Kalenik v Apostolidis

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

No. 7588 of 2000

ZORICA KALENIK	Plaintiff
v
JOHN IOANNIS APOSTOLIDIS & ORS	Defendant

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JUDGE:	HARGRAVE J
WHERE HELD:	Melbourne
DATE OF HEARING:	2 - 5, 9 - 12, 16 – 19, 23 - 26 February 2009 2 - 4, 10 – 13, 16, 18 - 20, 23 – 26, 30, 31 March 2009 1, 8, 21, 29, 30 April 2009 7 May 2009
DATE OF JUDGMENT:	29 May 2009
CASE MAY BE CITED AS:	Kalenik v Apostolidis
MEDIUM NEUTRAL CITATION:	[2009] VSC 208

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PROPERTY – De facto relationship – Adjustment of property interests under Part IX of the Property Law Act 1958 (Vic) ‑ Relevant principles – Adjustment order made.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr C Gunst QC with Mr R Edmunds	Leo Dimos & Associates
For the Defendant	Mr S Wilson QC with Dr D Kovacs	David Tonkin & Associates

TABLE OF CONTENTS

Parties and Introduction.......................................................................................................... 2
Outline of applicable law and summary of issues............................................................. 4
Demeanour and general credibility of the parties............................................................. 9
(1)     Plaintiff’s credibility and demeanour............................................................................ 9
(2)     Defendant’s credibility and demeanour...................................................................... 24
(3)     Failure to call witnesses: Jones v Dunkel....................................................................... 28
Facts     ...................................................................................................................................... 35
(1)     Background and overview............................................................................................. 35
(2)     Commencement, nature and duration of the relationship....................................... 64
(a)   Commencement: 1993...................................................................................................... 64
(b)   Engagement?.................................................................................................................... 71
(c)   Meghan Courtney: 1995-6............................................................................................... 76
(d)   Alleged separation under one roof: 1999 - 2000............................................................... 96
(e)    Alleged periodic absences................................................................................................. 98
(3)     Assets of the parties at commencement of the relationship..................................... 99
(4)     Commencing value of the furniture business........................................................... 100
(5)     Separation value of the furniture business................................................................ 103
(a)   The defendant’s evidence................................................................................................ 108
(b)   Expert evidence............................................................................................................... 114
(6)     Other assets at separation............................................................................................ 128
(7)     Defendant’s assets at the separation date.................................................................. 129
(8)     Plaintiff’s assets at the separation date...................................................................... 130
(9)     Plaintiff’s contributions towards growth of the furniture business...................... 130
(a)   Did the plaintiff make any financial contributions?...................................................... 131
(b)   Did the plaintiff work in the business?.......................................................................... 139
(c)   Did the plaintiff participate in significant business decisions?..................................... 161
(10)   Plaintiff’s contributions to acquisition and value of residence.............................. 164
(11)   Plaintiff’s domestic contributions as homemaker, partner, carer/step‑parent... 166
(a)   Homemaker tasks............................................................................................................ 166
(b)   Care of David.................................................................................................................. 167
(12)   Were the plaintiff’s domestic contributions made more arduous by violence and abuse inflicted by the defendant?.......................................................................................... 171
Has either party engaged in relevant litigation misconduct?...................................... 181
(a) Conduct relating to Bill Nedelcu................................................................................... 181
(b) Alleged threats by the defendant.................................................................................... 203
Have the plaintiff’s contributions been sufficiently recognised and compensated for? 203
What orders are necessary to ensure that the plaintiff’s contributions are sufficiently recognised and compensated for?...................................................................................... 205

VIII Constructive Trust Claim.................................................................................................... 209

Conclusion and orders......................................................................................................... 210
Referrals to authorities......................................................................................................... 210

HIS HONOUR:

Parties and Introduction

In early February 1993 the plaintiff, Zorica Kalenik, met the first defendant, John Apostolidis also known as ‘Jannis’ or ‘Janni’. For convenience I will call Mr Apostolidis ‘the defendant’ and will refer to Ms Kalenik and Mr Apostolidis jointly as ‘the parties’. The other defendants are companies owned and operated by the defendant, through which he conducts business and owns real estate and other assets.

The parties commenced living together as if they were husband and wife at some stage during 1993. There is a substantial factual dispute as to when this occurred. The plaintiff says that she moved in with the defendant on a particular day in or about early May 1993. The defendant says that the plaintiff moved into his home on a gradual basis commencing in November or December 1993. The significance of this dispute will become apparent.

At the time the parties commenced living together, the plaintiff was unemployed and in receipt of unemployment benefits. She owned, subject to a mortgage, a half‑interest in a house with her mother and had little else in the way of assets. At this time, the defendant owned, subject to a mortgage, a house in his own name and a furniture retailing business. The business was conducted by a company owned by the defendant, DSK Holdings Pty Ltd, from leased premises. It was at that time a fledgling business of modest value. For convenience, I will refer to it as ‘the business’ or ‘the defendant’s business’.

The defendant was assisted in the conduct of the business by his brother Ken Apostolidis. As appears hereafter, Ken had the capacity to be a material witness as to relevant events. However, although he was present in Court throughout the conduct of the trial, neither party chose to call him as a witness.

During the course of the seven year relationship between the parties, the profitability of the business grew very substantially. At the time the relationship ended, the defendant was a successful retailer of furniture, in particular imported leather furniture, from business premises owned by another company owned by him, Azura Pty Ltd.

The plaintiff did not obtain any significant outside employment during the course of her relationship with the defendant. She says that this was because she worked full‑time in the business for six of the seven years that the parties were in a relationship. The plaintiff contends that her work in the business, and her intellectual input into business decisions made jointly with the defendant and others, constituted substantial contributions to the growth of the business. The defendant flatly denies that the plaintiff worked in the business, participated in any significant business decisions or otherwise contributed to the growth of the business.

The plaintiff also contends that she contributed financially to the business, by persuading her mother to agree to the sale of the house owned by them, on the insistence of the defendant, and then making her share of the net sale proceeds available to the defendant when requested by him for business purposes. Once again, the defendant flatly denies this. He says that the plaintiff made no financial contribution whatsoever to the business at any time.

The plaintiff also contends that she made significant contributions to the household expenses of the parties. Once again, the defendant rejects this outright. He contends that the plaintiff was wholly supported by him throughout the course of their relationship and was, in effect, ‘a kept woman’.

The defendant contends that the plaintiff did not reside continuously with him from 1993, when they first moved in together, until March 2000 when they finally separated. He contends that the plaintiff would often be absent from his home for days or weeks following a series of arguments in what was a stormy relationship and that, for two periods during 1995 and 1996, the plaintiff moved out of his home for periods of eight months and four months respectively while he conducted a relationship with another woman who subsequently had his child. Further, the defendant says that he and the plaintiff were effectively separated under the one roof for the final year of their relationship, with the plaintiff moving into a separate bedroom and sexual relations ceasing. During this time, the defendant says that he conducted a relationship with a different woman. The plaintiff flatly denies all of the defendant’s assertions in this regard. She contends that she lived with the defendant on a continuous basis, sharing the same bed and having regular sexual relations, until the defendant informed her that the relationship was over and, in her words, she was ‘thrown out’ in March 2000. The plaintiff said that the only gap in the relationship was for a period of about three days in January 2000.

The parties finally separated on 17 March 2000 in fairly extraordinary circumstances. In January 2000, the defendant first met his current partner, Amanda Simpson, over the internet. In February 2000, the defendant travelled to America and met Ms Simpson in person for the first time. By early March 2000, the defendant had invited Ms Simpson to come and live with him in Australia, Ms Simpson had agreed, and the defendant had told the plaintiff that she had a week or so to leave his home because their relationship was over and he had found a new woman.

In November 2000, the plaintiff commenced this proceeding. In summary, the plaintiff claims that she made significant financial and non‑financial contributions to the growth of the defendant’s assets during the course of their relationship. She seeks adjustment orders under s 285 of the Property Law Act 1958 (Vic). The plaintiff contends that she is entitled to no less than one‑half of the value of the defendant’s assets, both personal and business, at the time of their separation in March 2000. As appears below, the defendant’s assets in March 2000 exceeded $10 million. The plaintiff places heavy reliance upon the fact that, notwithstanding her alleged contributions to the growth of the defendant’s assets, she left the relationship with virtually nothing. She had savings of approximately $50,000, a modest motor vehicle purchased for her by the defendant during the course of the relationship and $10,000 in cash given to her by the defendant when she left.

Outline of applicable law and summary of issues

The plaintiff’s claim is made under Part IX of the Property Law Act 1958 (‘the Act’), which allows for the making of adjustment orders in favour of one ‘de facto partner’ against the other following the termination of a de facto relationship.

Section 275 of the Act defines a ‘de facto relationship’ as the relationship of a man and a woman ‘living or having lived together as if they were husband and wife although not married to each other’.

Section 279 of the Act permits a court to make an order for the adjustment of interests with respect to the property of one or both of the de facto partners after the end of their relationship. The jurisdiction of the court to make an adjustment order is subject to conditions. For the disposition of this case, the relevant conditions are: (1) that the parties lived together in a de facto relationship for a period of at least two years;[1] and (2) that (subject to a power to extend the time) the proceeding was commenced within two years after the day on which the relationship ended.[2] These two conditions explain the relevance of the factual dispute between the parties as to the date of commencement of their de facto relationship and the defendant’s allegation that the plaintiff ceased living with him for a period of approximately eight months in 1995 and four months in 1996. If the defendant’s assertions are correct, that the de facto relationship between the parties did not commence until November or December 1993 and that it was first terminated for a period of approximately eight months in 1995, an issue would arise as to whether the first period of cohabitation of less than two years before the parties commenced living together again in about September 1996 could be taken into account and, if so, whether an extension of time would be necessary for leave to bring this proceeding in respect of that earlier period. However, for the reasons given below, I reject the defendant’s evidence in this regard. Accordingly, the existence of these conditions has no relevance to the overall disposition of the case. However, it is necessary to refer to them at this stage in order to give relevance to the factual dispute canvassed below.
[1]Section 281 of the Act.
[2]Section 282 of the Act.

In any event, as appears below, there is no dispute that the parties lived together as if they were husband and wife for a period in excess of two years commencing in or about September 1996. On this basis, it is acknowledged by the defendant that, even on his version of events, the Court has jurisdiction to make an adjustment order if the plaintiff establishes a case for the making of such an order.

