Lasic & Lasic

[2007] FamCA 837

FAMILY COURT OF AUSTRALIA

LASIC & LASIC [2007] FamCA 837

FAMILY LAW – PROPERTY SETTLEMENT – CONSENT ORDERS – Established that consent orders be set aside pursuant to s 79A Family Law Act 1975 allowing trustee of bankrupt estate a share in property of the wife. Ordered that the wife pay the sum directly to a creditor of the husband to prevent defeat of his claim by virtue of costs of the trustee.

DEATH OF A PARTY – Ordered that the parties make further submissions relating to the parties in the circumstances of the death of bankrupt between hearing and publication of judgment.

Family Law Act 1975(Cth) Section 79A

APPLICANT: MR LASIC

RESPONDENT: MRS LASIC

FILE NUMBER: PAF 7534 of 1997

DATE DELIVERED: 17 August 2007

PLACE DELIVERED: Parramatta

JUDGMENT OF: Coleman J.

HEARING DATE: 16, 17 & 18 July 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr. Durston

SOLICITOR FOR THE APPLICANT: Home Wilkinson Lowry

COUNSEL FOR THE RESPONDENT: Mr. Foster

SOLICITOR FOR THE RESPONDENT: Turner Freeman

Orders

1. That within 28 days Counsel for the applicant file and serve any further submissions in relation to the proceedings.

2. That within 56 days Counsel for the respondent file and serve any further submissions in relation to the proceedings.

3. That within 70 days Counsel for the applicant file any submissions in reply to the submissions of Counsel for the respondent.

4. That the costs of both parties be reserved.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of The Honourable Justice Coleman delivered this day will for all publication and reporting purposes be referred to as Lasic & Lasic.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

File Number: PAF7534/1997

MR LASIC

Applicant

And

MRS LASIC

Respondent

REASONS FOR JUDGMENT

1. By amended application filed 31 March 2005 Mr W (“the trustee”) as trustee of the bankrupt estate of Mr Lasic (“the husband”) sought orders against Mrs Lasic (“the wife”) pursuant to s 79A of the Family Law Act 1975 (“the Act”).

2. The effect of the relief sought by the trustee was that orders made by consent between the husband and wife in the Family Court on 2 April 1998 be set aside and, in lieu thereof, orders be made the effect of which was, suggested during counsel’s opening of the case, to be to divide the property of the wife equally between the trustee and the wife. The claim on behalf of the trustee was asserted to be worth not less than 25 per cent of such assets.

3. The wife has at all material times resisted any setting aside and/or variation of the consent orders.

4. Subject to the Court’s conclusions with respect to notional add-backs, the net value of the wife’s property approximates $3.6 million. The trustee’s claim is thus, at its highest, for an award of approximately $1.8 million, at its lowest, an award of approximately $900 000.00. These figures delineate the ambit of the dispute: a range of not less than $900 000.00, and as much as $1.8 million.

5. By facsimile transmission apparently dated 6 August 2007, the court received a copy of “Medical Certificate of Cause of Death” in relation to the husband. The document appears to suggest that the husband died on 7 August 2007. By that date, the Court had prepared these reasons for, and was about to deliver its judgment. The reasons reflect the evidence at trial. The implications of the husband’s death are considered at the end of these reasons.

Background

1. At the commencement of the trial counsel for the wife tendered a document entitled “Concession by the Respondent Wife” (Exhibit R1), the terms of which provided:

   1. that the inference arising from the circumstances of the making of the Consent Orders on the 2^nd April 1998 is that the intent of the Husband and Wife was to avoid possible recovery of any liability that the husband may have had after the said Consent Orders to [Mr M] arising from then current proceedings in the District Court of New South Wales in which the husband and wife were the Second and Third Defendants respectively and;

   2. that as a consequence of the failure of the husband and wife to notify [Mr M] of the proposed Consent Orders and their failure to refer to the then pending District Court of New South Wales proceedings in the Application for Consent Orders there was a failure to disclose relevant information and

   3. that such circumstances are sufficient to enliven the exercise of the courts [sic] discretion pursuant to s79A of the Act.

2. The “concession” was to the same effect, and in substantially the same terms, as a concession made by counsel then appearing for the wife on 27 March 2006.

3. The effect of the concession, it is common ground, is that the threshold to relief under s 79A of the Act is conceded by the wife. As is also common ground, the issue for determination in the proceedings is thus whether, in all the circumstances, the Court should now set aside or vary the consent orders of 2 April 1998 pursuant to the section.

4. In essence, the case for the trustee is that an entitlement to substantial relief is established by the evidence whilst on behalf of the wife it is submitted that no such entitlement has been made out.

The consent orders of 2 April 1998

1. It is useful to have regard to the terms of the consent orders of 2 April 1998, and to the documents relied upon in support of the application which led to those consent orders being made. The application was filed 5 January 1998.

2. The application for consent orders recited the birth of the husband on … November 1921 and the wife on … July 1938. Neither of those matters is controversial. The husband is accordingly 85 years of age and the wife is 69 years of age.

3. The application for consent orders recited the marriage of the parties and commencement of cohabitation on … October 1968 and the separation under the one roof of the parties on 16 January 1987. The joint application for dissolution of marriage filed earlier (22 December 1997) recorded that from 16 January 1987 until the filing of the application in December 1997 the parties had lived separately and apart “under the same roof”. None of those facts or circumstances is significantly controversial.

4. The consent orders provided for the transfer by the husband to the wife of the interest of the husband in six parcels of real estate, each of which was identified by reference to location and title particulars. The orders also provided for some chattels and other personalty to be assigned to the wife.

5. The orders noted that the husband was “the sole owner of a property comprising some 20 acres located about 50 km from Belgrade, Yugoslavia”. It is common ground that the husband is not and has never been the beneficial owner of such property or any other property reasonably capable of meeting that description.

6. The application for the making of the consent orders ascribed total values totalling $975 000.00 to the six parcels of real estate referred to in the consent orders.

7. The husband’s sworn affidavit in the proceedings, it is clear from the cover sheet of such affidavit, was before the Court when the consent orders were made. In such affidavit the husband deposed to having “despite advice [sic] I will be entitled to a significantly larger share of the matrimonial property” having “elected in any event to proceed with an application for consent orders” in the terms in which they were subsequently made.

8. The husband gave reasons for such decision, including asserting that he owned property in Yugoslavia “consisting of about 20 acres lying about 50km from Belgrade”, such property being used for “production of market vegetables and agistment of cattle”. The husband deposed to the intention to return to Yugoslavia which he described as his “home country”.

9. There is no evidence that the husband carried out that intention and, as was conceded by counsel for the wife, there is no suggestion, whatever the husband might have believed at the time, that he owned any property fitting the description thus appearing in his affidavit evidence.

10. The husband, in the clearest of terms, disavowed any wish to receive any part of the Australian assets which he suggested to be “worth approximately $990 000.00”. The husband did not suggest, save for the interest in property in Yugoslavia which it is now agreed he did not have, that he had any other property in Australia

11. It is common ground that, subsequent to the making of the orders, the transfers of property provided for therein were completed and that from that time to the present the husband has derived no benefit from any of the properties.

