LABROS & NADER
[2020] FCCA 132
•12 February 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| LABROS & NADER | [2020] FCCA 132 |
| Catchwords: COSTS – Applicant seeks indemnity costs on basis of respondent’s conduct – respondent has admitted money forwarded overseas – stage when admission made – matters to be considered – whether just to make order for costs. |
| Legislation: Family Law Act1975 (Cth), ss.4(1); 39B; 75(2); 79; 90MC; 90SF; 90SM; 117 Evidence Act 1995 (Cth), ss.36; 137; 140 |
| Cases cited: Bevan & Bevan [2013] FamCAFC 116 Biltoft & Biltoft (1995) FLC 92-614 Black & Kellner (1992) FLC 92-287 Briese & Briese (1986) FLC 91-713 Briginshaw v Briginshaw (1938) 60 CLR 336 Chang & Su (2002) FLC 93-117 Clauson & Clauson (1995) FLC 92-595 C & C (2005) FLC 93-220 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 C & C (2006) FLC 93-269 D & D [2003] FamCA 473 D v D [2005] FamCA 356 Ferguson & Ferguson (1978) FLC 90-500 Ferraro v Ferraro (1993) FLC 92-335 Fox v Percy (2003) 214 CLR 118 Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 In the Marriage of Browne & Green (1999) 25 Fam LR 482 In the Marriage of DJM and JLM (1998) 23 Fam LR 396 In the Marriage of Kowaliw (1981) FLC 91-092 In the Marriage of Omacini (2005) 33 Fam LR 134 In the Marriage of Spiteri (2004) 33 Fam LR 109 In the Marriage of Townsend (1994) 18 Fam LR 505 Ingold & Ingold [2019] FamCA 734 Jones v Dunkel (1959) 101 CLR 295 Kohan & Kohan (1993) FLC 92-340 Lee Steere v Lee Steere (1985) FLC 91-626 L & L [2003] FamCA 40 Luciano & Luciano [2000] FamCA 401 Russell & Russell [1999] FamCA 1875 Stanford v Stanford [2012] HCA 52 Steinbrenner & Steinbrenner [2008] FamCAFC 193 Trevi & Trevi [2018] FamCAFC 173 Wardman & Hudson (1978) FLC 90-466 Waters & Jurek (1995) FLC 92-635 Watson & Ling [2013] FamCA 57 Weir & Weir (1993) FLC 92-338 |
| Applicant: | MS LABROS |
| Respondent: | MR NADER |
| File Number: | ADC 4083 of 2017 |
| Judgment of: | Judge Brown |
| Hearing dates: | 5 & 6 August; 23 August & 14 October 2019 |
| Date of Last Submission: | 14 October 2019 |
| Delivered at: | Adelaide |
| Delivered on: | 12 February 2020 |
REPRESENTATION
| Counsel for the Applicant: | Ms Ross |
| Solicitors for the Applicant: | Belchamber Legal |
| Respondent: | In Person |
ORDERS
In full and final settlement of all applications for settlement of de facto property:
Within thirty-five (35) days of the date of these orders the respondent Mr Nader (hereinafter referred to as “the respondent”) do all things necessary and execute all documents required to transfer his entire interest in the property known as and situate at A Street, Suburb B, in the State of South Australia and being the whole of the land comprised in Certificate of Title Volume (hereinafter referred to as “the former family home”) to Ms Labros (hereinafter referred to as “the applicant”).
Concurrently with the production of the transfer required to give effect to order (1) hereof to transfer the former family home from the respondent to the applicant the respondent discharge any mortgage or charge secured against the property and provide the applicant with discharges of mortgage in registerable form in respect of such mortgages and in particular to cause the discharge of registered mortgages numbered …70 and …21 in favour of ING Bank (Australia) Limited.
Upon the transfer of the former family home from the respondent to the applicant the applicant will keep the respondent indemnified in respect of all mortgages and any other outgoings and liabilities in respect of the former family home.
The respondent is ordered to indemnify the applicant with respect to the liability of the applicant either personally or jointly with the respondent in respect of any debt asserted to be owed by the applicant to the respondent’s sister, Ms C and/or any other members of the respondent’s family.
Pursuant to section 90MT(4) of the Family Law Act 1975 a base amount of $115,000.00 be allocated to the applicant in respect of the respondent’s superannuation interest in the Super Fund AA (hereinafter referred to as “Super Fund AA”) and that pursuant to section 90MT(1)(a) whenever a splittable payment becomes payable in respect of that interest, the applicant is entitled to be paid the amount to be calculated in accordance with the Family Law (Superannuation) Regulations 2001 in respect of that base amount and there is a corresponding reduction in the entitlement of the respondent.
The Trustee of the Super Fund AA, the respondent and the applicant in accordance with the Family Law (Superannuation) Regulations 2001 shall do such acts and things and sign all such documents as may be necessary to calculate the payment entitlements of the applicant in accordance with order 5 hereof to have effect from the operative time, which shall be thirty-five (35) days from the date of these orders.
Including but without limiting the effect hereof, the applicant shall retain for her sole use and benefit absolutely free from any further claim or demand of the respondent:
(a)the furniture and furnishings in her possession, power and control;
(b)any motor vehicle in her possession;
(c)savings, shares and investments in her name;
(d)any superannuation entitlement, long service leave, annual leave or other work related benefits;
(e)personal effects;
(f)any other real and/or personal property and/or financial resources of the applicant or in the applicant’s name and/or possession not otherwise specified herein;
(g)all monies standing in the bank account relating to the family trust established by the parties during the course of their de facto relationship;
(h)the former family home;
(i)the D Shares standing in her name; and
(j)any other real and/or personal property and/or financial resources of the applicant or in the applicant’s name and/or possession not otherwise specified herein.
Including but without limiting the effect hereof, the respondent shall retain for his sole use and benefit absolutely free from any further claim or demand of the applicant:
(a)the property registered in his name known as and situate at E Street, Suburb F in the State of South Australia and being the whole of the land contained and described in Certificate of Title Volume;
(b)his real property in Country BB;
(c)his Country G superannuation fund;
(d)the furniture and furnishings in his possession, power and control;
(e)any motor vehicle in his possession;
(f)savings, shares and investments in his name;
(g)any superannuation entitlement, long service leave, annual leave or other work related benefits other than the amount split from his Super Fund AA pursuant to order (5) hereof;
(h)personal effects; and
(i)any other real and/or personal property and/or financial resources of the respondent or in the respondent’s name and/or possession not otherwise specified herein.
No order as to costs.
All applications be otherwise dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Labros & Nader is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 4083 of 2017
| MS LABROS |
Applicant
And
| MR NADER |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment relate to the settlement of de facto property proceedings, following a long relationship of around thirty years in duration, between the parties concerned. The law to be applied to the issue is contained in Part VIIIAB of the Family Law Act 1975.
In many ways, the relationship concerned can be regarded as being a conventional one. One spouse was the family’s main breadwinner, largely employed as a PAYG taxpayer; whilst the other spouse was largely engaged in household tasks and as a parent, which she did in an exemplary fashion.
However, the factual situation is highly unusual for one significant reason. Between 2003 and the date of separation (mid-June of 2017), one party directed regular sums of money to support a partner and children from another relationship, which he was conducting overseas, unbeknownst to his Australian partner.
The sum in question is around $200,000.00, which, when the parties’ other assets have been tabulated, represents a significant proportion of them. In this context, difficult issues arise as to how the sum is to be factored into the court’s deliberations, in order to bring about a just and equitable settlement of the parties’ competing claims for property settlement.
Background
The applicant is Ms Labros. She was born in 1956. She does not currently enjoy perfect health, having suffered cardiac problems since she was twenty seven years of age. She has also recently been diagnosed with depression and anxiety.
Ms Labros is currently in receipt of social security payments. She has not been fully employed for many years and has no formal qualifications. She keeps busy, as a volunteer at 'H' and has some limited employment as a customer service officer.
It is her position that her current circumstances preclude her from returning to the full time work force and are likely to continue to do so on a permanent basis. She estimates her average weekly income to be just over $400.00, which is exceeded by her usual level of expenditure in an amount of approximately $230.00 per week. In short, Ms Labros deposes that she is living hand to mouth.
Ms Labros owns a motor vehicle of modest value; superannuation of around $3,000.00; a small parcel of D Shares; and savings of around $5,300.00. In addition, she has the contents of her home, which she estimates to be worth around $5,000.00. These items are likely to be central to the maintenance of her lifestyle but of little interest to anyone else.
The respondent is Mr Nader. He was born in 1963. In my assessment, he is an intelligent and resourceful person. Mr Nader has two university degrees. Firstly, a Bachelor of qualifications, which was conferred by University in 1989 and secondly, a Bachelor’s Degree in qualifications, with Honours, conferred by University in 1995.
Mr Nader was born in Country BB, but came to Australia for the last year of his secondary education in 1983. He remains a Country BB citizen, but is entitled to permanent residency in Australia. Between 1994 and 1996, he lived and worked in Country G, where he was employed in the field of occupation. He concedes that he has “a very strong background in his occupation”.
However, the majority of Mr Nader’s employment has been performed in Adelaide, where he worked for Employer CC between 2000 and 2013. During this period, he worked as a professional and more recently as a professional. Clearly Mr Nader has many ties with Australia. However, whether he will continue to live in this country is a major issue in the case, for reasons which will become apparent in due course.
In the latter stages of his career at Employer CC, Mr Nader had responsibility for managing urgent repairs to the State’s infrastructure, requiring him to oversee the work of sub-contractors, often at uncivilised hours of the day and night. He found this work stressful and, in his view, it caused him to contract alopecia, which he found distressing. This led him to make a decision to take early retirement at aged fifty.
The parties’ major asset, in dollar terms, is their former family home located at A Street, Suburb B. It is currently worth approximately $450,000.00. This property was acquired in 2002 and remains registered in Mr Nader’s sole name. It is subject to mortgage in favour of the ING Bank.
Ms Labros currently resides in the property and wishes to retain it unencumbered. Mr Nader agrees that this is appropriate, given the parties’ current circumstances. Also relevant to these proceedings is an investment property, again registered in Mr Nader’s name alone, which is located at E Street, Suburb F.
