Kingsley and Trang

FAMILY COURT OF AUSTRALIA

KINGSLEY & TRANG

[2016] FamCA 790

FAMILY LAW – PROPERTY – alteration of interests – Where the wife was not candid about what assets she had nor what she had done with a large amount of money – Where the husband was living on capital and had the care of the children – Where the unexplained missing money and the known expenditure was very large relative to the known assets – Where it was not just and equitable to make an order in the wife’s favour.

Family Law Act 1975 (Cth)

Bevan and Bevan (2013) FLC 93-545
Cerini and Cerini [1998] FamCA 143
Chang v Su (2002) FLC 93-117
Stanford v Stanford [2012] HCA 52
Weir and Weir (1993) FLC 92-338

APPLICANT:

Mr Kingsley

RESPONDENT:

Ms Trang

FILE NUMBER:

MLC

8207

2014

DATE DELIVERED:

19 September 2016

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

4, 5 and 12 August 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT:

SOLICITOR FOR THE APPLICANT

Mr Hutchings

Zeno Lawyers

THE RESPONDENT:

In Person

Orders

That the husband forthwith upon request, sign any transfer provided by the wife to enable her to be the registered proprietor of motor vehicle numbered ...
That the amended initiating application of the wife filed 27 January 2016 is otherwise dismissed.
That save as to issues of costs, the response of the husband filed 6 October 2014 is dismissed.

IT IS CERTIFIED

That it was reasonable for the attendance of counsel for the husband

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8207 of 2014

Mr Kingsley

Applicant

And

Ms Trang

Respondent

REASONS FOR JUDGMENT

Mr Kingsley (“the husband”) and Ms Trang(“the wife”) commenced living together in 1992, married in 1993 and separated in March 2014. For my convenience, I shall refer to them as husband and wife.
The marriage produced three children, two of whom are under the age of 18 years. Those two children are aged 17 and 13 years respectively and they live with the husband. They have had no contact with the wife since May 2015. Whilst the wife provided some child support for them, that has been modest.
These proceedings concern the division of the parties’ assets. The existing known assets are modest but because of the controversial use of cash money particularly by the wife, no compromise was reached and thus, the parties required court intervention. Much of these reasons focuses on approximately $250,000 which had been under the wife’s control and where it went.
Until shortly before the hearing, the wife was represented by lawyers. Their assistance to her ended shortly before the trial and the wife chose to proceed to represent herself. She had the added difficulty of desiring a translator. Although her English was good, she felt more comfortable conducting the case through the assistance of a Country A interpreter. There were some problems with that.

The language issue

In an earlier interlocutory hearing, Bennett J had ordered an interpreter of the wife’s documents to file an affidavit as to the wife’s understanding of the sworn concepts. Although it is not entirely clear why her Honour did that, the warning bells were ringing. The dilemma is whether the wife used the language issue to obfuscate or whether there were genuine communication issues. I find the supposed language difficulties have been used by the wife to give evasive evidence.
In February 2016, the trial was listed to begin but the wife’s counsel asserted to the Court that the trial affidavit of her client sworn without interpreter assistance was inadequate and factually wrong. Having accepted the difficulties on the wife’s own side, an adjournment was granted. The wife blamed that inadequacy of presentation on her then legal practitioner particularly because of the absence of a translator throughout the preparation of the affidavit material. This was well after the hearing before Bennett J.
In March 2016, the same solicitor who had apparently drawn the wife’s earlier material settled the wife’s current trial affidavit. That document is endorsed as having been sworn through an interpreter. Immediately following that and presumably as a precaution, the wife’s solicitors filed an affidavit by the new translator who confirmed that the wife had “a reasonably high level of English comprehension” although there were several words she apparently did not understand.
On the first day of this hearing, the wife had a Level 2 translator but he could only stay for that first day. Despite wanting a translator, the wife had difficulty conversing in the Country A language and was frequently heard speaking to the translator in English forcing him to be a facilitator or communicator. I directed that she conduct the whole proceeding in the Country A language (as she had originally requested) but even then, there were times that she seemed comfortable in responding in English.
Unfortunately, as the second day of the hearing dawned, the translator service failed to find a relevant professional. The wife wanted a translator so the proceedings had to be adjourned for a week. Whilst any litigant who feels uncomfortable about the language barriers should have a translator, the wife really had a limited need. She was able to personally argue for the trial not to proceed without a translator.

