KOSTAS & KOSTAS

[2018] FamCA 246

FAMILY COURT OF AUSTRALIA

KOSTAS & KOSTAS [2018] FamCA 246

FAMILY LAW – PROPERTY – Adjustment of property interests after a long marriage – Where the husband has failed to make disclosure of material matters – Where it is not possible to quantify the amount that the husband has received or spent – Where the husband has been largely non-compliant with orders – Where there is no utility in making orders for the wife to retain the Country D property – Where husband will retain the property in Country D and will be given the opportunity to purchase the wife’s interest in the former matrimonial home – Where the former matrimonial home will be sold should the husband not comply with the order.

FAMILY LAW – DISQUALIFICATION – Where an application was made by the husband for the Judge to be disqualified – Where the application was made at the conclusion of the case – Where the basis for the apprehended bias was a decision to reject a late filed affidavit and not to allow the husband’s evidence to be re-opened – Where the Court is not satisfied that a fair-minded lay observer would reasonably apprehend any bias – Application dismissed.

Family Law Act 1975 (Cth) ss 75(2), 79(2), 79(4)

Ebner v Official Trustee in Bankrupcy (2000) 205 CLR 337
Johnson v Johnson (2000) 201 CLR 488
Kennon v Kennon (1997) FLC 92-757
Strahan & Strahan (Disqualification) (2009) FLC 93-414

APPLICANT: Ms Kostas

RESPONDENT: Mr Kostas

FILE NUMBER: PAC 971 of 2015

DATE DELIVERED: 18 April 2018

PLACE DELIVERED: Sydney

PLACE HEARD: Parramatta

JUDGMENT OF: Rees J

HEARING DATE: 28 and 29 March 2018

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Z Lawyers

COUNSEL FOR THE RESPONDENT: Ms W

SOLICITOR FOR THE RESPONDENT: S Lawyers

Orders

1. That on or before 4.00 pm on 15 May 2018, the husband pay to the wife, as directed by her, the sum of $460,000.

2. Simultaneously with Order 1, the husband and wife shall do all acts and things necessary to transfer the wife’s interest in the property at B Street, Suburb C to the husband.

3. That in the event that the husband has not paid the sum in Order 1 by the due date, then the wife is appointed the Trustee for Sale of the Suburb C property to sell that property and retain the whole of the net proceeds of sale.

4. That in order to facilitate the sale of the Suburb C property, the husband shall vacate the property, removing all of his belongings, by not later than 4.00 pm on 18 May 2018.

5. That any funds held by the solicitor for the wife, remaining from the sum of $8,187.58 paid into the trust account of Z Lawyers on 5 April 2018, shall be applied towards the discharge of the mortgage over Suburb C.

6. That the wife sign all documents tendered to her by the husband to cause her interest in the two apartments described …, City F, Country D to be transferred to the husband at the expense of the husband.

7. That otherwise than as provided in these orders, each party shall be solely entitled to such items of personal property as are in his or her possession at the date of these orders.  

Notation

1. That the Registrar be requested to forward a copy of these reasons to the Legal Services Commission in relation to the conduct of the husband’s solicitors and the Commission’s attention is drawn to paragraphs 32 to 38 of the reasons.

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 Kostas & Kostas 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 SYDNEY

FILE NUMBER: PAC 971 of 2015

Ms Kostas

Applicant

And

Mr Kostas

Respondent

REASONS FOR JUDGMENT

1. Ms Kostas (“the wife”) who was born in Australia and Mr Kostas (“the husband”) who was born in Country D in Europe, married in Country D and commenced cohabitation in 1989.

2. They have two, now adult, children.

3. They separated under the one roof on 13 December 2013 and physically separated on 22 December 2014 when the wife left the home where the husband and the children remained.

4. At the time they married, the wife had a superannuation fund which she estimated to be worth $5,500 and savings which she asserted were $40,000. The husband disputes that assertion and says that the wife had $20,000. The husband did not dispute her evidence that she paid for their wedding and for their expenses in Country D where they remained after their wedding for an extended holiday. After paying those expenses, the wife still had $20,000 which she later contributed to the purchase of a property in Country D. It is likely that the wife had $40,000.

5. The husband had savings, he asserts, of $50,000. The wife disputes that assertion. In cross-examination she gave evidence that the husband had accumulated $50,000 by 1997 but that he had a lesser amount when they married.

6. The husband had inherited a property from his grandfather in G Town.

7. In November 1989, the wife returned to Australia to her employment and the husband remained in Country D. The wife gave the husband her power of attorney to act on her behalf in Country D.

8. In February 1990, while the husband was still in Country D, the parties purchased a property in City F for about AU $65,000 (“the City F property”). The wife contributed $20,000 from her pre-marriage savings. The husband deposed that he contributed $50,000 towards the purchase. Since there was no evidence of any borrowing to purchase the property, I accept that the husband contributed $50,000 and that those funds were saved before the marriage.

9. The husband conducted the purchase and the City F property was registered in his name as to 80 per cent and the wife’s name as to 20 per cent. I accept that this was done without the knowledge of the wife. The husband’s justification for that position was that he had contributed 80 per cent of the purchase money and the wife had contributed 20 per cent. On his own evidence, that is not correct. The wife’s contribution was 31 per cent.