The parties agree the Suburb F property is worth $350,000.00 and is subject to a mortgage of around $118,000.00, again to the ING Bank. It is currently rented for $305.00 per week with the rent utilised to pay the weekly mortgage payment of $241.34. Mr Nader controls the property, paying the outgoings associated with it. The property’s income generating capacity is presently close to neutral. Mr Nader would like to retain the property.
At present, Mr Nader is living in a share house in Suburb DD, with five others. His rent is $170.00 per week. He is a self-employed Uber driver, who earns between $1,000 and $1,500 per week gross, depending on demand for his services. He must also pay for his fuel and a service fee to Uber, which in total amount to somewhere between $380.00 and $430.00 per week. He is currently working between 50 and 60 hours per week. It is his case that he, too, is also living in financially parlous circumstances at present.
Mr Nader has accrued superannuation, with Super Fund AA in an amount of $167,703.00 and a further sum of around $10,000.00 superannuation with authorities in Country G, which he derived from his period of employment there. He does not own a car, in Australia, and has less than $2,000.00 in the bank in the form of savings. The manner in which he has managed his financial affairs, over the last three financial years, has enabled him to recoup tax refunds of around $23,400.00, which he has utilised for his living expenses.
The Suburb B property is not only Ms Labros’ home but also that of the party’s son Mr EE, who was born in 1993. Mr EE suffers from cerebral palsy, epilepsy and a central processing disorder, as a result of a brain injury. It is Ms Labros’ evidence that Mr EE faced many health challenges, as he grew up, and it was she who predominantly managed these issues and cared for him.
The parties disagree about the implications of Mr EE’s special needs and the overall level of his dependency currently. It is Ms Labros’ case that he requires her daily care, whilst Mr Nader asserts that Mr EE is capable of some level of self-support.
Regardless of these controversies, it is the case that currently Mr EE receives a disability pension ($916.00 per fortnight) and works as a labourer at Suburb FF, which provides him with a wage of $40.00 per day or around $134.00 net per week. Suburb FF is within walking distance of the Suburb B home. Mr EE was described by Ms Labros as being a confident person. It is common ground that he has travelled overseas, on his own, in the past. He does not pay her board.
In answer to a question from me, Mr Nader agreed that he has something of an entrepreneurial bent. He also seems to have a facility to make contacts with all sorts of different people. Whilst he worked at Employer CC, Mr Nader formed a business relationship with a colleague, Mr J, to acquire land in suburban Adelaide and develop it by building units, which were then sold.
After Mr Nader left Employer CC, he continued his involvement in property development in what many would regard as an unorthodox manner. The Suburb B property was subject to a line of credit, provided by the ING Bank and secured by mortgage. The sum of $200,000.00 was available through the line of credit.
Mr Nader formed a commercial relationship, with a property developer, Mr K, who operates a company known as L Group. In 2014, Mr Nader advanced Mr K the sum of $200,000.00 via the line of credit, for use by the latter in his property development enterprises.
The loan advanced by Mr Nader was for a period of twelve months and attracted an interest rate of 30% per annum and so netting him the sum of $60,000.00, when the loan fell due. It is Mr Nader’s case that this was a legitimate transaction, which provided him and Ms Labros with a modest income, on which he paid tax.
He refutes any suggestion that there was any irregularity in this arrangement or that it was done to deceive or defraud Ms Labros. Mr Nader continued the arrangement in subsequent years, although the rate of interest charged by him reduced first to 20% and, in 2018, to 15% resulting in income, from the interest derived, of $40,000.00 and then $30,000.00.
It is the effect of Mr Nader’s evidence that property developers, such as Mr K, have a need for cash flow, whilst they are in the construction phase of their developments. This is as a consequence of them having fully utilised their borrowing capacity, from orthodox financiers, with the purchase of the land being developed. Because of this exigency, unconventional lenders, such as he, can demand higher rates of interest return on what can only be characterised as unsecured loans.
Mr Nader has had a similar relationship with another person, Mr M (also known as Mr N), withdrawing a further $70,000.00, from the line of credit, in December 2016. The circumstances surrounding this transaction and what amount had been repaid and in what circumstance remain in controversy between the parties.
On 14 November 2018, Mr Nader consented to an order of this court which required the repayment of the sum of $200,000.00, previously advanced to Mr K’s company, to be repaid into the line of credit secured against the Suburb B property.
He also agreed that a sum of $20,000.00 advanced to Mr M should also be returned to the line of credit. In these circumstances, it is agreed that no monies are currently owed in respect of the mortgage secured over the Suburb B property and Mr Nader is not in a position to use its equity to pursue his commercial endeavours.
It is Ms Labros’ case that she was largely involved in home duties and the care of Mr EE, during the party’s relationship and left financial matters to Mr Nader, who kept his somewhat convoluted affairs at arm’s length and opaque from her, with her tacit approval, whilst he retained her trust. It is also clear that Mr Nader was the family’s main breadwinner.
The parties seem to have lived frugally. Mr Nader’s income, first provided by Employer CC and then through casual work and his various commercial activities, maintaining their modest lifestyle. From time to time, Mr Nader travelled overseas, ostensibly to Country BB, where his elderly parents and two of his sisters live. Mr Nader feels obliged to support his parents in their old age. He has two other sisters, who live in Country G and Country O respectively.
In addition, on occasion, Ms Labros and Mr EE accompanied him on his trips overseas, usually to visit Mr Nader’s family in Country BB. Ms Labros seems to have enjoyed reasonably cordial relations with Mr Nader’s family in the past. The longest period away Mr Nader had from Adelaide, was in 2011/2012, when he utilised his long service leave and accrued holidays from Employer CC, on his retirement.
This imprecisely based consensus – Mr Nader managing the family’s finances without any input from Ms Labros, whilst she tended to Mr EE and the Suburb B home – between Ms Labros and Mr Nader, began to unravel in early 2016, when Ms Labros became suspicious about the contents of text messages being received by Mr Nader.
These suspicions led her, in early 2017, to inspect Mr Nader’s passport and so discover, unbeknownst to her, that he had been a regular visitor to Country T. At the same time, she also discovered records of international money transfers from Mr Nader to a person hitherto unknown to her, Ms P, who was apparently a resident of Country T. Whatever trust or acquiescence, which previously existed between the parties as to how their finances, both present and future, were to be managed, was totally destroyed.
On 5 June 2017, the date which marks the end of the parties’ relationship, Ms Labros confronted Mr Nader about her discoveries and an argument ensued between the two, which also involved Mr EE. A few days later, on 1 July 2017, Mr Nader admitted to Ms Labros that he and Ms P were in a committed relationship with one another and had been for the past several years.
In particular, he disclosed that he had met Ms P, in Country T, in 2005 and remained in contact with her, as a friend, until 2011, at which stage the friendship developed to a romantic involvement. As a consequence of his relationship with Ms P, Mr Nader indicated that he had adopted Ms P’s daughter, from an earlier relationship, Q in 2011. She is now around eight years of age. In addition, Mr Nader and Ms P have a child together. She is R born in 2013.
Ms P has not provided evidence in these proceedings. She and the two children concerned live in City S, Country T, where Ms P works as a retail assistant. For obvious reasons, these revelations caused Ms Labros to be extremely suspicious about Mr Nader’s various financial activities during their relationship.
These disclosures were also extremely deleterious for her psychological health and she continues to seek treatment for the management of her grief arising from the end of her relationship with Mr Nader, which, in turn, has led to her developing symptoms of depression and anxiety.
In all the circumstances, again for obvious reasons, it has been impossible for the parties to resolve the property issues arising between them. Ms Labros views Mr Nader though a prism of hostility and mistrust; whilst for his part, Mr Nader admits his deceit, so far as his relationship with Ms P is concerned, but otherwise asserts that he has been transparent and honest about his unusual financial circumstances. These differing attitudes of the parties encapsulate the central evidentiary issue in the case.
Mr Nader left Australia, for Country BB in 2017. Against this difficult background, on 29 September 2017, Ms Labros began proceedings, in this court, seeking the settlement of de facto property issues with Mr Nader. Mr Nader responded to this application on 16 February 2018. Much time and effort has been expended on Ms Labros attempting to retrospectively examine Mr Nader’s financial activities during their relationship.
During the course of these proceedings, solicitors acting on Ms Labros’ behalf have issued subpoenae directed towards Ozforex; Western Union Financial Services; and the Commonwealth Bank; requiring each of these entities to produce documents relating to all money transferred from Mr Nader to Ms P's Country T Bank Account from 2004 onwards.
The sums revealed from these records produced by these three sources indicate that Mr Nader has transferred the sum of $214,274.79 overseas, between late 2003 and May 2018, the vast majority of these sums being forwarded to Ms P. Mr Nader does not dispute the quantum of this sum and agrees that he forwarded the monies overseas.
The central issue arising in the case is how this sum is to be characterised in these proceedings and what implications it should have for how the parties’ modest asset pool is to be divided between them, following their long relationship. Ms Labros would characterise the sum as being analogous to a premature distribution of assets, which has solely favoured Mr Nader, to her grave detriment.
In these circumstances, she contends that it should be allocated dollar for dollar to Mr Nader as an asset received by him. She is not in a position to ascertain what precisely was done with the money, as it was clandestinely removed from the parties’ joint funds unbeknownst to her. However, she has her suspicions that a significant proportion of the funds may still be extant in Country T, under the control of Ms P, and, in due course, when these proceedings are concluded, Mr Nader will be in a position to leave Australia and join Ms P to utilise them.
Through her counsel, Ms Ross, Ms Labros contends that the cost of living is significantly less in Country T than in Australia and, as such, Mr Nader and Ms P are likely to be able to fund a comfortable standard of living there on a sum of around $200,000.00 or potentially more, if Mr Nader was able to secret more funds out of Australia, which her endeavours have not been able to uncover.
In addition, Ms Labros has deposed that, in the past, Mr Nader has indicated a desire to live overseas, somewhere in Country T, on his retirement, particularly in Country T. She also believes that Mr Nader’s skills are such that he is likely to be able to find some form of employment for himself in Country T. In all these circumstances, she does not rule out the possibility that Mr Nader, through the proxy of Ms P, has already acquired a comfortable residence for himself in Country T, where he will be able to live out a secure retirement.
In contrast, she contends, she will be facing an insecure future marked by financial austerity. She will have to struggle by on social security payments and will retain responsibility for caring for Mr EE as she grows older. Although she may be able to retain the Suburb B property, it will be difficult for her to maintain the outgoings related to it. Essentially, Ms Labros contends that it would be inequitable for Mr Nader to be able to benefit from his gross deceit and betrayal of her.