The power to make an adjustment order is contained in s 285(1) of the Act, which provides:

(1)A court may make an order adjusting the interests of the de facto partners in the property of one or both of them that seems just and equitable to it having regard to‑
(a)the financial and non‑financial contributions made directly or indirectly by or on behalf of the de facto partners to the acquisition, conservation or improvement of any of the property or to the financial resources of one or both of the partners; and
(b)the contributions, including any contributions made in the capacity of homemaker or parent, made by either of the de facto partners to the welfare of the other de facto partner or to the welfare of the family constituted by the partners and one or more of the following‑
(i)a child of the partners;
(ii)a child accepted by one or both of the partners into their household, whether or not the child is a child of either of the partners; and

(c)any written agreement entered into by the de facto partners.

As can be seen, the Court is invested with a discretion to make an adjustment which is just and equitable. However, although the discretion is a broad one, there is a statutory direction that it must be exercised ‘having regard to’ contributions of the kind mentioned in paragraphs (1)(a) and (b). Paragraph (1)(c) is not relevant in this case as there was no written agreement between the parties.

Further, in making an adjustment order, the Court is directed ‘so far as is practicable’ to make orders that will be final, ending the financial relationship between the de facto partners and avoiding further proceedings between them.

Although the Court is vested with a wide discretion in formulating an adjustment order which is just and equitable in the circumstances of a particular case, the authorities indicate that the Court should exercise that discretion by proceeding through a three-step process. In Giller v Procopets,[3] Neave JA approved and applied the following description of the three‑step process by the New South Wales Court of Appeal in Kardos v Sarbutt:[4]

The first is the identification and valuation of the property of the parties, which determines ‘the divisible pool of property’ — that is ’the property of the parties to the relationship or either of them’ … which may be the subject of an adjustive property order … The second is the evaluation and balancing of the respective contributions of the parties of the types referred to in [s 285], and typically though not invariably results in an apportionment between the parties on a percentage basis of the overall contributions of the types referred to in [the legislation] of each of them, made to the date of hearing. The third is the determination of what order is required sufficiently to recognise and compensate the applicant’s contributions, and typically results in an order which leaves the applicant with that percentage identified in the second step of the divisible property identified in the first step.[5]

[3][2008] VSCA 236, [314].

[4](2006) 34 Fam LR 550.

[5]Ibid, 558.

In this case, there is substantial dispute about each stage in the three‑step process. As to the first step, the principal dispute concerns the value of the defendant’s business at the date of separation and, consequent upon that, whether the defendant’s assets at the separation date included a large amount of cash which is otherwise unaccounted for in the evidence. As to the second step, apart from a measure of agreement as to the homemaker contributions of the plaintiff, there is substantial dispute regarding every part of the evidence. In particular, the defendant denies that the plaintiff ever worked in the business or provided any input into the significant business decisions responsible for the rapid growth in value of the business. At the third stage, the defendant contends that any contributions made by the plaintiff, whether as homemaker or to any minor extent in relation to the business, have been adequately compensated for by the fact she was ‘kept’ at the expense of the defendant for the whole of the period of cohabitation and, in addition, was provided with a motor vehicle and $10,000 when the parties separated. In contrast, the plaintiff contends that she is entitled to not less than one‑half of the defendant’s assets.

In seeking more than one‑half of the defendant’s assets, the plaintiff relies heavily upon statements in the authorities to the effect that an adjustment to property interests to reflect a homemaker contribution may be increased if that contribution was made more arduous by reason of domestic violence by the other de facto partner. In this regard also, the relevant authorities were reviewed by Neave JA in Giller v Procopets.[6] Neave JA accepted that the existence of both verbal and physical abuse was a relevant matter to take into account in assessing the homemaker contributions of a de facto partner. Where such conduct is established, it may increase the weight to be given to the homemaker contribution in determining a just and equitable adjustment order.
[6][2008] VSCA 236, [288] – [300].

Each party also seeks to rely upon the principle that adverse inferences should be drawn against the other by reason of certain ‘litigation misconduct’. It was submitted that this litigation misconduct leads to the inference that the other party did not have any real confidence in the strength of that party’s case. In this regard, reliance was placed upon the following statement by Gillard J in Li v The Herald & Weekly Times Pty Ltd:[7]

Conduct by a litigant suggesting lack of faith and confidence in the litigation is evidence that can be relied upon, on a common sense basis, that if a litigant does anything which tends to suggest a lack of confidence in the claim, it is a matter that can be taken into account and lead to an inference that the claim lacks merit. It is a piece of circumstantial evidence. It is not a piece of evidence which, taken in isolation, would lead to the conclusion that the case has no merit, but it is a piece of circumstantial evidence that may be taken into account.[8]

[7][2007] VSC 109.

[8]Ibid, [305].

It is for this reason that much focus was placed by the parties in evidence upon alleged subornation of perjury, alleged failure to discover documents which were obviously relevant and alleged threats made by the defendant against the plaintiff. Of course, these matters are, in any event, relevant in assessing the credit of the parties.

What has been written to this stage of these reasons is sufficient to understand the relevance of the evidence which was adduced and the factual issues which must be resolved in order to make a determination.

Demeanour and general credibility of the parties

The Court’s fact finding task in this case is an extremely difficult one. This is because the relevant events took place between 9 and 16 years ago, because nearly every important fact is in dispute, and because there are very few contemporaneous documents to assist in the task. Further, as appears below, I do not accept that either the plaintiff or the defendant was a credible witness. The evidence of each of them was a tangled web of truths, half‑truths, mistaken recollections, inconsistencies, exaggeration, understatement, evasion, dissembling, concoction and deliberate lies. The witnesses called to corroborate their respective cases were unsatisfactory in many respects and, with only a few exceptions, it is unsafe to rely upon their evidence. Further, key witnesses who were available to give evidence did not do so; in particular, the defendant’s brother Ken Apostolidis, who sat in the courtroom during virtually the whole of the trial but was not called by either party to give evidence.

In these circumstances, the Court is left with the unenviable task of deciding between two versions of events which are directly inconsistent. Given the polar extremes of some aspects of the evidence, it is sometimes necessary to find that one or other party, or a witness, has told deliberate lies. Finally, it should be noted that some aspects of the evidence are confused and incomplete, with the result that it is not possible to make all findings of fact fit together. Some anomalies remain. Where this is so, I have made findings on the evidence considered as a whole.

Plaintiff’s credibility and demeanour

The plaintiff commenced her evidence theatrically. She paused for some time and stared first at the Bible and then at me, in an apparent attempt to convey that the oath meant a great deal to her, and then took the oath. During the course of giving evidence, she emphasised her religiousness by stating that she was a strict Catholic. Whether or not that is so, I am well satisfied that she told lies on many occasions.

There were many occasions when the plaintiff became tearful. On only some of those occasions am I satisfied that the tears were genuine. I accept the submission made by senior counsel for the defendant that the plaintiff’s tears were often an act; and that the plaintiff only genuinely cried when caught lying on significant matters, or when inconsistencies with her other sworn evidence contained in affidavits or answers to interrogatories was exposed. However, even then, the plaintiff would recover almost instantly, moving rapidly from tears to a bright demeanour, especially if a subject matter about which she felt confident was raised.

As appears below, I am satisfied that the plaintiff’s evidence was based in large part upon a rehearsed script. There were many occasions when she forgot the script or used scripted responses at inappropriate times. Further, as part of the scripting, the plaintiff attended Court each day in company with one or two security guards. The obvious purpose of this was to portray that she was in fear of the defendant, and to support her allegations that he has assaulted and threatened to kill her.

In assessing the plaintiff’s evidence that she contributed significantly to strategic decisions made with respect to the defendant’s business, it is relevant to note that the plaintiff presented throughout her evidence as a woman very unsophisticated in all things financial.

Against the background of these general observations as to the plaintiff’s demeanour, I proceed to consider some specific matters concerning her credibility as a witness.

The plaintiff admits that she has told lies to government social security agencies. She seeks to justify some of these lies by stating that the defendant forced her to tell them under threat of violence to her, her family or friends. Further, the plaintiff acknowledged she told other lies to assist herself and the defendant to jointly build up their assets or, in one case, because she was ‘just trying to help’ her mother. For reasons which appear below, I do not accept that any of the lies were told by the plaintiff under threat of violence or other coercion. It follows that the plaintiff is a person prepared to lie for the purposes of financial gain to either herself or her family when it suits.

There is other false evidence given by the plaintiff which she does not admit is untrue or, if she does admit it is untrue, she attributes either to honest mistakes made by her or to the negligence or misunderstanding of her lawyers, both past and present.

Further, there is much evidence given by the plaintiff which may have some basis in truth but, because she has chosen to exaggerate and embellish the evidence to a very significant degree, must be rejected for that reason alone. Where the probabilities favour there being some element of truth underlying the exaggeration, I have made findings accordingly.

The incredible nature of some of the plaintiff’s evidence, and the fact that it is replete with exaggeration and embellishment, was obvious when it was given and is obvious from reading the transcript of it. Many parts of her evidence have been quoted in full as a demonstration of this.

The plaintiff’s efforts to denigrate the defendant at every opportunity, including by way of many non‑responsive answers to questions, are littered throughout her evidence. It is not only the content of this evidence, but the plaintiff’s demeanour in giving it, which reveals an extraordinary level of bitterness and hatred towards the defendant. This must be taken into account in assessing the credibility of her evidence.

The plaintiff was a repeatedly non‑responsive witness. Although often reminded and admonished for not providing a responsive answer to the question asked of her, the plaintiff continued to volunteer irrelevant material, almost always with the obvious purpose of denigrating the defendant. Senior counsel for the defendant described these occasions as ‘gratuitous sledges’ and I agree that this is an apt description. The plaintiff herself acknowledged that she understood what she was doing and said she would endeavour to answer the questions in a responsive manner, but continued to engage in this practice throughout the course of her evidence. I am satisfied that this was a deliberate strategy of the plaintiff and that she chose to ignore the clear directions given to her to provide responsive answers to the questions asked of her. For example:

(1) when asked to describe the defendant’s assets at the time she started living with him, the plaintiff said that the defendant told her, on a number of occasions commencing in ‘around 1995’, that he had opened a safety deposit box in a different name during the 1980s, and that he explained to her the reason for the existence of the safety deposit box in the following terms:

The words were, "I'm putting cash into these safety deposit box. I also have a Greek passport in there. I also have jewellery that I could cover you with in there that I have stolen from the Hilton Hotel." I said to him, "Janni, are you in any trouble?" He said, "Zorica, I hate the tax man with a vengeance. He said, "Zorica, all judges and anyone with a degree are all stupid. I can and have got away with everything I've ever done. I look at myself in the mirror, I practise it, and it's a funny thing, Zorica, I even believe my own lies."

