Kuay-Hoa & HOA & Ors
[2011] FamCA 1093
•16 September 2011
FAMILY COURT OF AUSTRALIA
| KUAY-HOA & HOA AND ORS | [2011] FamCA 1093 |
| FAMILY LAW – PROPERTY – Final property orders pursuant to section 79 of the Family Law Act 1975 (Cth) – Where two real properties are owned by the second respondent company – Where, post separation, the husband divested his shares and control of the second respondent company to the third and fourth respondents and it was alleged that the second respondent company held the property on trust for the third respondent – Where the property owned by the second respondent company is property of the parties to the marriage. FAMILY LAW – PROPERTY – Transaction to defeat claims – Where, post separation, the husband divested his shares and control of the second respondent company to the third and fourth respondents through a series of transactions – Where the wife sought that those transactions be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) – Where the Court set aside those transactions. FAMILY LAW – PROPERTY – Contributions – Where the husband was the primary breadwinner and the wife was the primary homemaker and carer of the two children – Where the wife alleged that the husband had subjected her to physical violence and abuse during the marriage and post separation – Where the wife sought an adjustment in her favour pursuant to Kennon & Kennon (1997) FLC 92-757 – Where the evidence did not establish that the wife had been subjected to a course of conduct which made her contributions significantly more arduous. FAMILY LAW – EVIDENCE – Rule in Jones v Dunkel (1959) 101 CLR 298 – Where the parties all failed to call a number of witnesses who would have reasonably been expected to have provided evidence favourable to their respective cases. FAMILY LAW – PRACTICE AND PROCEDURE – Where the third respondent did not take part in the proceedings. |
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) Legal Aid Act 1978 (Vic) Property Law Act 1958 (Vic) Statutory Declarations Act 1959 (Cth) |
| ANZ Banking Group v Harper and Ors (1988) FLC 91-938 Chorn & Hopkins (2004) FLC 93-204 D’Cruz & Pierce [2008] FamCA 819 Denning & Denning [2011] FamCA 160 G & G [2006] FamCA 877 Giller v Procopets (2008) 24 VR 1 Heath and Heath (No. 2) (1984) FLC 91-517 In the marriage of HJ and Kellner (1992) FLC 92-287 In the Marriage of Clauson (1995) FLC 92-595 In the Marriage of Ferraro (1993) FLC 92-335 In the Marriage of Lee Steere and Lee Steere (1985) FLC 91-626 JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474 Jones v Dunkel (1959) 101 CLR 298 Kennon & Kennon (1997) FLC 92-757 Kildea & Kildea [2007] FamCA 1524 Mallet and Mallet (1984) 156 CLR 605 Milankov and Milankov (2002) FLC 93-095 O’Donnell v Reichard [1975] VR 916 Oscar & Traynor [2008] FamCAFC 158 Payne v Parker (1976) 1 NSWLR 191 Pierce & D’Cruz [2010] FamCAFC 99 Prince & Prince (1984) FLC 91-508 Re: H & Ors (1996) 1 All ER 1 Robb and Robb (1995) FLC 92-555 Russell v Russell (1999) FLC 92-877 S & S [2003] FamCA 905 SCA v Pavlidou [2008] FamCA 1120 Spence & Spence; F Pty Ltd & Spence [2008] FamCA 263 Townsend and Townsend (1995) FLC 92-569 Transport Industries Insurance Co. Ltd. V. Longmuir [1997] 1 VR 125 Whitaker and Whitaker (1980) FLC 90-813 Zalewski & Zalewski (2005) FLC 93-241 |
| APPLICANT: | Ms Kuay-Hoa |
| RESPONDENT: | Mr Hoa |
| SECOND RESPONDENT: | B Pty Ltd |
| THIRD RESPONDENT: | Mr C |
| FOURTH RESPONDENT: | Ms D |
| FILE NUMBER: | MLC | 931 | of | 2007 |
| DATE DELIVERED: | 16 September 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
| HEARING DATE: | 11, 12 May; 29, 30, 31 July; 5 August; 1, 3, 4 September; 7, 8, 9, 10, 11 December 2009; 5 February; 2, 3, 4, 5 March 2010; 25 June 2010; 26 July 2011. |
| LAST WRITTEN SUBMISSIONS RECEIVED: | 2 July 2010 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms E Swart |
| SOLICITOR FOR THE APPLICANT: | KM Legal |
| COUNSEL FOR THE RESPONDENT: | In person |
| SOLICITOR FOR THE RESPONDENT: | In person |
| COUNSEL FOR THE SECOND RESPONDENT: | In person |
| SOLICITOR FOR THE SECOND RESPONDENT: | In person |
| COUNSEL FOR THE THIRD RESPONDENT: | No attendance |
| SOLICITOR FOR THE THIRD RESPONDENT: | No attendance |
| COUNSEL FOR THE FOURTH RESPONDENT: | In person |
| SOLICITOR FOR THE FOURTH RESPONDENT: | In person |
Orders
Setting aside of transactions
(1)Pursuant to s 106B of the Family Law Act 1975 (Cth), the transaction on 20 November 2006 lodged with ASIC on 13 December 2006 (whereby the husband transferred 100 shares in the Second Respondent, B Pty Ltd (“the Company”), to Mr C as recorded in ASIC Form …) be set aside.
(2)Pursuant to s 106B of the Family Law Act 1975 (Cth), the transaction on 22 September 2008 lodged with ASIC on 20 November 2008, whereby 16,250 new shares in the Company were created and issued to Ms D as recorded in ASIC Form 484, be set aside.
(3)Pursuant to s 106B of the Family Law Act 1975 (Cth), the Declaration of Trust document dated 21 May 2007 (annexure “PAX-2” of the affidavit of Ms D filed 4 May 2009) be set aside.
(4)Pursuant to s 106B of the Family Law Act 1975 (Cth), the Declaration of Trust document dated 30 January 2008 (annexure “PAX-3” of the affidavit of Ms D filed 4 May 2009) be set aside.
B Pty Ltd International Developments
(5)(a) The Respondents be restrained from issuing any further shares in the Company until compliance with these orders is complete.
(b) Subject to paragraph 9 of this Order, Ms D forthwith deliver to the husband all documents and things which she has in her possession, custody or control, in relation to the Company.
Wife’s Centrelink debt
(6)That the wife do all acts and things necessary to ascertain, in writing, the exact value of her Centrelink debt as at the first of either the date of settlement of:-
(a) F Street, Suburb K; or
(b) E Street, Suburb H –
and provide the husband and the solicitor who is to receive the proceeds of sale of the properties with any documentation that the wife receives which states this amount.
F Street, Suburb K
(7)The Respondents be and are hereby restrained from causing suffering or permitting any dealing with F Street, Suburb K otherwise than is contemplated by this Order.
(8)The husband forthwith do all acts and things necessary in his personal capacity and/or in his capacity as a director or officeholder or shareholder of the Company to transfer to the wife, on trust for sale, the property at F Street, Suburb K.
(9)Ms D forthwith deliver or cause to be delivered to the Court, the original Duplicate Certificate of Title Vol … Folio …, being the title of the property at F Street, Suburb K for collection by the wife’s solicitors, or such other solicitors as the husband and wife may agree act on the conveyance.
(10)The wife have sole conduct of the sale of the property at F Street, Suburb K and, absent a prior written agreement between the husband and wife, the solicitors for the wife be responsible for the conveyance.
(11)The wife forthwith sell the property at F Street, Suburb K, and apply the proceeds of sale as follows:-
(a) To pay the costs of advertising and sale, including the solicitor’s costs of acting in the trust transfer and sale of F Street, Suburb K;
(b) To pay any outstanding land tax and rates in relation to F Street, Suburb K;
(c) The sum of $401,000 to be paid to the solicitor with responsibility for the conveyancing, to be applied to any capital gains tax assessed against the Company, such sum to be paid as soon as practicable after provision of a notice of assessment, and in the meantime, to be invested in an interest bearing deposit on terms of not more than one month duration;
(d) If settlement of F Street, Suburb K, takes place before the settlement of E Street, Suburb H, the sum which is equal to the value of the wife’s Centrelink debt, as ascertained pursuant to paragraph 6 herewith, be paid to the solicitor with responsibility for the conveyancing and be paid as soon as practicable in satisfaction of the wife’s Centrelink debt so that ;
(e) To pay the balance into an interest bearing trust deposit to be disbursed in accordance with paragraph 17 herewith.
(12)The husband in his capacity as a director and/or shareholder and/or in his personal capacity forthwith do all acts and things necessary to cause an assessment for calculation of capital gains tax liability in respect of the property at F Street, Suburb K to issue and then forward same to the solicitor with responsibility for the conveyancing. In the event that the Company and/or husband desires to appeal or review the assessment, he provide the solicitor and the wife with copies of all documentation submitted by him for the purpose of the appeal, review or application for re-assessment, as the case may be.
(13)There be liberty to all parties to apply on short notice, specifically in relation to capital gains tax and the assessment and payment thereof.
E Street, Suburb H
(14)The husband forthwith do all things and sign all documents necessary to transfer to the wife on trust for sale the property at E Street, Suburb H.
(15)The wife have sole conduct of the sale of E Street, Suburb H and absent a prior written agreement between the husband and wife, the lawyers for the wife be responsible for the conveyance.
(16)The wife forthwith sell the property at E Street, Suburb H and apply the proceeds of sale as follows:-
(a) To pay the costs of advertising and sale, including the solicitor’s costs of acting in the trust transfer and sale of E Street, Suburb H;
(b) To pay any outstanding land tax and rates in relation to E Street, Suburb H;
(c) If settlement of E Street, Suburb H, takes place before the settlement of F Street, Suburb K, the sum which is equal to the value of the wife’s Centrelink debt, as ascertained pursuant to paragraph 6 herewith, be paid to the solicitor with responsibility for the conveyancing, and be paid as soon as practicable in satisfaction of the wife’s Centrelink debt forthwith, such payment to be made directly to Centrelink;
(d) To pay the balance into an interest bearing trust deposit, to be disbursed in accordance with paragraph 17 herewith, or any subsequent order.
Distribution of net proceeds of property sales
(17)The parties do all acts and things necessary to ensure that the net proceeds of the real property sales, held on trust in accordance with paragraph 11(e) hereof and paragraph 16(d) hereof, be paid out to the husband and the wife pursuant to the following formulas:
(a) The husband receive T x 0.52 – H
(b) The wife receive T x 0.48 – W
(c) Where:
| T = | the total property pool | = P + H + W |
| P = | the net proceeds of the property sales deposited into an interest bearing trust deposit in accordance with paragraph 11(e) and paragraph 16(d) herewith | |
| H = | the value of the H Street office ($135,000) and the relevant addbacks attributable to the husband ($353,658) | = $488,658 |
| W = | the relevant addbacks attributable to the wife | = $142,700 |
(18)That in the event the capital gains tax on the disposition of F Street, Suburb K is greater than the estimated capital gains tax ($401,000), the husband and wife be and are hereby responsible for and must pay any capital gains tax in excess of that amount, in the following proportions:
(a) 52 percent thereof by the husband;
(b) 48 percent thereof by the wife –
and the husband and wife pay those amounts to the solicitors responsible for the conveyancing for payment by those solicitors to the Australian Taxation Office on behalf of the Company.
