Maloich and Maloich

[2013] FCCA 1068

FEDERAL CIRCUIT COURT OF AUSTRALIA

MALOICH & MALOICH [2013] FCCA 1068

Catchwords:
FAMILY LAW – Property dispute – short marriage – wife alleging substantial concealment of assets by husband – whether husband’s business possessed of valuable assets and choses in action – finding that husband not concealing assets – wife’s allegation of husband’s deliberate non-disclosure not accepted – pool of matrimonial assets assessed as minimal – virtually nothing to divide – orders the best the Court can do in the circumstances. 

Legislation:  

Family Law Act 1975 (Cth), s.75(2)

Stanford v Stanford [2012] HCA 52

Applicant: MS MALOICH

Respondent: MR MALOICH

File Number: MLC 9560 of 2012

Judgment of: Judge Burchardt

Hearing date: 13 June 2013

Date of Last Submission: 11 July 2013

Delivered at: Melbourne

Delivered on: 19 August 2013

REPRESENTATION

The Applicant: In person

The Respondent: In person

ORDERS

1. The husband do all things necessary to transfer his right, title and interest in his Land Rover to the wife at the expense (if any) of the wife. 

2. For the purposes of these orders:

   (a)the husband is the member spouse;

   (b)the wife is the non-member spouse;

   (c)the superannuation fund is the [M] Super Fund (“the Fund”).

3. Paragraphs 2-9 of these orders are binding on the trustee of the Fund.

4. The wife is to be allocated out of the interest of the husband in the Fund the base amount of $3,160.

5. Whenever the trustee of the Fund makes a splittable payment from the interest held by the husband in the Fund, the trustee is to pay to the wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there is to be a corresponding reduction in the entitlement that the husband would have had but for these orders.

6. Order 5 is to have effect from the operative time.

7. The operative time for the purposes of these orders is 20 business days after the day of service of these orders upon the trustees of the Fund.

8. Until the happening of any of:

   (a)the establishing of a separate account in the name of the wife; or

   (b)the transfer or rolling over into another superannuation fund of the payment split created by order 5; or

   (c)the husband be and is restrained by himself, his servants or agents from executing a Death Benefit Nomination in favour of any person or doing any other act or thing which would render any part of his interest in the Fund a non-splittable payment within the meaning of Regulations 12 of 13 of the Family Law (Superannuation) Regulations 2001.

9. Each party and the trustee of the Fund have liberty to apply in relation to the implementation of orders 2-9 inclusive.

10. Unless otherwise specified in these orders and except for the purposes of enforcing the payment of any money due under these, or any subsequent orders:

    (a)each party be solely entitled to the exclusion of the other to all property (including choses in action) in the possession of such party as at this time;

    (b)money standing to the credit of the parties in any bank account remains the property of the account holder;

    (c)each party hereby foregoes any claim they may have to any superannuation benefits belonging to, or earned by, the other;

    (d)all insurance policies to become the sole property of the owner named thereon;

    (e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

    (f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

11. There be liberty to the Trustee of the Fund to make application in relation to the implementation of these Orders. 

IT IS NOTED that publication of this judgment under the pseudonym Maloich & Maloich is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 9560 of 2012

MS MALOICH

Applicant

And

MR MALOICH

Respondent

REASONS FOR JUDGMENT

Introductory

1. This is a property dispute between a couple who were married for only five years.  Both parties were, at least at trial, self-represented.  The evidence provided is substantially deficient.  While I have had regard to all the materials filed, these reasons for judgment concentrate on the matters I regard as significant. 

2. The wife seeks that she receive all the husband’s superannuation (approximately $30,000), spousal maintenance in a sum to be determined by the Court and a 50 per cent division otherwise of the property pool as the Court finds it.  On the wife’s version of the property pool, it would be a substantial amount of over a half million dollars. 

3. The husband opposes the wife’s application, although he indicated at one stage that he was prepared for the wife to take all of his superannuation, and his car, valued by the wife at $13,000 and valued by the husband at $5,000.  The husband otherwise left the matter to the Court to determine. 