10. The husband remained in Country D and renovated the property. There is a dispute as to the extent of the renovations. The wife said that the property was cleaned and painted and tenanted. The husband asserted, but did not prove, that the renovations were more extensive. However, since there was no evidence that there was any more money to fund renovations, it is likely that the wife’s evidence is correct.

11. The husband returned to Australia in about August 1990. He did not enter full time employment but did various casual jobs.

12. The husband travelled to Country D each year and collected the rents that had been paid. The wife deposed that on six of these occasions, the husband stayed in Country D for longer than three months. On other trips, he stayed for a month.

13. Their first child was born in 1991 and their second child was born in 1993. While the children were small, the wife worked part time during the day and the husband cared for the children. He then worked casually in the evening when she was available to care for the children.

14. From 1995, the wife worked full time.

15. In 1997, they purchased their home at Suburb C for $130,000. The property is held by them as tenants in common with the husband holding a 60 per cent share and the wife holding a 40 per cent share. This was done at the husband’s insistence because he perceived that he had paid the greater contribution towards the deposit.

16. Between them, they had savings of $40,000. The husband sought to make much of the fact that he had $33,000 to contribute towards the purchase and the wife only had $7,000. However, since all their pre-marriage savings had been exhausted in the purchase of the City F property, any savings accumulated for the purchase of Suburb C were accumulated after the marriage and the disparity is not relevant. All of the funds contributed by each of them towards the purchase were joint funds. It is likely that the wife had less savings because, as she deposed, she paid the majority of their expenses.

17. After the settlement of the purchase, the husband required the wife to pay the whole of the mortgage payments because she had made a smaller contribution to the deposit. She continued to pay the whole of the mortgage payments until 2000.

18. In 2000, the husband began working and the parties began to share their expenses more equitably.

19. The parties were approached by a developer with a plan to demolish the City F property and build units. They negotiated an arrangement whereby they received two units in the new development and they took possession of the units in 2009.

20. There is a dispute about when the City F units were rented which cannot be resolved. It is, however, not disputed that when rent was received, it was retained by the husband. The circumstances of the rental of the City F properties will be discussed in detail later in these reasons.

21. In 2011, the husband suffered an injury while working.

22. In December 2013 the parties separated although they remained living in Suburb C. The wife asserted that they separated because of violence towards her by the husband. He denied that assertion.

23. In 2014, the husband received a compensation payment in relation to his injury. The net amount he received was $127,689.

24. The wife finally left the home in December 2014. She lived with friends for some time. The husband remained in Suburb C. The mortgage had been discharged and the husband received the benefit of the occupation of their jointly owned property. Between March and May 2015, the husband travelled to Country D and the wife moved back into Suburb C. She then rented a small flat where she remains living.

25. These proceedings were commenced by the wife in March 2015.

26. In October 2015, the husband commenced proceedings in Country D seeking divorce and an order that the City F units be held by him as to 80 per cent and by the wife as to 20 per cent.

27. In May 2016, the wife withdrew $30,000 from her superannuation fund to pay for surgery.

28. On 16 May 2016, orders were made restraining the husband from dealing with Suburb C, the City F units or the house in G Town. The husband was restrained from taking any further steps in the proceedings commenced by him in Country D. The husband was represented when those orders were made.

29. In cross-examination, the husband gave evidence that he had pursued the Country D proceedings which were heard in May 2017 and that he is awaiting judgment.

30. On 20 July 2016, further orders were made. Because of the significance of those orders they are set out in full below:

    BY CONSENT AND PENDING FURTHER ORDER IT IS ORDERED THAT:

    1.        Within fourteen (14) days the husband shall:

    i)        Provide full and frank disclosure as to:

    (i)All bank accounts held by or for him in [Country D] (including the Bank of [Country D]);

    (ii)The claims made by the husband as to works on the properties in [Country D]; and

    (iii)The balance of the funds received from the husband’s compensation payment in 2014.

    2.The wife shall provide to the husband a list of outstanding disclosure items and documents within seven (7) days and the husband shall provide that disclosure within seven (7) days of the receipt of the wife’s list.

    3.The husband shall provide to the wife any necessary letter of authority to [Mr H] ([Country D] Solicitor) required such that the [Country D] solicitor provides as directed by the wife:

    (i)All bank account records for monies received and paid by the husband to the [Country D] solicitor or by the [Country D] solicitor as controlled monies on the husband’s behalf;

    (ii)All directions from the husband for making of payments by the [Country D] solicitors;

    (iii)     All tax returns prepared of or filed for the husband; and

    (iv)All rental receipts issued for properties of the husband and wife in [Country D].

    4.The husband shall provide all of the items required in order 8 of the wife’s Application in compliance with order 8.

    5.That the Application may be restored to the list upon the request of either party.

    6.The husband shall provide the wife a certificate of currency for insurance and other receipts for the [Suburb C] property to establish compliance with order of Registrar Bartlett of 2nd March 2016 requiring the husband to pay all

    (i)       Council rates;

    (ii)      Insurance; and

    (iii)     Water rates.

    7.The husband shall pay to the valuer (Mr J) half of the required valuation costs in accordance with the order of Registrar Bartlette on 2nd March 2016.

    NOTATION

    A.The intention of the parties by order 3 is for the wife’s solicitor to provide the wording of the authority to the husband’s solicitor as agreed by the parties.