The Proceedings in this Court

1. On 22 March 2000 the Court of Appeal of the Supreme Court of New South Wales gave judgment in favour of Mr M (“[M]”) against the husband in proceedings commenced by [M] against the husband and wife and a son of the parties in the District Court of New South Wales.

2. The orders of the Court of Appeal provided:

   1. Appeal allowed with costs.

   2. The respondent, [Mr Lasic], to have a certificate under the Suitors' Fund Act, if otherwise entitled.

   3. The verdict in favour of [Mr Lasic] set aside.

   4. Verdict and judgment entered in favour of Appellant against Respondent [Mr Lasic] in the sum of $201,589.07.

   5. The order that the plaintiff pay defendant's costs of the trial set aside and order that defendant [Mr Lasic] pay plaintiff's costs of the trial be substituted.

   6. Orders of Patten DCJ not otherwise to be disturbed.

3. A bankruptcy notice was issued against the husband on 6 April 2000 in an attempt by M to enforce his judgment debt against the husband. A sequestration order was made on 30 June 2000.  The trustee was then appointed as trustee of the husband’s bankrupt estate.

4. Thereafter, in December 2001 the wife was summonsed to attend for examination pursuant to the provisions of the Bankruptcy Act 1966. The wife was in fact examined pursuant to the provisions of the Bankruptcy Act 1966 on 25 February 2002 and 12 April 2002. Thereafter, it is common ground, there was no contact between the trustee and the wife. On 20 January 2005 the present action was commenced against the wife. The wife had no prior notice of the application or the intention to make such application.

5. The transcript of the wife’s examination in the bankruptcy proceedings has been in evidence in these proceedings and has been extensively referred to by counsel for both parties.

6. The only direct evidence in relation to contribution issues before this Court is that of the wife. There is no evidence before this Court by or on behalf of the husband, nor is there any significant evidence of attempts to have the husband give evidence, by affidavit or subpoena, if, as is likely, the husband was at all material times unwilling, or perhaps unable, to cooperate with the trustee. To the extent that there is an explanation for the absence of any apparent endeavours to either facilitate the husband giving evidence in these proceedings, or at least giving instructions to enable counsel for the trustee to cross-examine the wife, those apparent omissions seem at least in part to be in reliance upon a letter written by the solicitors for the wife to the trustee on 27 April 2005.

7. In the course of that letter the wife’s solicitors represented that the husband was living in a nursing home, suffering from dementia and cognitive impairment, diabetes induced sight impairment and inability to read. The husband was then said by the wife’s solicitors to have been retired and unable to derive an income, to have no assets from which he could derive “a passive income”, to receive “government benefits only” and to have low levels of English literacy.  In the circumstances, it was potentially in the wife’s interest in proceedings in this Court that no attempt be made to have the husband give any evidence or provide instructions to the trustee in relation to the proceedings. Reliance upon the letter of 27 April 2005 appears a less than sufficient basis for the apparent absence, or failure of, attempts to either adduce evidence in opposition to the wife’s claims, or seek instructions that would enable those claims to be challenged, either through direct cross-examination, or cross-examination on documents obtained as a result of such instructions.

8. Notwithstanding that the trustee has had five years since the wife’s examination in the bankruptcy proceedings to pursue documentation, or avenues of enquiry relating to the reliability or otherwise of the wife’s allegations, other than by cross-examination directed to establishing inconsistencies between evidence given by the wife subsequent to the 2002 examinations and evidence then given, little of a forensic nature has arisen from the three years which intervened between the wife’s examinations in the bankruptcy proceedings and the commencement of the proceedings in this Court, or from the five years which intervened between those examinations and the trial of the proceedings in this Court.

9. Not surprisingly, given the antiquity of many of the events referred to by the wife in her evidence in these proceedings, and the reality that, contrary to the submissions of counsel for the trustee, the wife had no reason to anticipate the proceedings being brought against her with respect to the 1998 consent orders prior to early 2005, the evidence in chief of the wife left much to be desired. The wife in her affidavit evidence to this Court and in evidence given by her in the bankruptcy proceedings has alleged contributions of various kinds within s 79(4) of the Act. There is a dearth of documentation to which the wife has referred to corroborate her assertions. Given the flaws in the wife’s own evidence, that absence of documentation makes acceptance of some of those claims difficult. That dearth of documentation also precludes rejecting many of the wife’s versions of events as such documentation might reasonably have been expected to be conclusive of the details of numerous acquisitions and sales of property.

10. It is less than clear that the husband or, more significantly his son R (referred to as B) who is apparently the “manager” of the husband’s affairs was aware that the proceedings were listed for trial before the Court commencing Monday 16 July 2007. The affidavit of the trustee’s solicitor filed 17 July 2007 does not assert that the husband’s manager was advised that the proceedings were to be before the Court on the dates listed for trial.

11. The consequences, if any, of the manner in which the trustee has sought to prosecute the husband’s claim pursuant to Part VIII of the Act is not a matter with which this Court need concern itself. The position however is that the only direct evidence in relation to contribution issues is that of the wife.

12. Given that no instructions have apparently ever been taken from the husband or any other person who might have knowledge of the events alleged by the wife in her evidence, counsel for the trustee was limited in cross-examination to testing the reliability and accuracy of the wife’s evidence. Consistent with the ethical constraints imposed by those realities, counsel for the trustee was unable to assert any contrary version of events to those asserted by the wife. Cross-examination of the wife within those practical and ethical constraints failed to reveal an alternative version of events to those asserted by the wife.

13. The Court concludes, contrary to the submission by counsel for the trustee, that it was not until the commencement of these proceedings in early 2005 that the wife had any reason to anticipate a challenge to the 1998 consent orders. This is particularly so given that the wife was examined twice in early 2002 and, as is not in contest, was, in the intervening three years, not contacted by or on behalf of the trustee to conduct further examinations under the Bankruptcy Act 1966, or in any way put the wife on actual or constructive notice that proceedings would or might be taken against her to seek to interfere with the long since executed 1998 consent orders.

14. The only direct evidence with respect to contributions is that of the wife. It cannot be said that there is any evidence rebutting or denying the wife’s claims. To the extent that counsel for the trustee appeared to submit that the Court should reject the wife’s evidence or, at the very least, regard the wife’s claims as gross exaggerations, the difficulty the Court has is that even if it rejected the substance of the wife’s claims, notwithstanding the absence of any evidence justifying so doing, the absence of evidence establishing any different version of events would leave the Court unable to make findings with respect to contributions. To resort to presumptions in those circumstances would not appear to be a permissible course to adopt (see Mallett v Mallett (1984) 9 Fam LR 449).

15. Understandably, having regard to the antiquity of many of the relevant transactions, no documentation capable of impacting on the probabilities has been tendered. Nor has documentation impacting upon the probabilities of more recent events been tendered. There is a comparative absence of cross-examination of the wife suggesting an absence of due search and enquiry on her part in relation to relevant documentation.

16. There is no evidence that the wife has been called upon to give general or specific discovery and inspection of documents. There is no evidence that the wife has been asked to provide particulars of her allegations. Interrogatories have apparently never been administered.

