasing shares in the wife’s name. He gives no details other than that he purchased “$236,000 shares in Australia in [Ms Judd’s] name” and that “[Ms Judd] sold these shares in around October 2011 and spent the money”.
The only other evidence in the proceedings in relation to these shares comes from the wife. She says that in June 2006 the husband “established a Comsec margin loan in my name”. She annexes to her affidavit records in relation to that loan for the period 19 June 2006 to 11 August 2011 and says that she does recall authorising any of the trades for the whole of the period and did not operate that account in her name.
Under cross-examination the husband agreed that he does not adduce any evidence for his assertion that he purchased $236,000 worth of shares in Australia in the wife’s name. He agreed that the Comsec account referred to by the wife was the means by which he purchased the shares and that he used the wife’s name and did all of the trading except the final transaction. He agreed that if he wanted to produce evidence to support his contention he could have issued a subpoena but did not do so.
The husband agreed under cross-examination that the only interpretation of this statement “[the wife] sold these shares in about October 2011 and spent the money” is that she sold and utilised the whole of the $236,000 worth of shares. He also conceded that the only transaction that the wife had on any share trading account was the last transaction in the sum of $16,705.92 in October 2011 which she utilised to make a payment on the Suburb L mortgage. Under further cross-examination about this statement the husband claimed that he meant by using those words that “the shares in [the wife’s] name were sold and transferred to her account [by payments of] $10,000 a month”.
Bank records annexed to the wife’s affidavit for this period indicate that four payments of $10,000 each were transferred to the parties’ joint account in Australia between August and November 2011. The transaction details for these deposits record
·       monthly expenses – “[MS JUDD]” (August);
·       mortgage and bills (September);
·       Bills (October);
·       maintenance and CS (November).
The husband agreed that these funds were used by the wife to pay the mortgage and outgoings on the Suburb L home and living expenses for the family. When asked why he had used the expression “which [Ms Judd] spent” he said that he wanted to the Court to draw the inference that it [the expenditure] “wasn’t for my benefit”. The husband would not agree, no matter how the questions were put, that he had received any benefit from this expenditure. Ultimately he reluctantly agreed that as his children were housed and fed, went to school and were clothed and as the mortgage did not go into default, insurances were paid and upkeep was maintained on the family home that he did have “some benefit” from this expenditure.
In summary, there is no evidence to support the husband’s contention in his affidavit that he used $236,000 from any inheritance to purchase shares or that the wife sold the shares he had purchased in her name in around October 2011 and spent the money for her own purposes. I am satisfied that the wife utilised any money received by her (which may have originated from share trading from an account in her name) during this period only for the purposes of mortgage payments and family expenses.

Purchase of shares in Asia

The third asset in which the husband contends he invested the money from his inheritance is the purchase of $100,000 of shares in Asia in 2007 in joint names. He gives no other details in relation to these shares except to say that he sold them (on an unspecified date and for an unspecified sum) and “transferred $30,000 to Australia and $60,000 “to [Country K]” and that the latter was used to pay his Country K tax bill, child support and living expenses when he was unemployed.
The husband agreed under cross-examination that he adduces no evidence of the purchase of the shares and no evidence of any money coming directly from his inheritance or otherwise for that share trade account. He also agreed under cross-examination that he did operate a share trade account in Asia which was also in the wife’s name and that she did not operate that account. He agreed that he could have produced documents in relation to that account and provided no explanation for his failure to do so.
As there is no evidence to support this contention I am not satisfied that the husband invested $100,000 which he received as part of his inheritance in shares in Asia.
I am not satisfied that the husband received an inheritance of $380,000 or in any amount during the relationship. He did not pursue the claim in his Financial Statement in 2013 that he had received this sum prior to cohabitation and that it should be regarded as his initial contribution, and appeared somewhat surprised when he was shown the document in which that was asserted as it is inconsistent with his contention that he received this inheritance in late 2005. He produces no documents which support either the receipt of the inheritance or the manner in which it was spent, and conceded that he did not take any steps to obtain and produce these documents in the proceedings. His failure to do so leads to an inference that such evidence would not have assisted his case[2]. A similar inference can be drawn concerning documentary evidence relating to a loan which he says was made by him to F Pty Ltd for the purchase of 2 and 3 D Street, which he ultimately agreed was the means by which he claims he invested some of his inheritance. Further, for the reasons previously given in relation to his credit, I prefer the wife’s evidence over his where that evidence differs. I am satisfied that the wife’s oblique reference to “all [Ms I’s] money” having “gone” is consistent with the wife having an awareness that at some time the husband received some money from his aunt and that the money was spent by the husband in a profligate manner, which in the wife’s words, would cause the aunt to be “horrified”.
[2] Jones v Dunkel (1959) 101 CLR 298.