The wife as a litigant and problems in her written evidence

Perhaps because the wife was without legal representation, the husband’s evidence was not severely tested but in any event, he was able to plausibly explain where money went and he generally corroborated his evidence with documents.
Despite the wife having two opportunities to file a comprehensive picture of her financial circumstances and the financial history of the marriage, and having sworn her second affidavit was accurate, she acknowledged in cross-examination that there were still significant errors. That could not be the fault of anyone but herself because of the assistance she received from the translator when the affidavit was sworn.
One such problematic example was that the wife said that a VCAT hearing about tenants of the parties’ business had cost the husband and wife $200,000 in “legal fees” but when pressed, she said that was the legal costs and the lost rent. The husband had confirmed that the rent was not recovered. Because the affidavit of the wife was so emphatic, and it was done with a translator, I am satisfied she embellished the story. Why she would do that however remains a mystery because she (and presumably the lawyer who prepared the affidavit) must have known the discovery process would quickly expose the correct answer.
A second example concerned statements of a sweeping or broadbrush nature the wife made about what she did with money she had earned and retained in an account in her sole name. When challenged and faced with documents such as solicitor’s bills, she could not justify the claims about where large sums of money went. The broadbrush statements were inaccurate.
In a third example, the wife said (paragraph 59) the property of her parent’s home was “still in” her mother’s name and formed part of her mother’s estate. The only inference was that the property did not belong to her. In cross-examination, she conceded that in 2013, she paid out the mortgage and, consistent with the copy of the title in the hands of the husband, she had bought it. She conceded that she was the legal owner. The front page of the title, somewhat like the Torrens System of Titles, showed her deceased mother’s name but the addendum indicated otherwise. This inaccuracy was detailed in the second affidavit prepared with the guidance of the lawyer under the translation-assistance she was provided. This could not have been a mistake. I am satisfied it was deliberately misleading.
Another example was that the wife said she used her wages to support the family and she detailed the areas to which these particular funds were said to have been directed. Yet, her wages remained in her account and were untouched. When challenged about the absence of withdrawals and asked to explain her statement, she avoided the question and said that that was what the husband had directed her to do. Even if true there was no other plausible explanation of how she had access to cash to do anything at all. This evidence (paragraph 31) concerned the period after the parties’ business had ended so how she contributed financially remained a mystery. I consider she was again deliberately misleading.
In addition to her saved wages, it transpires that the wife was receiving Centrelink benefits. I deal with the finer details below. It was not her evidence that that was some form of joint enterprise with the husband and it is not in doubt that the money went into her account alone. This money was not mentioned for tax purposes by the wife in circumstances where the husband was responsible for the returns of the household. He produced evidence to show the details the wife had given him and they excluded the relevant benefits. Ultimately, the system caught up with the wife and money had to be repaid. Curiously, and the wife did not challenge the husband about it, he paid back Centrelink a large sum from the parties’ capital. I shall take that into account in noting that as I set out below, the wife probably had an interest in the capital in the husband’s account and therefore she was probably repaying her own debt from her own money. Similarly, I accept that, with the wife retaining her own savings, the capital sums in the husband’s name supported the entire family and ultimately its reduction is explained by those various uses. I was not asked to consider the Centrelink issue as some sort of fraudulent activity and it is conceivable that it was just as a result of an overpayment but having regard to the cash the husband was holding and, on her own evidence, the wife was working two jobs, the entitlement to Centrelink was odd. The lack of explanation is not a basis to draw any adverse inference against the wife but it is significant that the husband denied any knowledge of the funds until the demand was made by Centrelink for a return of them.
Unfortunately, the wife’s inadequate answers and her implausible story about where money went meant that in respect of important issues about what is to be divided, I have concluded that she was prepared to embellish the evidence to suit her argument. Again, it is curious as to why she would do that when her own bank records indicate that the version of the husband is correct.

The husband’s credibility

The husband readily conceded that when the children were young, the wife “was a good mother” but he went on to say her role when she worked two jobs was limited. His version of those events is plausible and I accept it.
Because I am satisfied of the accuracy and care of the husband in respect of his evidence, I find that there is little about the evidence of the wife which is reliable.

The issues

There were a number of issues canvassed in the proceedings which included:
(a)      what each party owned when the relationship began;
(b)what homemaker and parent role each fulfilled and where the parties’ respective monies went;
(c)in respect of the wife, what property she now has in Country A;
(d)how to treat the large sum of money that the wife has used;
(e)      what property of the parties is left now to divide; and
(f)       how to treat money spent on legal fees.

The wife’s proposals and that of the husband

The wife’s proposed orders were encapsulated in the documents prepared for her by her former solicitor. That document suggested that the husband should receive “55 per cent of the net asset pool” consisting of the real property at B Street and the funds in the husband’s bank account. She sought the registration transfer of her motor car.
Because she was without the assistance of the lawyer who drew the February outline, the wife was pressed to indicate what orders the Court should make. She avoided responding to questions about whether she adopted the outline drawn by her former lawyers and said the Court should decide the issue. In final address, she began by saying she wanted $400,000 but then acknowledged that was all of the husband’s cash, so she modified that to a payment of $350,000.
In contrast, the husband sought a dismissal of the wife’s application. That is, that the Court should make no orders relating to the alteration of his property interests in favour of the wife.

Applicant and respondent

Initially, the wife had been the applicant and the husband the respondent but because of the lack of representation of the wife, and her assertions against the husband, it seemed more sensible to reverse the litigation positions. The wife did not contribute any reason why that would prejudice her and accordingly I ordered it.