    IT IS FURTHER ORDERED THAT:

    8.The matter is adjourned to Monday 26 September 2016 at 9:15am for directions hearing before the Registrar for the Registrar to consider the parties’ compliance with orders made today and whether the matter is then appropriate for referral to the Family Law Settlement Service or requires the matter to be relisted for further judicial Case Management hearing.

    9.The parties are granted leave to issue such subpoena as they consider relevant to the issues before the Court with such subpoena to be returnable by no later than Wednesday 14 September 2016.

    10.      Costs to date of and incidental to this application be reserved.

    IT IS NOTED THAT:

    B.In relation to the Wife she asserts some incapacity for employment and other adverse health circumstances whereby she has been seeing a treating psychologist and seeks to qualify an expert psychiatrist to give appropriate evidence in these proceedings.

    C.In relation to the Husband he has recently received a Worker’s Compensation verdict and documents relating to that claim are presently before the Court by way of subpoena although as yet the Husband’s now solicitor has not had the opportunity of inspecting those documents.

    D.It is proposed that the parties will reach agreement in relation to a Single Expert psychiatrist as to the issues raised by the Wife and to this end it is proposed that the Wife will nominate three psychiatrists, one of whom will be [Dr K] clinical psychiatrist, and upon such nomination the Husband shall elect one of such practitioners to be a Single Expert for the preparation of an appropriate report to the Court and in respect of that report the Wife should meet the costs of same in the first instance with the ultimate costs of the report being reserved to final trial or agreement.

31. The wife brought proceedings for an order requiring the sale of Suburb C and the payment to her of an amount by way of interim property settlement. That application was heard and judgment was delivered on 16 June 2017. Orders were made for the sale of Suburb C and the payment of $150,000 to the wife. The balance was to be held pending determination of the substantive proceedings.

32. The husband appealed against those orders. On 31 January 2018, the Full Court made the following orders:

    UPON RECEIVING FURTHER EVIDENCE IN THE APPEAL AND ON THE JOINT APPLICATION OF THE PARTIES IT IS ORDERED:

    (1)      The appeal is allowed.

    (2)Order 1 of the orders of Justice Foster made 16 June 2017 is set aside.

    BY CONSENT IT IS ORDERED:

    (3)The husband shall pay to the wife, by way of interim property settlement:

    (a)$150,000 within 35 days from the date of these Orders; and

    (b)Costs of and incidental to these proceedings (Appeal) as agreed or as assessed.

    (4)For the purposes of giving effect to Order 3(a), the wife will simultaneous with the payment of $150,000 to the wife, transfer to the husband, by provision of a signed transfer, title in the matrimonial property situated at [B Street, Suburb C] NSW … (“The Property”).

    IN THE EVENT OF THE HUSBAND’S DEFAULT:

    (5)In the event of the husband’s non-compliance with Order 3(a), [Mr L] of [M Lawyers] is appointed as trustee for sale of The Property and in the event he ceases to act the wife is appointed as trustee for sale.

    (6)Orders (2) through to (6) of the Honourable Justice Foster J of 16 June 2017 continue operative from the date of non-compliance from the husband, being:

    2.Upon appointment The Property vest in the said Trustee for Sale and be sold by the trustee for sale at the best price reasonably obtainable by public auction within three months from this date.

    3.The husband pay as they fall due and payable all outgoings on The Property including council and water rates and insurances.

    4.The husband pending sale maintain The Property in good order and condition having regard to the condition of The Property when inspected by the selling agent appointed by the Trustee for Sale.

    5.Upon sale of The Property the proceeds of sale be paid in the following order and priority:

    (a)In payment of agent’s commission and selling costs;

    (b)      In payment of legal costs of sale;

    (c)      In payment of any contract adjustments;

    (d)In payment of $150,000.00 to the wife or as she may otherwise direct the Trustee in writing;

    (e)In payment of the balance to an interest bearing account in the name of the Trustee as Trustee for both parties pending further order.  

    6.The Trustee have liberty to apply on short notice for directions or further or other orders.

    IN THE EVENT OF THE HUSBAND’S COMPLIANCE:

    (7)      The husband shall be restrained as follows:

    (a)From selling, transferring, assigning, and further encumbering The Property;

    (b)      From borrowing any amount in excess of $150,000; and

    (c)From establishing a credit facility in excess of $150,000 which permits draw down on any further sum.

    (8)      The husband shall provide to the wife:

    (a)Copies of all loan applications, statements, contracts and other document within 7 days of receiving them or within 7 days of receiving a request from the wife such that the wife can determine the husband’s compliance with Order 7; and

    (b)Copies of all mortgage statements on a monthly basis to verify compliance with these Orders.

    (9)The husband shall pay all mortgage payments, fees and charges payable under any mortgage on The Property as they fall due.

    (10)The wife shall be permitted to lodge a caveat on The Property at the cost of the husband noting these Orders as creating the wife’s interest in the property and as to the restraints.

    (11)That in the event that the husband fails to execute any deed or instrument, a registrar of the court shall be appointed pursuant to section 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of the husband and do all acts and things necessary to give validity to the operation of the deed or instrument.

    (12)In the event that The Property is sold pursuant to final orders of this Honourable Court, the husband shall pay all exit fees from the mortgagee or any other party by reason of such discharge of mortgage.