(19)That in the event the capital gains tax on the disposition of F Street, Suburb K is less than the estimated capital gains tax ($401,000), the husband and wife be entitled to share the balance of funds in excess of $401,000, in the following proportions:
(a) 52 percent thereof to the husband;
(b) 48 percent thereof to the wife –
and the solicitors responsible for the conveyancing disburse the funds accordingly, subject to any further order of the Court.
Section 106A
(20)In the event that any party fails or neglects to sign documents to give effect to this Order, pursuant to s 106A of the Family Law Act 1975 (Cth), Registrar Riddiford and/or Registrar Sikiotis be and are hereby authorised to sign all documents necessary to facilitate the transfers and sale of properties pursuant to this Order. An affidavit by the wife’s solicitor, which states that the husband and/or Ms D and/or the wife have failed or neglected for a period of not less than seven (7) days to execute documents which are contemplated by this Order and which are required to be executed, shall be sufficient proof of default and may be accepted by the Registrar as the circumstance in which his/her authority to execute documents pursuant to this Order can be exercised.
Costs
(21)Any application for costs be filed and served within 21 days and be supported by a written submission of not more than 7 pages (13 point font and 1.5 spacing) and have annexed to it a copy of any account for costs and disbursements which has been rendered to the application for costs and such other memorandum or estimate of costs upon which that party will rely for the purpose of estimating what (if any) funds ought to be withheld from other parties in anticipation of a costs order being made against the order parties (or any of them).
(22)Any respondent to an application for costs file and serve any written submissions upon which he/she seeks to rely not more than 21 days after service upon them of the application and such submissions be of not more than 7 pages (13 point font and 1.5 spacing) and specify whether he/she wishes to make oral submissions in addition to written submissions and have annexed to it a copy of any account for costs and disbursements which has been rendered to the application for costs and such other memorandum or estimate of costs upon which that party will rely for the purpose of estimating what (if any) funds ought to be withheld from other parties in anticipation of a costs order being made against the order parties (or any of them).
(23)Any applicant for costs upon whom a response is served, file and serve any reply in writing, such reply to be of not more than 4 pages (13 point font and 1.5 spacing) and specify whether he/she wishes to make oral submissions in addition to written submissions and be filed within 14 days of receipt by him/her of the response.
(24)This matter be adjourned to 16 November 2011 at 9.00 am for a determination of what funds (if any) should be withheld from any of the parties pending a determination of any costs application against him/her.
Procedural
(25)All exhibits tendered in these proceedings be returned (to the party on whose behalf the exhibit was tendered) at the expiration of any appeal period or the determination of any appeal which is filed within time (whichever is the later).
(26)The Subpoenaed Documents Clerk of this Registry return any documents produced on subpoena to the person producing same within 14 days.
(27)There be liberty to apply in relation to implementation of this Order and any consequential orders.
IT IS NOTED that publication of this judgment under the pseudonym Kuay-Hoa & Hoa has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 931/2007
| Ms Kuay-Hoa |
Applicant
And
| Mr Hoa |
Respondent
| B Pty Ltd |
Second Respondent
| Mr C |
Third Respondent
| Ms D |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction and overview
1.These are the competing applications of the husband and the wife for orders to effect a final alteration of property interests between them. The issues affect one property in the name of the husband, two properties in the name of B Pty Ltd (“the company”) and a number of add backs.
2.The wife contends that assets in the name of the company are assets which are really owned by the husband and should be divided between the husband and herself in these proceedings for a final alteration of property interests.
3.The wife’s case is that, in the midst of a violent and tumultuous relationship with the husband and after separation, the husband entered into certain transactions or caused others to do so to defeat her claim, in whole or in part, in this proceeding. The transactions included divesting himself of the control and ownership of the company (and therefore its assets) in favour of his father and then Ms D.
4.The real properties which the wife seeks to include, but the husband and Ms D say must be excluded, are:-
a)F Street, Suburb K (“F Street”), which is vacant land owned by the company and valued at $1,850,000. It is unencumbered but for a Statutory Charge pursuant to the Land Tax Act 2005 (Vic).
b)H Street, Sydney (“H Street office”), which is a serviced office property which is registered in the name of the company and is under the management of J Management. It is valued at $135,000.[1]
[1] There was no evidence as to how the company financed the purchase of this property, or whether or not the property is subject to a mortgage: see Transcript of proceedings 11 May 2009, 49.
5.There is an apartment at E Street, Suburb H (“E Street apartment”), in which the husband currently resides and the family have previously lived. The husband is the sole registered proprietor of the property. It is said by the wife to be worth $550,000. There is a current mortgage registered in favour of National Australia Bank, on which there was owing $201,255.50 as at 11 October 2007.[2] During the hearing on 11 May 2009, the husband stated that the mortgage was $200,000.[3] The wife accepts that the debt is secured against the property but says that the mortgage over the property which was in existence during the marriage was reduced to nil or thereabouts on 17 November 2005 and closed on 5 May 2006. The wife’s case is that subsequently the husband unilaterally established the new mortgage facility with the National Australia Bank which was secured by the E Street apartment. It is said by the wife that the proceeds of this mortgage were used for his sole benefit and ought to be his sole responsibility. Otherwise the husband alleges that he owes $223,100 to Country I money lenders and that debt is secured against E Street apartment, rather than just owed by him as a personal liability. The wife says that there is no registered security in favour of the money lenders so that, even if the husband does owe money (which she does not admit), that debt is not an interest which takes precedence over anyone else including her. She says that even if the husband establishes that monies are owed to Country I money lenders (which she does not admit), those funds were raised and spent by the husband after separation for his own purposes and any such liability ought not be taken into account in such a way that it lessens the value of the husband’s equity in the property, for the purpose of it being divided in these proceedings.
[2] Exhibit “H3”.
[3] Transcript of proceedings 11 May 2009, 10.
6.There are a number of transactions which the wife says have resulted in a premature distribution of property to the husband and ought to be “added back” into the pool of divisible assets. These include:-
a)The balance of the proceeds of 2 F Street, Suburb K (“2 F Street”), which amount to $13,744.78. The property was owned by the husband and wife. It was sold on 14 November 2005 and $180,000 of the net proceeds of sale was paid in reduction of a National Australia Bank mortgage affecting the E Street apartment, which had the effect of reducing that mortgage over the property to “nil” or thereabouts.
b)Part of the proceeds of sale of R Street, Suburb M, New South Wales (“R Street”), being $72,742.84, received by the husband on 8 December 2008. The husband says that those funds have been spent and ought not be taken into account.
c)The proceeds of sale of husband’s Commonwealth Bank Shares in the sum of $57,172.
7.There is other relevant property of a less contentious nature which I will mention later in these reasons when I make findings about the property divisible between the parties.
8.The wife does not seek to disturb the security interest of National Australia Bank over the E Street apartment. If she succeeds in her argument that the property ought notionally to be regarded as unencumbered, she will only benefit if there is other property against which the benefits already received by the husband can be adjusted. Likewise, the money claimed as add-backs has been spent by the husband so any adjustment in favour of the wife in that regard will have to be against other property as well or it will be of no effect.[4]
[4] Milankov and Milankov (2002) FLC 93-095, 88,864 per Kay J (dissenting on this point), who stated that, “In my view, the law is well settled. The Court cannot make an order for the alternation of property interests that extends beyond the available assets of the parties (see Walters and Walters (1986) FLC 91-733, 10 Fam LR 1006; Evans and Public Trustee (1991) FLC 92-223, 14 Fam LR 646; and Grace v Grace (1998) FLC 92-792, 22 Fam LR 442.”
9.If the wife’s contention about 1 F Street and the H Street office is correct, she seeks that various transactions be set aside or declared to be void so that those properties will be accessible to her on a final adjustment of property interests between herself and the husband. If her contention fails, there may be very little, if anything, to divide between the husband and the wife.
10.The costs of these proceedings are a very significant factor as far as the wife is concerned. In the event that she applies for either or both of the other parties to pay her costs, that application must follow an opportunity by all parties to consider these reasons. The husband and Ms D may want to claim costs against the wife. Insofar as the recoverability of costs by litigants in person is concerned, the parties may to refer to the Full Court’s reasons for judgment in Oscar & Traynor [2008] FamCAFC 158, particularly paragraphs 73 to 92.
Conduct of the proceedings
11.The proceedings were dominated by the wife’s claim against the interests of the third parties being the company, the husband’s father and Ms D.
12.The proceedings occupied some 21 days of evidence over a regrettably long period followed by final submissions in writing. The hearing commenced on 11 May 2009. On 12 May 2009 the hearing was adjourned as the third respondent, the husband’s father, had not been served. The proceedings continued on 16 July and were heard somewhat sporadically, due to the lack of any significant gaps in my judicial docket and underestimations of the time necessary to complete the evidence, between July 2009 and early March 2010. The matter was listed for mention on 26 July 2011 when each party confirmed that very little had changed.
13.While I recognise the difficulties of appearing before this Court in person, the husband and fourth respondent’s cases were poorly prepared. The necessary breaks between hearing days provided the wife’s practitioners with opportunities to obtain further documentary evidence with which to disprove the evidence given by the husband or Ms D. This was to an extent which could not have occurred if their cross-examination had been uninterrupted or contained within one or two consecutive days. It served to prolong the proceedings but, I am satisfied, led to evidence being adduced upon which the court can rely in preference to the evidence of any of the participating parties.[5]
[5] An example of this is found in the husband’s evidence about the first letter from the wife’s then solicitors dated 8 December 2006, discussed later in these reasons at paragraphs 209 to 224.A further example is the husband’s evidence on 5 August and 1 September 2009, regarding the origin of the money used to acquire the most valuable assets in the case, 1 F Street. This is discussed later in these reasons at paragraphs 137 to 144.
14.I discuss my substantive findings about the credit of the parties in the course of these reasons for judgment, however, I note that the proceedings were protracted by the husband, wife and Ms D regularly changing their evidence (apparently on a whim), consistently using noncommittal or ambiguous language when answering questions put to them during cross-examination and stubbornly refusing to concede obvious inconsistencies in their evidence during the course of cross-examination.
15.The wife gave evidence and was cross examined over five days.[6] The husband gave evidence and was cross examined over 11 days.[7] Ms D gave evidence and was cross examined over five days.[8]
[6] For a total of 8 hours and 45 minutes over 12 May 2009; 30 and 31 July 2009 and 3 and 4 March 2010.