The evidence

The evidence about the financial history of the parties is largely to be found in the husband’s affidavit. As I have indicated, his evidence is reliable. He was cross-examined by the wife but none of the matters that she put to him, were very controversial.
The husband’s evidence was that he is 54 years of age and the wife 52 years of age. The parties acquired a property in C Street, Suburb D in 1993 for $65,000 of which he provided $55,000 from his savings. Curiously, right at the end of the case, the wife disputed that and said each had begun the relationship with nothing. That flew in the face of her previous lawyers’ outline and her own evidence (paragraph 15). She said the first house came from “savings” and that the husband had told her when they met that he was “broke”. But the first purchase was very early in the relationship and at a time when they were both working. No documents were produced by the wife to dispute the husband’s assertions about the limited mortgage they obtained. It is more probable than not that the husband had savings because the wife concedes she knew little about his affairs. Without savings in existence before the relationship, the acquisition of the first property could not have occurred because of the limited borrowings. I therefore prefer the husband’s version. That amount was significant in the contribution assessment. Ten years later, C Street was sold for a significant profit and at which stage, the debt had been paid. The proceeds of $310,000 went into the reduction of the business premises mortgage. The business premises is mentioned shortly.
Two years after the purchase of C Street, the neighbouring property was purchased for $150,000 most of which was borrowed. The rental income paid the mortgage payments. This property was sold a year after the other C Street property and again, a significant profit was made which was applied to the mortgage on the business premises.
In 1997, the business premises which I have mentioned was acquired by the husband and his brother and five years later, the brother’s share was purchased. The acquisition of the brother’s interest was made by the husband and the wife jointly. They became the registered proprietors. That business that the parties conducted from the premises was operated jointly between husband and wife. Each fulfilled a different role.
In 2005 their business collapsed and they leased the building but that too was largely an unsuccessful venture. The tenant failed to meet his obligations. The business premises was then put up for sale.
In respect of the sale of the real property in the business premises, the wife said that the decision was made without her knowledge. I am satisfied she ultimately must have participated because lawyers acting for both husband and wife on the sale prepared all of the documents in their joint names. Similarly, the mortgage documents, which required a discharge, were directed by the mortgagee to the parties as joint proprietors. There were a number of people and organisations involved in the sale so even if the wife maintained that she did not know of the sale until the “for sale” sign went up, she participated thereafter. Importantly, the conveyancing statement of adjustments shows the resulting proceeds were drawn by cheque in the husband’s name alone. There can be no doubt that the sale was conducted jointly but the wife was content for the money to be given to the husband alone. The statement of adjustments is addressed to both parties and the wife said nothing about why the cheque was drawn as it was.
Having sold the property, the parties purchased a house at E Street for cash and they turned that into a commercial development and made another significant profit. Those funds too were placed in the account in the husband’s name alone.
Whilst there were significant funds in the husband’s account from the sale of the business premises and the E Street property, they were used to support the family. One controversial issue was why the husband did not obtain gainful employment. He said he had been injured and was physically incapable of manual work. The wife disputed that (albeit in her lawyer’s case outline) but, despite the opportunity to redress the inadequate earlier affidavit, it did not receive attention in her ultimate trial affidavit. She did not cross-examine the husband who set out comprehensive details in his affidavit. I acknowledge that his affidavit contains assertions (para 50) that are objectionable but the subsequent evidence indicates he has not worked for 13 years most of which time the parties were together. As such, the lack of attack by the wife on the husband’s evidence is odd. It must be said also that he gave evidence that he had fulfilled the role of homemaker and full time parent. Thus, the basis behind his not working becomes less important.

The business premises capital

The husband gave evidence as to where the business premises and other capital has gone and the wife stated that she had no knowledge of it. It was not her case before the Court that the husband had dissipated funds unnecessarily. At its highest, her case was that he had not explained the expenditure. The wife’s February outline said she asserted that he had spent “about $187,878 since separation” and he probably had. No testing of that occurred. An examination of her affidavit material drawn by her previous lawyers would not suggest that she was making a complaint that the husband had been recalcitrant, extravagant or dishonest in respect of the use of those funds.

The known property

Although it was difficult to get a sense of what, if any, concession the wife was making about known or even agreed property, I draw some comfort from the documents upon which she relied and which were drawn by her lawyers. It is again helpful in that regard, to recall that the ultimate trial affidavit was drawn after the debacle in February 2016 when the trial was adjourned.
Albeit the trial was adjourned in February 2016, the wife’s outline of case as at 18 February 2016 said the assets were:
B Street, Suburb F;
CBA Net Bank;
CBA Goal Saver;
ANZ account;
Country A account;
Motor vehicle 1;
Motor vehicle 2;
Monies owed by Mr G.
The wife then recorded that she had some “super” by which she was referring to the $35,000 (approximately) of superannuation which she has accrued from her employment. Superannuation has not been a disputed issue by the husband.

In her February affidavit, the wife deposed to owning two parcels of land in Country A and having two bank accounts with nominal amounts. Whilst the values attributed to that land have to be ignored because they were neither agreed nor their source disclosed, at least the wife was acknowledging the existence of interests in property. The husband did not agree with the extent of the wife’s declared interests.
In her affidavit filed 29 March 2016, no doubt carefully drawn, the wife did not set out what property she conceded then existed. She did endeavour to explain what had happened to various monies under her control.
Thus, there is no real challenge to the husband’s assertion that the known property of the parties (ignoring values) is:
B Street, Suburb F;
CBA accounts;
The Country A bank accounts;
Two motor cars;
Some furniture.
The husband asserted there was property in Country A. Having regard to the wife’s concession, that is not controversial. It is controversial as to what property in Country A each is talking about, what portions are owned by the wife in any event and ultimately, what values those interests have.