    (13)In the event of the husband’s non-compliance with Order 9 then the house is to be sold in accordance with Orders 5 and 11 and Orders 2 to 6 of the Honourable Justice Foster  dated 16 June 2017.

    FURTHER ORDERS:

    (14)     The husband’s solicitor will provide the wife’s solicitor:

    (a)      Transfer documents; and

    (b)      Discharge authority

    within seven (7) days of these orders and the wife’s solicitor will return the said documents to the husband’s solicitor within a further seven (7) days.

    (15)Order 7 of the Honourable Justice Foster dated 16 June 2017 shall be extended to any cost application at final hearing.

    NOTATION:

    (A)The husband has represented that he intends making a loan application to facilitate the satisfaction of the above Order.

1. No caveat was lodged by the wife to give notice of her interest as was provided in the orders of the Full Court. Had a caveat been lodged, the husband could not have raised the excess funds on the mortgage as he did.

2. In about January or February 2018, the husband mortgaged Suburb C to a private lender for $182,000. The term of the mortgage was 60 days and interest for 60 days was deducted from the principle advanced. After 60 days, the interest rate payable increased to 19.95 per cent. The husband’s solicitor witnessed his signature on the mortgage.

3. A portion of the funds, in the sum of $11,000, was paid to the husband’s solicitor on account of legal costs. The receipt of the solicitor for that payment on 14 February 2018 was tendered.

4. In cross-examination, the husband gave evidence that he was introduced to the mortgagee by his solicitor.

5. The next interest payment, which was due on 31 March 2018, was in the sum of $1,812.42. The husband made that payment directly to the mortgagee on 29 March 2018.

6. Upon hearing that evidence, I put the legal representatives for the husband on notice that, in submissions, counsel for the husband should address the issue of referral of the husband’s solicitor to the Legal Services Commissioner. On the evidence of the husband there is a prima facie case of misconduct on the part of the husband’s solicitor and the Registrar will be requested to forward a copy of these reasons to the Legal Services Commissioner.

7. The sum of $150,000 was paid to the wife and is held in her solicitor’s trust account.

8. The matter was listed for hearing commencing on 28 March 2018.

9. The wife, at hearing, sought orders which would have the effect of the husband retaining all of the property in Country D, the sale of Suburb C and the payment of the net proceeds of sale to her.

10. The husband sought orders that he retain 80 per cent of the City F units and the wife retain 20 per cent. It was his position that the property on G Town should be excluded from any consideration. He wished to purchase the interest of the wife in Suburb C and to pay her 40 per cent of its value.

11. At the commencement of the hearing the wife’s solicitor sought to file and rely on an affidavit of Mr R sworn the previous day. The affidavit did no more than annexe the Mortgage which had been executed by the husband and witnessed by his solicitor on 24 January 2018. Since the document was admissible without the affidavit, the affidavit was accepted.

12. Counsel for the husband then sought to file in court an affidavit setting out further evidence of the husband. It was not clear that the document had been provided to the solicitor for the wife who, in any event, was not in a position to meet it. The affidavit was not permitted to be filed.

13. It then emerged that there was a dispute about the report of the single expert valuer in Country D. That issue will be the subject of consideration later in these reasons.

14. At the end of her submissions, counsel for the husband made an application that I disqualify myself from further dealing with the matter. That application was refused and I indicated that reasons would be provided.

15. At the conclusion of the hearing, when it emerged that the mortgage over Suburb C was due to accrue penalty interest at the rate of 19.95 per cent in a few days, the wife made an application for the immediate sale of the property. On behalf of the wife, it was submitted that there was no evidence in the husband’s case that suggested he would be able to meet the mortgage payments and any delay in the sale would do no more than diminish the equity in the property. After hearing submissions, an order was made to the effect that, provided the husband lodged $10,000 in the trust account of the wife’s solicitor within seven days, to be applied to the interest payments on the mortgage, the property would not be sold.

16. That money was paid. A sum of $1,812.42 was paid directly to the mortgagee and the remaining sum of $8,187.58 was paid to the wife’s solicitors’ trust account. I consider these payments to be compliant with the orders made at the conclusion of the hearing.    

DISQUALIFICATION APPLICATION

1. Counsel for the husband made an application at the conclusion of submissions that I disqualify myself for reason of apprehended bias.

2. The application appeared to be based solely on my refusal to allow the husband to rely on his updated affidavit which he sought to file and serve on the morning of the first day of the hearing. The wife objected to the affidavit and it was rejected on the basis that it was filed out of time and the wife’s solicitors had not been given sufficient opportunity to respond to it. It was therefore incumbent on counsel to seek leave to adduce any further evidence of the husband orally in examination in chief. Counsel for the husband made no such application at the appropriate time but rather, during her submissions, sought to adduce further evidence, by which time the evidence had closed.  I did not permit the husband to re-open his case at that time.     

3. The concept of apprehended bias was explained by the High Court in Ebner v Official Trustee in Bankrupcy (2000) 205 CLR 337 at 345:

   The apprehension of bias principle may be thought to find its justification in the importance of the basic principle, that the tribunal be independent and impartial. So important is the principle that even the appearance of departure from it is prohibited lest the integrity of the judicial system be undermined. There are, however, some other aspects of the apprehension of bias principle which should be recognised. Deciding whether a judicial officer (or juror) might not bring an impartial mind to the resolution of a question that has not been determined requires no prediction about how the judge or juror will in fact approach the matter. The question is one of possibility (real and not remote), not probability. Similarly, if the matter has already been decided, the test is one which requires no conclusion about what factors actually influenced the outcome. No attempt need be made to inquire into the actual thought processes of the judge or juror.