[7] For a total of 24 hours and 49 minutes over 12 May 2009; 5 August 2009; 1, 3 and 4 September 2009; 7, 8, 9, 10 and 11 December 2009 and 5 February 2010.
[8] For a total of 14 hours and 7 minutes over 12 May 2009; 5 February 2010 and 2, 4, and 5 March 2010.
16.Each of these parties appeared quite capable of understanding spoken and written English, however their written English skills were less sound than their oral skills. The court provided interpreters for all parties. Where possible there was consistency with the interpreters which were retained. All interpreters were Country Y/English interpreters. I observed that the interpreters were not utilised to their full capacity and they proved to be an additional factor which added to the length of the trial. The husband in particular became frustrated when relying on the interpreter to translate his answers during cross-examination for the Court. This was especially apparent when the evidence dealt with issues that required a command of technical English, such as the terminology used to describe corporate structures, transactions and share ownership. A number of times the husband interrupted or corrected his interpreter when the interpreter was trying to interpret the husband’s evidence. In many instances the husband bypassed his interpreter altogether and spoke to the Court in English, both at the bar table and in the witness box.
17.The husband often attempted to convey his position to the Court in English, but his accent was very difficult to understand and the court frequently required the husband to again make his statement in Country Y so that the interpreter could again make the statement in English. Much Court time was spent clarifying what the husband was trying to convey. This consumed much more time than it would have if the husband had used the interpreter, as he was supposed to do, without interruption and consistently. Late in the proceedings, the husband said that he spoke a dialect other than Country Y. On further enquiry, said he wanted to proceed with Country Y interpreters nonetheless.
18.As to the propensity of the husband to disregard and speak over the interpreter but to finally have to rely on interpretation to make himself understood, I estimate that the time which was taken to receive his evidence was prolonged in the vicinity of four or five times.
19.The wife and Ms D used their interpreters more consistently and without interruption with the consequence that, whilst their evidence was prolonged by interpretation, the prolongation was not of the same magnitude as the husband.
20.At the conclusion of the evidence, on 5 March 2010, I made directions for written submissions. The wife was required to file her submissions by 23 March 2010 and that the husband and second respondents file their submissions by 13 April 2010. On 13 April 2010, both the husband and second respondent filed their (very brief) written submissions. The wife did not file her written submissions within the timeframe set out in the orders. Accordingly, I listed the matter for mention on 25 June 2010.
21.On 25 June 2010, the wife sought an extension of time to enable her written submissions to be filed. I granted the wife this extension of time on the basis of evidence contained in an affidavit of the wife’s solicitor, Mr Rennick, which gave details of Counsel for the wife’s unavailability to prepare the submissions for personal reasons and the fact that Mr Knoff, the instructing solicitor throughout the trial, had ceased employment with that firm. At that hearing I delivered ex-tempore reasons which have been recorded at [2010] FamCA 1278. I incorporate those reasons into these reasons.
22.The wife’s written submissions were dated 29 June 2010 and filed on 2 July 2010. The husband and Ms D had stated on 25 June 2010 that they sought no opportunity to respond to whatever submissions the wife may file and they did not do so.
23.The matter was mentioned before me on 26 July 2011 for the purpose of ascertaining what, if anything, had changed in the financial circumstances of the participating parties. Nothing had changed. Each party made statements to the Court by agreement with each other party that reliance could be placed on the statements, as if on oath. When, in these reasons, I refer to something being “current”, I mean that it is based on information which is current as of 26 July 2011 notwithstanding that the bulk of the evidence was concluded much earlier.
24.I will deal with some of the history of the matter and explain how the proceedings were conducted without any direct participation by the third respondent who, according to the husband and Ms D, is the beneficial owner of 1 F Street and the H Street office.
Background of the parties, procedural fairness to the third respondent and other persons of interest
25.The husband and wife commenced living together when the husband migrated to Australia in 1994. The parties married in Melbourne in 1994. The marriage is now dissolved. The wife said that she and the husband separated in December 2002, although she also listed a number of other separation dates throughout the proceedings. The husband’s position in relation to the separation date was difficult to pin down. He said that he and the wife separated under one roof in December 2002 and physically separated on or around 15 June 2004, when the parties appeared in the state Magistrates’ Court in relation to the intervention order. However, the husband also said that the parties separated in September 2005.
26.The husband was born in Country I in 1962 and is 48 years old. He deposed to a weekly income is $875 from BD Solicitors, but that represented draw downs on capital and was not representative of his income earning capacity. At the time of the hearing, he was studying part-time at TAFE to become a real estate agent. The course is two and a half years full-time and he was due to graduate at the end of 2010. Currently, the husband has only completed 5 out of 14 units of the course and does not know when he will finish the course other than to say, “I will do my best to finish as soon as possible”. He lives in the E Street apartment. He said that he has not re-partnered. The wife said that he is in cahoots with Ms D and that they have had an intimate relationship, which is an allegation both the husband and Ms D deny. The husband says that he has not been employed over the last 18 months but might have a job interview very shortly. He informed the court that he was living on borrowings from L Pty Ltd (“L Pty Ltd”).
27.The wife was born in Country I in 1962 and is 48 years old. Currently, she and the children live in government housing at M Street, Suburb G, which is a three bedroom flat. In all, the wife’s income tested pensions or benefits total approximately $386 per week, including a Carer’s Allowance payable in respect of O. Her rent is now $274.20 per fortnight. She no longer receives a family allowance for the eldest child of the relationship, P.
28.There are two children of the marriage:-
a)P born in 1995. She is currently 16 years old and is a student at Q School where she is in Year 10. P receives Youth Allowance from the government in lieu of part of the family allowance her mother used to receive.
b)O born in 2002. He is currently nine years old and a student at R School in Grade 3.
The wife’s evidence is that O suffers from autism spectrum disorder and global development delay and that P has significant learning difficulties. The husband denies that the children have learning difficulties of any kind.[9] There is no expert evidence before the court either way. The relevant family report did not indicate that the children had any difficulties or special needs. I am not able to find that the children suffer from the specific conditions alleged by the wife. However, I note that the husband did not contest the wife’s statement that she is paid a Carer’s Allowance for O so I infer that he is a child with some special needs.
[9] Affidavit of the husband sworn 29 April 2009, [2.12].
29.On 10 December 2009, which was the 14th day of the hearing, final orders in relation to the children were made, by consent. Mr Timothy Mulvany was the independent children’s lawyer. The order provides that the wife has sole parental responsibility for the children. The children are to live with the wife and spend time and communicate with the husband in accordance with their wishes. By the conclusion of the evidence, neither child was spending any time with the father.
30.Ms D is the fourth respondent. Ms D first came to Australia in the second half of 2003. She lives in a rented property at T Street, Suburb U. She is unemployed and undertaking a Bachelor degree at University IK. Her previous study and employment history includes working part time work at a migration agency until 2009; completing a migration agent course in 2008; obtaining a Diploma at University IK from 2005 until mid to late 2007 and undertaking a Masters at the University Z from early 2004 until late 2004 or early 2005. She says that she receives money from her parents in Country Y to cover her living expenses while she is in Australia.
31.Ms D says that she first met the husband’s father at a firm of accountants called W Accountants (“W Accountants”), in City X, where she worked as a receptionist. She said that the husband’s father was a big client of the company and she was approached to act on his behalf.
32.The husband’s father, Mr C did not participate in the hearing notwithstanding that he is named as the third respondent. I will refer him as either “Mr C” or the “husband’s father”.
33.Initially, the husband’s father appeared to have a relatively minor interest in the proceedings. He was the shareholder of 100 out of 16,350 shares issued in the company. However, in Ms D’s affidavit of 4 May 2009 it is alleged that the company holds 1 F Street and the H Street office as trustee for the husband’s father “absolutely” and that the company “will when called upon by [the husband’s father], execute a transfer of [the husband’s father] or his nominee as the case may be.” The declaration of trust relied upon appears as annexure “PAX-2” to Ms D’s affidavit and is dated 21 May 2007. A further declaration of trust in the same terms appears as annexure “PAX-3” and is dated 30 January 2008. The wife seeks to set aside these instruments.
34.At a mention of this matter on 15 October 2008 the husband did not object to the joinder of the company, the husband’s father and Ms D as parties to the proceedings. The husband described his father as “over 75 years old. He is very old (indistinct) in [Country I].” The husband said that he (the husband) has nothing to do with the company which he “just hand over” to Ms D who is the “president – director” of the company.[10] As to the joinder of Ms D, the husband said:
[10] Transcript of proceedings 15 October 2008, 32-34.
HER HONOUR: Anything you want to say about her being joined, anything to oppose me joining her as a party?
[THE HUSBAND]: I just would like to notify what I know about this company and I do my best to tell the court.
HER HONOUR: Okay. You will have an opportunity and they will be here as well. If the company or your father is not here and steps are taken to serve them and I'm satisfied that he is served, orders will be made anyway. So it would not be a good idea if you do happen to be talking to your father to simply ignore these proceedings.
[THE HUSBAND]: Ignore these proceedings.
HER HONOUR: Do you understand?
[THE HUSBAND]: No.
HER HONOUR: Don't ignore the proceedings because orders might be made taking his property away even if he doesn't come to court. If I'm satisfied that he should know about them, then the orders may still be made. So he can't just ignore them and think it will be all right.
[THE HUSBAND]: Okay.[11]
[11] Transcript of proceedings 15 October 2008, 33.
35.When the final hearing commenced on 11 May 2009, the husband and Ms D attended Court and represented themselves with the assistance of interpreters. The wife was represented throughout the hearing by Ms Swart of counsel and the wife had the assistance of an interpreter. The husband’s father did not appear.
36.The matter commenced on the basis that counsel for the wife would hand up proof of service of the proceedings on the husband’s father. However, by the second day of the hearing, 12 May 2009, counsel for the wife informed the Court that she was not in a position to satisfy the Court that the husband’s father had been served with proceedings. Documents had previously been sent to the husband’s father at the E Street apartment which, the Court was informed, was the address for the husband’s father on the ASIC shareholder register. However, immigration records produced on subpoena, at the behest of the wife, showed that the husband’s father had not been in Australia between May 2004 and February 2009 and hence the Court could not be satisfied that the husband’s father would have received the documents unless they were forwarded to him by the husband. There was no basis in the evidence upon which I could be satisfied that this occurred.
37.On 12 May 2009, the husband gave evidence about contact with his father. He testified that the last day on which he spoke with his father was probably 16 October 2008[12] after the matter was mentioned. The husband said that he had a record of having called his father on that day and said that-
[12] Transcript of proceedings 12 May 2009, 71.
I actually told my father what the court has told me is that you should know about these proceedings in case that your property is sold off, that you don’t have knowledge of it.[13]
[13] Transcript of proceedings 12 May 2009, 76.