17. Having regard to the claims of the trustee in relation to preparation of his case as they emerged in cross-examination, it can reasonably be presumed that the absence of any documentation relied upon in support of the trustee’s claim is referrable to the unavailability of such documentation, rather than to the failure to seek to locate such documentation. Even so, the failure to obtain the relevant dealings with respect to the clearly identified properties referred to in the consent orders is significant, as these would have been available from the Land Title Office.

18. These absences, given the years which the trustee has had to prepare its case, and the fact that, albeit in proceedings under a different Act, for a somewhat different purpose and in another court, he had a “dummy run” in relation to the wife’s evidence are significant.

19. The absence of documentation is potentially a “double edged sword”. Whilst the absence of documentation has limited the ability of counsel for the trustee to effectively challenge most of the wife’s allegations, the absence of any reasonable basis for anticipating a need to have such documentation until these proceedings were commenced in early 2005 has denied the wife the opportunity to secure or retain documentation which she may have had prior to that time.

20. Counsel for the trustee referred the Court to the helpful decision of Young J of the equity division of the Supreme Court of New South Wales in Ramirez v Sandor’s Trustee (an apparently unreported judgment) of his Honour of 23 April 1997. The trustee in the case before this Court, the “well-known liquidator, Mr. [W]” was also the trustee in the case before Young J. The trustee’s no doubt equally well-known Counsel in the case in this Court was also his Counsel before Young J.

21. In the course of his judgment in Ramirez, Young J observed that “the mere fact that the plaintiff has some defects in character does not mean that she must lose any litigation which she commences.” Substituting “defends” for “commences” that observation has relevance to the present case, given that the wife’s actions in relation to the 1998 consent orders evidence “defects in character” on her part. Whilst those same facts and circumstances would be seen as revealing “defects in character” on the part of the husband, it is difficult to meaningfully translate the implications of such defects as the husband has given no evidence in this Court.

22. In a passage upon which counsel for the trustee placed particular reliance, Young J cited the statement of Madden CJ of the Supreme Court of Victoria in Michael v Thompson (1894) 20 VLR 548 in which the Chief Justice said (at 552):

    Where all the facts concerning the settlement are within the knowledge of the settlor and settlee and are not within the knowledge of the creditors impugning the settlement, although the burden of proof is on those impugning the settlement, a very slight degree of proof should be sufficient to shift that burden.

1. In this case it is substantially correct to say that the facts were more in the keeping of the wife than the trustee. On the other hand, the seven years which the trustee has had to examine the facts, and the number and nature of opportunities which have arisen over that period precludes the Court from accepting that the wife was entirely in possession of the facts, or even overwhelmingly so, or that the evidentiary onus upon the trustee was in the circumstances only slight. The fact that the proceedings before this Court are constrained by the terms of s 79(2) of the Family Law Act further complicates this issue.

2. Having considered the impact of s 140 of the Evidence Act 1995, and the “comfortable satisfaction principle”, Young J concluded that s 140 of the Evidence Act 1995 “did not intend to displace the principle referred to by Madden CJ in Michael’s case”. For the reasons which he detailed, Young J concluded in the circumstances of the case before him that “one must look with suspicion and require a greater degree of comfortable satisfaction when considering the balance of probabilities”.

3. Encouragingly for the wife in the present proceedings, Young J’s conclusion with respect to the evidence before him in Ramirez (supra) was that “[a]lthough when one looks at all the details one can see that they do not all fit together nicely, if one looks at the bigger picture it seems to me very hard to see how the purchase price could have come about otherwise than the way the plaintiff says it came about.” As will be seen, in circumstances where the only direct evidence of contributions is that of the wife, reference to the “bigger picture” is potentially instructive in a case such as this when determining where the balance of probability lies.

4. The direct evidence with respect to contributions is that of the wife only. Realistically, the extent to which the wife’s allegations are accepted is thus pivotal to the findings of fact the Court makes. The wife did not impress as a witness. The Court cannot ignore the reality that, albeit in cooperation with the husband, the wife engaged in deceitful conduct in April 1998. In terms of credibility,the wife cannot conveniently walk away from implications of that conduct. This is perhaps the more so given the nature of the potential liability which she and the husband sought to defeat.

5. As a reading of the transcript of the proceedings in this Court at trial would confirm, the wife’s version of events has been inconsistent and unsatisfactory in a number of material respects. There have been inconsistencies between previous sworn evidence and written and oral evidence in these proceedings, internal inconsistencies in the oral evidence given during cross-examination, conceded material and significant errors in the written material presented to this Court, vagueness and a selective memory, all indicative of a desire to give evidence in the terms perceived to be most helpful at the time such evidence was given.

6. It is inherently improbable that if, as her affidavit asserts, the husband made no contributions from 1974 at the latest, the wife would have dealt with real estate in the way in which her evidence reveals. The explanation proffered for such dealings in the wife’s affidavit material is unconvincing, and differs materially from what seems to have ultimately been suggested to have been the reason for doing so, as it emerged from her evidence in cross-examination.

7. Having seen and heard he wife give evidence, having regard to the inaccuracies in such evidence, and the damage to the wife’s credibility resulting from her cross-examination, the Court does not accept that the wife would have repeatedly placed properties in the joint names of herself and her husband had he failed to contribute to the extent and in the ways which her evidence asserts.

8. The Court concludes that there is a significant measure of convenient exaggeration in the evidence of the wife. Viewing the wife’s evidence with “suspicion” is warranted.

9. In reaching its conclusions with respect to the wife’s claims, the Court is mindful of the reality that, as the wife suggested from the witness box, English is not her first language. That suggestion, well into cross-examination, by which time the wife could not have failed to realise the likelihood of the Court regarding her evidence with caution, is to be contrasted with the picture of success and skill in relation to the acquisition, conservation, improvement and realisation of various assets over a long period of time which her affidavit evidence sought to convey. In that context, language was not even hinted at as a limiting or impeding factor. The Court’s adverse findings with respect to the credibility and reliability of the evidence of the wife are not undermined by any lack of understanding of the English language on the part of the wife.

The Property of the Parties

1. Save in two respects, the property of the parties is not in issue. The real estate owned by the wife is currently agreed to be worth $2 548 826.00. The wife has a superannuation interest which is agreed to be worth $1 000 000.00.  The wife is able to access her superannuation entitlement without detriment and it is accordingly appropriate to include the superannuation interest as an asset (see C v C (2005) FLC 93-220). The net assets of the wife are accordingly $3,548,826.00.

2. On behalf of the wife the Court was asked to notionally add-back two sums, $195 000.00 and $206 000.00, both of which the husband is asserted to have received and retained. The husband has never made any admissions with respect to either of these sums and the joint documentation presented to the Court in April 1998 in support of the application for the making of consent orders gave no hint either that the wife alleged the husband had funds approximating $400 000.00, or that the husband conceded either having or having had funds of that magnitude. Understandably, there is no documentation which sheds helpful light on the topic.

Liabilities

1. The wife has no relevant liabilities. On behalf of the husband (see Exhibit A1) it was submitted that the husband’s bankrupt estate had debts of $1 055 461.82. That figure is asserted in reliance upon an agreement between M and the trustee. The circumstances surrounding the agreement between the creditors of the bankrupt estate (which really means M as he is the only creditor of the estate) and the trustee are of concern. Those concerns fall outside the ambit of this Court’s jurisdiction, but remain relevant to the determination of the liabilities of the parties for the purpose of these proceedings.