Mr Nader has deposed that he sees his future in Australia, where he has lived for most of his life. It is his case that he holds a moral duty to support Ms P, Q and R, which he will continue to discharge for the foreseeable future, whilst he is able to do so. It is the effect of his evidence that he forwards the sum of US$1,000.00 per month to support his Country T dependants and will continue to do so, regardless of where he chooses to live.
If Mr Nader does elect to live overseas in future, it is his evidence that he will choose to live in Country BB to look after his elderly parents, who are 95 and 87 years of age respectively. He is content to continue to carry on as an Uber driver and live in rented accommodation as, in his own words “this is the best [he] can do at present”. He enjoys good health at present, apart from a sore shoulder and neck as a consequence of long hours of driving. He does not rule out the possibility of returning to some form of secure employment at some stage in the future.
In these circumstances, he refutes the suggestion that he has been engaged in a process of salting funds away from Ms Labros in Country T to advantage himself personally. Rather, he asserts that the money, which he has despatched overseas, has been utilised by Ms P for her support and is no longer accessible by him.
Mr Nader’s evidence is that Ms P needs around US$1,000.00 per month to pay her rent; to provide support for herself and the two children; and particularly to ensure Q and R receive a good education. It is Mr Nader’s evidence that it is important to him that the children attend a private school where they will be exposed to Country Y culture and tradition and be able to learn the language.
Accordingly, it is the underpinning of Mr Nader’s case that it would be grossly unfair to him for the court to act on what he would characterise as the false assumption that he has directly or personally benefitted from the monies sent overseas to Ms P. As a consequence, he resists the add back and notional attribution of the sum of $212,000.00 to him as this would mean, in effect, he would receive nothing directly from these proceedings.
Mr Nader has acted largely on his own behalf in these proceedings. It being his position that he is not in a position to fund legal advice. Although he has not explicitly put it as such, the tenor of his case is that although he may have behaved in a reprehensible way, so far as Ms Labros is concerned and notwithstanding any moral censure which may attach to him for forming a liaison with Ms P in the first place, it would have been equally wrong for him to have abandoned her and Q and R.
Rather, he regards Q and R as his children, which necessarily entails an obligation, on his part, to provide support for them to the best of his ability. In his evidence, he indicated he did not differentiate between them and Mr EE.
Essentially, Mr Nader’s position is that although his conduct and deceit may deserve condemnation, the court must be careful not to approach the case from the perspective of some form of misplaced moral judgment over him. It is his case that the $212,000.00 is spent and was done so in discharging obligations, which he held to other members of his family, apart from Ms Labros and Mr EE, albeit that he concealed their existence from them.
In all these circumstances, the approaches advocated by each party in the case, can be easily summarised. On the one hand, Mr Nader proposes that a modest asset pool consisting of the Suburb B property, the Suburb F investment property, and his superannuation, should be divided equally between the parties, which would, he submits, be a fair result given the length of the relationship between them and what he would characterise as their relatively comparable financial futures.
In Mr Nader’s own words he contends as follows: “I want to settle what we’ve got fairly and move on. Two houses and my super. That’s all we’ve got. Split it and move on.” However, Mr Nader concedes that whatever happens, Ms Labros should retain the security of the Suburb B property without the need to borrow any monies against it.
On the other hand, Ms Labros seeks that a large property pool, inflated by the addition of the monies advanced to Ms P, should be divided 60/40% in her favour to reflect what she would characterise as her more uncertain financial future and her greater financial and non-financial contributions during the parties’ lengthy relationship.
Ultimately, Ms Labros wishes to have transferred to her the Suburb B property in an unencumbered form and receive a cash payment of around $50,000.00 from Mr Nader, which would provide her with some form of nest egg against future exigencies. Such an outcome is also predicated on the basis that Mr Nader should make a significant contribution towards the payment of her legal costs in the case, which are significant.
Given the parties’ very different work history, they hold very different amounts of superannuation. Mr Nader has many times the superannuation of Ms Labros, although his holdings cannot be regarded as large, given his age. In what Ms Labros would characterise as the highly unusual circumstances of the case, particularly the clear evidence that Mr Nader’s actions have resulted in a diminution of the parties’ capacity to acquire assets, she seeks that all Mr Nader’s superannuation entitlements be transferred to her.
Underpinning her case is the submission that the court should not be slow to act in a manner which advantages her, to some extent, given the gross level of deception practiced by Mr Nader, which can leave the court with no confidence that there is any truth whatsoever in his evidence, particularly in regards to the extent of the money he has actually utilised for his own purposes, during the relationship, and whether he can access it now or in the reasonable future, if he moves to Country T.
In my view, these are difficult and complex issues, which are not easily amenable to resolution on the basis of my assessment of the credit of the parties concerned, particularly Mr Nader. As observed earlier, I have not had the opportunity of receiving direct evidence from Ms P in respect of either her mode of life in Country T, particularly whether she has been able to save funds on account of the money forward to her or more significantly whether she is holding funds on behalf of Mr Nader.
Nor is Ms Labros able to gain access to the bank account into which the monies were placed in Country T and trace what happened to them through the issue of a subpoena. The only evidence Ms Labros has been able to garner about the potential value of $200,000.00, in the context of a person living in Country T, has been provided by Mr GG.[1]
[1] See affidavit of Mr GG filed 2 August 2019
Mr GG is an economist, who lives in Country HH, where he consults from time to time for an organisation based in Country JJ. It his evidence that he has accessed labour statistics, relevant to Country T, and has ascertained that the average monthly wage for a Country T person, in 2017, both male and female, was A$334.97.
The inference implicit in this evidence being that the sum provided to Ms P would provide a very comfortable life style for Ms P and, by necessary implication, enable her to bank a regular surplus over time. However, I have not been provided with specific evidence regarding what are the actual costs of living in City S, Country T and whether there are differences between what a person requires to live in a rural setting as opposed to an urban one.
The only actual evidence about Ms P’s level of expenditure is that provided by Mr Nader and it is that he provides her with sufficient funds to ensure she and the children have reasonable accommodation, sufficient food and other necessities of life, and the children are able to go to what he regards as an appropriate school. In concrete terms, Ms Labros is not able to rebut this evidence other than to assert Mr Nader has demonstrated a significant deficiency, in regards to his credit, as a consequence of his past behaviour.
Mr GG was not cross-examined and Ms Ross did not place significant weight on his evidence in her submissions. It does however remain her position that the court cannot exclude the possibility that Mr Nader has significant funds available to him overseas, which are attributable to the parties’ relationship. I am troubled by the relevance of Mr GG’s evidence and its potential to be unfairly prejudicial or misleading to Mr Nader, particularly in the absence of cross-examination.[2]
[2] See Evidence Act 1995 (Cth) at ss.36 & 137 and Chang & Su (2002) FLC 93-117
In this context, it is not possible for me to make an accurate assessment of what is the likely cost of living, in Country T, other than that, in general terms, I am aware that it is a developing economy, in which prices for all manner of goods and services is likely to be cheaper than in a developed country such as Australia. I can only conjecture, I think, whether there are significant sums of money likely to be available to Mr Nader in Country T. In my view, I should be careful in respect of the weight to be placed on such conjecture.
Ms Labros is deeply suspicious about many aspects of how Mr Nader managed financial matters during the parties’ relationship, particularly in respect of his relationships with Mr K and Mr M and the large sums of money involved. However, neither individual has given evidence in the case.
In her evidence, she conceded that, during the parties’ relationship, she “never saw a bank statement” and let Mr Nader “do all the financing”. In these circumstances, the only person who is able to provide details of many of these transactions is Mr Nader, whom for obvious and understandable reasons, Ms Labros is likely to disbelieve.
In this context, it is to be expected that she will be fearful that there is a distinct possibility that Mr Nader has wrought other financial deceptions on her of equal or perhaps even greater magnitude than those involving Ms P.
Part of Ms Labros’ resentment, at how she has been treated, stems from the fact that she and Mr EE have lived extremely frugal lives, over many years, largely at the behest of Mr Nader, whilst he has been leading a secret life involving the regular diversion of a significant proportion of the family’s income stream away from them. From Ms Labros’ perspective, this is profoundly unfair and high handed.
In these circumstances, Mr Nader can really only do what he has done – accept the fact that his transgressions have been discovered and admit the quantum of his deception, given the incontrovertible evidence of the bank records, and assert that he has been otherwise candid in his disclosures to the court about his various financial affairs.
In response, Ms Labros can only metaphorically adopt the words attributed to Mandy Rice-Davies of “Well, he would say that wouldn’t he?” It is her case that the court should, if in doubt about the reliability of any aspect of Mr Nader’s evidence, err in her favour in how it allocates what property has been identified to avoid inflicting some species of injustice on her, who, in axiomatic contrast to Mr Nader, has been guilty of no deception, in respect of how she has approached the parties’ joint financial affairs during their relationship.
These reasons for judgment are directed to resolving this complex and confronting issue as well as ending the parties’ financial relationship with one another. Whatever orders the court ultimately makes to reach these ends, it must be satisfied that the outcome which it proposes is a just and equitable one.
Other issues
The issue regarding the treatment of the monies advanced to Ms P is not the only issue of controversy arising between the parties. These issues can be summarised as follows:
·It is Mr Nader’s case that the parties are indebted to his sister, Ms C in an amount of Country G$80,000.00, which was advanced to him in 2002 and 2006 to enable the purchase of the Suburb B property and later to reduce the mortgage;
·It is further Mr Nader’s case that the loan attracts an interest rate of 5% per annum and hitherto there have been no payments of either principal or interest;
·In these circumstances, it is his case that the parties are indebted to Ms C in a total sum of approximately A$166,000.00 and it should be accounted, in these proceedings, as a joint debt of the relationship;
·Ms Labros confirms that Mr Nader told her of the alleged loan, shortly after the settlement of the purchase, but she has seen no records in respect of it and it is not evident in any contemporaneous bank records produced by Mr Nader or discovered by her;
·Mr Nader has not called Ms C to give evidence nor has he produced any formal or informal loan documents between the two; and
·In these circumstances, Ms Labros doubts the existence of the loan and seeks that, if the loan does exist, Mr Nader assume responsibility for it and indemnify her in respect of it.