The uncertain property

In her financial statement, the wife said (in respect of property in Country A) she had a 33 per cent interest in H Town, Province I and a 100 per cent interest in a block of land in J Town, Province I. Her cash savings were nominal but she also had no debts. She acknowledged having had a bank account in Country A but she had lost the bank book and was issued with a new one and it was into this account that she transferred money for use when she travelled to Country A. However, she did not state how much money went through that account.
The wife told the Court that she paid for airfares to Country A along with expenditure on a burial ceremony and memorial for the husband’s mother. That cost was disputed by the husband. Because I generally accept the husband’s evidence and the wife did not corroborate any of that expenditure, I do not accept that it explains the significant amount of money missing.
The wife then set out to explain various inter-bank account transfers. In an endeavour to explain her post-separation spending, the wife said she spent:
In March 2015 and afterwards, nearly $60,000 which was used to pay for flights and to holidays;
Rental costs and acquisition of furniture at an estimated $30,000;
Living expenses of about $25,000;
Legal fees of almost $157,000.
Despite the wife’s former outline assertion, two significant conclusions can be drawn from a combination of the evidence. On the wife’s own evidence, it is possible to discern that at separation in March 2014 (paragraph 38) the wife had at least $113,318.33 in savings. An examination of the exhibits tendered by the husband would suggest that there was approximately a further $20,000 in a different bank account. In his affidavit (paragraph 72) the husband set out various withdrawals that can be seen to have occurred prior to separation and whilst there are some figures that relate to local activities such as perhaps living expenses and even legal fees, there can be little doubt that at least $122,000 remains largely unexplained. The husband hypothesised that those sums probably went overseas. In cross-examination, the wife conceded that she had probably sent about $140,000 overseas.
Having conceded $140,000 was sent overseas, it is interesting to note that in the amended affidavit filed in March, she said she thought the amount was “about $103,000”. The $103,000 figure was explained by the payments (para 53 of the wife’s affidavit) but she then said that she did not recall the specifics for which the payments were made. She said she recalled sending money to her father who was very ill with heart disease and her sister contacted her to pay for his medical bills. She made these payments between 2010 and 2014 but none of these were specifically matched up with the payments she set out in her affidavit.
The wife also said that there were two floods in Country A between 2012 and 2013 and she sent money to her sister in City K for her sister’s accommodation because the house was uninhabitable and repairs had to be done. Where that fits into the $103,000 worth of payments set out in para 53 of the affidavit remains unclear.
The wife also said that in 2012 she sent “about $20,000” to Country A to discharge the mortgage on her parent’s home. She said this amount was sent in various amounts to her sister but again, bearing in mind the payments for her father’s illness and the flood damage, none of this made much sense.
Importantly, the wife said that all of these funds were transferred with the husband’s knowledge and consent. She said that he assisted her with the transfers and showed her how to transfer the funds. None of that is accepted by the husband. In an interesting statement (at para 57) she said:
To my knowledge that money has been spent and is not kept in any bank accounts. Other than paying off the debt my sister secured against my mother’s home, it was not used to purchase or pay for any property in [Country A].
Bearing in mind the wife’s capacity to produce copies of transfers of money, evidence from her sister and more importantly, the inconsistencies in relation to title transactions, I do not accept her evidence.
The evidence of the husband came from records provided by banks under subpoenae issued by the Court. The wife’s mantra was that the husband not only knew about all these things but that he had access to the various bank records. That would seem to fly in the face of the husband having to issue subpoenae of a general nature to find out what the wife had done with money in bank accounts. The pursuit of those records by subpoenae had only arisen because the wife had not produced the relevant records to the husband. When she was cross-examined about that issue, her response was that she had given all of these things to her lawyers. There were at least three law firms involved for the wife and there was a consistent complaint by the husband that he could not get discovery. When it was put to the wife that it was the fault of the lawyer, she seemed to agree. It was difficult to know exactly what happened and by way of example, shortly prior to this trial, the solicitor for the husband requested all of the passports of the wife and on any view, apart from an evasive response by the solicitor, only parts of the document were provided. It beggars belief that three firms of lawyers would consistently fail to provide records to their counterpart in circumstances where they were given those records by their own client. Combined with the earlier matters about credit, this is another example of where the wife was deliberately misleading.
In summary therefore, in a very short space of time prior to separation and in the two years since then, the wife has disposed of over $250,000 not to mention that since separation, she received a payment of $70,000 from the husband by way of partial property settlement. The $250,000 is made up of what was drawn from her bank accounts, much of which came from her earnings. She conceded sending money overseas and she gave evidence of money spent on legal fees, living expenses after separation and holidays. These amounts probably exceed $250,000.
In respect of the money said to have been transferred to Country A, in respect of medical expenses, the husband asserted that as the wife’s father had a relative in the police force, there were no expenses of a medical nature because the government provided them. The wife rejected that. Again, I accept the husband’s evidence.
There was discussion about the exchange rate and it would seem to be somewhere between 26 … to the Australian dollar and 33 … to the Australian dollar. If the wife spent $140,000, she was providing the family with approximately 4 million .... To get some sense of relativity about this, it was the wife’s evidence that a valuer had said that the land she owned in Country A would be worth about 3 million … if the house was not infested with termites. I have no sense of what the expenses would be for medical treatment and flood relief assistance but on the wife’s assertions about the money she sent, it exceeded the value of the house she there owns. The evasiveness in evidence, the unresponsiveness in disclosure and her secrecy about bank accounts are all good reason to doubt that she has given away all of this money. In addition, she gave conflicting evidence about money she had received early in 2016. She said that she obtained money ($28,000) associated with her legal proceedings and that some of it came from friends. She did not say who those friends were and indeed declined to do so but then added that in any event, the money had been repaid. How that was possible in circumstances where she had to borrow in the first place, remains a mystery. When she was asked about the matter further, she said that her sister had provided her money. The picture became more confused when she made comment about the fact that this was in response to a loan or repayment of a loan. The evidence that the wife gave was so confusing that I could not be satisfied that she was doing anything other than making it up on the spot.