2. The Court accepts and finds, and there is no controversy in this regard, that the husband’s bankrupt estate owes M the sum of $391 991.69 inclusive of interest to July 2007 pursuant to the 2000 decision of the New South Wales Court of Appeal. In addition, the husband owes $78 922.75 by way of legal costs awarded to M and subsequently taxed with respect to the Supreme Court proceedings. As against those monies, the wife is entitled to be paid $29 000.00 by M with respect to the Supreme Court proceedings in which she was wholly successful against M.

3. The balance of the monies claimed to be owing by the husband’s bankrupt estate comprise, and totalling in excess of $500,000.00 consist of a variety of expenses for the trustee and counsel, solicitors, disbursements and “25% uplift premium on total fees” with respect to the trustee and counsel.

4. The evidence before this Court does not establish that the husband’s bankrupt estate is, on the balance of probabilities, indebted to the trustee and others referred to in Exhibit A1 in the sums alleged. The circumstances surrounding the agreement of M to those amounts, the absence of notice to the husband of the proposed agreement and the nature and quantum of the amounts themselves preclude such a finding in the current proceedings. Even if the Court should find the husband’s bankrupt estate is indebted to the trustee and the trustee’s solicitors and counsel, as will be seen, that does not impact upon the determination of these proceedings. If on proper application of s 79A, the consent orders of April 1998 should be varied, the extent to which any such variation meets or fails to meet expenses of that kind is not determinative of the order appropriate to be made under s 79A.

5. Counsel for the wife sought to notionally add back two sums to the assets of the parties. The first of those amounts was the sum of $195 000.00 being monies alleged by the wife to have been received by the husband when the proceeds of sale of a property which can for convenience be referred to as “[W property]” were divided equally between the parties. The second amount, in the sum of $206 000.00, was referrable to the receipt by the husband of the proceeds of sale of the property at D (“D property”) which the husband owned at the time the parties married. There is no independent documentary evidence impacting upon these issues. The only direct evidence is that of the wife.

6. In her affidavit evidence in chief, the wife deposed to the acquisition in 1977, in the joint names of herself and the husband, of the W property for $42 000.00 which sum the wife alleged she had paid for with the money “earned and saved in the [agricultural business] and with my personal savings.”

7. The wife alleged that the husband failed to make any contribution to that property although counsel for the wife conceded that the contribution entitlements of the parties could broadly be seen as having been equal up to 1974.

8. The wife deposed to the sale of the bulk of W property in 1994 for $390 000.00 and alleged that each party received “approximately $190 000”. The receipt of the funds pre-dated the consent orders by four years. The thrust of the wife’s evidence, if not necessarily so expressed, was that she thereafter derived no benefit from nor knew what the husband did with the sum which he thus received, whether it was $190 000.00 or $195 000.00.

9. The $206 000.00 arose from the sale of the D property by the husband in approximately 1982. There is no doubt that the property sold for $206 000.00. The wife alleges that she received no part of the $206 000.00 and there is no evidence to the contrary.  Perhaps unsurprisingly, given the antiquity of the transaction, there is no documentation impacting upon the probabilities in relation to the fate of the proceeds of sale.

10. As noted earlier, the Court is in a very difficult position given the way the case has been presented in this Court. The Court is unable to accept the wife’s evidence as thoroughly credible, reliable or accurate. Her claim is totally reliant upon the evidence of one unreliable witness with a motive for giving that evidence. On the other hand, there is no rational basis for rejecting much of what the wife contends, and even if the Court did, no other explanation of events is suggested or emerges.

11. There is however documentation prepared earlier, and at a time when proceedings not of the kind currently before this Court were not in contemplation, which sheds helpful light on these topics. The application for the consent orders and documentation advanced in support of those orders expressly asserted on the husband’s part that he was accepting less than his proper entitlement, for reasons which he detailed in his affidavit evidence.

12. Whilst, understandably, there was no evidence on behalf of the wife suggesting that she was doing rather better than she might have expected, it is surprising, if the husband had obtained the exclusive benefit of any part of the monies of the proceeds of the sale of W property and/or D property that reference would not have been made to it by either of the parties, either in an affidavit or in some other document which came before the Court.

13. The parties represented to the Family Court that the only assets then existing were the assets referred to in the documentation placed before the Court. It is clear that no reference was anywhere made in such documentation to the possibility of the husband having some or all of the proceeds of sale of properties approximating $400 000.00.

14. It is to be remembered, and confirmed by the documentation then presented, that the parties were anxious to have the consent orders made, for reasons which are not in doubt. Whilst a representation that the husband still had any of the funds from W property or D property would have potentially defeated, or reduced the effectiveness of the objectives which the orders sought to achieve, disclosing those funds as having been received and retained by the husband could only have enhanced the prospect of the Court concluding, as it was obliged to, that the orders were “just and equitable”, and thus proceeding to make them.

15. It could be argued that, having made the representations to the Court in 1998 which she did, or failed to then make the representations she now seeks to make, the wife ought not be able to now successfully assert that the husband had received the exclusive benefit of $400 000.00 over the final sixteen years of the marriage. That reality is influential in the Court’s conclusion. The absence of any documentation of any kind, at least with respect to the 1994 transaction, is also influential.

16. So too is the reality that the wife does not suggest in her material that the husband was dependent upon social security at any time subsequent to his last having worked in 1973. The wife suggested that she was financially supporting the husband during this period but gave no details of the extent or source of such support, albeit she was cross-examined on the issue to some extent. It could reasonably be inferred from the wife’s material that she was suggesting that the husband was living off his capital over this period, at least to some extent.

17. There is no objective evidence that the husband had approximately $400 000.00 or any sum of similar magnitude in 1998, much less that he has any of such funds at present. Given the time, and fees sought to be charged for doing so, expended on exploring the husband’s finances since his bankruptcy in 2000, it can reasonably be inferred that if any such sums had been unearthed the Court would have heard about them.

18. The wife bears the onus of establishing that the husband had funds in 1998 of approximately $400 000.00. For the reasons the Court has given, the wife has not discharged that onus.

19. There are potentially two relevant liabilities, the first and most obvious is that of the husband to M which the evidence (Exhibit A1) suggests approximates $392 000.00 inclusive of interest to the present time together with legal fees of approximately $79 000.00 against which, if they were to be treated as debts for present purposes, the sum of $29 000.00 owed by M to the wife by way of legal fees should be offset.

20. Different views could be taken of M’s liability and legal fees claimed by the trustee. How one viewed those would depend essentially on whether or not a nexus between the liabilities and the marital relationship of the husband and wife was demonstrated. The Court is not immediately persuaded that either of the liabilities in question bears a relevant nexus. That conclusion is based essentially on the nature of the husband’s liability to M and, as a consequence of his bankruptcy, his trustee in bankruptcy and the lawyers and others who have been thereby engaged.

21. The reality that the incident which gave rise to the husband’s liability to M also gave rise to litigation which was conclusively determined in the wife’s favour militates against this Court regarding the husband’s personal liability to M as a “matrimonial” debt.