   The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. The bare assertion that a judge (or juror) has an "interest" in litigation, or an interest in a party to it, will be of no assistance until the nature of the interest, and the asserted connection with the possibility of departure from impartial decision making, is articulated. Only then can the reasonableness of the asserted apprehension of bias be assessed. [Emphasis added]

4. In Johnson v Johnson (2000) 201 CLR 488 at 492‑493, the plurality (Gleeson CJ, Gaudron, McHugh, Gummow and Hayne JJ) set out the following:

   … It has been established by a series of decisions of this Court that the test to be applied in Australia in determining whether a judge is disqualified by reason of the appearance of bias (which, in the present case, was said to take the form of prejudgment) is whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide. [Emphasis added]

5. The Full Court in Strahan & Strahan (Disqualification) (2009) FLC 93-414 stated, at 83,690:

   It will be noted that the plurality in Johnson considered it unnecessary to undertake a detailed analysis of the principles relating to apprehended bias, preferring to rely on the test of “whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.” The plurality in Ebner articulated a two step process to be used in applying that test in individual cases. The first step is the identification of the matters said to give rise to the apprehended bias. The second step requires consideration of the “logical connection” between the matters identified and the possibility, real not remote, of a deviation from the course of deciding the case on its merits.

   In applying this two step process to particular cases it must be kept firmly in mind that judicial officers have a duty to sit and should not accede too readily to suggestions of appearance of bias.

6. Adopting the above principles, I do not consider that, on the basis of counsel’s submissions, a fair-minded lay observer might reasonably infer an apprehension of bias based on my decision to reject the husband’s affidavit which was filed out of time, or to allow him to re-open his case once the evidence had concluded.

THE ISSUES

1. From the narrative above, the following issues emerge:

   ·    The husband’s actions in breach of orders;

   ·    The husband’s non-disclosure;

   ·    The effect of the orders to be made in Country D on the husband’s application;

   ·    The valuation of the Country D assets;

   ·    The wife’s allegations of family violence.

The husband’s actions in breach of orders

1. The orders of the Full Court made in January 2018 restrained the husband from encumbering Suburb C by any amount in excess of $150,000. The husband mortgaged the property for $182,000.

2. In cross-examination, the husband said that he was aware of the order of the Full Court but that he needed the extra money.

3. He displayed no remorse or understanding of the serious nature of his breach of orders and it was clear that his attitude to any order made by the Court was that he would ignore it if it did not suit him.

4. It was also clear that he believed that his solicitor had assisted him in the breach by finding the lender and witnessing his signature on the mortgage. Some of the money was then paid to the solicitor.

5. The husband was also well aware of the order which was made restraining him from taking any further step in the proceedings in Country D.

6. In cross-examination, his explanation was that the properties were in Country D and he could not be prevented from pursuing his application in Country D.

7. Again, the husband made it clear that he was not influenced by the existence of the restraining order and had no compunction in breaching it.

8. There are no proceedings on foot to deal with the husband for what might be seen as a flagrant disregard of orders but the consequence of his actions is that it must be found that he will breach any order made by the Court that does not suit him.

9. This has particular significance when his application is that he be permitted to retain the Suburb C property and pay out the wife and, perhaps more significantly, that the wife retain 20 per cent of the City F units. The husband has never accounted to the wife for any share of the rent of those units and his protestations that he will do so in the future are hollow in light of his previous actions.  

The husband’s non-disclosure

1. There were four aspects of the husband’s evidence that constituted material non-disclosure. They were the failure to provide the following:

   ·    Documentary evidence of the money received by way of rent for the City F units;

   ·    Documentary evidence of money held in bank accounts in Country D;

   ·    Documentary evidence of money held in the trust account of the Country D solicitor who manages the City F units and collects the rents on behalf of the husband; and

   ·    Documentary evidence of the manner in which the proceeds of the husband’s compensation claim was dissipated.

2. The husband was on notice of the requirement that he provide this information by virtue of the orders made on 20 July 2016.

3. In cross-examination, the husband’s position was that it was up to the wife to contact the solicitor in Country D and get any information she was able to extract for herself. He did not consider that he had any obligation to obtain the information, despite being ordered to do so. The wife said that the Country D solicitor had ignored her request for information.

4. The husband had been in Country D only a week or so before the commencement of the trial and was thus in a position to obtain the information. The only documents which the husband provided were a copy of a passbook page for a Country D bank account and tax returns, in Country D, which were provided to the wife’s solicitors the day before the commencement of the trial.

5. The husband was well aware that the disposition of the Country D rents and the disposition of his compensation money were serious issues for trial. As far back as 12 November 2016, the solicitors for the wife wrote to the husband’s solicitors about the lack of response from the Country D solicitor to their requests for information.

6. The husband was cross-examined about the disposition of the compensation payment. He said that $108,000 had been transferred to Country D and spent on rectifying work on the City F units. When challenged, he did not provide any document to support that assertion.

7. The husband was also cross-examined about a withdrawal, on 9 September 2013, of $43,549 from his ANZ account. A letter had been written to his solicitors in March 2016 asking for information about this withdrawal but there was no reply. In cross-examination, the husband said that he now recalled that the $43,549 was part of his compensation money and had been sent to Country D. 