Land in Country A

It is unnecessary for me to delve into the issue of land in Country A in any detail. On a cursory reading of the wife’s affidavit, the reader would conclude that she had little or no interest there. A simple example will suffice. Reference was made to land provided to the wife and to her sibling by their mother. It took cross-examination by counsel for the husband to expose the fact that the land is next to a temple. The wife described the area as not in a town but in a village and she knew nothing about any offers by the temple to buy the land. Nothing in the wife’s affidavit indicates that not only did she get the land by way of transfer from her mother but that since that time, she has acquired the interest of her sister. The sister’s land adjoins that which she owns. The wife did not dispute that she was the owner and it is curious therefore that this issue had never been disclosed. The husband certainly seemed to know about it but it was the wife’s obligation to be candid and I am satisfied on the evidence that she was not. The significance in that lies in the fact again that the original affidavit in January was said to be inaccurate and a lot of effort was therefore put in to rectifying the problem. As I said, the cursory reading of the paragraph about this particular land is very misleading. Because of the reticence of the wife to fulsomely disclose details about the overseas land, I can only conclude that she has interests and does not want the Court to know about them.
That problem creates another dilemma. Because of the $250,000 to which I have just referred, if any of that money went towards the acquisition of the sister’s interest, or indeed the payment out of the mortgage on her mother’s home, it would not be fair to double-dip in some form of assessment as to what is in the assets owned by the wife. The wife said (paragraph 56) that she sent the sum of $20,000 in 2012 to discharge the mortgage on her parent’s home. No corroborative evidence supports that.

The Mr G loan

Whilst the wife has given no satisfactory explanation as to where a lot of the funds have gone, the husband has done the exact opposite. He set out from where he drew funds including lending money to Mr G. Mr G currently owes the husband $27,000 and although that was not shown in any of the balance sheet documents of the husband, he properly conceded that it ought to be included as an asset because he suspects that he will get it back.

The husband’s legal fees

The husband has also paid various legal expenses for the conduct of the proceedings. Normally those funds would be “added back” in some way notwithstanding they have clearly been dissipated because it would be inappropriate for the wife to be expected to be funding the husband’s costs from what might otherwise be joint assets. I propose to do that here because there is a clear concession by the husband of having spent about $35,000 on legal fees and that money came from a source in which the wife may have had an interest.

The wife’s earnings

The husband calculated and the wife did not dispute that, she earned $268,500 in income up until the time of separation in March 2014. Tracing all of her money has been an impossible exercise. For example, she conceded that she put cash on a travel card and had a holiday in the United States of America. She also paid some modest legal costs around that time. When the husband asked for receipts and/or statements in relation to the travel card and the expenditure in the United States, the wife said she did not get receipts nor did she have any statements in relation to the travel card because she gave them to her previous lawyer. Where they are now, remained a mystery. She also added that there were no formal travel card statements so I presume that any bank statements that she was referring to did not include the travel card statements. It is therefore difficult to know exactly what she has spent and I propose to take a conservative approach in working out what I consider she has in her possession or control now.

Furniture

Apart from there being statements about modest amounts which might be seen as admissions against interest in respect of the husband, there was no valuation evidence about furniture. In addition, the wife’s evidence was that she had used the cash she had retained to acquire furniture. It would not be appropriate to guess nor to double dip and in those circumstances I propose to ignore the furniture completely.

How to approach the uncertain property?

The husband argued initially that the money received by the wife from her employment and Centrelink should be “added back into the asset pool”. The difficulty with that is that income does not always translate into assets and there is the question of how a court alters “add backs” which are really a reference to notional property. For example, legal fees paid by a litigant are gone but it must be just and equitable to notionally “add back” those fees.
In circumstances where I could not be satisfied what the wife has, the only proper solution is to take into account that the wife has used her funds to her own advantage even though she has produced evidence to show that she paid various legal bills. It would not be just and equitable to have the husband contribute towards those fees when he has paid his own fees unless of course, the husband has paid his from money which might be deemed to be owned also by the wife. That certainly is the case here. In those circumstances, it would only be just and equitable if the fees of both parties were included as a premature distribution by each of them of funds under their control.
The husband then argued that if the Court chose not to “make a finding” with respect to the wife’s interest in overseas property, “that all monies withdrawn by the wife from 2011 to March 2014 be added back into the asset pool”. This too is fraught with difficulty because it presupposes that the money withdrawn by the wife has somehow ended up in assets or notional property. Here, I am not satisfied that I understand what has happened to the money albeit I can be satisfied that some of the money has ended up in real property in Country A by virtue of the discharge of the mortgage said to have been the responsibility of the wife’s mother. Another difficulty is that it was not controversial that the money withdrawn by the wife came from earnings and Centrelink. As such, it is important to consider whether the husband had some interest in those amounts in any event.