22. The countervailing argument is essentially that, the wife having conspired with the husband to keep M out of his entitlement for so long, albeit those administering the husband’s bankrupt estate over the past seven years can be seen as having done little to effectively curtail that endeavour should, as a matter of justice and equity, result in these liabilities being regarded as if they were in fact matrimonial debts and thus “paid off the top” in the way that secured or other joint liabilities would be. The fact that the wife has by deception had the sole enjoyment of all the matrimonial assets over the period since the 1991 orders supports such an approach.

23. This argument assumes some attraction in relation to M who, it is clear, has had no capacity since 2000 to do anything to seek to enforce his debt. To say that M was entirely in the hands of the husband’s trustee in bankruptcy in pursuing s 79A relief would be a realistic summary of his position. The Court has some sympathy for M, both by reference to what the husband and wife colluded to achieve with the 1998 consent orders and by virtue of the preparation and presentation of the s 79A claim and the timeframe within which such activities have occurred. These factors incline the Court to be somewhat unsympathetic to the position of the husband’s trustee and the legal retinue he has retained to pursue the proceedings in this Court.

24. The Court does not propose in determining the assets of the parties to regard the husband’s indebtedness to M of approximately $450 000.00 as a liability for the purpose of determining the net assets of the parties. Nor does it propose to regarding the monies claimed to be owing by the husband to the trustee and others particularised in Exhibit A1. Whilst the Court accepts that the husband is indebted to M in the sums appearing in Exhibit A1 (subject to the offset of $29 000.00 which M owes the wife) whatever the status of Exhibit A1 may have in the Bankruptcy Court, this Court does not find debts in those amounts proved. As the transcript of the trial would confirm, counsel for the wife left no one in doubt that the claim in relation to those amounts was vigorously contested.

25. It is conceded that, albeit perhaps permissibly under the Bankruptcy Act 1966, the husband had no notice of the meeting at which M agreed to what, on its face, was a very generous remuneration package for the trustee and those he retained. It is clear from the evidence of the trustee and counsel for the trustee in this Court, that M will potentially only be paid after the other interests reflected in Exhibit A1 are paid, raising the distinct possibility of M “missing out” altogether. It is not in doubt that M had no independent legal advice prior to the creditor’s meeting (he being the only creditor) which approved the remuneration reflected by Exhibit A1. Nor was it suggested to M, notwithstanding what are said to be the implications of the approval of Exhibit A1 by him, that he obtain independent legal advice. As noted earlier, M was very much dependent upon the trustee pursuing proceedings in this Court in order to have any chance of receiving his entitlement under the Orders of the Court of Appeal. The effect of s 79(10) and s 79(10A) is probably that M had no capacity in his own right to seek to intervene in these proceedings to protect his own interest.

26. The wife in these proceedings does not accept the debt asserted by the trustee for legal and other fees. To the extent that the trustee seeks to discharge the onus of proof in that regard by reliance upon Exhibit A1, the provisions of the document, and the circumstances surrounding its acceptance by M, the absence of any opportunity for the husband’s interest to be considered in relation to it deny the trustee the ability to establish the indebtedness of the husband to him.

Contributions

1. It is necessary to consider contributions and, as counsel for the wife correctly in the Court’s view submitted, to reach conclusions with respect to the contribution and s 75(2) entitlements of the husband and wife both at the time the consent orders were entered into in 1998, and at the present time. If the Court concluded that what the husband received, or did not receive, pursuant to the 1998 consent orders reasonably reflected his entitlement at that time, it is difficult to see on what basis, particularly in the circumstances of this case, that could change as a consequence of contributions occurring thereafter.

1. In broad terms, the contention of the trustee is essentially that the entitlements of the parties in 1998 were approximately equal and that the husband was, by virtue of the consent orders, relinquishing an entitlement of approximately $500 000.00.

2. On behalf of the wife it was submitted, either on the basis that the husband had and still should be seen as having had, or had received and utilised solely for his own benefit, approximately $400 000.00 over the preceding sixteen years, the husband’s entitlement should be seen as having been extinguished by 1998. He accordingly was asserted to have relinquished nothing to which he was entitled as a consequence of the 1998 orders.

3. As noted elsewhere throughout these reasons, the Court is in the very difficult position that, albeit the credibility, accuracy and reliability of such evidence has been significantly impaired, the only direct evidence in relation to contributions is that of the wife. The Court does not know what the case for the husband is or might be in relation to contributions, and no cross-examination of the wife changed that state of affairs, even accepting, as the Court does, that counsel for the trustee was necessarily limited in that regard by the matters referred to earlier.

4. On behalf of the wife, significant reliance was placed upon two capital contributions and their impact. One such capital contribution was a sum of $100 000.00 which the wife alleged that she had acquired from working in a restaurant in a hotel in France prior to coming to this country.

5. The wife deposed to having a child of a previous marriage who was born in 1959 and was thus 5 years of age when the wife came to Australia. The wife alleged in her affidavit that between 1959 and 1964 that she had accumulated approximately $AU100 000.00 after supporting herself and her child. There is no evidence before this Court as to the likely earnings of the wife in France over the period relied upon by her.

6. The wife’s claim seems inherently improbable. Understandably, forty years later, there is no documentation in relation to the monies, but title searches, including memoranda of transfer and mortgages, or more significantly the absence of mortgages, are likely to have been available to corroborate the claims the wife makes, or to cast doubt on the accuracy of such claims. Regrettably neither party has provided such documentation.

7. Cross-examination of the wife in relation to the period during which she claims to have accumulated $100 000.00, how she brought the money to this country and what happened to it thereafter until the acquisition in 1972, eight years after she came to this country and four years after she married the husband, is unhelpful, either for the Court in determining the probability or otherwise of the wife’s claim being accurate, or the assertion on behalf of the trustee that the wife could not have had so much money.

8. Although less than satisfactory, the Court perceives that it has little alternative than to conclude that the wife had savings when she came to this country, but that her evidence in relation to those savings involved a considerable element of exaggeration. It would be nonsensical having regard to the evidence to suggest the quantum of the savings. Notwithstanding the defects in the wife’s evidence, the savings can be regarded as being substantial relative to the times and the assets which the parties otherwise then had.

9. The other capital sum relied upon by the wife is the sum of $70 000.00. The wife’s evidence in relation to those funds, even accepting that the transactions occurred forty years ago, was unimpressive. Notwithstanding the wife’s sworn affidavit of evidence-in-chief in 2005, in oral evidence at trial a different version of the times of the transaction was advanced, as was the composition of the funds allegedly totalling $70 000.00. The wife’s mother is deceased. There is no documentary evidence shedding any helpful light on the claim. Reference to memoranda of transfer and mortgages in relation to all property acquisitions and sales, the identity of the properties not being in doubt, would have been likely to have enabled counsel for the parties to examine or cross-examine (as the case may be) the wife productively with respect to the probabilities of the wife having had, whether from her mother or anywhere else, approximately $70 000.00 in 1967, or 1969.

10. Again the Court is left in the position that the evidence of the wife, though probably involving considerable exaggeration, cannot be totally rejected as pure fabrication. Although less than satisfactory, the Court is satisfied that in about 1969 the wife acquired a significant capital sum from her mother.

11. As suggested to counsel for the wife during the course of final submissions, the tax returns of the parties over the three decades in which they were cohabiting and/or living under the one roof would have been highly instructive documents. The wife made a number of references in her evidence to an accountant or tax agent whom she named. There is no evidence that either party sought to adduce any evidence or obtain any records from the accountant or tax agent whose identity does not seem to have been in doubt.