4. For the reasons that follow, I propose to order that the wife receive the husband’s car, and that otherwise each party retain all chattels and possessions they currently have.

Uncontroversial background facts

1. The wife was born [in] 1955.  She described herself in her first affidavit filed on 18 October 2012, as a [occupation omitted].  She has two children, then aged 27 and 28. 

2. The husband was born [in] 1959 and has two daughters, one of whom, [X], is 11, the other is adult.  The husband was described by the wife as a [occupation omitted].  The wife asserted that [X] lived with the parties for about nine months during the relationship. 

3. The parties were married [in] 2007, although the wife says that cohabitation commenced in April 2007. They separated on 30 June 2012. 

4. It seems that there is no dispute that at or about the time of separation (and indeed just before it), the parties entered into the lease of a property where the wife presently lives.  This property was larger than they would have otherwise required because it was proposed that the husband would conduct his business from it.

5. The husband is an extremely experienced person in what the wife described as the [omitted] Industry, but it is more accurate to say that he is an extremely experienced [omitted]. 

The circumstances of the parties since separation

1. Since separation, the wife has continued to live in the rented property to which I have referred.  Her lack of financial resources (she is in receipt of statutory benefits only) has led her to have two homestay students (although one appears to have been for a short period of time).  It is only the payments from these persons which enable her to make ends meet to the extent that she does.  The wife says nothing in particular about her health, but it is clear that she has not worked in full time employment for many years, including, as I understand it, all the years of the relationship with the husband. 

2. The husband has lived in his factory.  He had to move factories because the rent was not paid.  He says, and I accept, that he took out a two year lease on a new factory, which was in some respects superior in any event, because that was the minimum period of lease he could get.  His tenure at that premises is uncertain, and I note that he lives there in any event.

3. The husband has asserted, without contradiction, that he has a heart condition.  He asserted that he is likely to return to Queensland where it would appear he has family.  He asserted he has been offered a [occupation omitted].

Consideration of section 79(2) of the Family Law Act 1975

1. It is clear from the decision of the High Court in Stanford v Stanford [2012] HCA 52 that the first step in any property proceeding is to consider whether it is just and equitable in all the circumstances to make an order altering the parties’ property interests. This involves identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in property.

2. In many ways this is what much of the dispute in this case is about. 

3. The Financial Statements filed by the parties make it clear that they in many ways own but little by way of property. The parties’ affidavits say but little about their employment history. The wife says that she received two WorkCover payments during the course of the marriage in a combined total of $77,000. She deposes that those funds were received in 2010 and were dissipated in their entirety by her supporting the household and the husband’s daughter. The wife’s Financial Statement filed 18 October 2012, lists a car with an estimated value of $10,000 and no other relevant assets. It suggests she has superannuation in the sum of $243. The wife’s Financial Statement asserts a loan from her son in the sum of $4,000 and a credit card debt of $8,000.

4. I would infer from the minimal quantity of the wife’s superannuation that she cannot have been employed for a very long time. The superannuation guarantee legislation has been extant for some years and she would have accrued more than $243 if she had been in employment since that legislation was first introduced in the early 1990s.

5. The husband’s financial statement, filed on 17 December 2012, lists an income from his business, [A] Pty Ltd (“[A]”), at an estimate of $950 per week.  It details funds in the ANZ Bank of just over $18,000 and a Land Rover asserted to be worth $5,000. 

6. The husband’s Financial Statement also asserts interests in a business (presumably [A]) worth $5,000 and tools, art, iPad, camera and stereo worth $3,000 and a total superannuation of just over $30,000. 

7. Under the heading “Liabilities,” the husband disclosed an unpaid tax bill of almost $11,000 and an overdraft from the ANZ in the sum of $30,000, together with credit card debts worth almost $50,000. 

8. The real issues in the case are about the alleged assets that the husband controls.  A very substantial proportion of the wife’s affidavit material has been directed to establishing the proposition that the husband is wilfully concealing substantial assets under his control.  These relate, of course, essentially to his business activities. 