The legal issues

In Cerini and Cerini [1998] FamCA 143, the Full Court dealt with notional “add backs” and made clear that it was not placing a fetter upon the exercise of the discretion of trial judges but in any event, adding monies disposed of back into the “pool” should be the exception rather than the rule. Importantly, the Full Court observed that parties are entitled to reasonably conduct their affairs post-separation in a manner that is consistent with getting on with their lives.
In this case, the husband who has not worked since 2003, has had little choice but to live on the accrued capital. In respect of the support for the children, minimal amounts of child support were forthcoming from the wife. It is reasonable in the circumstances to presume that the reduction in capital went towards living expenses in circumstances where there has been no significant challenge by the wife to that concept.
The difficulty arises in cases associated with absence of plausible explanation as to what has happened to money. Some insight as to how that issue is to be approached can be seen from the Full Court determination in Chang v Su (2002) FLC 93-117 where Kay and Dawe JJ said [at 89,195] said that an order could only be just and equitable if it was measured against the whole of the available assets of the parties. The available assets of the parties in this case are those that are known including the assets in Country A but to achieve justice for both parties, the Court has to deal as best it can, with what the wife had and has disposed of and thus, the justice and equity of any order must be measured against both the known and potential notional figures.
Having regard to the wife’s evidence, the Court is entitled to contemplate the observations of the Full Court in Weir and Weir (1993) FLC 92-338 where at 79,593, the Full Court said:
It seems to us that once it has been established that there has been a deliberate non-disclosure…then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
I find that but for her disposal of significant funds under her control, the wife would have had much more than she now asserts and whilst it is open to speculate that the Court might not have altered her entitlement to those funds on the assumption that she had kept them separate from the husband and he had been content with that, including the Country A land, what the wife has taken and/or retained, would still have been taken into account in any ultimate adjustment. The justification for that approach lies in s 79(4)(e) and (f) and in respect of the former, s 75(2)(n) and (o). All of those have to be contemplated with the question of whether it is just and equitable to make an order at all.
The difficulty still remains how to treat this uncertain property. In Bevan and Bevan (2013) FLC 93-545, the Full Court indicated that notional property was unlikely to be “property”. As the Full Court observed, it was important to deal with disposals by a party carefully in circumstances where assets no longer existed and that the vehicle for so doing lay in the relevant sections of the Act to which I have just referred.

Is it just and equitable to make an alteration of property interests?

The first question to decide is whether it is just and equitable to make any alteration of property interests at all (Stanford v Stanford [2012] HCA 52). In reality, any alteration could only be one way because the husband did not seek any alteration of the interests in property held by the wife.
All property in the husband’s control is property in which he has sole legal ownership. To decide whether it is just and equitable to alter that property in favour of the wife, it is necessary to look at why the interests are what they are now and whether some fact points to the wife having an interest other than a legal one which is readily recognisable. Here, the bulk of the cash in the husband’s account came from the sale of their joint enterprise which was an business premises albeit that the money went straight into the husband’s name only. The second major asset is the house at B Street which was acquired with the funds from the husband’s account simultaneously with the parties’ separation and in the husband’s name alone.

The sale of the business premises occurred in 2008. The husband’s unchallenged evidence was that just over $1.1 million was deposited into the account in his name alone. Curiously, notwithstanding there were two attempts with the involvement of lawyers to get her evidence right, the wife did not dispute the husband’s version of events. Even without any submission by the wife or a lawyer to say she had an equitable interest in the proceeds from the sale of the business premises, one would be hard pressed not to see that the wife was a proprietor of the business that was sold and, with the husband, ran it that way. In one way or another, the proceeds must be seen to be jointly owned in equity. The dilemma is that the husband has not been able to work for years now as a result of an accident but also has not received any social security benefits.
The family has been supported by the husband on the capital sum until separation (and the modest interest from it) and it has now dwindled. The wife went to work in two jobs and, on any view of the evidence, retained her earnings, along with significant Centrelink payments which were ultimately clawed back from the joint capital as being overpaid. It would seem that not all of the repayment came from the parties’ joint funds but the contribution from the wife’s own resources seems to have been modest.
In deciding whether it would be just and equitable to alter the interests of the husband, it is important to recognise what I have just said about what happened to the business premises money, noting that the wife said nothing in her evidence about why it ended up solely in the husband’s control. Therefore, to the extent that the existing arrangements would not be a just and equitable outcome (but for the matters to which I shall turn below) I would make an order altering those interests.

What property is to be divided?