38.The husband gave evidence about how often he speaks to his father otherwise. The husband said that he called his father for his father’s birthday in 2007 and 2008 but not in 2009. The father had previously told the Court that his father’s date of birth was in 1937,[14] so two birthdays had fallen prior to this decision. He gave evidence that his father had not called him on his last three birthdays, being 17 December 2008, 2009 and 2010 even though it was customary for his father to do so. He added that he usually received a call from his father because telephone charges were cheaper from Country I than from Australia. On 12 May 2009, he gave evidence as follows:
[14] Transcript of proceedings 15 October 2008, 34.
HER HONOUR: Why didn't he ring you this year? Why didn't he ring you six weeks ago?
[THE HUSBAND]: I think my father know the ex-wife, if I can say, applicant, took away his grandson and the grand-daughter from my care. He would feel since I'm not tough enough to protect the family, so my father somewhat feel a bit disappointed with me.
HER HONOUR: Why did it take him so long to come to that disappointment? You haven't seen your children or been with your wife for much longer than a year. Why now, why not last year?
[THE HUSBAND]: Why not last year? Yes, that's no call to allow me to do that.
MS SWART: Did he speak to you in March 2008 on his birthday, or near his birthday? […]
INTERPRETER: Apart from this year his birthday I didn't call him because I've been busy with the court case matters and in the past year I had called him on his birthday.
MS SWART: Did you speak to him in 2007 on the telephone?
HER HONOUR: What about on your birthday? Did he ring you on your birthday?
[THE HUSBAND]: I could not recall that. Yes, past, but not every year.[15]
[15] Transcript of proceedings 12 May 2009, 95-96.
39.In May 2009, Ms D advised the Court, not on oath, that she had not advised the husband’s father of the proceedings. The discussion was as follows:
HER HONOUR: […] Ms D, do you know if [Mr C] knows about the proceedings?
INTERPRETER: Last year I only told his father about the land tax we have to pay and I didn't mention any other matters to him.
HER HONOUR: Did you advise him of the land tax in your capacity as the only director and secretary of the company?
INTERPRETER: Yes.
HER HONOUR: You didn't think that there was any need to tell him that all of the assets that the company owns, which are mentioned in these proceedings, are at risk of being taken and paid to the wife?
INTERPRETER: I have always been thinking that all assets belong to him and there's no names that others will take those assets.
HER HONOUR: You say that is the extent of how you discharged your duty as the director and secretary of this company?
INTERPRETER: Your Honour, can you repeat?
HER HONOUR: You say that is the extent of how you discharged your duty as a director and secretary of this company? That's all you did, you are a director and secretary of the company and is that all you did?
INTERPRETER: Yes, that's all I did.
HER HONOUR: [to the interpreter] What did [Ms D] say before she said, "Yes, that's all I did"? What did she say because you had some conversation.
INTERPRETER: Okay. She said that - she basically repeated what she said before. That she always thought the assets belonged to his father and no-one has the right to take them.
HER HONOUR: Very well, thank you.[16]
[16] Transcript of proceedings 12 May 2009, 76-77.
40.As a result of evidence and information received on 12 May 2009, I made the following orders:-
(3)That upon compliance by the wife with sub-paragraphs a) to c) hereof further service on the third named respondent, [the husband’s father] of such documents as the wife considers are necessary, be and is hereby dispensed with:-
a)The wife send such documents addressed to the third named respondent by pre-paid airmail post addressed to him at [DD Street, Suburb EE, City FF, Country I];
b)The wife send such documents by pre-paid airmail post addressed to the third named respondent at the accounting firm, [W Accountants], [AA Street, Suburb BB, City X, Country Y], …; and
c) The wife send such documents addressed to the third named respondent, but under cover of a letter to the husband’s brother, [Mr GG], informing the husband’s brother that the documents are sent to him pursuant to an Order of this Court because the husband, [Mr Hoa], has given evidence to the Court that he is unable to provide the Court with the residential address of their father and that the wife, [Ms Kuay-Hoa], is required to provide the husband’s father with notice of the orders she seeks be made and affecting [1 F Street] and [the H Street office] in which the husband and one [Ms D] each assert the husband’s father holds a beneficial entitlement.
(4)That in each case where documents are forwarded to the husband’s father pursuant to this Order they be forwarded under cover of a letter in the Country I language and in English addressed to the husband’s father which advises the husband’s father of the relevant aspects of these proceedings and the purpose of service upon him of the documents including that the wife, [Ms Kuay-Hoa], seeks a final alteration of property interests between herself and the husband, [Mr Hoa], and that she seeks orders which affect [1 F Street] and [the H Street office] which are properties registered in the name of The company which the husband asserts are beneficially owned by his father. The letter should also refer to a sealed copy of this Order (which should be enclosed in untranslated form) which requests that the husband’s father notify the Court of an address for service for himself and make known to the wife and the Court and each other party to the proceedings any objection or opposition by him to the orders being made as sought by the wife and affecting the property of [the company].
(5)That the solicitors for the wife file and serve evidence of compliance with this Order as to service and detail any response thereto by not later than 1 July 2009.
41.I am satisfied by virtue of the correspondence referred to in the affidavit of Mr AB filed 15 July 2009, to the effect that the above Order was complied with, that substituted service has been effected on the husband’s father. I am satisfied that the third respondent had notice of the proceedings.
The husband’s father did not appear or file any documents with the Court when the hearing resumed on 29 July 2009, or subsequently.
As the husband and Ms D were self-represented, I endeavoured to ensure that they each understood that failure by either or both of them to adduce evidence from the husband’s father was likely to impact on their case, as well as on the case of the husband’s father.
At various times during the hearing I requested that the husband consider contacting the third respondent as his evidence would be significant in verifying his evidence and the evidence of Ms D. On 1 September 2009, the husband told the Court that on 5 August 2009 he unsuccessfully attempted to contact his father by calling his Country I mobile phone number.
The wife submits that it is open to the Court to conclude that the husband’s father did not appear or seek to communicate with the wife’s practitioners or the Court either because:
a)the evidence of the husband and Ms D as to how he could be contacted was false; or
b)he received all the information and chose to make no contact with the wife’s practitioners because he did not regard himself as having any entitlement to the assets in issue and did not wish to defend his position.[17]
There is merit in that submission.
[17] Wife’s final submissions dated 29 June 2010, 6.
It was further submitted on behalf of the wife that-
more than enough was done to bring the case to the attention of [Mr C] and if he was personally concerned about the loss of the company assets he would have appeared. It was also the evidence of the husband and [Ms D] that neither of them had ever communicated with [Mr C] about these proceedings. In the case of the husband that was clearly surprising given his insistence that the company assets were always his father’s. In the case of [Ms D] who presented herself as a third party Director brought in by the [City X] accountants to look after the interests of their client, the failure to inform the supposed beneficiary about a court case in which the major dispute is the company assets is a clear breach of fiduciary duty.[18]
[18] Wife’s final submissions dated 29 June 2010, 7.
Neither the husband nor Ms D chose to answer the submission specifically, notwithstanding that the wife’s submission goes to the root of their case, being that the husband has no interest in the assets of the company and that the husband’s father is solely entitled to the assets of the company. I agree that the fact that neither the husband nor Ms D did anything to bring these proceedings to the attention of the husband’s father is difficult to reconcile with their ostensible regard for the father’s alleged entitlement in or ownership of the assets. As I am satisfied that all that could be done has been done by the wife to bring the proceedings to the attention of the husband’s father. Accordingly, I regard the wife’s application as being unopposed by the husband’s father.
On 26 July 2011, the husband confirmed that there had been no further communication by him with his father and that he had last spoke to his father on or about 16 October 2008.
Also on 26 July 2011, Ms D said that she had not been in communication with the husband’s father at all since the conclusion of the evidence in March 2010.
I will now mention briefly other persons who are relevant to the proceedings but who were not called as witnesses. They are relevant from an historical and/or a procedural perspective. The descriptions may be longwinded (but are nowhere near as detailed as the written and oral evidence received by the Court; the descriptions should also provide some relevant historical context).
Mr HH was the wife’s first husband. The wife believes that he died in a car accident in 1993. However, the husband says that he has spent at least $50,000 on investigations to establish that Mr HH is still alive, but has produced no evidence of this. Neither party can prove that he is alive or dead. For the sake of convenience, I will refer to him as if he has passed away. Nothing turns on whether or not the wife’s first husband is alive.
The wife’s relationship with Mr HH was originally one of concubinage. He was a man of means in the Country JJ and married to a woman who was unable to bear his children (“Ms II”). It was agreed between Mr HH and Ms II that he would live with the wife (Ms Kuay-Hoa) in a de facto relationship in Country I until she bore him two children. The agreement provided for Mr HH to return to the Country JJ no later than 1993. If he failed to do so, he would surrender significant assets that he had accumulated in the Country JJ and an ongoing income he received as a result of a patent that he held, to his Country JJ wife.
Mr HH and the wife cohabited for six years. In 1989 they married according to the law of Country I. Mr HH had not notified Country I authorities of his marriage to his Country JJ wife. The Country JJ wife did not learn immediately about Mr HH’s marriage to the wife. The wife deposed that she was known as Ms II. Two boys were born. Not long after the trip to Australia in 1992 the wife and Mr HH separated. The wife migrated to Australia on a Skilled Migrant Visa and Mr HH took up employment at a University in City KK in Country Y. The wife did not see Mr HH again.
Mr KK, born in 1990 and Mr LL, born in 1991 are the sons who were born to the wife during her concubinage and, later, her marriage to Mr HH. The wife says that the husband met her sons when she, Mr HH and the boys travelled to Australia in 1992. The husband denies that he was aware of the wife’s older children until after these proceedings were commenced. The boys remained in Country Y when the wife migrated to Australia in 1992 and were cared for by their father and/or their maternal grandparents. The boys were in Australia from 2001 to 2008 and for some of that time they lived with the wife and the children of this marriage. In 2008 Mr KK and Mr LL went to the Country JJ where they remain in the company of, and financially provided for by, their father’s Country JJ wife. They never lived with the husband.
W Accountants CPAs[19] (“W Accountants”) is, according to Ms D and the husband, a firm of accountants in City X, Country Y, for whom Ms D worked and of which the husband’s father is a client. Ms D alleges that she was introduced to the husband’s father in the course of her employment and subsequently retained by him to administer the company. She provided a postal address for W Accountants[20] to which documents were sent for the attention of the husband’s father by way of substituted service and pursuant to the Order of 12 May 2010.
[19] City X W Accountants Chian Jiang Accounting Firm Pty Ltd.
[20] Exhibit “W6”.
W Accountants is central to the case advanced by the husband and Ms D. Ms D alleges that it was through that firm that she communicated with the husband’s father over her investment of $16,250 in the company. Ms D and the husband allege that their overseas trips to Country MM, Country NN and Country Y were at the behest of W Accountants. The husband and Ms D each say that all transactions in relation to the H Street office are conducted between the managing agents and W Accountants. Notwithstanding the significance of W Accountants to the cases ran by the husband and Ms D, no evidence was called from a representative or member of the firm.