8. Thus the Court was not able to make any findings as to the money which has been received by the husband from the City F rents; the funds which might be held on his behalf by the Country D solicitor; the funds which might be held by him in bank accounts in Country D and the manner in which his compensation fund was spent, if it was spent at all.

The effect of the orders to be made in Country D on the husband’s application

1. The orders which the husband seeks in the Country D proceedings are that the property on  G Town be disregarded in any division of assets and that the Court declare that the parties hold the City F units by the wife as to 20 per cent and the husband as to 80 per cent.

2. Since the wife did not participate in the hearing in Country D, it is likely that those orders will be made.

3. The practical effect of such an order is that the wife will continue, as she has since separation, to receive no information about the City F units and the husband will continue, as he has since separation, to retain the whole of the rents.  Her proposed 20 per cent interest will be useless and of no value to her.

4. No order that is made in these proceedings will be enforceable in Country D and nothing that this Court can do will enable the wife to receive her proper entitlement to either the income of the City F units or a share of the sale proceeds.

5. The Court is therefore left with no alternative but to order that the husband retain the Country D properties.

The valuation of the Country D assets

1. At the commencement of the hearing, counsel for the husband told the Court that she wished to challenge the valuation of the single expert Mr J, in relation to the three Country D properties. The basis of the challenge was in relation to Mr J’s expertise.

2. Orders were made for the appointment of a single expert valuer for the Country D properties in October 2015. The orders provided for the solicitor for the wife to provide the names of three valuers in Country D and for the husband to choose one.

3. On 18 January 2016, three names were sent to the husband’s solicitor who was also provided with email addresses to enable enquiries to be made of the proposed valuers as to their qualifications and experience.

4. In January 2016, the Registrar noted that no agreement had been reached as to the appropriate valuer.

5. On 22 March 2016, a joint letter of instruction, signed by the solicitor for the husband and the solicitor for the wife, was forwarded to Mr J.

6. On 20 July 2016, orders were made requiring the husband to pay half of the costs of Mr J. No issue was then raised by the husband about the qualifications of Mr J.

7. Counsel for the husband was asked to provide any letter sent to the wife’s solicitors after 22 March 2016, giving notice that Mr J’s expertise was challenged but no such letter was provided.

8. I am satisfied that no such notice was given.

9. There was no application to call an adversarial expert.

10. Although no notice had been given, counsel for the husband was given leave to cross-examine Mr J by telephone. However, no arrangements were made for this to occur and therefore the valuation evidence was unchallenged.  

The wife’s allegations of family violence

1. The relevance of family violence allegations to the exercise of adjusting entitlements to property is that family violence perpetrated by one party on the other may have the effect of rendering the victim’s contributions more arduous, resulting in an adjustment of the contribution assessment in favour of the victim (See Kennon v Kennon (1997) FLC 92-757).

2. In the present case, the wife alleges a history of both physical violence and financial control.

3. The husband denies each and every one of her allegations.

4. I consider that the evidence of the manner in which the husband, on his own evidence, dealt with family finances is corroborative of the wife’s allegations of financial control. The husband caused the City F property to be registered in unequal shares because he perceived that their contributions were unequal. Even in that exercise, he favoured his own interests.

5. He caused the Suburb C property to be registered in tenancy in common in unequal shares because, again, he perceived, albeit wrongly, that he had made the greater contribution and then required the wife to make the mortgage payments until their contributions were “evened up”.

6. It is likely that the husband was financially controlling in other aspects of their life.

7. I also accept that the husband was physically violent towards the wife. I accept her evidence that the only reason she left the house where she did not have to pay rent and incurred the burden of rent was that she feared for her safety.

8. However, I do not accept that this case falls into that exceptional category of cases where it is appropriate to make any adjustment in favour of the wife. This decision is, in part, a consequence of the findings that I will make about the extent of the wife’s entitlement based on her contributions and the adjustments that I will make pursuant to s 75(2) of the Family Law Act 1975 (Cth) as are explained later in these reasons.

9. By virtue of those determinations, the wife will receive the whole of the available property in Australia.

THE ASSET POOL

1. In the course of the trial, the parties tendered an agreed balance sheet.

2. The matters in dispute on the balance sheet will be dealt with using the item numbers on the document.

Ownership		Description	Wife / de facto partner’s value	Husband / de facto partner’s value
ASSETS
1.	J	B Street Suburb C (valuation from T Real Estate)	$610,000.00	$610,000.00
2.	J	2 units in City F Our valuations from Mr J: Unit 1 City F 148,000 Euro Unit 2 City F 156,00 Euro 304,000 Euro which equates to $487,988.78 AUD	$487,988.78	$380,783.99 (235,800 EUROS)
3.	H	House / land at  G Town Country D (50,000 Euro)	$70,629.96	EST.$16,148.60 (10,000 EUROS)
4.	W	Household Content B Street Suburb C	$10,000.00	$700.00
5.	W	Motor vehicle 1	$8,000.00	$8,000.00
6.	H	Motor vehicle 2	$1,000.00	NIL
7.	W	Bank account M Bank …06	$0.00	$1,000.00
8.	H	Bank account ANZ …53	NK	NIL
9.	H	Money in Country D ($AUS, EU, U.S)	NK	NIL
10.	H	Account in Country D (…79)	$2,288.16	$2,288.16
11.	H	ANZ access advantage cheque (account …53)	NK	NIL
12.	H	ANZ platinum card (…45)	NK  NK	NIL
13.	H	ANZ Access Advantage Account, Account number …46	NK	NIL
14.	W	M Bank Retirement Plus Account	$0.46	NIL
15.	W	Funds held by Applicant’s solicitor in trust on Behalf of Ms N Kostas	$150,000.00	$150,000.00