In 2008, Mr Nader and his cousin were gifted seven acres of agricultural land in Country BB by his father in equal shares as tenants in common. It is a farm, which Mr Nader claims he is unable to sell as family tradition requires that it be held by the Nader family in perpetuity. It is also his evidence that the land does not produce any income because it is not currently being utilised.
Ms Labros does not accept that the land could not be realised in some way by Mr Nader. The parties agree that the land is worth A$43,500.00. It is Mr Nader’s position that this is only a notional sum, given what he asserts is the impossibility of it being realised. Ms Labros contends that it is a valuable asset which should be attributed to Mr Nader in the calculation of the final to be made by the court.
In 1993, Ms Labros inherited $70,000.00 from her mother. She used this sum to purchase 600 D Shares and furniture and fittings, which are still utilised in the Suburb B property. It is also her evidence that she used this sum to support herself and Mr EE for a number of years. In these circumstances, she contends her direct financial contributions towards the maintenance of the family have been greater than those of Mr Nader and she seeks a weighting in this regard of 2.5%. As previously indicated, it is Mr Nader’s position that the parties’ various contributions should be assessed as being essentially equal.
Again, as previously indicated, the parties have different views about their prospective financial circumstances. It being Ms Labros’ position that she suffers compromised health, has little work experience and no formal qualifications, responsibility for caring for Mr EE and is not far from retirement age. In these circumstances, she asserts her financial future must be regarded as uncertain and, on this basis she seeks an adjustment of property, in her favour, of a further 7.5%.
Mr Nader does not accept this analysis. It being his case that he will struggle to find suitable accommodation for himself and is currently working in an unskilled field, which pays him a modest wage for long hours. On this basis, he asserts there should be no such allowance made in Ms Labros’ favour.
On the other hand, Ms Labros would characterise Mr Nader as a highly skilled person, with extensive tertiary qualifications, who has a good work record. Given these factors, she believes that he easily could return to work at Employer CC or obtain a well-paid position, in his professional industry, if he chose to do so. In addition, he is about a decade off from the formal age of retirement and enjoys good health, in marked contrast to her.
It is Ms Labros’ position that Mr Nader has not been frank about his financial dealings with both Mr K and Mr M and, as a consequence, there is a significant probability he will receive further payments of interest, due to him, after these proceedings. Her suspicions have been heightened by the fact that Mr U paid her the sum of $5,000.00 on 22 August 2019 without explanation. The sum was paid into an account in Mr EE’s name.[3]
[3] See Exhibit H
This issue centres on evidence provided by Mr Nader in respect of his agreement with Mr U, who in the relevant agreements styled himself as the Nader Family Trust.[4] These indicate that in December 2016, Mr Nader lent Mr U the sum of $70,000.00 at an interest rate of 30% per annum to be repaid on 2 December 2017. The sum being due amounting to $91,000.00.
[4] See Exhibits D & E
Mr Nader has deposed that he holds a high degree of trust for Mr M, whom he regards as a “good person”. It is his evidence that Mr M did not repay the $91,000.00 as stipulated and this led the two to enter into a subsequent agreement, dated 2 December 2017, pursuant to which Mr Nader was to be paid the sum of $91,000.00 at an annual rate of interest of 25% on 2 December 2018, with any monies still outstanding, after that date, to attract an interest rate of 30%.
It is Mr Nader’s evidence that Mr M paid him regular instalments, both in cash and directly into the ING line of credit between April 2018 and November 2018 until the sum of $91,000.00 was paid back. However, he and Mr M were in disagreement about the effect of the second agreement. In these circumstances, it was Mr Nader’s evidence that he felt he had no alternative other than to forgo the additional interest to which he felt he was entitled.
From Ms Labros’ perspective, the unsolicited arrival of a further sum of $5,000.00 causes her to doubt the veracity of Mr Nader’s evidence even more and question whether there are more interest payments likely to be outstanding from both Mr M and Mr K, which Mr Nader will conceal from her.
Mr Nader refutes that this is the case and has deposed that he has no idea why Mr M elected to make what he regards as an unsolicited payment, when earlier he (Mr M) had indicated to him that he regarded his obligations under the loan agreement to have been satisfied. In these circumstances, it is Mr Nader’s evidence that his activities in respect of the ING line of credit have been concluded and he currently has no outstanding monies owed to him by anyone.
In this context, he points to the fact that the sums of $200,000.00 and $91,000.00 were repaid into the line of credit and it is not asserted, by Ms Labros, that he has disobeyed any court orders in respect of it. In this context, on 14 November 2018, Mr Nader consented to an order requiring payment of $91,000.00 to the line of credit on or before 2 December 2018 and the principle monies advanced to Mr K (L Group) of $200,000.00 to be repaid into the line of credit on 24 November 2018.
From Mr Nader’s perspective, this is testimony to his bona fides in the proceedings. It resulted in Ms Labros being able to live securely in the Suburb B property, which became unencumbered. It also meant that he was not able to pursue his commercial activities, which resulted in him having to secure other sources of employment.
The parties to proceedings, under the Family Law Act, involving property issues are subject to a duty to make full and frank disclosure. This process is mandated by Rule 24.03 of the Federal Circuit Court Rules 2001. It is facilitated by the requirement to file a statement of financial circumstances and the production of a stipulated number of financial records, such as tax returns and superannuation records.
In maintenance cases, it also entails the production of bank records for the past twelve months; payslips; business activity statements; and documents which may assist the court in determining the income, needs and financial resources of the individual concerned.
However, the duty to provide full and frank disclosure does not arise solely under the court’s rules but is also a fundamental principle of common law. This duty has been described as being “fundamental to the whole operation of the Family Law Act in financial cases…”[5]
[5] Per Smither J in Briese & Briese (1986) FLC 91-713 at 75,181 cited with approval by the Full Court in Black & Kellner (1992) FLC 92-287 at 79,133
For obvious reasons, for parties to be able to engage in fair negotiations in order to resolve property issues arising between them and, in the event such negotiations fail, for the court to make a fair adjudication, it is necessary for all concerned to have a comprehensive picture of the financial affairs of the parties involved.
Given one of the central functions of the court is to assess financial contributions made by the parties concerned, it is very often the case that this duty has historical connotations, as necessarily such contributions were made in the past.
In Weir & Weir the Full Court of the Family Court said as follows:
“…the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contributions, or to properly assess section 75(2) factors.”[6]
[6] Weir & Weir (1993) FLC 92-338
Accordingly, the duty to make a full and frank disclosure, in financial matters brought under the Family Law Act, does not arise merely by virtue of the rules of practice of the court but rather is a fundamental rule of law, which arises because of the necessity for the court, in each property proceeding arising before it, to consider all aspects of the financial circumstances of the parties concerned.[7]
[7] Luciano & Luciano [2000] FamCA 401 at [373]
However, in cases involving a fundamental imbalance of knowledge, between the parties concerned, regarding the financial circumstances of their marriage, it is not unknown for one spouse to be delinquent in respect of his or her obligation to make full disclosure of his/her financial circumstances. For obvious reasons, in such cases, there may be powerful motivations which lead to such delinquency. These include both greed and malice and possibly shame, guilt and regret arising from past incidents of conduct.
It is Ms Labros’ case that Mr Nader has been fundamentally delinquent in his duty to make a full and frank disclosure about his financial circumstances, particularly in respect of his relationship with Ms P and its financial implications for her and Mr EE. From her perspective, the motivation for his non-disclosure is immaterial.
She contends that it is only through her efforts that the full extent of the monies advanced to Ms P has come to light and what admissions Mr Nader has made have come only after she has demonstrated that he has no realistic alternative other than to make concessions about what has occurred. It is her case that during the parties’ relationship and afterwards, Mr Nader has cloaked his financial affairs to avoid her scrutiny and confuse her.
Mr Nader is not in a position to deny that he concealed the existence of his relationship with Ms P from Ms Labros. This may be regarded as being morally reprehensible but is explicable in human terms. It is his case that Ms Labros was not greatly interested in financial matters, particularly how he utilised the line of credit, during the parties’ relationship.
Thereafter, it is his case that he has made appropriate concessions and produced documents requested of him as required. In terms of the funds sent overseas by him, it is the tenor of his evidence, that this was a lengthy period of time and he did not keep records of the transactions involved. As a consequence, he has not been in a position to recall, with any degree of facility, what were the exact amounts of the very many involved, from his memory alone.
Given what she would characterise as the manifest failure of Mr Nader to provide an appropriate level of disclosure, Ms Labros seeks that he pay her costs to be assessed on an indemnity basis. She calculates this to be a sum in excess of $100,000.00. Ms Labros has indicated that she has already been billed legal costs amounting to $65,148.25, of which she has paid $33,844.15. Her counsel’s fees amount to a further $22,500.00 and her further anticipated costs are in the vicinity of $31,000.00.
Failing the granting of an order for indemnity costs, Ms Labros seeks costs calculated by reference to the Federal Circuit Court Rules, which she calculates would produce a sum of around $45,00.00. Mr Nader resists this application and seeks that each party bear their own costs.
In summary, these various controversies have resulted in the parties having very different views in respect of the net extent of the asset pool available to be divided between them. They do agree that Ms Labros should retain the Suburb B property debt free. On this basis, Mr Nader would have to assume the debt relating to Suburb F.
Regardless of these differences, issues remain as to whether the court should approach the asset pool on the basis of what are the tangible as opposed to what are the notional assets available. Ms Labros wishes to include all the monies identified by her as sent overseas, which would be attributed to the possession of Mr Nader.
In this context, Ms Labros calculates a larger asset pool than Mr Nader, with fewer liabilities. Mr Nader proposes a smaller asset pool with greater liabilities – chiefly what he characterises as the personal loan to Ms C. On Ms Labros’ approach, Mr Nader would be required to pay her a sum of around $52,000.00. On Mr Nader’s approach he would require to receive a payment from Ms Labros.
The parties agree on the value of their respective superannuation entitlements but not on the approach to its allocation. It is agreed that Ms Labros has superannuation worth $3,049.00; whilst Mr Nader has $10,000.00, in Country G, as a consequence of his employment there and $167,703.00 held in Australia, which is attributable to his employment with Employer CC. The total is $180,752.00.