(2) during the course of giving evidence about her own contributions to the furniture business, the plaintiff drifted off the subject matter and volunteered that the defendant engaged in the dishonest business practice of paying cash for ‘seconds’, which were usually damaged in some way, and passing them off as new and undamaged. She said that the defendant would touch‑up scraps and chips with coloured felt marker pens. The customers would often complain and this lead to the defendant being taken to the Small Claims Tribunal on numerous occasions. She gave an elaborate description about how she questioned the defendant about the morality of this practice and was told by him that he did not care. She gave evidence of the defendant ‘on many occasions’ rehearsing in front of the bathroom mirror before attendances at the Tribunal and stating to her on one particular occasion, while laughing:

“You know, Zorica, it’s amazing, I am such a good liar that I even believe my own lies. All these judges are so f-ing stupid … they, you know, what’s the point in a qualification? You know, they’re poor as dirt, I don’t have qualifications and look at me.”

(3) when cross‑examined about the serious matter of alleged rapes by the defendant, the plaintiff volunteered that, before raping her, the defendant would ‘normally … read Mein Kampf for a while’.

The cross‑examination of the plaintiff revealed a large number of prior inconsistent statements made by her in the various versions of her statement of claim, her answers to interrogatories and an affidavit sworn by her in connection with an interlocutory application in the proceeding. The inconsistencies were in many respects of a most significant kind. It is obvious that this was well-known to the plaintiff and her lawyers. Accordingly, during the course of evidence in chief, evidence was led from her to the effect that her former solicitors were incompetent and that they were responsible for the mistakes and inconsistencies. In framing his questions, senior counsel for the plaintiff identified a small typographical discrepancy in her answers to interrogatories and used this as a touchstone for the plaintiff to give evidence about the incompetence of her previous solicitors and, in particular, about the circumstances in which her answers to interrogatories were sworn. I found the evidence unconvincing at the time it was given. As cross‑examination progressed, it became obvious that it was wholly unconvincing.

The explanation was given in the following terms:

Apart from this case, have you ever been a plaintiff in a proceeding, in a case, in the Supreme Court of Victoria?---No.
Do you know what interrogatories are?---Vaguely.

The plaintiff was then taken to her answers to interrogatories, which she acknowledged contained her signature. She was then asked:

Your solicitors were then not the same as the solicitors you have now?---That's correct.
Your solicitors were Hallett West Johnston?---That's correct.—
And the young practitioner handling it was a young man …?---That's correct.

The plaintiff’s attention was then directed by her senior counsel to an obvious typographical error, which the plaintiff identified as being ‘absolutely wrong’. She was then asked to explain the circumstances in which the answers to interrogatories were sworn:

I had asked you whether your solicitors were then a different firm from your present solicitors?---Yes.
They were a firm called Hallett West Johnston and you told His Honour the name of the practitioner who was handling your matter at that stage was a Mr…. ?---That's correct.
Was he a junior or a senior practitioner?---He was a clerk.
Would you explain to His Honour the circumstances in which you came to swear these answers to interrogatories, please?---Yes. If I can just say he was a clerk and then he became a junior solicitor. Sorry, Your Honour. Can you please repeat the question?
Could you explain the circumstances in which you came to swear these answers to interrogatories, please?---Yes. I was in [the junior solicitor’s] office. I was with my business adviser at the time. I believe I was with my business adviser at the time. I can't remember; it was so long ago. I looked through the documents and there was some words in there that I couldn't understand. As I left school at a young age, Your Honour, my reading and spelling is not very good. I then said to [the junior solicitor], "… there's a lot in here that I don't understand and also a lot in here that you have put in that doesn't make sense", meaning, for instance, the so-called few days that I was in the business …
…
What did [he] say to you in response?---[He] then said to me, "Zorica, you need to start trusting your legal team. I have been through this thoroughly. Don't worry about reading it. Just sign it and trust in your legal team that they will do the right thing on your behalf."
Did you sign it? Did you then sign it?---I did then sign it.
Did you swear on a bible? Did you pick up a bible and take the oath at the time you signed it?---I don't believe he had a bible in the room. Quite honestly, I can't say for sure whether he had a bible in the room at any stage. I know that Mr Hallett had one in his office. However, he was away on holiday.
So is this the position: you know that you signed it because your signature is there, but you can't recall whether or not you took the bible in your hand and swore that the answers which were given to the interrogatories were true and correct?---I have to - - -
You have sworn affidavits in this proceeding. You understand the procedure?---I have to say, Your Honour, my answer to you is going to be no. I didn't swear on the bible, even though I'm not sure. It's going to be no because I would not swear on the bible if I wasn't sure that it was all true, and for me that wasn't - I didn't believe it was a proper document, but I had to trust in my lawyers. That's all I had.[9]

[9]Emphasis added.

I reject this evidence as highly improbable.

The plaintiff’s credibility is also undermined by an agreement which she entered into in December 2004 with Ken Apostolidis. By that agreement, the plaintiff agreed to pay Ken Apostolidis, in return for assistance with funding of this proceeding, one‑half of the net proceeds of any judgment recovered by the plaintiff against the defendant. This extraordinary agreement was entered into in the following circumstances. The plaintiff had assisted Ken Apostolidis in his case against the defendant by providing a witness statement. The agreement recites that both the plaintiff and Ken Apostolidis were ‘unhappy with the settlement that Ken was forced to accept’ in that proceeding. From the recitals contained in the agreement, and the evidence as a whole in this proceeding, I have no hesitation in finding that at the time the plaintiff entered into this agreement with Ken Apostolidis it was intended that Ken Apostolidis would give evidence on behalf of the plaintiff in this case. In these circumstances, any agreement to share the proceeds of any judgment obtained in this proceeding with Ken Apostolidis was improper. I have no doubt that the existence of this agreement would not have been discovered by the defendant were it not for the subsequent dispute between the plaintiff and Ken Apostolidis. If Ken had given evidence for the plaintiff, this agreement would have remained secret to them.

At some stage in late 2007 or early 2008, the plaintiff and Ken Apostolidis had a falling out. The plaintiff contends that Ken Apostolidis did not provide the promised financial assistance to enable her to prosecute this proceeding. By 14 February 2008, when the plaintiff’s outlines of evidence were served on the defendant, there was no outline of evidence in respect of Ken Apostolidis.

The plaintiff’s credibility as a witness is also undermined by the role of Brian Pollett. In early 2001, soon after the commencement of this proceeding, the plaintiff met Brian Pollett. They commenced a relationship and, in or about May 2002, began living together. From May 2001, Mr Pollett has assisted the plaintiff and her lawyers in the prosecution of this proceeding.

When describing the circumstances in which she swore her answers to interrogatories in March 2002, the plaintiff said that she was accompanied by ‘my business adviser’,[10] a reference to Mr Pollett. The defendant contends that the only ‘business’ conducted by the plaintiff at any relevant time is the business of this case, and that the plaintiff’s case has ‘grown like topsy’ since the involvement of Mr Pollett. It is contended that Mr Pollett’s involvement has resulted in the plaintiff’s alleged contributions to the growth and acquisition of the defendant’s assets increasing in significance over the course of numerous amendments to the statement of claim, in outlines of evidence and in the plaintiff’s oral evidence.
[10]Emphasis added.

Further, the defendant contends that Mr Pollett assisted the plaintiff to craft a case based upon a ‘script’, to be followed by her and her witnesses, which seeks to dishonestly maximise the extent of the plaintiff’s contributions to the growth and acquisition of the defendant’s assets, to paint the plaintiff as a paragon of virtue and to demonise the defendant at every opportunity.

The evidence discloses that Mr Pollett has paid money over at least five years to a witness, Bill Nedelcu, upon whom the plaintiff placed much reliance. Mr Nedelcu admitted that he had been paid regular amounts of money by Mr Pollett between approximately 2002 and the commencement of the trial and that, by about April 2008, the amounts had totalled approximately $5,000 to $6,000. However, he said that these amounts were paid by way of charity to a friend who was in financial difficulty, and not to secure favourable evidence. The plaintiff confirmed this. Further, Mr Nedelcu made the extraordinary allegation that he had been abducted by the defendant at gunpoint and forced to swear an affidavit recanting the outline of evidence prepared on his behalf by the plaintiff’s lawyers. These bizarre events are referred to in detail below.

Mr Pollett did not give evidence. It was submitted on behalf of the plaintiff that he was not a relevant witness to any of the events in issue, as he had not even met the plaintiff until after she had separated from the defendant. Although it is true that Mr Pollett could not have given relevant evidence as to the events in question, he could have given relevant evidence as to allegation that he paid money to Mr Nedelcu to give false evidence. An allegation of that kind gives rise to a clear exception to the ‘collateral evidence rule’, which usually prevents witnesses being called on issues going only to credit or other collateral matters.[11] Mr Nedelcu swore in his recanting affidavit that:

The circumstances under which I made the attendance at the Plaintiff’s solicitor’s office was that I was contacted by Brian Pollett who is known to me. I believe he is Zorica’s current boyfriend. He told me if I made a statement that would assist Zorica in her court case they “would look after me”. This was clearly intended to mean that I would receive some financial gain if I assisted the Plaintiff’s case. I have received about $5,000 - $6,000 cash given to me by Brian Pollett.
In my discussions with Brian Pollett he suggested the types of things that I should say to the solicitor about Jannis. These things were to discredit Jannis so as to help Zorica in her court case. These things, as stated earlier in this Affidavit are untrue.

[11]Nicholls v The Queen (2005) 219 CLR 196.