Total $1,339,907.36    $1,168,920.75  

ADDBACKS
16.	H	Workers compensation payout	$108,035.00	NIL
17.	W	Monies withdrawn from superannuation	$24,000.00	$24,000.00
18.	H	Extra funds in excess of $150,000 loaned against Suburb C property	$32,000.00	$32,000.00
Total		$164,035.00	$56,000.00
LIABILITIES
19.	W	Overdraft ANZ account …46	$1,953.59		-
20.	W	Credit Card Coles …01	$1,505.08		-
21.	W	Credit Card CBA …34	$4,523.98		-
22.	W	M Bank Credit Card Account number …32	$10,633.04		-
23.	W	M Bank Vertigo Platinum, Account number …43	$6,009.53
24.	W	M Bank Personal Loan, Account Number …00	$41,026.62
25.	W	American Express Velocity Escape Card	$7,127.00
26.	W	O Credit …04	$8,901.74		-
27.	W	NAB Low Rate Account, Account Number …19	$5,623.20
28.	W	Westpac Low Rate Visa Card account number …25	$3,026.24
29.	W	ANZ Low Rate Credit Card	$6,072.96
30.	W	Personal Loan CBA …08	$18,378.89		-
31.	H	Loan secured against Suburb C property	$182,000.00		$182,000 (includes $150,000 paid to wife)
32.	W	Wife’s Legal Fees as at 27 March 2018	$288,806.38		$60,000
Total		$585,588.25		$ 242,000

SUPERANNUATION
Member		Name of Fund	Type of Interest	Wife / de facto partner’s value	Husband / de facto partner’s value
33.	W	P Super Member	accumulation	E $60,848	E $60,848
34.	H	Q Super Member	accumulation	$6,968.97	$6,968.97
Total		$67,816.97	$67,816.97

Item 2 – the City F units

1. The value proposed by Mr J will be adopted. There was no alternate valuation in the husband’s case.

Item 3 – house on  G Town

1. Mr J valued the property at 44,000 Euros. In the balance sheet extracted above the wife has attributed a value of 50,000 Euros to this property and calculated the Australian dollar equivalent based on that figure. No alternate evidence of value was provided in the husband’s case.

2. Although the husband contended for a different valuation in the balance sheet (10,000 Euros), his position in submissions, and in cross-examination, appeared to be that the property on  G Town should not be included as an asset. There was no authority given for that proposition.

3. It is clear that the Court is required to ascertain and value all of the assets of the marriage and then to consider what contributions have been made towards the acquisition, conservation and improvement of those assets.

4. The husband had inherited the property before the marriage. The wife does not claim to have made any contributions towards it.

5. It will be included as an asset of the husband on that basis.

Item 4 – household contents of Suburb C

1. No evidence of value was filed. The contents will be included at the value proposed by the husband as a concession against interest.

Item 6 – the husband’s Motor vehicle 2

1. There was no evidence of value. This item will be removed from the balance sheet.

Item 7 – the wife’s bank account

1. The husband provided no evidence to support his assertion. The item will be removed from the balance sheet.

Item 16 – the husband’s compensation payment

1. Despite being ordered to do so, the husband provided no evidence of the manner in which the fund has been used. It is not possible to ascertain whether the funds still exist. If they exist, then they are probably in Country D. The husband’s receipt of that fund will be taken into account as a factor when considering any adjustment pursuant to s 75(2).

Item 17 – money withdrawn by the wife from superannuation

1. The husband seeks to add back these funds.

2. There is no dispute that the funds were used by the wife to pay for surgery after separation.  There was no assertion that the surgery was unnecessary or merely cosmetic. The procedure was recommended by her treating specialist.

3. No submissions were made in relation to this issue.

4. The evidence does not establish any basis on which the money should be either added back or taken into account pursuant to s 75(2).

Item 18 – money secured against Suburb C contrary to orders of the Full Court

1. The husband borrowed $32,000 more than he was permitted to borrow and used the additional funds to pay legal costs, both to his present solicitor and to a former solicitor.

2. There is no likelihood that the funds can be recovered.

3. There is no utility in adding back the amount but it will be taken into account pursuant to s 75(2).

4. I therefore find the known assets of the parties to be as follows:

Ownership		Description	value
1.	J	B Street Suburb C (valuation from Meadow Real Estate)	$610,000.00
2.	J	2 units in City F Our valuations from Mr J: Unit 1 City F $148,000 Euro Unit 2 City F $156,00 Euro $304,000 Euro which equates to $487,988.78 AUD	$487,988.78
3.	H	House / land at  G Town Country D (50,000 Euro)	$70,629.96
4.	W	Household Content B Street Suburb C	$700
5.	W	Motor vehicle 1	$8,000.00
6.	H	Account in Country D (183/675350-79)	$2,288.16
W	Funds held by Applicant’s solicitor in trust on Behalf of Ms N Kostas	$150,000.00

Total $1,329,607

1. There is no dispute as to the existence of the liabilities. The wife seeks an order that the husband pay half of her liabilities incurred after separation which total $114,782.