Ms Labros proposes that Mr Nader retain his Country G superannuation and she receive all the remaining superannuation. This is a reflection of her concerns about the difficulty she will experience in pursing the sums provided to Ms P, whether they do or do not currently exist and what she would characterise as the overriding considerations of justice and equity, which dictate that she should receive her proper entitlements notwithstanding Mr Nader’s conduct in placing relationship assets overseas.
Mr Nader, as a corollary of retaining responsibility for the Suburb F debt and the monies alleged to be owing to Ms C, would want to receive a payment of capital from Ms Labros to achieve an equal division of assets on the basis of the asset pool constructed by him.
Regardless of how the asset pool is ultimately calculated, the relevant tangible assets are of relatively modest value. If, as Mr Nader contends, the reality of the situation is that the pool consists of Suburb B ($450,000.00); the net equity in Suburb F ($232,000.00); and superannuation ($180,752.00); with the issue of the personal loan to Ms C unclear: the potential payment of costs becomes crucial and depending how they are assessed, may render the outcome of the case nugatory, from one or other of the parties’ perspectives.
At this stage, given the centrality of the issue of costs, particularly what sum of money and level of asset backing each will retain at the conclusion of the proceedings, it is useful to outline the legal principles applicable to the award and calculation of costs as a prelude to setting out, as best I can, the conduct of each of the parties in the proceedings to date, this being a matter potentially relevant to the award of costs.
Principles applicable to costs
Section 117(1) of the Family Law Act abolishes for the purpose of family law proceedings, the general rule that, in civil proceedings, costs follow the event. It provides that each party should bear his or her own costs in such proceedings.
However, pursuant to section 117(2) if the court is of the opinion that there are circumstances that justify it in doing so, it may, subject to a number of stipulated considerations, make such order as to costs as it considers just.
The relevant considerations are set out in section 117(2A) of the Family Law Act and are as follows:
·The financial circumstances of each of the parties to the proceedings;
·Whether any party to the proceedings is in receipt of legal aid;
·The conduct of the parties to the proceedings, including in respect of issues of discovery and production of documents;
·Whether the proceedings were necessitated by the failure of a party to comply with previous orders of the court;
·Whether any party to the proceedings has been wholly unsuccessful in the proceedings;
·Whether any party has made an offer in writing to settle the proceedings and the terms of any such offer; and
·Such other matters as the court considers relevant.
The court’s discretion to make an order for costs is a wide one and includes the authority to make an order for indemnity costs. However, the discretion remains one which must be exercised carefully and judicially.
In this context, orders for indemnity costs are extraordinary or exceptional in nature. In Kohan & Kohan[8] the Full Court of the Family Court characterised an order for indemnity costs as “being a very great departure from the normal standard”. In this context, the Full Court said as follows:
“The Court should not depart lightly from the ordinary rules relating to costs between party and party and the circumstances justifying the departure should be of an exceptional kind.”[9]
[8] Kohan & Kohan (1993) FLC 92-340
[9] Ibid at 79,614
There is no closed category of cases in which indemnity costs may appropriately be awarded. However, in Palmolive Co v Cussons Pty Ltd[10] the Full Court of the Federal Court indicated that the kinds of situations in which indemnity costs might be considered included those in which a litigant had:
·Commenced or continued an action knowing it to have no chance of success;
·Made false or irrelevant allegations of fraud;
·Made groundless allegations, which prolonged the case concerned; and
·Imprudently refused an offer to compromise.
[10] Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225
The conduct of the proceedings
Ms Labros commenced these proceedings on 29 September 2017, whilst Mr Nader was overseas. She sought orders for substituted service and specifically an order for particulars of all monies transferred to Ms P by Mr Nader via Western Union; Ozforex; and by bank transfer. At this stage, she alleged that the sums so transferred were in excess of $100,000.00.
On the first return of her application (15 November 2017) orders were made in the absence of Mr Nader that he be served by email and injunctions were granted restraining him from removing any further sums from the ING line of credit.
Given the ex parte basis of the orders made, the proceedings were adjourned briefly to 22 November 2017. Mr Nader appeared on this occasion and provided an undertaking to the court to repay the sum of $70,000.00 into the line of credit, when it was repaid to him.
Mr Nader responded to this application, through his then solicitors, on 15 February 2018. He did not contest the interim orders made against him. He described himself as an investor by occupation and disclosed assets to the value of $980,726.76, which largely consisted of the Suburb B property; the Suburb F property; the farm in Country BB; an investment in the L Group, valued at $40,000.00; and a personal loan to Mr M, valued at $91,000.00.
He disclosed superannuation in similar terms to what he indicated at trial and asserted he was indebted to Ms C in an amount of $166,314.25 and indicated that this sum was referrable to a personal loan advanced by her in 2002 in an amount of Country G$80,000.00. At this stage, Ms Labros did not dispute that the loan had been made.[11] It is currently her position that there is no collateral evidence to support the advance.
[11] See affidavit of Ms Labros filed 29 September 2017 at [32]
In both his statement of financial affairs and supporting affidavit filed at this stage, Mr Nader acknowledged his relationship with Ms P and his commitment to supporting Q and R, which equated to a monthly payment of US$400.00 per month. If it is assumed the relationship began in 2011, this would be a period of approximately seven years, so the sum involved would have been about $33,600.00.
In the light of what the subpoenaed records have subsequently indicated in respect of the amount of monies transferred overseas, Ms Ross contends that Mr Nader must have known this was a gross under-estimation of the monies despatched by him and the only explanation for his evidence is that Mr Nader was acting disingenuously, in the hope that he could gull Ms Labros and those advising her.
Pursuant to section 26 of the Federal Circuit Court Act 1999 the court has the authority to refer parties in proceedings before it to a conciliation conference. The parties were referred to such a process which took place in two segments on 17 April & 29 May 2018. In conjunction with this process, Mr Nader was ordered to produce documents, relating to his financial affairs, in accordance with a list which had been prepared by Ms Labros’ solicitor. This included bank statements.
The Court Registrar, who convened the conciliation conference, reported back that the parties had not been able to reach a compromise in respect of the proceedings and that issues remained outstanding regarding discovery. It was against this background that Ms Labros’ solicitor issued the relevant subpoenae, directed towards Ozforex; Western Union; L Group; and the CBA; in June of 2018.
It is the submission of Ms Ross that her client was put to the expense of issuing these subpoenae because of the failure of Mr Nader to produce the relevant records and be candid about the extent of the monies sent overseas by him. In these circumstances, she makes a specific application for the costs entailed in this process.
The subpoenae were each answered, without objection, between 20 & 27 June 2018 and subsequently administrative orders were made for the inspection of the relevant documents. In this context, the parties agreed to hold another informal conference to discuss settlement prospects in the light of what the relevant documents revealed.
The Federal Circuit Court Rules in Division 15.5 provide a formal process whereby facts and the content of documents can be the subject of admissions as to their truth by a party to proceedings. In this case, Ms Labros’ solicitor has prepared two notices to admit facts, pursuant to rule 15.31 on Mr Nader. This was done on 11 July & 20 July 2018 respectively in regards to the records of Ozforex and Western Union.
The relevant aspects of the rule read as follows:
“(1) A party to a proceeding (the first party) may, by notice in accordance with the approved form, ask another party to admit, for the proceeding, the facts or documents specified in the notice.
(2) If the other party does not, within 14 days, serve a notice on the first party disputing the fact or the authenticity of the document, the other party is taken to admit, for the proceeding only, the fact or the authenticity of the document.”
The first notice asserted that Mr Nader has transferred the sum of $131,582.49 to Ms P between 1 July 2011 and 30 May 2018 via Ozforex. In this context, Mr Nader was formally requested to admit the following documents:
“Records of all transfers of funds made by Mr Nader's Client Reference … including but not limited to transfers to Ms P Bank Account … Bank, City S Country T .”[12]
The notice also asserted that Mr Nader had transferred the sum of $58,043.70 to himself in March of 2014.
[12] See Notice to admit facts filed 10 July 2018 at 1
As he was entitled to do, Mr Labros filed a notice of dispute. This focused solely on the sum of $58,000.00, which Mr Nader denied he had made to himself, a refutation he made at trial, indicating the sum had been mistakenly credited by the forwarding agency and subsequently reimbursed. Ms Ross has indicated her client’s acceptance of this explanation.
The second notice to admit asserted that Mr Nader had forward the sum of A$55,000.00 to Country T and Country Y between 23 July 2008 and 21 May 2018 via Western Union. Attached to the notice was a print out of the various transactions concerned, which had been provided by Western Union. Mr Nader did not respond to the notice.
Accordingly, in a formal sense, Mr Nader admitted approximately twelve months prior to the commencement of the trial to having remitted around $186,000.00 overseas. This sum did not include monies sent via the CBA. Ms Labros has deposed that there were some difficulties tabulating these sums due to the manner in which the bank held its records.
During the course of the proceedings, the relevant bank records were tendered into evidence by Ms Ross.[13] At my request, a schedule was prepared of the sums advanced, which each party was able to inspect and which was also provided to me.[14] This reveals the following sums:
[13] See Exhibits F, G & H
[14] See AM 1
Commonwealth Bank
$12,219.79
Western Union
$66,048.82
OzForEx
$136,006.18
TOTAL
$214,274.79
Mr Nader has not chosen to dispute this sum at trial. He deposed as follows: “I agree with the sum. It’s in black and white”. He also agreed that the majority of the money was sent to Ms P and the payments commenced in 2003. In addition, Mr Nader points to the fact that he paid the money used by him to fund his investment activities back into the line of credit and has provided the various loan documents between him and Mr M and L Group.
In these circumstances, he refutes any suggestion that he has been consciously recalcitrant in respect of discovery issues or the conduct of the proceedings generally. Rather he asserts that he has been cooperative in preserving assets, following the commencement of the proceedings and has made significant concessions during them.
It is his case that he did not have access to a full record of the overseas transactions made by him because he did not actively record them and whatever receipts he had were left behind, by him, at the Suburb B home, when the parties separated and so he was not able to access them. As such, he was not able to present an accurate figure of the sums involved until presented with the documentary records.
In contrast, he points to Ms Labros’ evidence, which indicates she found very many Western Union and OzForEx receipts at the Suburb B home, which enabled her to estimate a sum of around $200,000.00 was involved.[15] Accordingly, it is Mr Nader’s position that although he may have been guilty of deceiving Ms Labros in an egregious manner during their relationship, he has not done so during the proceedings which have followed.