On the 20th day of the trial, 5 March 2010, Ms D agreed that an email address recorded on her Register of Agents page was W [email protected], which is the email address for W Accountants. She was unable to provide a credible explanation as to why W Accountants’s address was on a site relating to herself. Similarly, Ms D did not provide any explanation as to why she was maintaining a website for W Accountants.
Counsel for the wife submits that the email address “raises the question whether the accountants firm in City X actually exists.” It was submitted that if W Accountants existed as a business, it would be unlikely to use a free email address such as that provided by Gmail.[21] I accept that it is most likely that an accounting firm would use a secure site and establish something upon which it could build.
[21] Wife’s final submissions dated 29 June 2010, 9.
Mr OO[22] is, according to Ms D and the husband, the husband’s father’s accountant at W Accountants. Mr OO purportedly signed a declaration of trust on behalf of the company on 21 May 2007 and purportedly signed a statutory declaration on 30 March 2009. I have addressed these two documents in these reasons for judgment below. On 12 May 2009, when the matter was adjourned part heard so that service could be effected on the husband’s father, I made an order that the solicitors for the wife also send a letter to Mr OO care of W Accountants, detailing the relevant aspects of this proceeding. Mr OO did not swear an affidavit in this matter, nor was he called to give evidence. As I have made it clear in these reasons below, Mr OO’s participation in these proceedings could have improved the husband and Ms D’s cases, by corroborating some of the key aspects of their evidence.
[22] As his name appeared on the statutory declaration signed 30 March 2009, which was annexure “PAX-4” to Ms D’s affidavit sworn 4 May 2009. I note while Ms D called Mr OO, “OO” during cross-examination on 12 May 2009, on 5 February 2010 during cross-examination she called him “OO Tung”.
Mr PP was a solicitor who specialised in migration work. His firm was QQ Legal. The father worked as his associate from 1995 until about 2002. The father introduced clientele to QQ Legal and completed forms and documents for migration and other purposes, including corporate purposes such as minutes of directors’ meetings and alterations to shareholding. The wife says that the husband held himself out as a licensed migration agent. The husband did not become a registered migration agent until 1997 and the husband asserts that he did not work with QQ Legal as a migration agent before this. Copies of two business cards of the husband which state that he was registered in migration were annexed to the wife’s affidavit, however it is not clear when these were printed and in any event it is not necessary for me to make a finding either way.
In 1999 when the parties moved to Sydney the husband operated a QQ Legal subsidiary from the H Street office owned by the company. By the time the husband and wife returned to Melbourne, in or about April of 2002, the husband appears to have disassociated himself with QQ Legal and Mr PP.
On 22 December 2004 the Supreme Court of Victoria Court of Appeal handed down the judgement of PP v The Legal Ombudsman [2004] VSCA 247, which related to circumstances surrounding the purchase of a café in William Street, Melbourne, by two Chinese clients of QQ Legal, Mr RR and Ms SS, in 1998 and 1999. The Appellate Court upheld the finding of the Full Tribunal of the Legal Profession Tribunal that Mr PP, the applicant in the appeal, was guilty of misconduct within the meaning of the Legal Practice Act 1996 (Vic). Mr PP’s practising certificate was cancelled, as was QQ Legal’ practising certificate. In the same matter the husband was considered by the Legal Profession Tribunal to have falsely completed at least some documentation associated with registering a company and minutes of meetings of shareholders and directors, and to have exerted undue pressure on clients. I am mindful of the fact that as the proceedings were not against the husband, he had no right to be heard. However, he gave evidence before the Tribunal, which commented, “We do not accept [the husband’s] evidence on that point or generally. We did not find him to be a truthful witness.”[23] If this was the only evidence relied upon by the wife as to the husband’s dishonest dealings in enterprise, I would be very cautious in placing any weight on it. The husband was cross-examined on the facts as they appear in the decision. I am comfortable with the findings described in the reasons of Chernov J being more likely than not correct. They corroborate the assertions of the wife in this case and I give them some weight in my assessment of the husband.
[23] Legal Ombudsman v PP [2002] VLPT 13 (8 May 2002), [13].
Mr PP was also removed from the register of Migration Agents in relation to the same factual matrix. The Federal Court of Australia in PP v Migration Agents Registration Authority [2004] FCA 1622, upheld the decision of the Administrative Appeals Tribunal, which in turn had affirmed the decision of the Migration Agents Registration Authority, that Mr PP’ registration as a Migration Agent be cancelled.
Mr TT (“the husband’s uncle”) is the husband’s uncle. He is a Country I monk. The husband’s evidence is that he has received money from, and transferred money and real property to, this uncle on various occasions. These include the land at UU Street, Suburb K (“UU Street”), on which the first home of the husband and wife was subsequently built. The transfer was in 1995 from the joint names of the couple to the sole name of the husband’s uncle, and was pursuant to a transfer of land dated 23 October 1995, on which the wife alleges that the husband forged her signature.
On 7 June 1996 the property at 15 F Street, Suburb K, was purchased by WW Pty Ltd. The only office bearers and share holders of WW Pty Ltd were the husband and the wife. On 15 August 1996, WW Pty Ltd executed a transfer of land of the property in favour of the husband’s uncle. The consideration shown on the transfer document was “out of love and affection”. The husband alleges that WW Pty Ltd was an entity actually owned by his uncle. The wife denies that she signed the transfer of land in favour of the husband’s uncle and alleges that the signature which was affixed was forged by the husband. This is an assertion about which I am unable, on the evidence, to draw a conclusion. It is a very serious allegation, involving criminality, which requires cogent evidence. Here, there was no expert handwriting evidence on which I could be satisfied that the signature was not the wife’s, let alone evidence from which I could safely conclude the identity of the person who affixed it.
L Pty Ltd (“L Pty Ltd”) is a group of unidentified Country I business people, from whom the husband alleges that he borrowed significant sums of money. One such sum is $150,000 which was advanced as $100,000 in cash and $50,000 in payment of fees for investigative work, undertaken by L Pty Ltd, into the whereabouts of Mr HH. The loans are unsecured although the husband gave evidence of his belief that his default would, at the election of L Pty Ltd, result in a forced sale of the E Street apartment. The loans are at relatively high interest and documents as to their existence are incomplete. According to the husband, persons associated with L Pty Ltd come from Country I to visit the husband at his residence from time to time, to assess his financial position and they will return shortly to assess the progress of this proceeding and the husband’s ability to repay them.
B Pty Ltd (“the company”) is the second respondent in the proceedings. Ms D represents its interests as well as her own. On the formation of the company, the husband and wife were both directors. The husband was the secretary and held 90 of 100 issues shares. The wife held the remaining 10 shares. As a result of transactions which I will describe in more detail below, Ms D now has 16,250 of 16,350 shares in the company and the husband’s father has the remaining 100 shares. Ms D is the sole director and secretary of the company.
Applications of the parties and orders sought
The proceedings were commenced by the wife, who filed an application on 29 January 2007 in which she sought, inter alia, 75 percent of an undefined pool of assets by way of final alteration of property interests and lump sum spousal maintenance. The husband filed a Response on 20 February 2007 and, insofar as it is relevant, he resisted any valuation or alteration of property interests on the basis that a prenuptial property agreement provided that he and the wife each retain their own assets as at separation. It was clarified that the pre nuptial agreement to which the husband refers is not a financial agreement within the meaning of s 71A(1) of the Family Law Act 1975 (Cth) (“the Act”) and the husband made no submissions about the agreement at the final hearing.
Since the proceedings commenced, the wife has amended her application, including on 8 April 2009, to seek that assets in the name of the husband’s father and the company be included in the pool of assets divisible between herself and the husband pursuant to Part VIII of the Act.
It is the wife’s case that the assets divisible between the parties include assets in the name of the company and certain monies which the husband has had the benefit of and which constitute a premature distribution of property in his favour. Specifically, in the wife’s final submissions filed on 2 July 2010, the wife sought a division of 70 percent of the divisible property in her favour, with the remaining 30 percent to go to the husband.[24]
[24] Exhibit “W40”.
The wife contends that it is not possible for her proper claim under Part VIII to be met from the assets now standing in the names of herself and/or the husband. She identified s 106B as the source of power by which the Court can set aside various transactions between the husband, his father and Ms D, the effect of which will be to put valuable assets back into the property pool.
The wife seeks the following orders:
1. Pursuant to s 106B of the Family Law Act 1975, the transaction on 20 November 2006 lodged with ASIC on 13 December 2006 (whereby the Husband transferred his 100 shares in the Second Respondent The company to the Third Respondent [Mr C] as recorded in ASIC Form 484) be set aside.
2. Pursuant to s 106B of the Family Law Act 1975, the transaction on 22 September 2008 lodged with ASIC on 20 November 2008 (whereby 16,250 new shares in the Second Respondent The company were created and issued to the Fourth Respondent [Ms D] as recorded in ASIC Form 484) be set aside.
3. Pursuant to s 78 of the Family Law Act 1975, it is declared that the Declaration of Trust document dated 21 May 2007 (Annexure PAX-2 of the Affidavit of [Ms D] filed 4 May 2009) is not valid in law and has no force and effect.
4. (a) Pursuant to s 78 of the Family Law Act 1975, it is declared that the Declaration of trust document dated 30 January 2008 (Annexure PAX-3 of the affidavit of [Ms D] filed 4 May 2009) is a sham and of no effect,
Or in the alternative –
(b) Pursuant to s106B of the Family Law Act 1975, the Declaration of Trust in the document dated 30 January 2008 (Annexure PAX-3 of the Affidavit of [Ms D] filed 4 May 2009) be set aside.
5. The Fourth respondent [Ms D] forthwith do all things necessary to transfer to the wife on trust for sale the property at [1 F Street] held by The company.
6. The respondent be and are hereby restrained from dealing with [1 F Street] or from creating any interest or encumbrance in relation to the property whatsoever.
7. The wife forthwith sell the property at [1 F Street] and apply the proceeds of sale as follows –
a. To pay the costs of advertising and sale, including the solicitor’s costs of acting in the trust transfer and sale;
b. To pay any outstanding land tax and rates;
c. To pay the Fourth Respondent the sum of $16,250 plus interest at 11 per cent from 22 September 2008 to the date of sale;
d. To hold an amount in her solicitor’s Trust Account sufficient to meet any Capital Gains Tax assessed against The company, such sum to be paid as soon as practicable after provision of a notice of assessment from the company director;
e. To pay an amount to the wife as determined by the Court;
f. To pay the balance, if any, to the husband.
8. The Husband pay the Wife’s costs of these proceedings, from the date of their beginning to the end of Trial, and such costs to be calculated on an indemnity basis.
Paragraphs 3 and 4 of the orders sought by the wife require relief pursuant to Section 78 of the Act. That section provides that in proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property. Further, where the court makes a declaration under s 78(1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.