The value of B Street

I have mentioned the property at B Street. When the wife was asked what her view was about the valuation of that property, she said she did not agree with the one nominated by the husband. This was frustrating for everyone because not only did she not have a valuation, there had clearly been a consensus about its valuation up until February 2016. In February 2016 it will be remembered, the trial was to proceed. At that time, both parties were represented. Both parties had filed an outline of case and there was clear consensus as to the value. As agreement had been reached then (and the Court was told of it), the wife’s subsequent affidavit failed to rectify what her counsel had asserted were errors. Little indication was given in the affidavit about the errors other than by reference to correcting account balances. The value of B Street had never been an issue and absent some plausible explanation (and there was none) why the situation had changed, I reject the wife’s suggestion that the property has increased in value and that it ought to be valued again. Apart from delaying the trial which would be prejudicial to the husband, he paying his own costs, the wife did not produce any evidence to indicate that the $295,000 previously obtained was incorrect. It is important to note that B Street is unencumbered because it was acquired from the cash in the bank.

The husband’s savings

The husband provided updated details as to his savings. There is just over $430,000 in those accounts. As may be understood, as the husband has no source of support other than the capital, the figures have altered slightly by a reduction since earlier in 2016.
Out of the proceeds of the husband’s account which was in existence at the time of separation, the sum of $70,000 was also paid to the wife by way of a partial property settlement. No explanation has been given as to what has happened to that fund and as I have no confidence in the wife’s evidence, I am not sure what she now has. I reject her evidence that she has no money left.

Other known assets

The parties also included in their respective outlines in February 2016 such property as furniture and cars. It was common ground that there was no value agreed and the Court is not expected to guess. I propose to ignore those items on the basis that each party has a car and that was the situation around the time of separation. There is no basis to alter the legal ownership of those although it is important that the wife’s car be transferred into her name.

The assets

I find the assets to be divided are:
B Street  $295,000
The husband’s cash  436,000
The husband’s pre-paid legal fees  35,000
The Mr G loan  27,000
Sub total  $793,000

Superannuation

The wife has superannuation of approximately $35,000 and the husband did not seek any alteration of that interest. Whilst the Court still has power to alter such an interest if it considers it just and equitable to do so, my view is that it would not appropriate in this particular case because there is no benefit for the husband in superannuation nor has any approach been made to the trustee of the wife’s fund for a splitting order. In her lawyer-drawn outline, the wife proposed that the superannuation should be equalised by way of a superannuation split. In my view that would not be just and equitable to do that in circumstances where the husband does not seek such an order and indeed, I suspect neither does the wife notwithstanding what was written in her outline of case. The wife is a long way from retirement. She is 51 years of age and in those circumstances, adding her superannuation to the other assets is not appropriate because they are of an entirely different character. The husband will apparently not be in employment in the foreseeable future and as such, a split in his favour from the wife’s superannuation would be of limited value where it is not foreseeable that he could add to any such split sum. The wife has the capacity to work whereas the husband does not.
The husband needs support now bearing in mind I accept that he has little chance of government benefits in the foreseeable future.

Section 79(4) assessment

It is important to recognise that the contributions that each party makes to a relationship also includes a non-financial contribution. In this particular case, the husband’s non-financial contribution relates predominantly to the care of the children but both fulfilled a variety of non-financial roles during the marriage. The wife conceded that she worked two jobs after the sale of the business premises and whilst she initially maintained that she assisted with the children, she conceded that was limited. She did not challenge the husband’s role as a parent and homemaker. She did say that there were times after work when she bought food but that does not sit comfortably with the fact that she could not show the source of those funds.
I accept that the husband’s role in the household was greater than that of the wife until separation and nothing in the wife’s evidence disputes that.
I have already mentioned the wife’s dealings with Centrelink earlier. It would seem from the records that the husband obtained that the wife was receiving approximately $1067 per month between 2008 and January 2011 when it as reduced to $776 per month for approximately six months and it then was increased again to $1000 per month. In addition to what seems to have been monthly payments, there were lump sum payments also received at various times. The husband estimated that the wife would have received in excess of $102,000 over a space of six years. I accept his evidence that he knew nothing about those matters. From the husband’s bank account, $14,788 was paid by way of refund to Centrelink.
The husband produced a list of large cash withdrawals over a space of six years which includes the period prior to separation. One might expect that the more modest sums could be explained by the wife’s assertion that she was buying food and clothing as she said but that would not account for such withdrawals as $28,800 in 2009 and $9500 in 2010. There was a withdrawal of $12,000 in August 2012 and $7000 in 2013. That particular account which does not seem to have been the account into which her wages were paid was ultimately closed in December 2014 with a zero balance. As I have also indicated earlier, large sums were taken in 2013 from the term deposit. The husband was able to ascertain from the banks the details of telegraphic transfers of money sent to Country A. On his evidence, which the wife did not dispute, $190,000 was sent to Country A during the marriage. It was the husband’s case that the wife had purchased properties in Country A as well as provided money to her sister to renovate a property. The husband was able to show the details of the property that he had attended in Country A but he was unable to obtain valuations of those properties because of his lack of proprietorship there.
In 2010, the husband’s father passed away and as a consequence, the husband received $151,192 from the estate. That too went into the husband’s account. Some four years earlier in 2006, he inherited $90,000 from his mother’s estate together with various shares which had a modest value. The money from his mother’s estate went into the capital account. The husband has to be given credit for the fact that his inheritance monies were used to support both families up until separation and including thereafter. The wife probed the husband in cross-examination in a minimal way about the fact that she had assisted her late mother in law but the husband rejected any particular concept that I could identify as a significant contribution by the wife. I accept that.
The wife too received an interest in a property in Country A from her mother but I know little about it. When the hearing began, the wife wanted to rely upon an affidavit that she had drawn herself only days before attached to which were various purported valuations of properties in Country A to which translation had been attached. As the valuation issue and the ownership of property in Country A had been an issue for a long time during which the wife had been represented and had resisted the husband’s requests for co-operation concerning valuation, the husband objected to the Court permitting that evidence to be used. The wife withdrew the request to rely upon it. As such, I have no idea what property the wife legally owns in Country A and indeed what values I could apply to that property.