[15] See affidavit of Ms Labros filed 25 July 2019 at [174]
In this context, one central evidentiary issue remains, which is not capable of being resolved by reference to any external business record. It concerns whether there are any funds accessible by Mr Nader in Country T which relate to the overseas transfers. Mr Nader’s oral evidence in this regard is as follows: “The money does not exist. It was maintenance.”
The Evidence
In these reasons, findings of fact are made on the balance of probabilities, from my observation of the demeanour of each of the witnesses concerned.[16] I have tried to reach my conclusions on credibility and reliability on the basis of contemporary materials, objectively established facts and importantly, on the apparent logic of events.[17]
[16] See Evidence Act1995 (Cth) at section 140
[17] See Fox v Percy (2003) 214 CLR 118 at 129 [31] per Gleeson CJ, Gummow and Kirby JJ
In addition, I bear in mind section 140(2) of the Evidence Act 1995, which indicates that in applying this standard of proof, I am entitled to consider the nature of the subject-matter of the proceedings and the gravity of the matters alleged.
These criteria reflect the well-known comments of Dixon J, in the case of Briginshaw v Briginshaw[18] as follows:
“The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the Tribunal. In such matters “reasonable satisfaction” should not be produced by inexact proofs, indefinite testimony, or indirect inferences.”
[18] Briginshaw v Briginshaw (1938) 60 CLR 336 at 362
Mr Nader presented as a courteous, pleasant and unassuming witness. He was not defensive in his evidence and, in my assessment, made concessions appropriately. In this context, I appreciate that it is Ms Ross’s position that given the weight of evidence, he really had no alternative to do anything other. He did not present, in the witness box, as shifty or self-serving.
I also appreciate that the medium of the witness box is not necessarily the best mechanism to assess the truthfulness of any person. It is the thrust of Ms Labros’ case that Mr Nader is likely to be able to present in a disarming and charming manner, whilst being capable of maintaining the most elaborate of deceptions. However, he was not caught out in any such deceptions during the course of his cross-examination.
When the case is boiled down, there is no dispute about the two major issues in the case:
·Firstly, Mr Nader concedes that he sent a very significant sum of money overseas, during the parties’ relationship, without Ms Labros’ knowledge and this sum is almost certainly in the vicinity of $200,000.00; and
·Secondly, after he left the employ of Employer CC, Mr Nader utilised the accrued equity in the Suburb B property in an unorthodox investment scheme, which provided his income for a number of years between 2015 and December 2018.
That leaves two major controversies, in respect of which there is a dearth of independent evidentiary material, namely:
·Whether there remains a surplus of funds available to Mr Nader in Country T; and
·Are the parties indebted to Ms C and, if so, what is the status and quantum of that loan, particularly is it ever likely to be called in?
Ms Labros has been represented throughout these proceedings and has had the assistance of experienced counsel at each step of the proceedings. Her trial affidavit is thirty six pages long and has attached to it some twenty four exhibits. In this affidavit, she has provided a comprehensive history of the parties’ involvement with one another over the past thirty years or so.
In contrast, Mr Nader has acted on his own behalf for the later part of the proceedings, including at trial. He prepared his own trial affidavit, which is two pages in length and concentrates primarily on issues relating to the controversy surrounding the monies said to have been advanced by Ms C. In these circumstances, significant portions of Ms Labros’s evidence stand unrebutted. Much of her evidence does not seem to be controversial, going to issues of her parenting and homemaking contributions. In any event, I assess her to be a truthful and honest person, who has done her best to reconstruct the history of the parties’ involvement with one another as best she can.
Ms Labros concedes that she is not a worldly or financially savvy person. She trusted Mr Nader’s judgment in respect of such things and was not inclined to challenge him. It is clear that the focus of her affairs, during most of the relationship, was on looking after the home and making sure Mr EE’s needs were met. Ms Labros has a capacity to live very economically.
The impression I have gained of Mr Nader is that he is something of a gambler by nature and one who is not particularly inclined to be consultative. As such, he is not averse to taking a risk. Although he has never been a particularly wealthy person, as already indicated, he has a strong entrepreneurial streak. During most of his years at Employer CC, Mr Nader earned between $57,000.00 and $81,000.00 per annum. As such, the family received what could be described as a comfortable level of income but not one which could be regarded as lavish.
In all these circumstances, Ms Labros was not temperamentally inclined to challenge Mr Nader in respect of financial issues, as long as she and Mr EE had a roof over their heads and the bills were paid. For his part, Mr Nader was not inclined to share information or renounce control of financial issues. He kept control of bank statements and household accounts.
Accordingly, during their relationship, it is likely that Ms Labros’ knowledge of the parties’ financial affairs, particularly the extent of their budget, was minimal and Mr Nader was not inclined to inform her otherwise. Rather, to a very significant degree, particularly from 2011 onwards, it suited him to have a docile, trusting and frugal partner. On any view, Mr Nader took advantage of this state of affairs and exploited Ms Labros’ amenability in this regard.
The central legal issue in the case is how the court should approach this situation, in the context of what can only be characterised as the unilateral actions of Mr Nader, in transferring a very significant portion of the family’s income overseas, in a clandestine manner. Should the issue be approached in a strictly arithmetical/accounting manner as an add back or should the court take a more nuanced approach and assess the issue within parameters of relationship contributions.
There can be no suggestion that Ms Labros was anything other than an honest and reliable witness. On any view, what has happened to her since the parties’ separation, can only be described as extremely traumatic. She discovered that she had been cruelly deceived, over very many years, by her partner, whom she had supported. Her sense of betrayal must have been acute.
The powerful emotions unleashed by this state of affairs must have inevitably influenced her approach to the current proceedings. In my view, it would be unrealistic to expect her to approach the case with any degree of emotional equilibrium. It is only natural that she will view every aspect of Mr Nader’s evidence or conduct, in these proceedings, with the highest degree of caution and skepticism.
Given the unusual circumstances of the case, I consider I must also adopt a similar level of caution in respect of Mr Nader’s evidence. But I must also be careful not to lose objectivity about the evidence provided in the case because of any sense of disapproval I may – consciously or unconsciously – have for Mr Nader’s conduct or on account of any sympathy I may hold for Ms Labros.
During the course of his evidence, I was not able to discern any obvious examples of Mr Nader being dishonest. Most significantly, in my view, he did not dispute the extent of the monies transferred by him overseas. In this context, I note, as Mr Nader himself conceded, the documents established this fact in black and white and it would be difficult to refute them.
In all these circumstances, I do not believe that, on the balance of probabilities, I am in a position to infer that there must be significant funds available to Mr Nader currently in Country T. In addition, although Mr Nader’s conduct may be viewed as being morally reprehensible, it was not illegal or even fraudulent.
Similar considerations, in my view, apply to how Mr Nader chose to apply the ING line of credit, following the cessation of his employment with Employer CC. I acknowledge that the rates of interest he was able to obtain, on the various advances made by him, can only be viewed as being extraordinary, perhaps commensurate with the degree of risk involved. However, I cannot discern any species of fraud or dishonesty, which attaches to his conduct.
Notwithstanding a certain level of irregularity about the various advances, the evidence indicates that Mr Nader has accounted for his use of the money and there has been no loss of capital accorded to the parties as a consequence of the ventures. In this context, I accept that Mr Nader utilised the interest generated by the various advances for his financial support and also that of Ms Labros.
If he is to be criticized for how he approached the line of credit and indeed in respect of his earlier involvement with property development, it is that he acted unilaterally of Ms Labros and without any great deal of consultation, if any at all, with her. However, in my view, this does not render his conduct deceitful. Rather he behaved high handedly, which to a certain extent reflected how the parties approached financial matters.
Chronology
The parties met in 1988, when they were both working at a business in Adelaide. At the time, Ms Labros had recently separated and had a modest amount of savings and a motor car. Mr Nader was studying and had little asset backing. After a few years, Ms Labros sponsored Mr Nader’s application to be granted a visa to remain permanently in Australia.
Ms Labros has a background working in customer service. When she was twenty seven years of age, in 1984, she underwent surgery to replace an aortic valve. She has taken warfarin ever since to prevent blood clotting. She had a further operation, in 2014, to repair the valve, which was leaking. This was successful. The prognosis of her current treating cardiologist, Dr V, is that her cardiac health is stable and the prognosis relatively good.[19]
[19] See Exhibit U to Ms Labros’s affidavit filed 25 July 2019
The early years of the parties’ relationship was marked by several periods of separation. Nothing turns on these periods. Thereafter they lived together between 1990 and1992, at which stage, Ms Labros alleges Mr Nader removed $3,000.00 of her savings, which he lost at the casino.
The relationship then gradually re-coalesced back into a permanent one, when Ms Labros fell pregnant with Mr EE. Mr Nader assisted with the pregnancy, which was not without its challenges due to Ms Labros’s cardiac issues. However, it is significant that the parties, although in a relationship, maintained separate residences.
In 1993, Ms Labros’s mother died and she received a bequest of around $70,000.00. She purchased some D Shares, which she still retains and invested the remainder. I accept her evidence that she approached the money prudently and has gradually used it over the many years which have elapsed since, to provide for herself and Mr EE.
Mr EE was diagnosed as suffering from mild to moderate cerebral palsy, shortly after his birth, which as previously indicated occurred in 1993. At the time, Mr Nader was in the final stages of his degree and, in these circumstances, I accept Ms Labros’s evidence that she was the parent primarily engaged in the challenging process of ensuring Mr EE received the best possible treatment and care.
Mr Nader’s qualifications did not lead to him being able to obtain employment in Adelaide. In these circumstances, he decided to pursue employment opportunities in Country G, where he obtained professional work in another industry. He was away from Australia between 1995 and 1997. It is Ms Labros’s evidence, which is not refuted by Mr Nader, that he provided her with moral support whilst he was in Country G but no financial assistance for Mr EE.
Although the parties were living in different countries for around two years, neither asserts that they did not continue to have a significant level of relationship with one another. Ms Labros and Mr EE visited Mr Nader in Country G and Mr Nader visited them in Adelaide. However, during this period, it is clear that the responsibility for parenting Mr EE fell exclusively on Ms Labros’s shoulders.