The wife’s applications under s 78 are misconceived. Section 78 is an empowering section which permits the court to declare interests in property. It does not provide jurisdiction for the court to find the absence of an interest in property. If, on the evidence, I find that the trust for which Ms D and the husband contend is a sham, then, that finding is sufficient to underpin consequential orders under s 106B.
During the final stages of the trial, counsel for the wife put Ms D on notice that she no longer conceded that Ms D should be refunded $16,250 if all of the transactions are set aside. That is, the wife no longer sought orders that Ms D receive $16,250 plus interest upon the sale of 1 F Street, on the basis that Ms D did not actually use her own money to pay the land tax debts.
The husband’s final submissions dated 9 April 2010[25] were lacking in detail. The husband simply objected to the wife’s application and requested that the matter be dismissed by the Court. He further submitted that, “the Applicant’s affidavits, financial statements and witness evidence through cross-examination are totally false which could not support her applications, even the Court feel comfortable that the Applicant has failed to make any appropriate and truthful disclosure through these proceedings.” He did not provide any details or rely on any specific evidence to substantiate his submissions.
[25] Exhibit “H11”.
The crux of the husband’s case is that there are no assets available for distribution. He said that he has no interest in or control over the company or its assets and that there is no equity in the E Street apartment, which he originally said was valued at $500,000, less an estimate of repairs to a water leak at $77,000, or $423,000. The husband also listed a mortgage of $200,000 over the property and a debt of $223,000 owing to L Pty Ltd, which he claimed is secured by the E Street apartment.
The general thrust of the husband’s submissions in Court was that the wife is a liar who gave false evidence and whose evidence, in its totality, cannot be relied upon.
The submissions of Ms D[26] were for the most part similar to those of the husband. She submitted that the wife’s claim was groundless and that the documents filed by the wife were a “sham”. She asked the Court to dismiss the wife’s claim and remove the caveat over the properties owned by the company. She said that the transactions by which she became sole office bearer and controlling shareholder of the company were legitimate business transactions entered into by her and the other parties, being the husband and the husband’s father, in good faith and for value. She resisted the wife’s application insofar as it concerned her, the company and/or the assets of the company.
[26] Exhibit “Q1”.
The general thrust of Ms D’s submissions in Court was that she has faith in the Australian judicial system and is confident that no injustice will be perpetrated.
As is the case in all property proceedings, I must determine the assets, liabilities and financial resources which are divisible between the parties. Then, I must determine each party's contributions. Third, I must consider the parties’ present and future resources and obligations, as well as the other s 75(2) factors. Finally, I must arrive at a decision that is just and equitable in all the circumstances.
A significant issue arises at the first step, as to whether assets standing in the name of the company should be included in the pool of assets to be divided between the husband and the wife.
None the parties contend that any further evidence is needed after I have determined the asset pool (the first step). Accordingly, I can proceed to the second, third and fourth step and adjust property finally.
As to contributions, the wife asserted that the parties’ contributions should be regarded as equal. She pointed to her early financial contributions of $5,000 and $30,000 which were applied by the parties in establishing themselves in Australia. The wife also said that her ability to bring the husband to Australia on a spouse visa was a significant non-financial contribution. Further contributions said to be made by the wife included supporting the husband with his business ventures by assisting in the office and supporting him through the litigation surrounding his involvement with QQ Legal.
The wife conceded that the husband was more involved than she was in acquiring money and real estate, but said that she had the primary responsibility and care of the children. The wife further submitted that the husband’s contributions should be diminished because of his violent and aggressive behaviour towards the wife and the children when he had been drinking. The wife also says that the husband made a “negative contribution” through his involvement with the litigation in relation to QQ Legal.
The husband did not make any submissions as to a percentage or dollar value of his or the wife’s contributions to the property of the parties.
As to adjustments under s 75(2), the wife sought an adjustment in her favour of 15 percent. The relevant factors given by the wife were her limited capacity for employment in Australia due to her poor English language skills, her reliance on investments from the property distribution and Centrelink and her on going care of the two children of the marriage. It was not submitted that if the wife’s contributions were assessed at less than 50 percent then the s 75(2) adjustment should be more.
The wife also sought an additional amount, equivalent to 5 percent of the property pool as lump sum spousal maintenance. The reasons for this were the same as those given in relation to the adjustment factors for the property distribution.
Evidence
At trial, the wife relied upon oral evidence from herself, two officers from Victoria Legal Aid and the following affidavit evidence:
a)Financial statement of the wife, sworn 2 March 2010;
b)Affidavit of Mr XX, accountant, sworn 5 August 2009, in relation to the amount of capital gains that would be payable on the sale of 1 F Street;
c)Affidavit of Mr AB, the wife’s solicitor, sworn 7 May 2009;
d)Amended Order 30 Affidavit of the wife, sworn 7 April 2009;
e)Affidavit of Mr YY, valuer, engaged to value the H Street office, sworn 1 April 2009; and
f)Affidavit of Mr ZZ, valuer, engaged by the wife to value the Melbourne properties, sworn 25 February 2009.
The wife was cross-examined extensively and Mr ZZ was cross-examined for about 30 minutes.
The husband relied upon the following evidence:
a)Affidavit of the husband, sworn 29 April 2009; and
b)Financial statement of the husband, sworn 2 March 2009.
Ms D, relied upon the following evidence:
a)Affidavit of Ms D sworn 4 May 2009; and
b)Affidavit of Ms D sworn 9 February 2009.
As indicated, each party made statements to the Court on 26 July 2011, essentially to the effect that nothing had changed in relation to his or her position.
Earlier affidavits and financial statements were tendered as exhibits during the hearing. In addition, on 13 May 2009 Ms D produced the minute book of the company to the Court as ordered.
There are persons referred to above which could reasonably be expected to have been called to give evidence on certain aspects of each party’s case but who were not called:
a)In relation to the husband, I would include his father, a representative of W Accountants, a representative of L Pty Ltd (for example Mr OO) and the husband’s uncle, Mr TT.
b)In relation to the wife, I would include her brother-in-law from whom she says she received about $100,000 comprised of a number of loans from 2005 onwards, and her nephew to whom she says that she advance funds and is still owed money.
c)In relation to Ms D, I would include the husband’s father and a representative of W Accountants (for example Mr OO).
There was no explanation as to why the above witnesses were not called.
On 12 May 2009[27] and again on 1 September 2009[28] I discussed the significance of the husband’s father not being called as a witness, not only as to the vulnerability of any interest in property in the name of the company but also in terms of it being open to me to infer that, whatever the husband’s father might have been able to say, would not have assisted the husband’s case or Ms D’s case.
[27] Transcript of proceedings 12 May 2009, 66-67.
[28] Transcript of proceedings 1 September 2009, 60.
It is convenient at this point to discuss the rule in Jones v Dunkel (1959) 101 CLR 298. The rule applies where there has been an unexplained failure by one party to call a witness whom he or she might be expected to call. It is correctly[29] summarised in the joint judgment of Newton and Norris JJ, in O’Donnell v Reichard [1975] VR 916, as follows:
…where a party without explanation fails to call as a witness a person whom he might reasonably be expected to call, if that person’s evidence would be favourable to him, then, although the jury may not treat as evidence what they may as a matter of speculation think that that person would have said if he had been called as a witness, nevertheless it is open to the jury to infer that that person’ evidence would not have helped that party’s case; if the jury draw that inference, then they may properly take it into account against the party in question for two purposes, namely: (a) in deciding whether to accept any particular evidence, which has in fact been given, either for or against that party, and which relates to a matter with respect to which the person not called as a witness could have spoken; and (b) in deciding whether to draw inferences of fact, which are open to them upon evidence which has been given, again in relation to matters with respect to which the person not called as a witness could have spoken.[30]
[29] Transport Industries Insurance Co. Ltd. V. Longmuir [1997] 1 VR 125, 138 (Tadgell JA).
[30] O’Donnell v Reichard [1975] VR 916, 929.
In Payne v Parker (1976) 1 NSWLR 191, Glass JA explained that whether or not the Jones v Dunkel inference can be drawn depends on whether the following conditions were satisfied:
(a) the missing witness would be expected to be called by one party rather than the other, (b) his evidence would elucidate a particular matter (in his favour), (c) his absence is unexplained.[31]
[31] Payne v Parker (1976) 1 NSWLR 191, 201. Glass J dissented as to the outcome of the case, but was ad idem with the majority on the issue.
It was recently observed by Young J in Denning & Denning [2011] FamCA 160, that:
[…] The so called “rule” in Jones v Dunkel was recently explained by the Full Court of the Family Court in GWR v VAR [2006] FamCA 894, [29]:
“The decision of the High Court in Jones v Dunkel does little more than confirm what common sense suggests would be the case, namely that where it would be reasonable to expect a party to have called evidence from a witness in relation to an issue, the unexplained failure to do so can justify drawing the inference that the evidence of that witness would not have assisted that party’s cause.”
There are some circumstances in which the inference may not be available or may be of little significance and this was explained by Mahoney JA in Fabre v Arenales (1992) 27 NSWLR 437, 449-450:
“But there are circumstances in which it has been recognised that such an inference is not available or, if available, is of little significance. The party may not be in a position to call the witness. He may not be sufficiently aware of what the witness would say to warrant the inference that, in the relevant sense, he feared to call him. The reason why the witness is not called may have no relevant relationship with the fact in issue: it may be related to, for example, the fact that the party simply does not know what the witness will say. A party is not, under pain of a detrimental inference, required to call a witness “blind”.
A Jones v Dunkel inference may not arise if, for example, the witness has a reason for not telling the truth or refusing to assist and the party who may well call him is aware of this.”
The Court cannot use an inference to fill in gaps that may exist in the state of the evidence before the Court.[32] It remains at the discretion of the Court to determine whether inferences should, in all of the circumstances be properly drawn.[33]
[32] Jones v Dunkel (1959) 101 CLR 298; West v Government Insurance Office of New South Wales (1981) 148 CLR 62.
[33] Denning & Denning [2011] FamCA 160, [76]-[78].
I agree with the above statements of the rule in Jones v Dunkel. Neither the husband nor Ms D asserted that circumstances justifying the non-calling of a witness applied in this case.
Out of fairness to all parties I have considered whether the fact that some of the potential witnesses are located overseas ought, of itself, displace the rule in Jones v Dunkel. I have earlier considered the question in SCA v Pavlidou [2008] FamCA 1120 and concluded that it does not.[34] I cited Crennan J (then of the Federal Court of Australia) who considered the question of the failure of a party to call an overseas witness in JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474. In that case, her Honour was required to be satisfied as to who had invented a patent. Her Honour held that:
… It is a common occurrence in the Federal Court for a relevant witness in a case to give evidence by video link from the USA and also routine for the convenience of an overseas witness to be taken into account when arrangements are made for such evidence to be given. The Court is entitled to assume that Mr Tait’s evidence would not have assisted the applicant: Jones v Dunkel (1959) 101 CLR 298.[35]
[34] SCA v Pavlidou [2008] FamCA 1120, [51]-[55].