2. I propose to take these liabilities into account when assessing the s 75(2) adjustment.

3. The liabilities were incurred solely by the wife although I accept they were incurred at a time when the husband was living rent free in their jointly owned home.

4. For the purpose of the division of the asset pool, the mortgage secured against Suburb C must be deducted from the value of the assets leaving assets with a net value of $1,147,607. The unencumbered value of Suburb C represents 46 per cent of the pool.

5. Of this pool, the husband has or will retain ascertainable assets to the value of $560,907. I am unable to determine what other money the husband may have, whether in Australia or in Country D. Thus the husband already has almost half of the ascertainable assets of the parties in his possession or control.

6. Each of the parties has superannuation. The wife has $60,848 and the husband has $6,969. 

SECTION 79(2)

1. Both parties ask the Court to make an order distributing their assets between them.

2. The husband asks the Court to distribute the assets in the same proportions as the legal titles are held. Thus, he would retain the house on G Town, 80 per cent of the City F units and 60 per cent of Suburb C.

3. The ownership of the City F units was arbitrarily determined by the husband. If, as I have found, the wife contributed $20,000 and the husband $50,000, then she contributed 31 per cent of the purchase price, not 20 per cent.

4. Similarly, the fact that the greater portion of the deposit monies for Suburb C were accumulated in the husband’s account is irrelevant when those funds had been generated during the marriage.

5. The legal title to the real estate does not represent the contributions made by the parties to its acquisition and it is just and equitable to make an adjustment.

CONTRIBUTIONS

1. At the commencement of the marriage the wife had $40,000 in savings and superannuation of $5,500.

2. The husband had $50,000 in savings and owned the property on G Town. There is no evidence of the value of the property at the time of the marriage.

3. In the course of their cohabitation they both worked and they both cared for their children.

4. I do not consider that the disparity in their contributions, taken over a marriage of some 24 years where two children were born, requires any adjustment and I assess the contributions as equal.

SECTION 75(2)

1. The husband is aged 62 years and the wife is aged 56 years.

2. They each have an earning capacity.

3. The wife earns $56,316 per annum. She has superannuation of $60,848.

4. The husband estimated that he earns between $400 and $500 per week, or between $20,000 and $26,000 per annum. However in cross-examination the husband said that if he were required to work longer hours in order to service a mortgage to buy out the wife’s interest in Suburb C, he could do so. Further, the husband receives the rent from the City F units, whatever that might be. It is not possible to determine what the husband’s earning capacity might be. He has superannuation of $6,969.

5. The wife has incurred significant debts for living expenses. Her expenses were exacerbated because she moved out of the unencumbered home and was required to pay rent.

6. After separation, the husband remained in the Suburb C property which was free of encumbrance and was not required to pay rent.

7. Each of the parties has incurred legal fees. The wife’s debt is far greater than that of the husband. However, each of them is entitled to instruct their legal representatives and the consequence of their decisions in that regard should not be visited on the other party.

8. Shortly after separation, the husband received a compensation payment of $127,689. He has not accounted for the disbursement of this amount except to say that about $108,000 was sent to Country D. He also said that $43,549 which he withdrew on 9 September 2013 was sent to Country D. Whether those amounts are cumulative or inclusive is not clear.

9. The husband has received the whole of the rent from the City F units at least since the parties separated in December 2013. Prior to separation, the wife received no portion of the Country D rents which remained in Country D and were used by the husband on his annual trips to Country D. It is not possible to determine how much the husband received. He was ordered to provide the relevant records and did not do so.

10. The husband may have money on deposit in Country D, either with his solicitor who collects the rent from the units or in bank accounts. Since he did not produce the relevant records, despite having been ordered to do so, it is not possible to determine how much may be held.

11. The husband borrowed $32,000 in excess of that which the Full Court permitted. That debt is secured against Suburb C and has the effect of reducing the equity and thus the wife’s ultimate entitlement.

12. Having regard to all of those matters, there should be a significant adjustment in favour of the wife.  

CONCLUSION

1. I am satisfied that the husband has the benefit of the Country D properties (which together account for 42 per cent of the net asset pool) in addition to the rents received from the properties which have not been disclosed.  It is not necessary to quantify the adjustment in favour of the wife except to say that she will receive the whole of the value of Suburb C and retain such assets as are in her possession.

2. The husband wishes to have the opportunity to purchase her interest. Although it is highly unlikely that he will be able to raise sufficient funds, I am conscious of the fact that the wife’s solicitor is holding funds to make the interest payments on the mortgage for at least four months and he will be given the opportunity to raise the necessary funds.

3. The wife has already received $150,000 by way of partial property settlement. Provided that he is able to do so within four weeks, the husband will be entitled to purchase the interest of the wife by paying her a further $460,000.

4. In default, the property will be sold, any money left in the trust account from the sum of $8,187.58 paid pursuant to my orders will be applied to the mortgage and the whole of the proceeds of sale will be paid to the wife.  

I certify that the preceding one hundred and forty-seven (147) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 18 April 2018.

Associate: 

Date:  18 April 2018