It is not to the point that Mr Nedelcu gave evidence that he swore his recanting evidence under duress, alleging that he had been abducted at gunpoint by the defendant. The defendant denied that this was so. The plaintiff placed a great deal of reliance upon the evidence of Mr Nedelcu as to the issues in the proceeding. In these circumstances, given the admitted payments made by Mr Pollett to Mr Nedelcu over a substantial period of time, I would have expected the plaintiff to call Mr Pollett to rebut the suggestion that the payments were made to secure favourable evidence in support of the plaintiff’s case. There is no doubt that Mr Pollett could have given very relevant evidence concerning these issues. Further, he was in telephone contact with Mr Nedelcu during the time which it is alleged Mr Nedelcu was kept at the defendant’s home following his alleged abduction.

In her evidence in chief, the plaintiff was asked about payments made to Mr Nedelcu by Brian Pollett. When first asked, the plaintiff responded that Mr Pollett had given money to Bill Nedelcu in the last few months ‘to help him with accommodation and with food, as Bill Nedelcu was on the run and in hiding from Jannis’. The plaintiff said that the amounts involved were approximately $200 every week or two. At the time this evidence was given, the plaintiff had been placed on notice that Mr Nedelcu had previously alleged that Mr Pollett had paid him approximately $5,000 to $6,000 to give favourable evidence on behalf of the plaintiff. The plaintiff’s evidence was incomplete and misleading. In cross‑examination, it became apparent that she well knew that Mr Pollett had been paying sums of money to Mr Nedelcu on a regular basis for many years.

Further, as appears below, I find that by February 2008 Mr Pollett had agreed to pay Mr Nedelcu another $25,000 from the proceeds of any judgment recovered by the plaintiff.

In these circumstances, I find that the payments made by Mr Pollett to Mr Nedelcu were intended to influence Mr Nedelcu’s evidence as to relevant events. I reject the evidence of the plaintiff that the payments made by Mr Pollett to Mr Nedelcu were simply charity to a friend in need ‘to help him with accommodation and with food’, and that there was never any question of an intention to influence Mr Nedelcu’s evidence. The credibility of Mr Nedelcu is dealt with below. For the reasons there given, I did not find him a credible witness. No reliance can be placed upon his evidence as to material events, or otherwise.

The pervasive role of Mr Pollett in the preparation of the plaintiff’s case, and the evidence to be given by her and witnesses called on her behalf, is demonstrated by an extraordinary document prepared by Mr Pollett. The document is in the form of a spreadsheet and is headed ‘ESTIMATED DISBURSEMENTS & COSTS INCURRED TO FIGHT THE SUPREME COURT CASES OF ZORICA KALENIK’. For convenience, I will call the document ‘the Pollett spreadsheet’. The Pollett spreadsheet was provided to the defendant by his brother, Ken Apostolidis, in circumstances discussed below.

It was submitted on behalf of the plaintiff that the Pollett spreadsheet should not be admitted into evidence because, on its face, it was obviously prepared for a without prejudice purpose. It was submitted that the evidence established that there was a dispute between the plaintiff and Ken Apostolidis at the time the Pollett spreadsheet was prepared on 15 February 2008. It was then submitted that the obvious purpose of the spreadsheet was to understate, in a misleading fashion by ‘a whole lot of expenses that are plainly loaded’, the amount which Ken Apostolidis could expect to recover from the proceeds of any judgment recovered by the plaintiff against the defendant. During the course of final submissions, I rejected this submission. There was no evidence to support the assertion that the document was given to Ken as a bona fide offer to compromise a dispute between himself and the plaintiff. Neither Mr Pollett nor Ken Apostolidis was called to give evidence to that effect. Nor did the plaintiff say this was the case.

The Pollett spreadsheet is an extraordinary document. It assumes the enforceability of the plaintiff’s agreement to pay Ken Apostolidis one‑half of the net proceeds of any judgment recovered by her against the defendant. It is in spreadsheet format, forecasting the net proceeds of gross judgments in the plaintiff’s favour of between $4 million and $9 million. The commencing forecast of a judgment in the sum of $4 million appears to have been chosen because the spreadsheet estimates that the plaintiff will incur costs and expenses of at least $3,568, 445 in prosecuting this case to judgment. In estimating those costs, Mr Pollett has recorded various unpaid legal fees, estimated future legal fees to be incurred, and the anticipated fees payable to an external litigation funder. In addition, Mr Pollett has recorded the following matters, each of which casts doubt upon the credibility of the plaintiff’s case as a whole, of the plaintiff as a witness, and of other witnesses called on her behalf.

First, the Pollett spreadsheet records an obligation by the plaintiff to repay her mother $160,000, because she had lent the plaintiff approximately $10,000 and her home had been encumbered by $150,000 in respect of the legal costs of this proceeding. For an unexplained reason, the Pollett spreadsheet assumes that the amount payable to the plaintiff’s mother will be double that obligation – an amount of $320,000. The plaintiff’s mother was a witness at the trial.

Second, the Pollett spreadsheet records many disbursements apparently funded by Mr Pollett to that time, and the fact that Mr Pollett had guaranteed the payment of the plaintiff’s legal expenses until external litigation funding was secured. The Pollett spreadsheet records in this regard:

Disbursements funded by Brian – who also had to go Guarantor for entire case to retain Leo Dimos, putting everything of his at risk as well as totally damaging Brian’s own business interests & advancement due to demands of case!

There are many disbursements listed in this Pollett spreadsheet. They are for significant amounts, as follows:

(1) Payment of disbursements to ‘Barristers etc’ ‑ $15,000. For some reason, unexplained in the document, Mr Pollett has grossed up the amount payable to him in respect of these disbursements by doubling the amount paid by him, thus seeking $30,000 from the proceeds of any judgment.

(2) Disbursements concerning Bill Nedelcu. The entry in the Pollett spreadsheet is in some respects ambiguous. The first entry is for $25,000. This amount has also been grossed up by doubling it to $50,000 payable from any judgment recovered by the plaintiff. A further disbursement of $11,250 is stated to be ‘not charged’. The description of this disbursement indicates that this is the amount, plus interest at 15 per cent, paid by Mr Pollett to Mr Nedelcu at 15 February 2008. The description is in the following terms:

Bill Nedelcu assistance to keep him alive, housed & feed.
Interest over 3 years (but support started 5 years ago) @ 15% would be $11,250 Not charged.

(3) Initial business valuation fee paid by Mr Pollett of $1,800. Again, this has been doubled to $3,600 in the amounts to be received by Mr Pollett from any judgment.

(4) Disbursements of $20,000 paid to the plaintiff’s present solicitors. This amount has also been doubled in the projected receipts for Mr Pollett.

(5) Bank fees of $8,000 paid by Mr Pollett in respect of home loan applications. Again, the amount has been doubled in the projected receipts by Mr Pollett.

(6) Estimated interest totalling $47,770 paid by Mr Pollett in respect of moneys borrowed against the security of the plaintiff’s mother’s home, presumably for the purpose of paying legal costs. Again, these amounts have been doubled in the projected receipts by Mr Pollett from any judgment recovered.

(7) $23,100 in respect of another loan apparently taken out by Mr Pollett in connection with the funding of this proceeding. Once again, this amount has been doubled in the projected receipts to Mr Pollett.

The next entry in the Pollett spreadsheet is truly extraordinary. Mr Pollett claims a ‘Management Fee’ for work done by him in preparing this proceeding for trial. The full entry for this item reads as follows:

Covering a period of 7 years from May 2001 to July 2008:
Management Fee for over 6,000 hours work by Brian covering but not limited to managing witnesses, evidences, thousands of emails to lawyers & barristers, editing videos, preparing presentations of evidence, analysing accounting information re Discovery and for submission to forensic accountants, hundred plus meetings with solicitors & barristers, dozens of attendances at Masters of Court hearings covering numerous issues including Discovery, use of delaying tactics due to loss of previously promised funding, supervision & management of mediation meeting, researching and interviewing barristers, managing 3 separate Supreme Court actions, reviewing and improving and correcting Statements of Claim, Witness Statements etc prepared by Solicitors and Barristers that were inaccurate or inadequate, efforts to save the entire action due to lose of previously promised full funding, including formal proposals to 6 private potential investors plus formal proposals & applications to 5 professional Litigation Funders before one finally secured, meetings with them to secure funding and increases thereto, meetings with Forensic accounting firms, purchase of special software & computer hardware to edit video, scan photos, photocopying thousands of pages, review of documents for courtbook inclusion, endless meetings with witnesses etc etc.[12]

[12]Emphasis added.

For this work, Mr Pollett claims 5 per cent of any judgment recovered ‘net after [litigation funder’s] disbursements deducted’. The amounts are substantial, commencing at $181,500 for a $4 million judgment in favour of the plaintiff and growing to $431,500 in respect of a $9 million judgment. In the spreadsheet, Mr Pollett seeks to justify this fee by stating that it ‘[s]hould be $600,000’ (which would equate to $100 per hour for his time) but notes that the percentage fee would result in him recovering only $30.26 on a $4 million judgment, growing to only $71.80 on a $9 million judgment.[13]
[13]The hourly rates are in fact stated as one‑half of that amount, attributable to each of the plaintiff and Ken Apostolidis.

Further, Mr Pollett offers the following justification in the spreadsheet for payment of a 5 per cent fee to him:

No Fee charged for living through this nightmare and the loss of relationship between Brian & Zorica nor for the non‑court case total financial support of Plaintiff prior to & post trial.

It was submitted on behalf of the defendant that the pervasive role of Mr Pollett, who is not a lawyer, in managing the plaintiff’s case:

at the very least, creates an improper filter in relation to instructions passed between the plaintiff and her witnesses and her solicitors. The fact that he was so involved casts serious doubt on the credibility of the plaintiff’s case and her witnesses.

I accept that submission. From May 2001, when the plaintiff met Mr Pollett, the plaintiff’s case has, as submitted on behalf of the defendant, ‘grown like topsy’. The amount of her alleged financial contributions to the business has increased substantially, allegations of financial contributions to household expenditure were introduced for the first time, allegations of physical violence (which are not contained in any court document prior to the service of outlines of evidence) were introduced, and the nature and extent of the plaintiff’s alleged non‑financial contributions to the business have increased in both time and content. Further, notwithstanding that relevant events occurred as long ago as between 1993 and 2000, the recollections of witnesses are in many relevant respects strikingly similar, and sometimes almost identical, on key evidentiary matters relied upon by the plaintiff. The presentation of the plaintiff’s case as a whole has the flavour of having been ‘scripted’, as contended by the defendant.