[35] JMVB Enterprises Pty Ltd v Camoflag Pty Ltd [2005] FCA 1474, [144].
In the first instance decision of Spence & Spence; F Pty Ltd & Spence [2008] FamCA 263, Strickland J expressed a similar view:
There is no doubt that there was some domestic violence during the marriage, but there is no basis to find that “there was a course of violent conduct” by the husband which had “a significant adverse impact” upon the wife’s contributions to the marriage. There is simply no evidence provided by the wife to establish the link between any domestic violence by the husband and any impact on her contributions. Certainly the report of the psychologist does not assist in this regard. It does not assist the wife that she may be suffering from post-traumatic stress disorder. That says nothing about whether any conduct by the husband made her contributions “significantly more arduous than they ought to have been”. Thus, this is a claim that cannot succeed.[193]
[193] Spence & Spence; F Pty Ltd & Spence [2008] FamCA 263, 163.
Therefore, an entitlement to an enhancement of contributions pursuant to Kennon would, in most instances, require the wife to lead evidence about the violence and the effect that the violent conduct had on her ability to make relevant contributions, that is, evidence as to how it made her contributions as, say, a homemaker and parent, significantly more arduous to perform.
The Court of Appeal of the Supreme Court of Victoria recently considered Kennon in Giller v Procopets (2008) 24 VR 1 in relation to Part IX of the Property Law Act 1958 (Vic). There, Neave JA (Maxwell P agreeing) was prepared to accept that it was self-evident that the violence and threats to kill to which a de facto husband subjected de facto his wife would have made it significantly more difficult for her to discharge her role as homemaker and parent, without specific evidence as to the effect that this had on her capacity to contribute.[194] I accord the greatest respect to another intermediate court of appeal in Australia. However, absent a determination by the High Court, I am bound by the decision of the Full Court this Court. I note that minority judgment of Ashley JA in Giller v Procopets more closely accords with the approach of this Court, as articulated by the above authorities, which approach was:
Even if the evidence had enabled a conclusion that there had been a pattern of physical or mental abuse in the period of the domestic relationship during the period of cohabitation, it would not necessarily follow that it made the appellant’s contributions relevantly more burdensome. I accept that it would have such an effect in respect of periods closely connected in time with proven assaults. But other than that, the learned trial judge obviously considered that the appellant was far from being put in fear of the respondent, or otherwise affected by mental distress.[195]
[194] Giller v Procopets (2008) 24 VR 1, 70.
[195] Giller v Procopets (2008) 24 VR 1, 20.
I also respectfully endorse the following observations of Ashley JA to the effect that the principles in Kennon are likely to be applicable to only a “narrow” band of cases:
I must make very clear my opinion that no incident of domestic violence is inconsequential. Every such incident should be deplored. Such an incident may call for penal sanction (as in fact was imposed in respect of the November 1996 assault) or entitle a civil remedy in an action for assault. But the authorities to which Neave JA refers do not, in my opinion, support a conclusion that relatively isolated incidents of domestic violence should trigger, in an application under s 285(1) or under similar provisions of the Commonwealth and other States, a conclusion that the victim’s contribution to the relationship were made “significantly more arduous than they ought to have been”. Cases where such a conclusion should be reached have been described as “exceptional”, and in a “narrow band”.76 There is good reason why that should be so. The idea that a partner’s contributions might be characterised as more burdensome than they would otherwise have been, this telling in money terms in favour of that partner in a property adjustment, originated in the Family Court. It introduced back into family law a conception which had been legislatively removed — the conception of fault. It is understandable that application of the “more burdensome” principle should be closely confined. I think it would be anomalous if some more generous approach was taken in the case of breakdown of a de facto relationship.[196]
It is difficult to imagine that repeated domestic violence does not lead to constant fearfulness in the victim. There is scope, I think, for our Court to clarify the test in Kennon’s Case which requires a “pattern of violence”, particularly where it is clear that controlling behaviour is a form of domestic violence for which a “pattern” may form although a pattern which discloses itself more subtly than physical injuries. A requirement to prove frequent or regular violence could, inadvertently, ignore the dynamic of a victim modifying his or her behaviour out of fear of future violence and for the successful purpose of avoiding such violence. That is the more arduous existence that Kennon’s Case would, presumably, also be intended to cover.
[196] Giller v Procopets (2008) 24 VR 1, 21.
I have recited the wife’s allegations of violence above. I do not accept that everything happened as the wife evidence would have it. I accept that the husband was violent to or threatening of the wife on the instances referred to above on which the wife called the police for assistance or sought an intervention order. However, I do not accept that the husband was violent to the wife on the other occasions, which she said led to her attending a police station and reporting the incident, but for which she could not produce any documentary records of at the trial.
I accept that relevant domestic disputes occurred on:
a)21 August 1996;
b)3 August and 4 October 1997;
c)10 February 1998;
d)12 June 2004, and
e)18 December 2005.
The last two disputes were confined to verbal violence and threats of harm. Despite the wife’s evidence to the contrary, I prefer the notes of Victoria Police (tendered into evidence by the wife) over the wife’s sworn evidence.
I am not satisfied that the incidences of violence constituted a pattern of the nature referred to in the authorities of this court referred to above or the reasons of Ashley JA in Giller v Procopets (supra) which I follow together with the other authorities cited above including Kennon’s Case and S & S (supra).
Second, the wife’s case contains no explicit and detailed evidence as to how the violence perpetrated by the husband made her contributions significantly more arduous, or any evidence which would allow me to quantify the effect of the violence on her capacity to contribute. This is the real flaw in her argument in relation to Kennon’s case and why the contention fails.
I reject the wife’s submission that the domestic violence perpetrated against the wife by the husband resulted in her contributions being “significantly more arduous than they ought to have been”. The evidence, as it stands, falls outside of the range of “exceptional” cases, to which the above authorities refer.
All this said, the wife’s contributions as a homemaker and parent during cohabitation and post separation, when she has been solely responsible for the children are very significant and far outweigh the husband’s contribution in that regard, to a very large degree.
Conclusion as to contributions
Given the time since separation, which likely occurred in December 2002, I have considered whether contributions should be assessed on an asset by asset basis rather than a global basis. I note the comments of Finn J in Zalewski and Zalewski (2005) FLC 93-241, where at 79,978 her Honour observed:
It is my impression that there are currently coming before the Court a significant number of cases in which the period between the parties’ separation and the hearing of their property settlement proceedings is substantial. The delay seems often to arise, at least in part, because the parties have initially reached some form of informal (or even formal) settlement from which one party later resiles (often for good reason). In these long separation periods, the parties will usually have built up substantial new assets or incurred substantial liabilities. In an endeavour to satisfy the parties that any orders which are eventually made by the Court in these somewhat complicated cases are just and equitable, it can, in my view, be very useful for Judges to assess contributions to property on an asset by asset basis.[197]
[197] Zalewski and Zalewski (2005) FLC 93-241, 79,978.
I agree that where there is a lengthy period of separation before the hearing of applications for alteration of property interests, it may be more useful and fair to undertake an assessment of contributions on an asset by asset basis rather than on a global basis, particularly where further assets have been accumulated or significant contributions have been made post separation. However, in this case, conspicuously little has happened as far as financial matters are concerned since separation. The husband has continued to live in the E Street apartment, F Street remains vacant land and the H Street office has been tenanted. As far as the children are concerned, the wife has continued to care for them. I am not satisfied that an asset by asset assessment is appropriate for this case. Indeed, if I did assess contributions on an asset by asset approach, it may be difficult to accord appropriate weight to the wife’s homemaker and parent contributions post-separation as well as during cohabitation.
Whereas the husband’s contributions can be found in the assets which are divisible between the parties, the wife’s contributions as a homemaker and parent have been very significant and must also be recognised “not in a token way but in a substantial way”.[198] However, I do not consider the wife’s contributions to be equivalent to the husband’s contributions.
[198] Mallet and Mallet (1984) 156 CLR 605, 609 (Gibbs CJ), 623 (Mason J) and 636 (Wilson J).
Taking all these matters in to consideration leads me to the view that, as a result of their respective and different contributions, the assets which I have found to be divisible between the husband and the wife should be apportioned 60 percent to the husband and 40 percent to the wife.
Therefore, having regard to the net pool of assets being somewhere in the vicinity of $2,340,783,[199] the contribution based entitlement of the husband and the wife would be:-
a)As to the husband, $1,404,470;
b)As to the wife, $936,313.
[199] The calculation is indicative only. It is not based on accurate costs of selling real estate or current market values, in light of the fact that properties will be sold.
Section 79(4)(d)-(g)
I now turn to the third step in the process of apportioning the assets available for distribution between the parties.
The wife seeks an adjustment of 15 percent in her favour on the basis that she has poor English language skills, has the care of the two children of the marriage and will be reliant on investments from the property distribution or Centrelink benefits for her income support.
The husband did not make submissions on this point, other than to say that the wife should not receive any of the divisible property.
a) The effect of any proposed order upon the earning capacity of either party to the marriage
The orders that I propose making in this matter will not affect the earning capacity of either party to these proceedings.
b) The matters referred to in sub-section 75(2) so far as they are relevant
a) The age and state of health of each of the parties
Both parties to the marriage are 48 years old. In the wife’s affidavit sworn 7 April 2009 she deposed that she has reasonably good physical health but suffers from anxiety and stress.
The husband gave evidence on 26 July 2011 that he had some health problems at some stage in the last 18 months which resulted in him having an operation. He said that the operation was successful and the husband otherwise has good health.
This factor does not support an adjustment in relation to either party.
b)The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment
On 2 March 2010, the wife was given leave to file an updated Financial Statement. In that document the wife stated that her total average weekly income was $539, comprised of $447 in government benefits and $92 per week in child support, paid by the husband. In the last 18 months the wife has attempted to maintain full time work twice, but in both instances this has lasted less than a week. The wife is currently receiving a Newstart Allowance from Centrelink of $386 per week.
Since the wife has lived in Australia her role in the family has been that of fulltime homemaker and parent. For a number of years she assisted the husband by cleaning his office. The wife’s ability to find employment in Australia is limited by her English language skills and while she continues to study English at TAFE, her progress is slow.
The husband’s financial statement states that his income is $875 per week but referred to notional drawdowns of capital rather than income. The husband’s oral evidence of 26 July 2011 in relation to his current income was vague and nonresponsive. He said that he is living on borrowings and has been unemployed for some time.