Child support

Subsequent to separation, the wife has paid $4016 in child support in 2½ years. That works out at about $30 per week. Whilst I accept that the wife’s income has been modest, if not low, she amassed significant capital which could have also been used to support the children. I have already indicated the holiday to the United States of America and the payment of legal fees. That is important because again, the capital sum originating from the sale of the business premises has been what has been used by the husband to support himself and the children.
Similarly, subsequent to separation the children have been with the husband and since May 2015 at least, solely in his care. Nothing in the evidence suggested any likely change in that situation. The care of the children is a significant contribution by the husband both before and after separation and one which is much greater than that made by the wife. To the extent that the wife did things otherwise than as described by the husband, in respect of the children, the evidence did not support a conclusion that her role was equivalent to or greater than that of the husband. Her complete absence from the children’s lives since May 2015 for whatever reason, indicates that the burden of the care of the children has fallen to the husband.
I am satisfied that the contributions by the husband are overwhelming greater than the wife. His initial contribution gave the parties a huge start in life that ultimately ended in the sale of the business premises. The parties would not have had that benefit had it not been for the initial savings. The inheritance is significant in this case because it was a large sum of money in both cases in the context of the current assets. All of that money went towards the support of the family which means that otherwise, the capital sum upon which the husband was living would have been less.
There is no doubt that both parties worked as a unit in respect of the business until it came to an end and fulfilled various tasks in respect of homemaker and parent roles. The wife’s role in that business culminated in the profit from the sale to which she must be seen to have made a contribution. It is important to recognise that, subsequent to separation, all of the physical support for the children has been as a result of the efforts of the husband. Similarly, the financial support for the children has been entirely from capital to which the wife has made an indirect contribution because of her role in the business premises. On any view, the contribution by the husband outweighs that of the wife and I would assess that as to 65 per cent to the husband and 35 per cent to the wife. In so doing, I have not taken into account the uncertain assets to which I earlier referred.

Section 75(2)

There is a justification in this particular case for a further adjustment in favour of the husband for a number of reasons. First, he has the children. Although they are approaching adulthood, there are still a number of years where he has the responsibilities for them and not just financially. I am satisfied on the evidence that the husband does not have the capacity to work. I am unclear as to the wife’s current employment status but it would seem that she has a dispute pending but there is nothing to suggest that she has no skills or training which would enable her to return to the workforce. The parties are of a similar age but the wife is more capable of obtaining employment. The husband has been out of the workforce for over a decade. Whilst the wife asserts that the husband is healthy, I am satisfied that he is unable to work as a result of his previous injuries but otherwise the parties enjoy good health.
The real issue in respect of s 75(2) lies in how the Court deals with the uncertain assets. It is open to speculation as to exactly what the wife has. She clearly has land in Country A and has not been forthcoming in respect of proper valuations. Valuations could not be undertaken by the husband because he did not have the legal authority to do so. The wife had had ample opportunity to obtain that information and failed to do so. No doubt her position was made more difficult to undertake those valuations in circumstances where she denied the ownership which I now accept she has. Significant sums of money have been spent by the wife not only in respect of her family as I have described but also on legal fees. Her legal fees substantially exceed those incurred by the husband and no explanation has been given as to why what was so. Furthermore, she received a $70,000 partial property settlement in the early stages of the litigation. On any view, the wife has had access to and expended more than $250,000 and has the land in Country A.
If the Court assumes that the wife has unaccounted for or given her family a large sum of money, it cannot be ignored. To give the wife 35 per cent of the known assets on top of what she already has, or had, would not be just and equitable to the husband.
It is an imprecise science but if for example $250,000 was added to the known assets described above, the Court would be dividing something just over $1 million. It may be higher depending upon the value of the Country A land.
Because of the obligations of the husband to support the children, the slowly reducing capital which will no doubt be whittled away further, the lack of child support from the wife, the wife’s better employability than that of the husband and ultimately, the uncertainty about what she has, in my view there is a justification for a further adjustment of 10 per cent in favour of the husband. That would mean that on a view of both a known and a notional list of assets, the husband should have 75 per cent and the wife 25 per cent. Twenty five per cent of that total would leave the wife with effectively what she has or had and the husband with what he currently has. If such an order was made, albeit the wife purported to say that she had nothing, she is debt free, has an earning capacity, has land in Country A and potentially the unexplained money. For his part, the husband simply has the capital sum and the unencumbered home. The unencumbered home is clearly a modest value and the capital sum will run out in due course. Having regard to all of those factors, it is just and equitable not to make any adjustment of the husband’s assets at all in favour of the wife.

I certify that the preceding Ninety Four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 19 September 2016.

Associate:

Date: 19 September 2016

[2016] FamCA 790

19 September 2016

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