The plaintiff made a number of attempts to downplay the significance of her relationship with Mr Pollett. For example, the plaintiff initially sought to deny that she had ever had a sexual relationship with Mr Pollett. That evidence was false. I am satisfied that, at least for some period, the plaintiff had a sexual relationship with Mr Pollett. The plaintiff commenced living with Mr Pollett after her first car accident in May 2002. She said:

Mr Pollett was kind enough to take me in and take care of me from that time on. From that time on I had severe injuries. Then in 2006 I had another bad car accident. Since then I have slept in my own bed and I‘ve had to have various treatments and whatnot for those injuries.
Do I infer from your last answer that prior to your second car accident you slept in the same bed with Mr Pollett? --- No, we were friends.[14]

[14]Emphasis added.

In the end, under cross‑examination, the plaintiff admitted that she had a sexual relationship with Mr Pollett. She attempted to justify her previous denials by an apology to the Court, stating that she ‘was extremely distraught and upset’ and had been trying to be as accurate as she could in her evidence. I do not accept that explanation. The plaintiff repeatedly denied having had a sexual relationship with Mr Pollett and evaded questions directed to that issue prior to finally accepting that she had done so.

Nor do I accept the plaintiff’s evidence as to the role played by Mr Pollett in the preparation of her case. She sought to downplay his involvement, describing it as no more than providing her with linguistic and technical assistance. This is totally inconsistent with the Pollett spreadsheet.

I also reject the plaintiff’s denial of having seen the Pollett spreadsheet. Before the Pollett spreadsheet was put to her in cross‑examination, the following exchange occurred:

Has Mr Pollett ever to your knowledge put a value on his management services provided to you in effect in managing this litigation on your behalf?---Look, I personally haven't seen it, but there could - everybody writes scrap bits of paper down. He could have done it. I personally never saw it. I don't know the answer to that.

I am satisfied that the plaintiff had seen the Pollett spreadsheet and gave this ambiguous and evasive answer because of a concern that Ken Apostolidis may have given it to the defendant.

Defendant’s credibility and demeanour

The defendant presented as an arrogant, cold, obsessive and competitive man. He had an off‑putting demeanour of constantly seeking eye contact with me and endeavouring to hold that eye contact. He was precise in many things and deliberately vague on others. He gave his evidence in an off‑hand manner, continually swivelling his chair and happy to paint himself as an unpleasant person where he thought it would assist his case. For example, although I am satisfied that he had some real emotional attachment to the plaintiff at some times, he endeavoured to present a picture of the plaintiff as merely his ‘sexual partner and [live‑in] person’. When questioned about the frequent arguments between the parties, he said that each would provoke the other. He gave the extraordinary evidence:

I would think that I think it was very mutual, you know. We are two arseholes together, if you may use that expression, sir, or I can use more subtle language and all that, but I was not any better or worse than her, blah, blah, blah, you know. I would have picked on her, she would have picked on me, no problem.

The defendant also presented as a short‑tempered man and there were occasions when he displayed this in the courtroom, both during his evidence and at other times during the trial. However, given the extremely serious and sordid nature of the allegations made against him by the plaintiff, I allow him some latitude in that regard. When his temper flared up, he was able to compose himself very quickly and go on with his evidence.

The defendant adopted the consistent practice of simply denying the truth or accuracy of any statement in a document which did not accord with his case; whether the document was something prepared by him or other employees of his business, or an official document.

I turn to consider some specific aspects of the defendant’s credibility.

The plaintiff alleged that the defendant engaged in tax fraud throughout the course of their relationship, particularly in the later years once the defendant’s business was well established and earning significant profits. She alleged that the defendant routinely took large amounts of the cash receipts of the business for his personal use and application, and that none of this cash was declared as income to the Commissioner of Taxation. The defendant denied this point blank. He said that all of the cash receipts of the business were banked or otherwise properly accounted for, and that no tax was avoided. For the reasons given below, I reject the defendant’s denials of tax fraud. I find that he gave deliberately false evidence on this issue and that this effects the whole of his credibility as a witness.

Further, the defendant has been convicted of a number of criminal offences, many involving violence, threats of violence, and abusive language. In an endeavour to downplay the significance of these convictions upon his credibility, and upon his propensity to react violently when provoked, the defendant gave evidence in chief in which he sought to explain and, in some respects, trivialise the circumstances giving rise to his convictions. This evidence was misleading and reflects very poorly upon the defendant’s credibility as a witness generally. I am satisfied that he deliberately attempted to downplay the significance of his convictions, and I reject his evidence that he does not remember the circumstances giving rise to these convictions, especially the most recent.

It is unnecessary to set out all of the evidence in which the defendant sought to trivialise the facts underlying his convictions. The following example suffices.

In November 2006 the defendant was convicted at the Sunshine Magistrates’ Court of making a false document to the prejudice of another person and stalking another person. On this occasion, the defendant pleaded not guilty. His conviction followed a contested hearing.

In his evidence in chief, the defendant said that he was in fact innocent of the charges and had been wrongly convicted. He also sought to downplay his involvement in the circumstances leading up to the events underlying the convictions, stating that he did not meet the customers until he saw them at Court. He initially repeated this evidence in cross‑examination. However, later he acknowledged that he had in fact been involved in the underlying dealings with the customers which gave rise to the circumstances of the convictions.

In short compass, a dispute arose between the defendant and some customers who were dissatisfied with a white leather couch which they had ordered. A deposit of $2,000 had been paid using the male customer’s credit card, and a telephone number had been left with the defendant. Following the dispute arising, the male customer sought to use his influence as a senior bank employee to have the $2,000 deposit transaction reversed. An argument between the defendant and the male customer then ensued.

In his evidence in chief, the defendant said that his conviction was based upon a false accusation that he had used the male customer’s credit card details to order a subscription to a sports magazine in the customer’s name. He said that he was convicted because his fingerprint appeared on the subscription coupon which had been torn out from a magazine. He explained that his fingerprint was on this coupon because he keeps magazines for display purposes in his furniture showroom. He said that this coupon was the false document upon which his conviction was based. He said that the stalking conviction was based solely on him mailing that coupon to the magazine company.

By this evidence, the defendant sought to trivialise the offences for which he was found guilty. In cross‑examination, a different story emerged.

The defendant was asked in cross-examination as to whether his evidence in chief concerning this offence was a full statement of the circumstances surrounding the offence. The defendant evaded the question, stating ‘I may have something left out, but in that case I’m not sure what I left out, but you can ask me please …You can refresh my memory’.

Senior counsel for the plaintiff then proceeded to put the police brief in respect of the offences to the defendant. As the issue had been opened in evidence in chief, I allowed this course to be taken. It quickly became apparent that there was much more to these offences than the defendant had stated in evidence in chief. The defendant said that he had forgotten these other allegations, but I do not accept that this is so. The convictions are the most recent in his criminal history. It may be that he was not convicted of all of these allegations. However, that is not to the point. His credit is undermined because, I am satisfied, he deliberately endeavoured to conceal the full scope of the allegations by pretending that he did not remember them.

The defendant’s credibility is also seriously undermined by his extraordinary conduct and evidence concerning the maintenance and use by him of safety deposit boxes. When he was asked as to whether he maintained any safe deposit boxes in Melbourne, the defendant responded ‘of course’. He proceeded to give evidence of having maintained two safety deposit boxes with the Commonwealth Bank since the early 1980s, a further safety deposit box with the Westpac Bank from the late 1980s or early 1990s, and a further safety deposit box with a private company, the name or address of which he could not recall, from the late 1990s or, more probably, after the year 2000. In further cross‑examination, after he had thought about it overnight, he revealed the existence of a second safety deposit box at the private company. It was not until the defendant was prompted as a result of internet searches made by Court staff that he was able to remember the name or address of this private company. The defendant said that the bank safety deposit boxes were kept in his own name because banks required full identification details to be given, but that he opened the two safety deposit boxes with the private company in a false name because, on an impulse, he realised that the private company did not require the same formal level of identification.

The defendant gave evasive and non‑responsive evidence when initially asked about the contents of the safety deposit boxes. When it was put to him that he used the Commonwealth Bank safety deposit boxes to store jewellery stolen by him while he was employed at the Hilton Hotel, the defendant snapped. He turned to senior counsel for the plaintiff, glared and pointed a finger at him and shouted ‘You take that back. You take that back.’ This flash of anger was the subject of rebuke by the Court. The defendant’s conduct in this regard provides some insight into his character, and some support for the submission made on behalf of the plaintiff that he is a man easily stirred into angry verbal responses.

Failure to call witnesses: Jones v Dunkel[15]
[15](1959) 101 CLR 298.

Both parties sought to draw an advantage from the failure of the other to call witnesses who would be expected to be called by the other party. In some cases, this is obvious. For example, Mr Pollett. It is only the plaintiff who could have been expected to call him; he is wholly in her confidence. For the reasons given above, I have inferred that his evidence would not have assisted the plaintiff’s case on the issues identified.

There are other witnesses who were not called, who could have given relevant evidence on one or more issues in the case, and who fall clearly within the expectation that one party or other would have called them if their evidence would have assisted that party. For example, the plaintiff’s sister Vesna Kustra and her mother’s partner Con Kazatzoglou. Both of these witnesses were clearly in the confidence of the plaintiff and it is to be expected that she would have called them if their evidence would have assisted her case.

Similarly, the defendant could have been expected to have called a number of witnesses, including the woman with whom he alleges he had a relationship during 1999, Natalie Brown, and his Malaysian business partners in the company Dalcy (M) SCN BHD. The evidence these witnesses could have given, and any consequent inferences, is considered below.

There are also some witnesses who the defendant clearly made insufficient attempts to locate for the purpose of attending to give evidence. In this regard, I refer to the mother and sister of Meghan Courtney, the woman with whom the defendant had a relationship in 1995 and 1996 and who bore his child in October 1996. This issue is considered below.

However, in relation to a number of other potential witnesses, some of whom were very important, the facts point in more than one direction as to which party would have been expected to have called them to give evidence. In this category are Ken Apostolidis, the defendant’s other brother Anestis Apostolidis, the defendant’s sister Anna‑Maria Schonenveld, and the defendant’s close business associate and fellow shareholder in Dalcy, Steve Yong. By far the most important of these missing witnesses is the defendant’s brother Ken Apostolidis, closely followed by Steve Yong.