Mr EE required extensive therapy. His limbs were placed in plaster casts. Ms Labros ensured he followed a regular exercise routine. She massaged his legs and arms. There were many appointments. She utilised some of her inheritance to provide for herself and Mr EE, whilst they lived in rental accommodation. Given the absence of any direct financial assistance, from Mr Nader, in my view, her parenting contributions, during this period, must be regarded as significant indeed.
Mr Nader returned to live in Adelaide in mid-1997, when Mr EE was aged around 3 ½ years of age. Around this time, Mr EE suffered a seizure and was subsequently diagnosed with epilepsy. He was referred to a neurosurgeon. Ms Labros’s evidence is that Mr EE suffered petit mal seizures several times a week and again the burden of taking him to recurrent medical appointments and ensuring he followed his required treatment regime fell on her shoulders exclusively, as she and Mr Nader disagreed about whether Mr EE should take neurological medication for his condition.
Mr EE began primary school in 1999. At this stage, school staff detected that he had some significant learning difficulties. As a consequence, he struggled at school. I accept Ms Labros’s evidence that she was the parent who ensured that Mr EE was delivered to and collected from school. I also accept that she assisted him with his homework and extra school work directed to assist Mr EE in overcoming his information processing disorder.
Ms Labros summarises this period in the following terms:
“I supported myself and our son until 1999, on my supporting parent’s benefit, supplemented by monies from my inheritance. The respondent and I had a continuous relationship, but maintained a separate address at the home of [a friend], who lived around the corner. He would sleep at my home three or four nights each week. In the time that the respondent was living with [the friend], he repaid most of the $3000.00 he had taken from my cash savings, but did not offer anything for general support of Mr EE or me.”[20]
[20] Ibid at [52]
The purchase of Suburb B
In 1999, Mr Nader moved in with Ms Labros and Mr EE at her rental property. Mr Nader obtained modestly paid work as a tradesman. The parties contributed equally to household bills and rent. Later that year, Mr Nader began work at Employer CC, , but over time he was promoted to become a professional and then in a managerial role.
His starting salary was around $35,000.00 per annum; increasing to $57,135.00 in 2006; $68,078.00 per annum in 2008; $73,373.00 in 2010; and $81,019.00 in 2011. As a consequence of Mr Nader’s employment, the parties began to consider the prospect of a home being purchased and started to look at houses together in 2001. It is not controversial that during this period, Ms Labros had limited, if any at all, paid work as she was focused on providing care for Mr EE.
However, the only source of possible funds, would appear to be the Suburb F property, which Mr Nader, as indicated above, would prefer to retain. It would enhance his future security if he was able to keep the property both as a potential home and a dependable, if small, income stream to augment his modest income. Much will depend on the allocation of costs.
65% of the parties’ net assets ($732,269.00) is represented by the sum of $475,974.85 and 35% by the sum of $256,294.15. If Ms Labros retains Suburb B; her D Shares; and her savings; she will have assets valued at $455,659.00
If Mr Nader retains the net interest in Suburb F ($231,915.00); the land in Country BB; and his savings; he will have assets valued at $276,610.00. Accordingly, to achieve the 65/35% division anticipated will require a cash transfer of $20,315.85 from Mr Nader to Ms Labros.
It is not a large sum, when the parties’ prospective needs are considered, but in the present scheme of their circumstances it must be viewed as being beyond the easy reach of Mr Nader. It would, however provide Ms Labros, as she enters the aged pension phase of her life, with some slight buttress against unforeseen exigencies.
55% of the parties’ superannuation is represented by the sum of $99,413.60 and 45% by the sum of $81,338.40. Taking into account Ms Labros’s small holding, to achieve this outcome will require a split of $96,364.60 from Mr Nader's Super Fund AA holdings.
In all the circumstances of this difficult and confronting case, what I propose is that the split be increased to $115,000.00 to reflect the shortfall in the division of actual assets reflected above at [384]. This will result in Mr Nader having an extremely small amount of superannuation (approximately $60,000.00) relative to his time in the workforce.
Mr Nader does not have many years, in paid employment in Australia, to recoup his superannuation position. If he remains living in this country, he may have to work, in some form or another, until he is in his late sixties. In this context, it can only be a matter of conjecture, on my part, whether Mr Nader will find the expatriate option more attractive. That is a matter for him.
At the end of the day, the sad reality remains that, no matter how it is cut and diced there are not enough assets to go around. Neither parties’ needs will be satisfied by the outcome which I propose. However, regardless of that difficulty, what I must consider now is whether, in these challenging circumstances, this represents a fair outcome.
With a heavy heart, I am satisfied that it does. Ms Labros has her home and a not inconsiderable tranche of superannuation in recognition of her thirty year relationship with Mr Nader, which produced Mr EE, with whom she still shares her life.
Mr Nader has much less. This is largely attributable to decisions which he made independently of Ms Labros, which nonetheless had financial ramifications for her. As I hope is apparent from these lengthy reasons for judgment, I have not found this an easy issue to resolve fairly.
It is not my prerogative to pass moral judgment on Mr Nader. From his perspective, he had no alternative other than to support his family in Country T, from the income which he derived in Australia. In the dilemma in which he found himself, he elected to do that clandestinely. In so doing he subsequently forfeited any trust in him formally held by Ms Labros.
This decision must have consequences, in the context of the current proceedings, because of its financial implications for Ms Labros. The sum sent off shore, albeit in comparatively small amounts, over many years, when tabulated, represents a large sum, when the parties’ current net worth is considered.
As such, it would not be fair for it to be overlooked or diminished by the court. On the other hand, it would not be fair, if Mr Nader left this lengthy relationship with close to nothing, on account of him having provided support for three individuals for whom he must be regarded as having some form of obligation because of his relationship with them. He is not to be punished, in this forum, for keeping their existence secret from Ms Labros, for many years, reprehensible though she may consider this conduct to have been.
Mr Nader leaves the relationship with the Suburb F property, albeit heavily encumbered; and a small amount of superannuation. He has a precarious position in the workforce, as an uber driver. He lives in rented accommodation. He has large bills to pay and perhaps faces insolvency. He is in late fifties. Financial necessity may force him back to a more conventional form of employment. He has the qualifications and experience necessary to do so. His age may be a disadvantage in this regard. He is however, significantly more employable than Ms Labros.
At the end of the judgment, I consider that Mr Nader has marginally more prospects than does Ms Labros, which establish the overall justice and equity of the outcome. The most inchoate of these prospects is whether Mr Nader will elect to take what he has and live in Country T.
Costs
Ms Labros seeks the payment of indemnity costs to her on the basis of Mr Nader’s conduct during the course of the proceedings, particularly what has been characterised as his obstructive approach to issues of discovery. The amount sought is in the range of $100,000.00.
In the alternative, Ms Labros seeks costs calculated by reference to the Family Law Rules and Federal Circuit Court Rules in an amount of $40,357.14. This sum is calculated from the instigation of proceedings and includes counsel’s fees.
There was never any level of dispute about what were the concrete assets available for division in Australia – essentially the two real properties and Mr Nader’s superannuation. There was some level of disagreement about the value of Mr Nader's Country G superannuation and the land in Country BB.
Mr Nader consistently maintained that he had modest superannuation in Country G because he had not worked there for very long. His position was subsequently vindicated. The issue about the value of the land in Country BB was also, in effect, resolved along the lines suggested by Mr Nader.
The significant evidentiary dispute in the case centred on the monies sent off shore by Mr Nader. Later, as these reasons for judgment indicate, there was a legal controversy between the parties as to how the sum in question was to be approached. Ms Labros, through her lawyers advocated that it be added back dollar for dollar and allocated directly to Mr Nader as an asset retained by him. Mr Nader consistently maintained that this would not be fair to him as he did not have the money as it had been paid by him as maintenance.
I acknowledge that this was an extremely difficult issue, both in emotional and legal terms. In addition, the manner in which Ms Labros discovered the truth about Mr Nader’s relationships in Country T and the magnitude of his deceit irremediably ruptured any degree of trust which she might previously have placed in him. Essentially, for understandable reasons, she was likely to disbelieve anything he told her about his financial affairs.
This is not an easy relationship in which to make pragmatic and coolheaded decisions about how to conduct litigation. The fact remains that the costs incurred by Ms Labros represent around 15% of the parties’ net non-superannuation assets. I appreciate that this is said with the benefit of hindsight but the extent of costs does not appear to be proportionate to what was at stake in material terms.
Mr Nader took an early decision that he could not afford to incur legal costs. He represented himself throughout the proceedings. In doing so, he demonstrated that he is an intelligent person. However, I doubt that he is any sort of financial Svengali. Ultimately, I accepted his evidence that he did not have access to any concealed assets.
In representing himself in the case, in my view, Mr Nader demonstrated a significant degree of pragmatism. It was significant, in my view, that he has consistently advocated an outcome that would see Ms Labros retain the Suburb B property and the rest of the parties’ assets being divided 50/50. As matters have transpired this was not an unreasonable position to advocate.
I acknowledge that Ms Labros has no-where near the degree of aplomb and accomplishment of Mr Nader, which would have easily enabled her to represent herself. Given her degree of mistrust of Mr Nader, which the circumstances prevailing entitled her to hold, it would have been unreasonable for her to approach proceedings without full scale legal advice and representation. Although the pool of available assets was modest, this was not a simple case.
It is in this difficult context that the court must approach the issue of costs and consider the various matters delineated in section 117 of the Family Law Act as follows:
(a) The parties’ financial circumstances
As matters currently stand, neither has liquid assets sufficient to pay the costs to be levied on Ms Labros. The only prospect of Mr Nader being able to contribute any significant proportion of those costs would be through the sale of the Suburb F property.
If full indemnity costs are imposed, there is the very real prospect that Mr Nader will leave the relationship with very little in material terms and with a significant level of debt. I have grave concerns that this would not be a just outcome.
(b) Receipt of legal aid
Neither party was in receipt of legal aid.
(c) Conduct of proceedings
This is the central issue in the determination of the issue of costs. The parties separated in mid-June of 2018. At this stage, Ms Labros had her suspicions regarding Mr Nader’s conduct but had no way of knowing what was the extent of the money which he had sent overseas to Ms P. She had been previously content to leave financial matters to Mr Nader and, as already noted, she did not aspire to anything other than a modest lifestyle.
In these circumstances, she did not peruse bank records or seek an account from Mr Nader as to what he did with his salary. Rather, she trusted him and, for his part, Mr Nader did nothing to cause her to question this trust in the manner in which he led his life. Apart from some unconventional investment decisions, there was nothing flamboyant about Mr Nader’s lifestyle.