12. The Court accepts that there are limits to the extent to which the ATO is able, and in the case of the wife has provided previous tax returns pursuant to freedom of information legislation. To the extent that the wife has supplied tax returns, their accuracy has not been sought to be impugned and no significance either way has been sought to be attached to the level of income in the years to which they refer.

13. The wife’s financial contributions are comprehensively and cogently recounted in her affidavit of evidence-in-chief, albeit the accuracy of that account leaves a good deal to be desired. More in reliance upon the wife’s examination in the Bankruptcy Court, which has become evidence in this Court, than from her own affidavit of evidence-in-chief in this Court, the wife appears to assert that home-making and parenting of the parties’ children was undertaken on her behalf by her mother, whom it seems lived with the parties during those times. The evidence in relation to home-making and parenting is so scant as to render unqualified reliance upon it unsafe. Cross-examination of the wife shed no useful light on that topic.

14. The wife’s evidence, which there is no reason to reject or discount, is that she worked in some capacity or other throughout cohabitation and separation under one roof for all but two years, approximately one year surrounding the birth of each of the parties’ children in 1969 and 1970. What, if anything, the husband did during those times is largely unknown to the Court. Cross-examination of the wife could reasonably be expected to have clarified the issue, potentially in ways assisting the husband’s case. The cross-examination did not have that outcome. On balance, on such evidence as there is, home-making and parenting contributions appear to modestly favour the wife until 1988, by which time the younger child of the marriage had attained 18 years of age. The evidence is silent in relation to such contributions by the husband, and limited to little more than whispers in relation to such contributions by the wife.

15. The husband had the capacity to contribute $206 000.00 to the marriage as a consequence of the sale of his D property. The wife did not deny that the husband owned that property at the date of marriage nor did she allege any contributions by her in the fourteen years between the date of marriage and the realisation of the D property. Conversely, the property having been rented out, and there being no evidence that the husband made any particular contributions to its conservation or improvement, only the passive contributions of the husband with respect to the property after the commencement of cohabitation require recognition.

16. There is little doubt that the fate of the D property proceeds of sale assumed significance in the proceedings. The wife contends that the husband retained those proceeds of sale. The cross-examination of the wife in relation to events surrounding and following the realisation of the D property does not provide a rational basis for rejecting her claims that the husband retained and utilised those monies, for whatever purposes. If one regarded the husband as having lived off those monies, as inferentially appears to be the least improbable scenario, he would have been able to draw down approximately $12 800.00 annually between 1982 and 1999.

17. Similar observations apply to the $190 000.00 (or $195 000.00) which the wife alleges the husband received on the liquidation of the bulk of the W property. That fund would have enabled the husband to draw down between 1994 and 1998 approximately $47 500.00 per year. The likelihood of the husband having dissipated funds of this magnitude cannot be suggested with any reliability. Cross-examination may have clarified the issue. On such evidence as there is, one could be somewhat sceptical as to the likelihood of the husband having drawn on funds to this extent and the wife nevertheless continuing to acquire property in co-ownership with him. Cross-examination may also have clarified that issue, but ultimately did not.

18. In effect, the wife’s claim is that from 1973 until 1998, a very lengthy period, the husband made no direct financial or non-financial contributions to the acquisition, conservation or improvement of their assets. There is no rational basis for rejecting the wife’s claims that the husband had no employment after 1973. In fairness to the wife, her account of how the husband came to cease employment in 1973, whatever his motivation thereafter, militates against rejecting the broad thrust of her claims. The position is thus that, on balance, from 1973 the wife can be seen as having been the only active participant in the paid workforce.

19. The wife’s explanation, the foundation for which was not effectively explored in the evidence at trial was that, despite the husband’s serial absence of contributions, she acquired numerous properties in joint tenancy with him because of tax considerations. Although not so intended, that is the only evidence of a concession made by the wife in relation to the husband’s indirect contributions to the conservation and improvement of assets. The failure to explore that issue in cross-examination of the wife limits the extent to which the trustee can advance the husband’s case in reliance upon that factor, save to the extent that the wife’s evidence necessarily contains a concession to that effect.

20. As noted earlier in these reasons, although forensically a less than satisfactory approach, the Court asks itself how likely was it, against the background of the husband contributing nothing by way of effort or earnings, and retaining for his own exclusive use and benefit capital of approximately $400 000.00, that the wife would have caused the properties to be acquired in joint names in the way the evidence reveals occurred, at the times those acquisitions occurred.

21. The Court has struggled to decide what it should conclude in this regard. On the one hand, having seen and heard the wife, and having had regard to the measures to which she has been willing to resort to preserve her assets, it is difficult to imagine that she would have put the husband in the position of potentially receiving a substantial share of property to which he had made no contribution. This is particularly so after 1987. On the other hand, there is no suggestion, either express or implied, of an alternate hypothesis for her having done so.

22. The evidence suggests that the husband probably supported himself and otherwise disposed of capital of approximately $400 000.00 between 1982 and 1998 in such manner as he chose. There is no rational basis for concluding that any of those monies were reflected in or by the assets which existed in 1998. There is no evidence that the husband had passive income of any kind or from any source after 1982. Conversely, there is no evidence of the extent to which the wife was supporting him, or that he was receiving social security payments during that period. Nor is there reliable evidence revealing what funds the wife had available to her over that period.

23. The wife also relied upon the contribution of approximately $132 000.00 from personal injuries monies received by her. Cross-examination of the wife provides no guidance as to the likelihood or otherwise of that having been the case, nor does it (or any other evidence) provide a basis for rejecting the wife’s claims. On balance, the wife is entitled to the benefit of a finding in her favour in relation to that contribution.

24. The parties cohabited for approximately twenty years after they married. The improbability of the husband having contributed as little as the wife alleges in that period is apparent, particularly having regard to the demonstrated unreliability of the wife’s evidence in numerous respects. Even so, for the reasons the Court has endeavoured to articulate, the probabilities suggested by the evidence are that the wife made significantly greater contributions to the current “property” of the parties pursuant to the various heads of s 79(4) than did the husband over the period.

25. The third decade of the relationship, during which the parties lived separately and apart in the same premises, is more curious given the transactions which the wife reveals occurred during that period. The wife made contributions for the welfare of the husband during that period, and there is no challenge to those contributions. There is no evidence that the husband made any contributions of any kind during the decade prior to the 1998 consent orders, or any scope for concluding that he did. Necessarily, suggesting the possible entitlement of the husband in 1998 is a difficult exercise.

26. On the evidence which the Court has accepted, to conclude a contribution based entitlement of the husband not exceeding 20 per cent of the then assets of the parties would be a reasonable but very broad reflection of the effect of the evidence which the Court has accepted.

27. Whilst the evidence is scant, it does appear that in 1998 the husband would have had some entitlement to a s 75(2) adjustment to his contribution based entitlement. The wife fairly conceded in her affidavit material that the husband had sustained major injuries in 1973. Whilst her evidence suggests that the husband was not motivated to work thereafter, her evidence that he was “injured severely” with severe burns “to most of his body” is significant. The wife’s evidence does not reveal her to have had corresponding health difficulties to those which she raised with respect to the husband. The husband’s health problems included his two heart attacks in 1997.