It was submitted on behalf of the defendant that Ken Apostolidis was a person who was ‘in the camp’ of the plaintiff from the time the plaintiff ceased cohabitation with the defendant. This was because Ken had his own dispute with the defendant, arising out of the defendant excluding him from the business shortly prior to the plaintiff ceasing to live with the defendant. Thereafter, litigation was commenced by Ken against the defendant, and the plaintiff was to give evidence on Ken’s behalf. However, that proceeding was settled before any evidence was given. Notwithstanding this, it is apparent that Ken Apostolidis continued to assist the plaintiff in her case until they fell out some time in late 2007 or early 2008.

It was submitted on behalf of the defendant that, at this time, outlines of evidence had already been exchanged for the purposes of the trial fixed in April 2008. Notwithstanding this, the plaintiff had not filed or served a witness statement on behalf of Ken Apostolidis. This indicated that, while Ken Apostolidis was in the camp of the plaintiff, a decision was made by her lawyers that he could not give any evidence which would assist her.

Following the fall-out, it is apparent that Ken Apostolidis has maintained an interest in this case. He was present in Court throughout the trial, with only rare exceptions, and stated from the floor of the Court that he was interested in attending because he wished to enforce a written agreement with the plaintiff, under which he was entitled to share in one‑half of the net proceeds of any judgment ordered in her favour in this proceeding.

On the other hand, Ken has assisted the defendant in connection with the trial; in particular, by providing the defendant with some very relevant documents. First, he provided the defendant with a copy of the abovementioned agreement with the plaintiff. Second, he provided the defendant with a copy of the Pollett spreadsheet.

Furthermore, during the course of the proceeding I have observed Ken Apostolidis in the courtroom. He has at times spoken cordially with the defendant. At other times he has spoken cordially with Mr Pollett.

I am not satisfied that it can be concluded with any sufficient probability that Ken Apostolidis is a person who it would be expected one party, and not the other, would have called to give evidence. On the one hand, he was clearly in the camp of the plaintiff until he fell out with her at some stage in late 2007 or early 2008. Taking the evidence as a whole, I am not satisfied that this falling out was after February 2008, when outlines of evidence were served on behalf of the plaintiff. I do not accept that any inference can be drawn from the fact that the plaintiff did not serve an outline of evidence in respect of Ken Apostolidis at that time. On the other hand, since he fell out with the plaintiff it is clear that Ken has provided at least some assistance to the defendant for the purposes of the trial of the proceeding. In particular, he provided the defendant with the two critical documents referred to. In these circumstances, I can understand the reluctance of each party to call Ken Apostolidis.

However, that is not an end of the matter. The authorities indicate a divergence of view as to the approach to be taken by a court when a witness is equally available to both sides, and neither side chooses to call the witness. One view is that espoused by Wilcox J in Claremont Petroleum NL v Cummings.[16] In that case, Wilcox J stated:

It seems to me that, where a witness is independent of both sides and equally available to them, the Jones v Dunkel inferences cancel out. The court has to decide the relevant issue, not only without the evidence of the witness, but also without drawing any inference adverse to either party because of his absence.[17]

[16](1992) 110 ALR 239.

[17]Ibid, 259.

An alternative view is that inferences may still be available against one or both parties. In Earle v Castlemaine District Community Hospital,[18] the Full Court of this Court considered a case where it was contended that the witness was equally available to both parties. On the facts of the case, it was held that the witness was not equally available to both parties. Accordingly, the submission that no inference was available against the party who would have been expected to call the witness was rejected. Nevertheless, Little J considered whether it was correct to lay down a uniform rule that no adverse inference could be drawn against either party where a witness was equally available to be called by both. Little J said that no such general rule should be laid down:

it would, in my opinion, be erroneous to lay down any general rule that in cases where it could be fairly said the witness was equally available to both parties, the inference under discussion cannot be drawn against a particular party. Circumstances attending cases are infinite in their variety, and the question must depend upon the facts and circumstances of a particular case. Reference in this connexion may be made to Tozer Kemsley and Milbourn (A’asia) Pty. Ltd. v Collier’s Interstate Transport Service Ltd. … In that case it is stated … that at the trial ‘the principal concern of each party appears to have been to wage a battle of tactics and to force the other to call [the relevant witnesses] or one or more of them rather than to seek to elicit the whole truth…[19]

[18][1974] VR 722.

[19]Ibid, 728. (Citations omitted)

The view expressed by Little J has since been adopted in this Court in CGU Insurance Ltd v CW Fallaw & Associates Pty Ltd,[20] and in the Federal Court in AMP Services Ltd v Manning.[21]
[20][2008] VSC 197 (Warren CJ).
[21][2006] FCA 256, [49] (Finkelstein J).

In this case, I have decided that no adverse inference should be drawn against either party for the failure to call Ken Apostolidis. He is a person of shifting allegiances and each party could reasonably be expected to have been wary of calling him to give evidence. Although he wished to give the appearance of seeking to enforce his agreement to share in the proceeds of this proceeding, and I was informed from the bar table that he has in fact commenced proceedings for this purpose against the plaintiff, he has nevertheless sought to assist the defendant in his defence of this case and has been regularly observed by me conversing cordially with the defendant and exchanging friendly glances with him.

The relevant factors placing Ken in one camp or the other are evenly balanced. The actions taken by Ken which are adverse to the defendant’s interests include suing his brother in this Court (it is common ground that this was a bitterly contested proceeding and there was a very heated exchange between Ken and the defendant once the proceeding had been dismissed following the conclusion of a settlement); reporting the defendant to the police and making statements adverse to the defendant’s interests; providing photographic and video evidence to the plaintiff for use in this proceeding; agreeing to provide funding to the plaintiff in return for a half‑share of the proceeds of any judgment recovered, and advancing approximately $45,000 for that purpose; and refusing to waive privilege over the plaintiff’s witness statement in his proceeding against the defendant. The conduct of Ken which indicates that he is not someone who the plaintiff would be expected to call includes the plaintiff’s allegations (which were not challenged) that Ken commenced seeing the defendant again in late 2007; that Ken did not provide the promised funding which was the basis of the plaintiff’s agreement to pay him a half‑share of the proceeds of the proceeding; the falling out between Ken and the plaintiff as a result; the plaintiff’s assertion that Ken has recently threatened her; the conduct of Ken in providing the plaintiff’s agreement with him and the Pollett spreadsheet to the defendant; and the commencement of proceedings by Ken against the plaintiff.

The next witness who was not called, in order of importance, was Steve Yong. The role of Mr Yong is explained below. There is no doubt that he could have given important evidence on relevant issues, in particular the extent to which the plaintiff worked in the business, whether the plaintiff participated in any significant business decisions, and whether the defendant had engaged in tax fraud. There was no evidence that Mr Yong had had a falling out with the defendant; this was put to the defendant by counsel for the plaintiff and he denied it. In these circumstances, Mr Yong – who lives in either Melbourne, Malaysia or a combination of both and does not appear to be unavailable for any reason – was equally available to both parties to call to give evidence. No party offered an explanation for their failure to call him as a witness.

The plaintiff could have been expected to call Mr Yong because there is no evidence that he bears her any ill will. Indeed, he provided her with a (false) letter stating that she was employed by Imex on a particular wage, in order to assist the plaintiff to obtain some finance over a property bought in her name on trust for her mother. In these circumstances, the failure of the plaintiff to call him as a witness is unexplained.

As to the defendant, Mr Yong was his previous business associate or business partner. It is likely that the defendant did not call him as a witness because of the damage which he could do to the defendant on the issue of tax fraud.

In my view, the plaintiff’s failure to call Steve Yong as a witness should lead to an inference being drawn against her that she feared his evidence would not assist her case as to the extent of her involvement in the business. I can think of no other explanation. Having regard to my findings on the issue of tax fraud, the plaintiff could not have feared to call him for that reason. The question remains: why did she not call him to support her evidence of contributions to the business? As appears hereafter, there are other reasons for rejecting the plaintiff’s evidence on this issue. However, the inference which I draw against her in this regard adds to my degree of satisfaction in making those findings. For the avoidance of doubt, in the absence of such an inference being available, I would in any event have made those findings.

An adverse inference should also be drawn against the defendant. For the reasons stated below, I am satisfied to a high degree that he engaged in tax fraud. Although it is unnecessary to rely upon an inference that the evidence of Steve Yong would not have assisted the defendant on this issue, I nevertheless draw that inference. It is another factor which supports my strong view on that issue.

The next witness to consider is the defendant’s other brother, Anestis. In order to meet a submission that she failed to call Anestis Apostolidis to give evidence on her behalf, evidence was given that the plaintiff and her legal advisers had made efforts to contact Anestis but had been unable to locate him. In these circumstances, they sought to rely upon a witness statement and affidavit of Anestis prepared in 2003.

I am not prepared to draw any inference adverse to the plaintiff based on the failure to call Anestis as a witness. I accept that neither she nor her lawyers know how to locate him. On the other hand, the defendant, although initially evasive on the subject, admitted that he has a belief as to the whereabouts of Anestis, that he is in Melbourne and that he believes that he could ‘find him’. The defendant denied having any ongoing dispute with Anestis.

The plaintiff’s application to rely upon the witness statement and affidavit sworn by Anestis Apostolidis in 2003 was based upon s 55(5)(c) of the Evidence Act 1958 (Vic). That sub‑section provides for the admission of evidence in a document where the maker of the relevant statement ‘cannot with reasonable diligence be found or identified’. However, that does not mean that the statement thereby becomes admissible. The Court retains a discretion under s 55(9) to reject any statement ‘if for any reason it appears to it to be inexpedient in the interests of justice that the statement should be then admitted’. This is such a case. The evidence of Anestis contained in the witness statement and affidavit should not, in the interests of justice in this case, be admitted. This is a case which depends almost entirely upon credit. Counsel for both parties urged upon me the consequent need to allow lengthy oral evidence to be given and even lengthier cross‑examination. The weight to be attached to the evidence of Anestis in the absence of cross‑examination, or even oral evidence in chief, would be of so little weight that the interests of justice would not be served by admitting his untested witness statement or affidavit.

The other witnesses are of lesser importance and the issue of any inference arising from the failure to call them is considered below during consideration of the evidence.

The defendant then telephoned his solicitor, Mr Tonkin, and insisted that he see him immediately. He said that he was ‘uncomfortable that Bill may change his mind for another day’.