Does the husband have undisclosed assets and income?

It is the wife’s case that from at least the time that the husband purchased shares through an account in her name in 2006, he was carrying out some financial transactions of which she was unaware. It is her contention that the husband solely had access to and received the benefit of funds from these transactions and even prior to separation those funds were not necessarily made available for the purposes of the family.
The husband agreed under cross-examination that from June 2006 he established a margin loan in the wife’s name for the purposes of trading in shares and that in 2007 he established a share trade account in Asia in the parties’ joint names for the purposes of trading in shares.
The husband also agreed that at the time the parties purchased the Suburb L home [October 2010], which they could not have done without $300,000 in loans from the wife’s parents, he was continuing to trade in shares in the wife’s name in Australia and in Asia.
It is also not in dispute between the parties that the joint bank accounts they established in Country K when they moved there were utilised by the husband alone following separation. The wife says she was unable to access complete records for these Country K accounts but does annex some records relating to them. Those records indicate that in the period from 15 October 2011 until 23 May 2012 eight significant withdrawals were made totalling $156,912.48 as well as other smaller transactions. Cross-examination focused in particular on three withdrawals of $20,000 each from a joint account in Country K on 15, 16 and 17 December 2011 and deposits in the same amounts into the husband’s personal account on 16 and 19 December 2011.
The wife contends that the husband alone and jointly with Ms N’ (who became his partner from at least April 2011) benefitted from the husband’s share trading including on an account jointly held in her name. She asserts that the balance of the share portfolio in February 2012 was equal to AUD $121,086. The husband gives no evidence about this share trading though in an email annexed to the wife’s affidavit he states “HSBC joint shares were sold in June 2012. A$30,000 was transferred to Australia. S$60,000 was transferred to HSBC SG and then joint DBS account.”
Initially under cross-examination the husband he said that he could not recall withdrawing money from [the share] accounts and depositing it into his joint account with his partner, but he subsequently agreed that he had sold $60,000 of the Asia shares and that this sum ended up in the joint account he holds with his partner. Bank records produced by the husband towards the end of his cross-examination on the last day of the hearing relating to the DBS account he jointly holds with Ms N indicate that he made deposits totally $78,957 into those accounts between 21 and 31 May 2012.
At various times, including at the time of the final hearing, and from September 2012 to May 2013 when the husband was unemployed he was able to enjoy a very good lifestyle.
From September 2012 to May 2013 it is to be remembered that the wife had moved out of the Suburb L property with the children and was living with her father and the Suburb L property was leased and rent being utilised to pay the mortgage. The husband was also not paying the child support he had been assessed to pay and his significant debt to his previous lawyer remained unpaid and was accumulating interest. During this same period, the husband’s enjoyed a three week holiday in Africa and travelled to Europe. Credit card payments indicate significant purchases including for clothing, restaurants, foreign car rental, airfares and other items which would suggest he had access to considerable funds despite his unemployment.
Another relevant period of unemployment was at the time of the proceedings. The husband is not clear when his period of unemployment commenced and was cross-examined about his recent sources of income. In the most recent Financial Statement sworn on 23 December 2015 the husband disclosed the sum of “$200,000” (sic) in the controlled monies account and a life insurance policy of $6600 as his only assets. He also disclosed superannuation in a retirement savings account to the value of $90,902.