28. The wife was 17 years younger than the husband and, even accepting the considerable measure of exaggeration in her evidence with respect to contributions, had a demonstrated capacity for property acquisition, management and resale. The husband’s capacity to earn in 1998 could be considered non-existent by reason of his health and his age.

29. A not insignificant s 75 adjustment in favour of the husband would in the circumstances have been appropriate in 1998. An adjustment of 5 per cent would not have been unrealistic. In broad terms, the husband’s entitlement in 1998 appears likely to have thus been in the order of 25 per cent of the pool of assets then represented by the parties to have been available. Thereafter there is no fact or circumstance which can be relied upon by the trustee to increase the husband’s entitlement by way of contributions. At its highest, the fact that the husband was, albeit by design, kept out of his capital for what has now been nine years might be thought relevant to what his interest might today be considered to be.

30. In the circumstances, the husband can be seen as having received in 1998 something in the order of $250 000.00 less than he might have received had the matter then been determined and findings of fact made in the broad terms this Court has suggested. To the extent that those findings are adverse to the wife, her own unsatisfactory evidence and the absence of corroboration, in respects where it might reasonably have been available, underpin such conclusions.

31. It is thus necessary to proceed to what might be considered to be the second stage of the determination, namely whether it is now just and equitable to interfere with the 1998 consent orders and, if so, in what way.

32. The evidence is clear that in the post 1998 period the wife has been solely responsible for the conservation and improvement of the parties’ assets in ways which are largely unchallenged, or ineffectively challenged, on the evidence. The assets are today worth substantially more than the parties represented them to be worth in 1998. The increase in the asset pool cannot properly be regarded as referable solely to inflation or other factors, the wife having actively conserved and improved the parties’ assets over the past decade.

33. As noted earlier, the Court knows nothing of the circumstances of the husband which could inform a consideration of a s 75(2) adjustment. Why those representing the husband in these proceedings have failed, or were unable, to take any effective or timely steps to put those matters before the Court has not been convincingly explained. The husband is obviously elderly. It appears that he may reside in a nursing home. Beyond that, the Court knows nothing of his circumstances. The wife has revealed little of her circumstances but, given that there was no effective challenge in cross-examination to any aspect of what she did disclose there is no reason not to accept such evidence, scant though it is. Had the matter been more effectively explored, it is conceivable that the husband might have some entitlement to a s 75(2) adjustment. In the absence of any evidence of that kind, the Court cannot and will not do so.

34. In the circumstances, to carry forward the husband’s notional 1998 entitlement in percentage terms would be quite artificial and unfair to the wife. On the other hand, notwithstanding that the husband brought about such state of affairs, to fail to reflect in any award now made the reality that nearly ten years has passed and that nothing has been received of the $250 000.00 would be unfair to the husband. It ought not be forgotten that it required the collusion of the husband and the wife to procure the miscarriage of justice which the consent orders of 1998 potentially and, for almost a decade, achieved. The evidence does not suggest the culpability of either spouse to be greater than that of the other in relation to the 1998 orders. Any order now contemplated should reflect those realities.

35. On balance, to adjust the husband’s notional 1998 entitlement by reference to inflation would in the circumstances be the appropriate approach. The annual inflationary figures from the Australian Bureau of Statistics are as follows:

Quarter	Consumer Price Index	Percentage Increase
December 1998	121.9	-
December 1999	124.1	1.80
December 2000	131.3	5.80
December 2001	135.4	3.12
December 2002	139.5	3.03
December 2003	142.8	2.37
December 2004	146.5	2.59
December 2005	150.6	2.80
December 2006	155.5	3.25
March 2007	155.6	0.06

1. Applying these figures to the husband’s entitlement of $250 000.00 on an annual basis produces a figure of $319 081.38.

2. Having thus concluded, prima facie, the 1998 orders should be varied to provide that such sum be payable by the wife and that such payment should be charged upon the wife’s assets. Before making such an order however a number of matters require consideration. These include the “unclean hands” argument on behalf of the trustee, and the provisions of s 79(2) of the Act. Also requiring consideration if the Court does propose ordering the wife to make payment is the form of such order. That, on the case presented by the trustee, is by no means a potentially academic exercise, the reality being that if the Court orders the wife to make the payment which it proposes it is apparent that there will be insufficient to enable M and the trustee to be paid. Indeed the order proposed would, on the evidence of the trustee and the statements of the trustee’s counsel, result in M receiving nothing.

1. It was submitted that in determining what award to make against the wife, the Court should be influenced by the fact that the husband and wife colluded in 1998 to defeat M’s ability to recover his entitlement from the husband and that the parties persisted in that endeavour thereafter. The time frame in that context is relevant.

2. As is clear, the husband was made bankrupt in 2000. In 2002 the wife was examined twice pursuant to the terms of the Bankruptcy Act1966. Why a period of two years elapsed before that examination took place is unclear. It is clear that the wife was not subsequently sought to be further examined pursuant to the provisions of the Bankruptcy Act 1966. It is also clear that the first the wife knew of a claim being made against her was when the current proceedings commenced in early 2005, five years after the husband was made bankrupt and almost three years after the wife last had any contact with the trustee. The wife was thus never, prior to 2005, on actual or constructive notice of the likelihood of any claim being made against her.

3. As the record makes clear, in March 2006 the wife made concessions in substantially the same terms as those confirmed in writing at trial in July 2007, the effect of which was to concede the “threshold” issue under s 79A. Whilst, even if the concession had not been made, it is likely that the Court would have found the threshold requirement of the Section to have been established, the fact remains that, by conceding as she did through her counsel in March 2006, that onus was removed from the trustee, and all parties were saved the costs likely to have been entailed in its agitation. The position is thus that the first time the wife had reason to believe that there was any challenge to the 1998 consent orders was in early 2005. Thereafter, at trial she conceded the threshold issue.

4. It could be submitted on behalf of the wife, although not successfully in the Court’s view, that had she known earlier of the trustee’s intention to pursue her pursuant to s 79A of the Act the wife may have been better able to procure documentation to corroborate her claims. The fact that her deceitful conduct gave rise to the need to ever seek such documentation militates against accepting that proposition The absence of evidence of due search and enquiry for such documentation since early 2005 also precludes the Court accepting that assertion.

5. With great respect to counsel for the trustee, to submit, as he did, that the Court should draw adverse inferences from the wife failing to make some approach to the trustee prior to the commencement of any proceedings, though perhaps what might occur in a perfect world, is not consistent with common sense and knowledge of what happens in the real world. Realistically, unless and until some approach was made by the trustee to the wife, which did not occur until early 2005 when proceedings were commenced, on no rational basis can the wife’s course of conduct in doing nothing and maintaining a low profile be criticised. The adverse implications of the wife’s 1998 deceit remain, and have been relied upon in ways earlier recorded in these reasons. It can thus be suggested that the wife has not avoided the consequences of her deceitful conduct.