Amanda Simpson did not witness this conversation. She remained in the defendant’s car while he went up to speak with Mr Nedelcu.

The defendant then introduced Mr Nedelcu to Mr Tonkin and the events described by Mr Nedelcu took place. Once Mr Nedelcu had signed the handwritten statement in the presence of the independent solicitor, Mr Davies, the defendant drove Mr Nedelcu home.

Later, on 29 February, the defendant again attended at Mr Nedelcu’s home and collected him. He drove him to Mr Tonkin’s office where Mr Nedelcu swore the recanting affidavit. The defendant then drove Mr Nedelcu home.

There was telephone contact between Mr Nedelcu and Mr Apostolidis over the next few days. Then, on 4 March 2008, Mr Nedelcu was admitted to hospital. He was visited by the defendant on three occasions. The defendant did not visit Mr Nedelcu out of any friendship or concern for his welfare. He visited him because he thought that it would be in his interests to remain on good terms with Mr Nedelcu, so that he would expose the conduct of the plaintiff and Mr Pollett concerning payments to Mr Nedelcu at trial.

After Mr Nedelcu was released from hospital, arrangements were made for him to see police officers at Mr Tonkin’s premises in order that he be interviewed in connection with his allegations that he had been paid money by Mr Pollett to give evidence in support of the plaintiff’s case. This interview took place on 25 March 2008.

At this time, the defendant said that Mr Nedelcu asked him ‘for a variety of reasons, if he can come and stay with me.’ The defendant described Mr Nedelcu’s expressed reasons in the following terms:

He told me a variety of reasons like he doesn’t feel good, he needs a rest, he prefers not to stay in his place, people were chasing him, he’s unwell; things like this.

In any event, not out of any friendship or concern for Mr Nedelcu’s welfare, but in order to ensure that he did not again change his evidence at the trial, which was then fixed for 21 April 2008, the defendant said that he allowed Mr Nedelcu to come and stay with him. He said that Mr Nedelcu stayed with him from that time until a week or two before he and Amanda left Australia on 18 May 2008 for an overseas trip.

The defendant said that, during the time that he stayed with him, Mr Nedelcu had no restrictions placed upon him as to his movements, and slept in the defendant’s daughter’s bedroom. The defendant said that he went to work each day and that Amanda, who doesn’t work, was either at home or out shopping or doing other things. During this period, the defendant said that he drove Mr Nedelcu to the doctor’s on a number of occasions. He also recalled that Mr Nedelcu cooked meals at his home on a few occasions. During this period, Rudi Germijns, a friend visiting from Belgium, was living next door in the house which the defendant had by then purchased. The defendant, his son David, Mr Germijns and Mr Nedelcu went out on a number of occasions to play the poker machines and have dinner. The defendant did not like poker machines, but went to keep Mr Nedelcu happy.

After Mr Nedelcu left the defendant’s home, the defendant said he continued to speak to him on the telephone on many occasions for the balance of 2008. He said that Mr Nedelcu would usually call asking him for money. The defendant gave him $50 here and there.

In the period August/September 2008, the defendant continued to socialise with Mr Nedelcu at poker machine venues and restaurants on a fairly regular basis. He was usually accompanied by Amanda Simpson, sometimes his son, David, and another friend from Belgium, Billy Roustam. Again, the defendant was quite clear about his motivations for continuing to see Mr Nedelcu. It was not out of friendship but rather, as he said:

because I always saw the possibility that Bill Nedelcu one day will be here in court explaining to you, your Honour, why he made a statement for them and then take the statement away and re-made another statement and saying the truth. With this in mind, I kept in contact with him. …
and then of course he was providing me with other information without me asking him, like the postcards, pictures, maybe other telephone calls that he had over them, so he was giving me all that. But that was the thing. No friendship involved.

At some stage in late 2008, the defendant obtained possession of two mobile phones owned by Mr Nedelcu. During the course of this trial, those mobile phones were seized by the police in relation to a separate matter. They were subsequently produced to the Court pursuant to a subpoena issued on behalf of the defendant.

As appears above, Mr Nedelcu gave evidence of telephone calls made by him on his mobile phones to Mr Pollett and the plaintiff during the time that he was staying with the defendant between February and May 2008. Mr Nedelcu said that he was forced to make these telephone calls, and to record them on the defendant’s mobile phone, at the insistence of the defendant. The defendant denied that this was so and said that he was not present when Mr Nedelcu made these telephone calls. I reject this evidence. I have no doubt that the defendant would not have allowed Mr Nedelcu to use his mobile phone under any circumstances. I find that the defendant encouraged, if not demanded, that Mr Nedelcu make the telephone calls to Mr Pollett and the plaintiff with a view to obtaining admissions from them about the payment of further funds to Mr Nedelcu. The defendant provided his mobile phone to Mr Nedelcu to enable these conversations to be recorded and I find that it is more probable than not that the defendant was present when the calls were made.

The defendant also gave evidence that Mr Nedelcu showed him a video recorded on his mobile phone of Mr Nedelcu having sexual contact with the plaintiff. To the best of his recollection, this occurred in September or October 2008. He gave the following evidence:

In what circumstances did he show them to you?---He was bragging that he banged Zorica, sir.
What did he show you? First of all, you have seen two phones have been produced, what might be described as a silver phone and a black phone?---Mm-hm.
Are you able to say which of the two phones he showed you any particular material on?---I'm not certain, but I believe it was the black phone.
What was the nature of the material that he showed you on that telephone?---You could hear background noise of Bill talking, but you cannot see him, but you could see Zorica on the video performing fellatio on him.

I reject this evidence. I find that it is a fabrication designed to blacken the plaintiff’s name. The mobile phones, when produced, contained no such video footage. The defendant says that he obtained these mobile phones in about September or October 2008 for the purpose of preserving evidence to be used against the plaintiff. He says that he checked the mobile phones for SMS messages which may be damaging to the plaintiff’s case, but made no attempt to check that the incriminating video footage was still there. I have not doubt that, if the defendant’s evidence was true in this regard, he would have checked to see that this video footage remained on the mobile phones at the time that he took possession of them.

Further, in making these findings, I take into account the fact that although the defendant, according to his own evidence, has known of the damaging video footage since September or October 2008, it was not until the plaintiff was about to leave the witness box that senior counsel for the defendant was instructed, in Court and for the first time, as to the existence of the video footage. I reject the defendant’s explanation that he did not see the significance of this video footage until this time. Mr Nedelcu was always going to be called as a witness for the plaintiff. Any financial or sexual relationship between the plaintiff and Mr Nedelcu was obviously relevant to the credibility of Mr Nedelcu’s evidence.

As I have said, the evidence of and relating to Mr Nedelcu reflects badly on all concerned. I have already made findings with regard to the purpose of the payments made by Mr Pollett to Mr Nedelcu. The payments were made for the purpose of securing favourable evidence from Mr Nedelcu. As to Mr Nedelcu himself, his credibility was affected by the receipt of those payments and by the other matters discussed above. In these circumstances, I reject his evidence that he was abducted at gunpoint and forced to make his recanting statement and affidavit under fear of death. His evidence provides no safe basis to make a serious finding of that kind. That does not mean that I accept all of the defendant’s evidence. He was also a most unsatisfactory witness.

I do not believe either Mr Nedelcu or the defendant about the events surrounding the making of Mr Nedelcu’s recanting statement and affidavit and Mr Nedelcu’s subsequent period of residence at the defendant’s home. The issue is one which, for the purposes of deciding this case, bears upon credit only. In circumstances where the credibility of both the defendant and Mr Nedelcu is seriously undermined for other reasons given elsewhere in this judgment, it is unnecessary to make a finding as to Mr Nedelcu’s allegations. However, even accepting the defendant’s own version of events undermines the credibility of his case. In circumstances where Mr Nedelcu was obviously in need of money on a day to day basis, and was thus susceptible to giving favourable evidence to those who paid him money, it was improper of the defendant to have him staying at his home and to then entertain him at his expense thereafter. Unlike the plaintiff, he did not even profess to have any friendship with Mr Nedelcu which could possibly justify his actions.

(b) Alleged threats by the defendant

The plaintiff also claimed that the defendant has made threats to kill her since the end of their relationship. She recounted an incident after the settlement of the proceeding brought by Ken Apostolidis against the defendant seeking a half share in the business. She recalled a heated exchange in French between Ken and the defendant in the courtroom following the announcement of the settlement and the trial judge leaving the court. The plaintiff was in the courtroom because she was to be a witness for Ken Apostolidis. Following this loud and aggressive argument between the brothers, she said that the defendant turned to her, pointed at her and said in English ‘You’re dead’. She said that he did not use as aggressive a tone as that which he had been using in his conversation with Ken.

I do not accept this evidence. The defendant’s solicitor, Mr Tonkin, was present at the time of the alleged threat and denied that the threat was made. I accept his evidence.

Have the plaintiff’s contributions been sufficiently recognised and compensated for?

The contributions of the plaintiff are the subject of findings above. They may be summarised as follows.

First, the plaintiff performed the homemaker role with competence. This role included a significant contribution towards preparing the Dowling Road home for sale, searching for the Yarrabee Court home and involvement in the renovation of that home. These contributions by the plaintiff were beneficial to the welfare of the defendant and, in addition, constituted non‑financial contributions to the acquisition of assets by the defendant by ensuring that he could focus on the business seven days a week.

Second, the plaintiff made significant and regular contributions to the welfare of the defendant’s son David. Once again, these contributions have two aspects. The defendant was relieved of his own parental responsibilities and was able to rely upon the plaintiff providing a caring environment for his son while he was the defendant’s responsibility. Further, the plaintiff’s role in this regard also ensured that the defendant could focus on the business.

Third, the plaintiff sold the Byfield Street home at the request of the defendant. She made her net proceeds of that sale available to the defendant on his request at a critical time in the development of the defendant’s business. Although I am satisfied that the defendant would nevertheless have proceeded to purchase the Dandenong shop, and to thereafter change his business model, the ability of the defendant to draw upon the plaintiff’s money must have given him some comfort at a time when large borrowings had just been undertaken to purchase the Dandenong shop. The ability of the defendant to borrow money from the plaintiff during 1994 gave the defendant confidence in committing to capital items such as the two large electric signs at the Dandenong shop.