In relation to his assets the husband agreed under cross-examination that on 22 December 2015, the date before he swore his Financial Statement, he had a balance of $31,659.90 in a personal bank account. Under further cross-examination concerning transactions on that account his attention was drawn to a “share payment deposit” of $19,084.43 on 11 December 2015. When asked about his recent share trading the husband gave contradictory and unclear evidence about whether he was currently trading in shares and thereby receiving income. Despite the clear inaccuracies in his Financial Statement the husband would not agree that he had not been honest in that document but did concede that he had “made some errors”.
It subsequently came to light that the husband had not disclosed another share trading account which he had held since at least 2014 or possibly as early as 2012.
A consideration of the wife’s contention that the husband has had and continues to receive the benefit of undisclosed income must be made in light of the husband’s disclosure (or as the wife’s contends non-disclosure) about financial matters.
It is submitted on behalf of the wife that the husband’s actions with respect to financial disclosure go beyond a mere non-disclosure and amount to a deliberate failure to disclose.
In his affidavit the husband claims that he is unable to produce relevant documents as “all of [his records] prior to April 2011 were stored… in the family home” and though he requested the documents several times from the wife, “she said that she destroyed them.”
In the course of cross-examination it was demonstrated on numerous occasions that the husband did have access to many relevant documents relating to the financial affairs of the parties and his assertion that his wife had control of them and destroyed them was incorrect. He had no credible explanation for his failure to produce documents and right up until the evidence closed he was producing documents for the first time on an ongoing basis, which were clearly available to him at all times. For example, on the first day of the hearing the husband produced documents relating to the accounts of G Pty Ltd for the first time and ultimately after great reluctance agreed that his statement that the wife had destroyed documents was incorrect[3]. He also produced documents in relation to the company F Pty Ltd for the first time on the first day of the proceedings and again with great reluctance and after much obfuscation agreed that he failed in his obligation to make a full and frank financial disclosure in the proceedings[4].
[3] Transcript 13 Jan 2016 p. 9.
[4] Transcript 13 January 2016 p. 10
The husband was also cross-examined about his Financial Statement in which he stated that his superannuation entitlement was valued at $90,902 but had failed to produce the most recent superannuation statement. Later, when that document was called for, it became apparent that his superannuation entitlement was as at 31 December 2015 a little over $100,000.
It subsequently came to light that on the last day of the proceedings the husband had further documents under his control which he had still not produced[5], in particular in relation to share portfolios and share trading. As noted earlier it became apparent that the husband had also omitted to declare a bank balance of $31,659.50 which appeared to relate to share trading.
[5] Transcript 13 January 2016, p. 45.
The omission of a $31,000 bank balance, understatement by $10,000 of his superannuation entitlements and non-disclosure of information relating to share trading, in my view are significant matters in circumstances where the property pool available is a little over $200,000 and subject to an $80,000 debt.
On the basis of the non-production or late production of documents, concessions made under cross-examination and inconsistency between the documents produced and the husband’s affidavit, I am satisfied that the husband has not made full financial disclosure in this matter and that his actions in doing so have been deliberate. He also ultimately conceded, that he continued to receive the benefit of share trading in a jointly held account and that some significant funds had found their way from his joint accounts with the wife into an account he jointly holds with his partner. In light of these concessions and his somewhat extravagant expenditure when unemployed, I am satisfied that the husband does have undisclosed assets and/or financial resources which are relevant matters when considering both the extent of the asset pool and s 75(2) factors.