6. The Court has earlier referred to the fees and charges detailed in Exhibit A1. The reasonableness or otherwise of those fees or charges may be decided by another court. They may be upheld in their entirety by such Court. What has been revealed (or not revealed) in this Court, relevant to these proceedings, which seem to be the only proceedings which have ever resulted from the husband’s bankruptcy, render it difficult to understand how fees of the quantum there referred have been incurred. The Court has earlier indicated some of the bases of its observations.

7. To the extent that the “unclean hands” argument has substance, its substance is limited to M. For all practical, and probably legal, purposes, M had no capacity to influence or assist the course of the proceedings which the trustee ultimately commenced in this Court five years after the husband became bankrupt and, at least three years after learning of the 1998 consent orders and their effect. To allow the husband and wife to in any way benefit vis a vis M from their actions, or to penalise M for the timeliness and effectiveness of actions taken by professionals over whom he had no control or influence would be unfair.

8. The Court apprehends that if the proposed order is made there would be sufficient funds to substantially, but not entirely, satisfy M’s entitlements. The “unclean hands” argument does not, in the Court’s view, under s 75(2)(o) or otherwise advance the cause of the trustee in relation to his fees, charges and expenses. A significant component of M’s indebtedness relates to interest calculated at a rate of 10 per cent per annum. That figure considerably exceeds the recorded rates of inflation since 2000. It also considerably exceeds the prime interest rates prescribed by the Reserve Bank of Australia from time to time which have been as follows:

Quarter	Change in Cash Rate (%)	New Cash Rate Target (%)
3 November 1999	+0.25	5.00
2 February 2000	+0.50	5.50
5 April 2000	+0.25	5.75
3 May 2000	+0.25	6.00
2 Aug 2000	+0.25	6.25
7 February 2001	-0.50	5.75
7 March 2001	-0.25	5.50
4 April 2001	-0.50	5.00
5 September 2001	-0.25	4.75
3 October 2001	-0.25	4.50
5 December 2001	-0.25	4.25
8 May 2002	+0.25	4.50
5 June 2002	+0.25	4.75
5 November 2003	+0.25	5.00
3 December 2003	+0.25	5.25
2 March 2005	+0.25	5.50
3 May 2006	+0.25	5.75
2 August 2006	+0.25	6.00
8 November 2006	+0.25	6.25

From this chart an average rate of interest of 5.33 per cent can be deduced. In the circumstances of this case, to preserve the real value of his award by reference to inflationary increases appears the most just means of attempting to protect M’s entitlement.

1. Section 79(2) constrains the Court from making an order unless it is satisfied that it is just and equitable to do so. There are realistically, in the context of this case, two elements of that exercise. The first really relates to the quantum of the proposed order as between the husband and wife. The second, in the circumstances of this case, arises by virtue of M’s entitlement. The Court has endeavoured throughout these reasons to explain the difficulties under which it has laboured in terms of evaluating the respective entitlements of the parties, and has made no attempt to conceal the unsatisfactory nature of the findings which it feels it has been able to make.

2. If the proposed order is made, the wife would have to pay the sum of $319 081.38. She would thus retain approximately $3.28 million which represents 91.12 per cent of the assets accepted as currently existing for the purpose of these proceedings.

3. The Court undoubtedly exercises a broad discretion when determining proceedings under Part VIII of the Act. It is difficult to imagine a case involving the exercise of that discretion being broader than in the circumstances of this case. Hopefully, the foregoing reasons adequately articulate why that is so. The Court is not persuaded that the proposed division of the wife’s assets is other than just and equitable.

4. It remains to consider the form which the order should take. The nature of the orders the Court is able to make are defined by s 79(1) of the Act. It does not seem to be suggested on behalf of the trustee that an order that the wife pay directly to M offends s 79(1) of the Act. The Court is satisfied that such an order is comfortably accommodated within the framework of s 79(1) of the Act. This is particularly so when regard is had to the third party creditor provisions of Part VIII.

5. The question in this case is not whether the Court can make such an order, but rather whether it should. The issue is of significance given that the proposed order is insufficient to satisfy M’s entitlement and the trustee’s claims. Moreover, the evidence of the trustee and the statements of the trustee’s counsel suggest that if the proposed order were to be made in favour of the trustee M would receive nothing. Such an outcome would, on the Court’s findings, be offensive to notions of justice and equity. To the extent that the wife will not be obliged to pay more than the Court has indicated, the reasons why that is so are largely referable to the findings of fact the Court has made, which in turn are referable to the difficulties in the fact finding exercise given the state of the evidence.

6. The Court has earlier made reference to the regrettable deficiencies in the evidence. It has also referred to the reality that M at no relevant time had any capacity to influence the course of proceedings. The provisions of s 79(10A) of the Act at all material times precluded M from seeking to intervene in the proceedings.

7. Section 75(2)(ha) of the Act is relevant and provides that the Court must in exercising its discretion under Part VIII of the Act take into account “the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant”. Whatever the status of the trustee under the bankruptcy legislation, the evidence before this Court does not, in the Court’s view, entitle the trustee to be regarded as a “creditor” for the purposes of s 75(2)(ha) although the trustee is probably a “person whose interest would be affected by the making” of an order (see s 79(10)). M is undoubtedly a creditor.

8. If the order were made in the form in which the trustee seeks, there is little doubt that M’s ability to recover his debt would be adversely affected. That is a matter of the upmost relevance in the circumstances of this case and one which, in the Court’s view, should be avoided to the fullest permissible extent.

9. The Court accordingly proposes that the wife be ordered to pay to M the sum of $319 081.38 and that the consent orders of April 1998 be amended to so provide. Payment of the said sum should be and remain a charge on the wife’s assets until it has been paid in full.

The consequences of the death of the husband.

1. As noted at the outset of these reasons, subsequent to the completion of the trial of the proceedings in July but before the Court was able to deliver its judgment in August the husband apparently passed away.

2. In terms of the substantive outcome of the proceedings, the Court struggles to think of anything arising from the husband’s death which would cause it to reach a different conclusion. However, the matter is not so simple. Clearly, as a matter of natural justice, the parties should have the opportunity to make further submissions with respect to the substantive outcome of the proceedings given that the husband is now deceased, notwithstanding that the husband never stood in life to gain anything as a result of the Court’s proposed determination of the proceedings.

3. Apart from issues of natural justice, the husband’s death may have implications in terms of the Bankruptcy Act and the Family Law Act, and particularly s 79A of the latter Act. The potential issues of substance in relation to those aspects of the proceedings would, independently of any natural justice considerations, require that the parties have the opportunity to be further heard.

4. The issues which potentially arise from the husband’s death appear not to be issues which would be likely to give rise to further evidence. The Court would view with disfavour any attempt to revisit the evidence at trial to which reference has been made in these Reasons for Judgment under the guise of issues arising out of the husband’s death.

5. Realistically, the issues with respect to which the parties are entitled to be heard, and may wish to be heard, appear to be issues of law rather than fact. In those circumstances, rather than reconvene the Court for further oral hearing, the most expeditious and hopefully cost-effective method of proceeding appears to be to invite further written submissions, and the Court proposes so ordering.

Costs

1. The issue of costs clearly will be live in the light of the outcome of the proceedings. Reserving the costs of both parties for further consideration once final orders are made is in the circumstances the appropriate, and probably the only course reasonably available to the Court.

I certify that the preceding one hundred and forty (140) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman.

Associate: 

Date:  17 August 2007