Although the defendant substantially repaid the plaintiff all moneys advanced to him, no interest was paid. In the meantime, the plaintiff was out of the property market at a time of high growth. In that regard, although I am not satisfied that the plaintiff worked full‑time in the business, the understanding of the parties was that she would work in the business from time to time as requested by the defendant and he acquiesced in her not obtaining full-time employment. In the absence of paid employment, the plaintiff was unable to use what funds were available to her for the purchase of an investment property, as the defendant said he suggested.

Fourth, the plaintiff contributed by working in the business, although not to the extent that she contended. The work which she performed was useful and unpaid.

It was submitted on behalf of the defendant that the plaintiff received adequate compensation because she enjoyed a good standard of living during the course of the relationship; all of her needs were provided for by the defendant without financial contribution by her and she was given $10,000 and a car when the relationship ended. Reference was made to the fact that the defendant paid all of the costs and expenses relating to the homes in which the parties resided, paid all of the joint living expenses of the parties, took the plaintiff on holidays, provided her with a motor vehicle and all running expenses, and gave the plaintiff sufficient moneys to pay for clothing and other necessities. In my view, this submission ignores the plaintiff’s work in the business, the fact that she sold the Byfield Street home and made the proceeds available for loan to the defendant for his business, and gives only token recognition of the plaintiff’s role as a homemaker and carer of David.

Taking the evidence as a whole, I am not satisfied that the plaintiff was adequately compensated for her contributions to the defendant’s assets, direct and indirect, or for her homemaker role. I proceed to consider what orders are necessary to ensure that the plaintiff’s contributions are sufficiently recognised and compensated for.

What orders are necessary to ensure that the plaintiff’s contributions are sufficiently recognised and compensated for?

The discretion to make an adjustment order under s 285(1) of the Act has been described as ‘a holistic value judgment in the exercise of a discretionary power of a very general kind’.[55]
[55]Davey v Lee (1990) 13 Fam LR 688, 689; Kardos v Sarbutt (2006) 34 Fam LR 550, [36]; Giller v Procopets [2008] VSCA 236, [331]; Kenyon v Akeroyd [2008] VSCA 277, [27].

Notwithstanding the general nature of the discretion, it is accepted that the Court should proceed in accordance with the three‑step process identified by the New South Wales Court of Appeal in Kardos v Sarbutt,[56] as approved and applied by Neave JA in Giller v Procopets.[57]
[56](2006) 34 Fam LR 550, [29].
[57][2008] VSCA 236, [314].

As to the first step, the Court normally values the property of the parties at the date of the trial.[58] However, there is no general rule that this course should be followed. In this case, there is no issue. The parties agreed that the property should be valued at the date of separation and that any adjustment order made by the Court should reflect the contributions made to the assets at that time. In addition, subject to some conditions which are unnecessary to mention here, it was also agreed that any adjustment order would carry interest from the separation date. The calculation of interest is to await further argument.
[58]Ibid, [317].

As to the second step, the evaluation and balancing of the respective contributions of the parties, a number of principles are established.

First, homemaker contributions are to be given appropriate recognition, notwithstanding that it may not be possible to link those contributions to the acquisition, conservation or improvement of any property. This is plain from s 285(1)(b) of the Act.[59]
[59]Ibid, [275].

Second, homemaker contributions are not to be treated in a token way or by reference to the commercial value of those contributions.[60] Each case must be determined by reference to its own particular circumstances.
[60]Ibid, [330].

There are a number of cases where the homemaker role has been assessed as equal to the breadwinner role in the context of making adjustment orders under s 285(1) of the Act. For example, in Kenyon v Akeroyd,[61] the Court of Appeal in this state treated the two roles as equal. The facts of Kenyon v Akeroyd differ markedly from this case. The parties had children and this necessitated that the role of Ms Kenyon be principally that of homemaker. In addition to her homemaker role, Ms Kenyon was responsible for the idea of subdividing some land which yielded a profit, did all of the necessary work to affect that subdivision, did the bookwork for Mr Akeroyd’s logging business on a weekly basis for about two years, worked part‑time in the business and managed the agistment of stock on the parties’ land. The relationship lasted approximately 11 years. In these circumstances, the Court held that it would be neither just nor equitable to view one party’s contribution as more valuable than that of the other party, and concluded that their contributions were reciprocal and equal.[62]
[61][2008] VSCA 277.
[62]Ibid, [28] – [30].

Third, the evaluation and balancing of the respective contributions is not to be undertaken by ‘a reductionist process analogous to the taking of partnership accounts’.[63] This is because some contributions are readily capable of evaluation in monetary terms, and others, such as those made in the capacity of homemaker and parent, are not.[64]
[63]Kardos v Sarbutt (2006) 34 Fam LR 550, [36].
[64]Ibid, [37].

As to the third step, it is important to note that the Court is concerned to make an adjustment order which is just and equitable ‘having regard to’ the contributions of the parties of the kinds specified in s 285(1) of the Act. Accordingly:

there is no warrant for regard to other factors such as the respective means and needs of the parties, which are made relevant to equivalent applications under the Family Law Act by s 79(4)(e) of that Act, an equivalent of which is conspicuously absent from [Part IX of the Act].[65]

[65]Ibid, [38].

In formulating an adjustment order, the Court may take what has been described as a ‘global’ approach or an ‘asset by asset’ approach or a combination of both. The authorities indicate that it may be appropriate to apply the rigour of an asset by asset approach as a cross‑check against an adjustment arrived at using the global approach, to ensure that the result is just and equitable in all the circumstances.[66] However, it is not necessary for such a check to be undertaken in every case.[67]
[66]Ibid, [49], [51] – [53]; Manns v Kennedy (2007) 37 Fam LR 489, [65].
[67]Kardos v Sarbutt (2006) 34 Fam LR 550, [49], [51] – [53].

I have decided to adopt a global basis in the formulation of an appropriate adjustment order. I adopt this basis because the plaintiff’s contributions are not readily capable of evaluation in monetary terms. In particular, her role as homemaker and carer for David and the strategic value of the loans made by her to the defendant in connection with the business at a vulnerable time are incapable of monetary assessment. It is not simply a matter of calculating interest for the time that the loans remained unpaid. They were of greater significance than that.

However, having regard to the high value of the defendant’s business, I will perform a rough estimation of the monetary value of the plaintiff’s contributions in order to ensure that she does not obtain an unjust share of the business. In this regard, it is important to note that the business was the defendant’s. He owned it prior to the commencement of the relationship. He was the one who applied his assets, skills and business talents to its growth. The plaintiff’s contributions, while not wholly insignificant, were incidental.

I will exercise my discretion to make an order under s 285(1) of the Act that the defendant pay the sum of $500,000 to the plaintiff.

I have performed the following asset‑by‑asset cross‑check to ensure that the amount of $500,000 is not unjust or inequitable in all the circumstances.

First, the plaintiff’s role as homemaker justifies granting her compensation equivalent to one‑half of the net value of the Yarrabee Court home. This is an amount of $130,000.

Second, the plaintiff worked in the business for about six years. She was unpaid. I estimate the value of her work at about half of that of a full‑time employee. The available evidence demonstrates that by 1998 full‑time employees were being paid approximately $505 per week. If the value of the plaintiff’s services were about half that, and less in the early years, she performed unpaid work worth approximately $70,000 over six years.

These amounts total $200,000. This leaves $300,000 as compensation in respect of the plaintiff’s direct and indirect contributions to the business.

Third, the plaintiff’s contributions as homemaker, carer of David, and in providing the strategic loans to the defendant, justify allowing her some compensation in respect of the growth in value of the furniture business, the cash receipts of the business retained by the defendant, and other business assets acquired by the defendant. These assets total approximately $11 million. $300,000 equates to approximately 2.7 per cent of the value of these assets. This represents fair compensation to the plaintiff and is neither unjust nor inequitable in all the circumstances of the case.

Constructive Trust Claim

The plaintiff made a further or alternative claim for a declaration that the defendant and/or companies associated with him hold property on a constructive trust for her. Reliance was placed upon the recent decision of Kaye J in Cressy v Johnson (No 3) in which the relevant authorities were reviewed.[68]
[68][2009] VSC 52, [185] – [200].

In this case, it is unnecessary to consider this aspect further. The remedy of a constructive trust is unnecessary in the circumstances of this case, and would operate unfairly to the defendant. As the plaintiff has established a right to an adjustment order under s 285(1) of the Act, the Court has ample power to protect the plaintiff against possible dissipation of assets by the defendant in order to defeat execution upon the plaintiff’s judgment entitlement. At present, the plaintiff’s position is protected by caveats lodged over real property. There is a counter‑claim for the removal of those caveats.

In my view, having regard to the dim opinion which I take of the defendant’s credibility and business practices, this is an appropriate case in which to make orders under s 291(1)(g) of the Act in aid of enforcement of the plaintiff’s judgment. That can be done by the making of appropriate injunctions restraining, to the extent necessary, disposition or further encumbering of real property owned by the defendant, Azura and/or DSK. I will hear the parties as to the form of such injunctions. When those injunctions are in place, the plaintiff’s caveats should be removed.

In the event that the judgment is not satisfied by the defendant, the Court retains the power under s 291(1)(b) of the Act to order the sale of property owned by the defendant and companies associated with him, and to make orders for the distribution of the proceeds of sale to satisfy the judgment.

Conclusion and orders

For the reasons given above, there will be judgment for the plaintiff in the sum of $500,000. I will hear the parties as to the form of the judgment, the calculation of interest and costs. As discussed above, I will make orders restraining the disposition of assets in aid of enforcement of the plaintiff’s judgment. The formulation of those injunctions will need to await the Court’s determination as to the amount of interest to which the plaintiff is entitled and the resolution of costs issues. It is only at that time that the Court will have sufficient information to determine the extent of injunctive relief which is necessary to protect the plaintiff’s position pending payment of the judgment sum, interest and any costs to which she may be entitled. In the meantime, the caveats provide the plaintiff with adequate protection.

Referrals to authorities

For the reasons stated above, I will refer the plaintiff’s conduct concerning the receipt by her of social security and Austudy benefits to the appropriate authorities to take such action as they think appropriate. I will also refer the defendant’s conduct concerning his own taxation affairs, and those of DSK, for consideration by the appropriate authorities. I reject the submissions made that such referrals should not take place. These matters were not minor irregularities. They were the result of deliberate and repeated conduct engaged in by the parties.

[2009] VSC 208

29 May 2009