The Law & Discussion

The approach to the determination of an application for property settlement orders is set out in Stanford v Stanford[6], which was considered in detail by the Full Court in Bevan & Bevan[7].
[6] (2012) 247 CLR 108.
[7] [2013] FamCAFC 116
The starting point is a consideration of “whether it is just and equitable to make a property settlement order by identifying, according to ordinary common law and equitable principles the existing legal and equitable interests of the parties in the property”[8].
[8] Stanford & Stanford (2012) 247 CLR 108, [2012] HCA 52 at [37].
This involves identifying the existing interests and then considering whether having regard to the particular circumstances before me, it would be just and fair to make orders for the alteration of property interests.
If it is just and equitable to make such an alteration of property interests I must then consider the matters set out in s 79(4)(a) to (c) of the Family Law Act 1975 (Cth) (“the Act”), to determine the financial and non-financial contribution made by each of the parties to the property and to the welfare of their family.
I must then consider the remainder of the matters in s 79(4) including the matters referred to in s 75(2) so far as they are relevant, and determine on this basis whether there should be a further adjustment to the parties’ contribution-based entitlements.
Finally, I must then consider the justice and equity of the proposed orders. As was said in Bevan (supra) at [86], the just and equitable requirement is “not a threshold issue, but rather one permeating the entire process”.

What are the existing interests of the parties?

Although the wife cannot be entirely sure about undisclosed assets, there is agreement between the parties as to the small pool of assets available for distribution. The only relevant liability is the debt of $80,000 to the wife’s father which has been determined by me to be a joint liability. The parties have also agreed that other small items belonging to each party including the wife’s small interest in her superannuation fund ($28,000) should not be included as she had a small superannuation entitlement prior to cohabitation and only accumulated a negligible amount of superannuation during the relationship. The husband’s superannuation fund of at least $100,000 is likewise not to be included in the balance sheet as he accumulated this sum after the parties separated.
On the basis of that agreement and my findings, the current interests of the parties are set out in the following table:

LIST OF ASSETS AND LIABILITIES
ASSET	HUSBAND		WIFE		JOINT
CBA bank account	$3,859
Proceeds of sale for Suburb L property	$203,471
Total Assets	$207,330
LIABILITIES	HUSBAND	WIFE		JOINT
Loan to Mr B for business	$80,000
Total Liabilities	$80,000

The question to be determined is whether it would be just and equitable to leave the property rights intact having regard to there currently being total assets to the value of $207,330 almost entirely comprised of the proceeds of sale of the Suburb L property in a controlled monies account and a joint liability to pay $80,000. Although the balance sheet indicates that the proceeds are an asset of the wife, in the husband’s Financial Statement he lists “$200,000 held in trust as property owned by him and in her Financial Statement the wife lists 50 per cent of the sum in the controlled monies account as owned by her. For the purposes of this judgment this asset will be treated as being jointly owned.

Accordingly the final orders I propose making will result in the wife receiving 85 per cent and the husband receiving 15 per cent of the remaining pool of assets after the $80,000 debt to the wife’s father is accounted for. I propose bringing this joint liability into account by adding this amount to the wife’s entitlement and making orders as she seeks that she be liable for this debt.
Of the $207,330 available for distribution, $80,000 will be given to the wife who will be required to pay the joint debt. She will also receive 85 per cent of the remaining $127,330, that is, $108,230.50. These orders will result in the husband receiving $19,099.50. The difference between the husband and wife is $89,131. In my view, the amount to be received by each party respectively and the disparity between them having regard to all the matters referred to in such a small property pool is a just and equitable property settlement. Accordingly, I make the orders set out at the forefront of these Reasons for Judgment.

I certify that the preceding one hundred and sixty-seven (167) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hannam delivered on 19 May 2016.

Legal Associate:

Date: 19 May 2016

[2016] FamCA 390

19 May 2016

Key Legal Topics

Areas of Law

Family Law

Equity & Trusts

Legal Concepts

Remedies

Injunction

Costs

Fiduciary Duty