His evidence during cross-examination on 4 September 2009 was that he believed that he would soon be able to make, “100 grand a year at least” as a real estate agent subagent.[200] The husband said on 26 July 2011 that he is making slow progress in his part-time course at TAFE, having only completed five of the total 14 subjects, despite the fact that he had previously given evidence that he was due to graduate at the end of 2010. The husband said that, “I will do my best to finish as soon as possible”, however, he did not provide any more specific information about when that might be. I take into account that the husband may be left with a liability for “top up” capital gains tax, upon the company making distributions to him in compliance with this order. That is a liability which will be solely his and upon which he could have led evidence in support of a different result, but did not do so.[201]
[200] Transcript of proceedings 4 September 2009, 268.
[201] In the marriage of HJ and Kellner (1992) FLC 92-287, 79,134.
I have regard to the contribution based entitlement of the husband and wife. This factor supports an adjustment in favour of the wife whose capacity to earn an income is necessarily inferior to the husband who speaks and reads English and who has been employed extensively.
c)Whether either party has the care or control of a child of the marriage who has not obtained the age of 18 years
The final orders in relation to the children which were made by consent on 10 December 2009 state the children are to live with the wife and have contact with the husband at times that are agreed by the children. The responsibility for the day to day care of the two children of the marriage will in future be borne by the wife. It is a very substantial responsibility. They are only 9 years old and 16 years old. It appears that the husband will have a very limited role in the children’s upbringing. This is a very significant factor in favour of the wife and justifies an adjustment in her favour.
d)Commitments of each of the parties that are necessary to enable the parties to support:
himself or herself;
a child or another person that the party has a duty to maintain;
The wife does not have any commitment which is necessary to enable her to support her two older children, as on her evidence her two older children continue to live in the Country JJ and have no plans to return to Australia. The wife does not provide them with any financial support. Each party must support himself/herself and the children of the relationship.
e)The responsibilities of either party to support any other person;
Neither the husband or the wife have a responsibility to support any one other than themselves and their two children.
f)The eligibility of either party for a pension, allowance or benefit under
any law of the Commonwealth, of a State or Territory or of any other country; or
any superannuation fund or scheme, whether the fund or scheme was established or operates within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
The wife is currently receiving Centrelink benefits $386 per week. I have dealt elsewhere with the wife’s liability to Centrelink and am satisfied that it should be repaid, direct to Centrelink, at the earliest opportunity so that the wife, and children, may benefit fully from whatever social security entitlement the wife has.
The husband is not receiving any welfare benefits at present. He did not make submissions as to whether he was eligible to receive such benefits.
g)Where the parties have separated or the marriage has been dissolved, a standard of living that in all the circumstances is reasonable;
The wife’s standard of living has deteriorated since the parties separated. The wife no longer lives at the E Street apartment, but instead lives in government housing at M Street, Suburb G, which is a three bedroom flat. The wife deposed that she does not have enough money to afford things that the children need for school, such as a memory stick for their computer, a saxophone for P, or a maths, science and English tutor for P. The wife also says that she has not been able to buy herself new clothes for a “long time”.
There is nothing to suggest that the husband’s current standard of living is inadequate.
The wife has to accommodate herself and two children. This factor supports some adjustment in favour of the wife.
h)The extent to which the payment of maintenance to the party whose maintenance is under consideration would increase the earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income;
As I have already indicated, the wife has little prospect of obtaining a job in Australia. She has undertaken an English language course for a number of years, but is making little progress. However, the wife does not have proposal to apply money that she may receive in these proceedings to improve her capacity to undertake work in Australia.
j)The extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party;
k)The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration;
The husband and wife married in 1994. At that time the wife was 31 years old. The parties separated in December 2002. Since separation the wife has not worked in paid employment for any more than a couple of weeks. I am satisfied that this is partly due to the marriage and her responsibilities as the primary homemaker and parent, however it is also due to her lack of English language skills.
l)The need to protect a party who wishes to continue that party’s role as a parent;
The wife wishes to continue her role as primary carer of the two children. The consent Orders that were made in relation to the children’s proceedings indicates that the husband is also amenable to the mother continuing in this role. The youngest child is only 9 years old. This factor justifies an adjustment in favour of the wife.
m) If either party is cohabiting with another person – the financial circumstances relating to the cohabitation;
The evidence of both parties is that neither of them are cohabiting with another person, nor is it likely in the foreseeable future that this situation will change.
na) Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage;
It appears that the husband is paying some $100 or so per week. It is a small sum having regard to the cost of raising two children.
o) Any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
I was not addressed as to this factor.
c) Any other order made under this Act affecting a party to the marriage or a child of the marriage
There are no other orders made under the Family Law Act 1975 which affect a party or the child which needs to be taken into account, save for the parenting orders which will be made in this matter and which will result in the child continuing to live with the wife.
d) Any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage
These provisions have been considered in relation to section 75(2)(na) above.
Conclusions on adjustive factors
Taking the above matters into account, and in particular the fact that the wife will be the primary carer of the two children and has a very limited capacity for employment in Australia, it is my view that it is appropriate that an adjustment must be made in favour of the wife. It is just and equitable that the wife receive by way of adjustment in her favour eight percent of the divisible assets. That increases her entitlement to 48 percent of the assets and reduces the husband’s entitlement to 52 percent.
The proportional entitlements, of 48 percent to the wife and 52 percent to the husband, applied to the pool of divisible assets and liabilities which has a net value of $2,340,783 produces the following results:
a)To the husband, $1,217,207;
b)To the wife, $1,123,576.
Fourth step: are the orders just and equitable?
Of the wife’s entitlement of $1,123,576, the wife already has $142,700, made up as follows:
Funds released pursuant to Order made 14 June 2007
$30,000
Funds withdrawn from Commonwealth Bank
$20,000
Money from wife’s father property investment
$92,700
The above calculations indicate a payment to the wife from the balance of assets of $980,876. The payment is only indicative because I have not had regard to the costs of selling the real properties at 1 F Street and the E Street apartment or the precise calculation of capital gains tax on the sale of 1 F Street at less or more than the estimate of $401,000.
Given the magnitude of the payment to the wife and the liability for capital gains tax, it is clear that there are insufficient assets available to meet the wife’s legitimate entitlement without the property at 1 F Street being sold. That being the case, the transactions pursuant to which it and other assets were sought to be alienated from the pool of divisible assets, must be set aside so that the sale can take place and each party to the marriage can receive his/her entitlement to property.
I have found the credit of all parties to be unsatisfactory. I am satisfied that all gave evidence dishonestly and with an intention to advance his or her own position over the position of an opposing party. It is wholly impracticable for the husband and wife to have joint conduct of the sale of the properties at 1 F Street and the E Street apartment. The effect of the orders under s 106B will be to remove Ms D from involvement with the company. As the wife is the only party who has a real interest in realising the assets without undue delay, I will make the wife responsible for the sales. Accordingly, I will require the parties to do all acts and things to transfer the properties to the wife on trust for sale. In the event that any party fails or neglects to sign documents required of him or her, a Registrar of this Registry of the Court will be empowered to sign documents on behalf of the party (or parties) who has failed to sign.
In view of the wife being responsible for conduct of the sale, her solicitors on the record in this proceeding should be the solicitors who do the conveyancing subject only to a prior written agreement between the husband and the wife that an alternative firm of solicitors ought to act. This preserves their right to seek better terms for the conveyancer than the wife’s solicitors may charge. However, given the parties experience with Mr BD in Sydney, it is important that the practitioner be legally qualified and has a good and thorough understanding of how these orders operate, as well as how the matter can be relisted to deal with any application in relation to implementation with these orders. It occurs to be that obtaining the capital gains tax assessment might be attended by some difficulty which will, conceivably, involve an application to enforce or to alter some of the machinery provisions under my orders.
Provision will have to be made in relation to calculation and payment of Capital Gains Tax. Having regard to that liability, but without regard to reasonable costs of sale and adjustments on settlement of the sales, land tax and rates, I intend that the orders will be implemented as follows:
To the husband at 52 percent:
H Street office
$135,000
Balance proceeds of 2 F Street
$13,744
Proceeds of drawdowns from NAB secured by mortgage over the E Street apartment
$200,000
Balance of proceeds of sale of R Street received from Mr BD on 8 December 2008
$72,742
Husband’s share of litigation funding order made 14 June 2007
$30,000
Proceeds of sale of Commonwealth Bank shares received 5 April 2004
$37,172
From proceeds of sale of 1 F Street and the E Street apartment
$728,549
$1,217,207
To the wife at 48 percent:
Wife’s share of litigation funding order made 14 June 2007
$30,000
Withdrawal by wife from Commonwealth Bank account in September 2005
$20,000
Money from wife’s father, redemption of property investment
$92,700
From proceeds of sale of 1 F Street and the E Street apartment
$980,876
$1,123,576
I am satisfied that a determination in the above terms is just and equitable vis a vis the husband and wife. There is no allowance for Ms D to be refunded any outgoings or disbursements in her own right or in her capacity as an officeholder of the company. This is because she has, I am satisfied, acted at the behest of the husband and her endeavours have been financed by him. I am satisfied that Ms D is not, and never was, a bona fide purchaser within the meaning of s 106B(3).
Spousal Maintenance
The wife also seeks an additional amount equivalent to 5 percent of the property pool as lump sum spousal maintenance. Counsel for the wife contends that this would allow the wife to support herself at her current rate of expenditure of $1,485 per week for 75 to 80 weeks.
I do not propose to accede to the wife’s application. The adjustment which I have made as a result of the s 75(2) factors is a significant adjustment in large part because the wife has a lesser income earning capacity or potential than the husband. It is not appropriate to make any award of spousal maintenance in addition to the adjustment which I have made.
Conclusions
For the above reasons I am satisfied that the property orders set out at the commencement of these reasons are appropriate and I make orders in those terms.
Costs will be a significant aspect in the balance of this case. Section 117AB provides that where the Court is satisfied that a party to the proceedings knowingly made a false allegation or statement in the proceedings, the Court must order that party to pay some or all of the costs of another or other parties to the proceedings. All parties in this proceeding made statements that were false but only the wife is legally represented. The wife sought orders quarantining $250,000 of the husband’s entitlement pending determination of the costs dispute. I do not know how the $250,000 is made up. The husband and Ms D may have some costs which are partially or wholly recoverable against the mother notwithstanding that they did not incur legal costs.
I will make provision for submissions as to costs to be filed. These submissions should be concluded within two months. Accordingly, I will adjourn the costs aspect of the matter to a date two months hence when I will hear submissions and/or evidence as to what amounts (if any) should be held back from the entitlement of the husband and wife to meet costs claimed by any other party. On that date, any party who seeks that some part of the other’s entitlements be held to meet the potential of an award for costs, should have provided to each other party details of the costs claimed. That could be in the form of an account for costs and disbursements. Obviously any claim for costs may not produce that result but the information should assist the Court in making a ball-park estimate of the figure at which costs which could, ultimately, be quantified.
I certify that the preceding four hundred and eighty-four (484) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett
Associate:
Date: 16 September 2011
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