The revelations of mid 2018 caused the scales to fall from Ms Labros’s eyes. In these circumstances, in my view, she had little option other than to seek legal advice and institute proceedings as quickly as she could, which she did about three months later. No doubt, she realised painfully that Mr Nader had taken her for a fool and had been grievously misleading her for many years.
In this situation, it would be fatuous for the court to expect Ms Labros to have any trust whatsoever in whatever Mr Nader told her about what was the extent of the monies sent overseas. From her perspective and the perspective of those advising her, it was necessary for documentary evidence to be accumulated to demonstrate the extent of the monies sent overseas in concrete terms.
Mr Nader was overseas when Ms Labros commenced her action against him. She demanded particulars of the monies sent overseas to Ms P by Mr Nader. In her initiating affidavit, she asserted the sum in question was in excess of $100,000.00 and had been transferred via Western Union and Ozforex from 2004 onwards.[56]
[56] See Ms Labros’s affidavit filed 29 September 2017 at [9]
Accordingly, in my view, it is significant that Ms Labros specified an amount and a time frame. Mr Nader’s affidavit in response is a short document. Under the heading Relationship with Ms P he deposed as follows:
“In 2005 or thereabouts, I met Ms P in Country T through our mutual friends. We remained in contact as friends through to 2011, after which our friendship developed into a romantic relationship.
In April 2011, Ms P and I legally adopted a baby girl, namely Q in Country T.
Our adopted child, Q, is currently residing in Country T with Ms P. I have been providing financial support to Q by transferring an amount of USD $200.00 every month for her living expenses.
In 2013, Ms P gave birth to our child, R.
R is currently residing in Country T with her mother. I have been providing financial support to R since her birth by transferring an amount of USD $200.00 for her living expenses.
It remains my intention to continue to provide financial support to Ms P and our two children in Country T.”[57]
[57] See affidavit of Mr Nader filed 15 February 2018 at paragraphs [33] – [38]
The impression provided by this affidavit is that the liability was one of USD$200.00 per month to each of Ms P and R and was one which had commenced in April of 2011. In round terms, this would have led to a sum advanced of around USD$33,000.00. In my view, it is demonstrably false. Records subsequently tabulated by Ms Labros’s solicitor, indicate that the payments started far earlier and were for larger amounts.
There is no evidence to indicate Mr Nader himself kept his own records of the amounts in question. Certainly, he has never provided any such records. It was against this background that the parties were referred to a compulsory process of conciliation and orders were made for mutual informal discovery.
Regardless of what Mr Nader indicated to Ms Labros was the extent of the monies sent overseas by him, it would appear doubtful that she would believe him. That, of course, does not relieve Mr Nader of the burden of making full and frank disclosure of his financial circumstances to her. Prior to the conciliation conference, it is clear that the extent of the monies sent overseas was a central issue in the case.
The matter did not resolve at two conciliation conferences scheduled for 17 April & 1 May 2018 respectively. It is not surprising to me that the case did not resolve given the gulf of mistrust which must have existed between the parties and which continues to the present stage.
To my mind, it was inevitable that those advising Ms Labros would have advised her to seek to reconstruct, as best as could be done, the monies advanced overseas by Mr Nader. The obvious mechanism to achieve this outcome was by issuing subpoenae, which was done in early June of 2018. The subpoenae in question being issued to Western Union; Oxforex; and the CBA.
The relevant subpoenae specified Mr Nader, Ms P and the Bank of Country T and sought all international monetary transfers referrable to them. The subpoenae were answered in June of 2018 and inspected by Ms Labros’s legal advisers in July. I am satisfied that the documents produced in June of 2018 formed the basis of Ms Labros’s calculations of the amounts forward overseas by Mr Nader.
This was the background to Ms Labros’s lawyers preparing the two notices to admit facts which were filed on 11 & 20 July 2018 respectively. Mr Nader only elected to dispute a sum of $58,043.70, which he indicated had been debited in error by his bank and subsequently re-credited. Otherwise, he did not put in dispute that a sum well in excess of $180,000.00 had been forwarded overseas by him.
The order listing the case for trial in August of 2019 was made on 5 September 2018. Other controversies relating to Mr Nader’s use of the ING off-set account and the advance of the sum of $200,000.00 were resolved by Mr Nader returning the money as previously indicated.
The major issue in dispute between the parties, at trial, was, in my view, essentially a legal one. Ms Labros contended that the entirety of the monies forwarded overseas should be added back dollar for dollar. Mr Nader did not dispute the extent of the sum but contended, in effect, that it would be unfair to him to approach the sum in the manner advocated by Ms Labros.
During his evidence, he indicated he was not in a position to dispute the extent of the sum in question as Ms Labros was in a position to prove it in black and white and had been in a position to do so since July of 2018. Since at least the conciliation conference, I do not consider that Ms Labros is able to establish that Mr Nader has acted in any disingenuous or manipulative way or has otherwise been shown to have attempted to suppress documents or otherwise mislead her or the court.
In my view, I must be careful, in assessing the justice of making any award of costs, of conflating Mr Nader’s poor conduct towards Ms Labros, in a general sense, as demonstrated by him concealing his relationship with Ms P from her, from any poor conduct demonstrated by him during the currency of the proceedings themselves.
In this context, it is significant that section 117(2A)(c) speaks of conduct … in relation to the proceedings. Ms Labros is not in a position to establish that Mr Nader intentionally withheld or concealed documents relating to Ms P from her. True it is that she was forced to subpoena documents to irrefutably establish the quantum of the monies sent overseas but when confronted with this evidence, Mr Nader did not, in my view, attempt to dissemble.
As previously indicated, many of Mr Nader’s financial transactions can be characterised as unorthodox in nature. However, in my assessment, they were not embarked upon to deceive Ms Labros. The mortgage account has been properly accounted for. The asset pool was established by the court in essentially the same terms as those proposed by Mr Nader.
As I have attempted to catalogue, in these reasons, there is much to be critical of Mr Nader in how he has treated Ms Labros but I am not persuaded that it can be said that the manner in which he has conducted himself, in these proceedings, can be said to be equally deserving of censure.
The manner in which the court should approach the monies advanced to Ms P was not a cut and dried issue by any means. Each party, given the difficulty of the issue, was entitled to have it adjudicated. Mr Nader, alive to his financial situation, elected not to have legal representation at trial.
Mr Nader conducted himself with propriety during the trial. He indicated consistently, throughout the proceedings, his view that Ms Labros should retain Suburb B unencumbered and the parties’ other assets should be divided equally after their long relationship. As the case has turned out, his attitude cannot be characterised as an inherently unreasonable one. To a certain extent, he has been vindicated in how the court has elected to approach the monies sent off shore.
Ms Labros, as was her entitlement, elected to be legally represented during the hearing. Given the complexity of the issues raised by the case and her lack of trust of Mr Nader, this was an understandable position for her to take and one for which she cannot be criticised. However, in my view, her decision in this regard must have consequences in respect of her retaining some level of personal liability for the costs which she has incurred.
(d) Proceedings necessitated by a failure to comply with court order
I do not consider that this consideration is relevant to the present matter.
(e) Party wholly unsuccessful
I suspect both Ms Labros and Mr Nader will greet my determination of their case and its ultimate outcome with some degree of dissatisfaction. Regrettably, there were not sufficient assets available to ensure that each of their respective needs could be adequately met and all the expenses arising from their complex litigation acquitted without hardship.
In blunt terms, neither of them could afford the type of litigation, which the complexity of the case and the level of mistrust between them required. It is not the case that one party has been entirely successful in the outcome of the case and the other wholly unsuccessful. In my view, it was a difficult and finely balanced case given that fault, in its moral sense, is not a component of the family law system in this country.
(f) Offer in writing
I have not been advised of any written offer to compromise the proceedings.
(g) Other fact or circumstance
The case did not resolve at conciliation. Given the extent of the monies sent overseas by Mr Nader was not established in concrete terms, at this stage, in my view, it is hardly surprising that it did not resolve. The case was only capable of resolution if firstly the parties agreed on how much money had been sent overseas and secondly they agreed on how the sum was to be approached in a legal sense.
Ms Labros is critical of Mr Nader in the sense that it was she who was compelled to go to the expense of issuing the relevant subpoenae and collating the various documents produced by them. It seems likely that she would have mistrusted any attempt by Mr Nader to undertake the same exercise. Essentially, it was necessary for her to do it herself.
Conclusions on costs
I do not consider that it would be proper or just to make an order for indemnity costs in all the circumstances of this case. This is because, at a relatively early stage of proceedings, Mr Nader admitted the major factual issue in the case, namely that he had dispatched a very significant sum of money to his family overseas.
In addition, given each of the parties’ respective financial positions and the orders made in the case, I do not consider that there are circumstances which justify the departure from the normal rule in family law proceedings that each party should bear his or her own respective costs.
Mr Nader’s conduct may be open to criticism, in the sense that it created a situation in which the resulting case became incapable of compromise. That, however, does not indicate that he is to be criticised for his conduct during the case, which I consider to be within acceptable bounds. When confronted with the concrete evidence of the extent of his cash remittances overseas, he admitted them.
From his perspective, he was open to compromise. In the light of his financial position, he elected to represent himself. It has not been established that he has access to hidden stores of wealth overseas. He lives in modest circumstances. An award of costs has the potential to leave him with very little.
In reaching this conclusion, I acknowledge that the outcome of the proceedings represents a financial disaster for each of them. The unusual circumstances thrown up by the case are confronting. They have created a situation in which neither of the parties’ needs are likely to be fully met and each must face an uncertain future because of the level of debt each must confront.
For all these reasons, the orders of the court are as set out at the commencement of these reasons for judgment.
I certify that the preceding four hundred and forty five (445) paragraphs are a true copy of the reasons for judgment of Judge Brown
Date: 12 February 2020
Clauson v Clauson (1995) FLC 92-595; and Hickey & Hickey & Attorney-General (Intervener) (2003) FLC 93-143 at 78,386
[37] Watson & Ling [2013] FamCA 57 at [13]
Key Legal Topics
Areas of Law
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Family Law
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Equity & Trusts
Legal Concepts
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Remedies
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Costs
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Fiduciary Duty
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Constructive Trust
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