The alleged sale of the [T] trademark and the [E] debt

1. It is common cause that the husband owns a trademark called [T]. 

2. In her first affidavit, the wife asserted that the husband had sold or was about to receive funds from the sale of this trademark for a price of $150,000. She annexed, as Exhibit C, a Memorandum of Understanding as to the sale of the trademark.  Exhibit C is a document headed “Memorandum of Understanding.”  It is dated 30 August 2012.  It is under the [T] logo.  It is important to note that the document is not in fact a multi-party document but is clearly created and signed wholly by the husband. The first paragraph of substance of the document reads:

   “The purpose of this document is outlining the activities of the manufacture of [omitted] and equipment.”

3. The document does say, relevantly:

   “I require a total of $150,000.00 as the buying price for the assets of [T] …”

4. It is, however, clear from the document that it is a proposal and not a concluded agreement. 

5. The husband’s evidence was that a company, which I will refer to as [S], run by a friend of the applicant’s, Mr W, had been in discussions with him.  [S] wanted the husband to go to Queensland and work for them there.  He did not wish to do so at the time because he was living close to his daughter (this having occurred in late 2012 does not sit altogether easily with the husband’s now asserted desire to return to Queensland). 

6. The husband’s evidence as given, however, was that he decided not to enter into any kind of commitment with Mr W.  I will return to this matter under the question of the demeanour of the parties, but it is sufficient to say that I believe the husband. 

7. The wife also asserted that the husband was owed the sum of $165,000 by [E] (see Exhibit D to the wife’s first affidavit).  [E] is a company with which it is clear that the husband had an inter-relationship. 

8. The wife sought to lead hearsay evidence to the effect that this was a recoverable debt based on conversations with a Mr P, who is the husband’s debt collector. 

9. It is clear from the correspondence from [E] that the debt is extremely debatable at best.  The fact is that the debt is, on any view, well over four years old.  The correspondence for [E] on its face shows considerable, if not insuperable, difficulties to recovery.  It seems to me that when looked at properly, the husband entered into a series of negotiations and discussions with [E] and performed some duties for [E], but in a wholly anticipatory way.  The husband says he has given up on this debt and I believe him. 

The assets of the company

1. This brings us to the evidence given in the case. 

2. The wife’s evidence-in-chief pointed to the non-compliance alleged against the husband in respect to disclosure.  The wife pointed out that there had been no response by [S] to a subpoena issued against [S].  This was a valid observation but not one that the wife sought to take further in terms of compliance. 

3. The wife pointed to the proposition that the alleged debt with [E] was recoverable. 

4. Under cross-examination by the husband, the wife essentially said that the husband was concealing his assets.  In respect of [V], a company in Queensland, the wife asserted that the company was now engaging in work that necessarily required the assistance of the husband.  She asserted that there was a hidden contract with Mr W to provide cylinders on request.  She did not accept that the [T] trademark had not been sold. 

5. The wife said that her [omitted] income was limited to a period of three months per year and was taken in cash which was declared to her accountant.  She said that after all costs, it was more like a hobby. 

6. The wife was adamant that the husband would collect the [E] debt later and that he had sales pending of over $70,000. 

7. The husband’s evidence was that the wife had had no involvement with his business.  He said that he had prepared a number of [omitted] but that he had no more than 30 presently in his possession.  He said he was in the process of shutting his business down and was considering, as I have indicated earlier, returning to Queensland. 

8. Under cross-examination by the wife, the husband said that he had only one term deposit account which he used as a guarantee on his bank overdraft. 

9. So far as [S] was concerned, he said that Mr W was happy to have him work for him as they went back a long time.  Nonetheless, he did not wish to return to Queensland, because he was close to his daughter.  This was why he had not progressed the matter. 

10. The husband denied that he had manufactured any machinery for [V] and said that the contract with [V] was purely for teaching. 

11. He said that the carbon tax had effectively destroyed his business. 

12. I should interpolate and say that the husband’s evidence as to the difficulties imposed by the carbon tax upon his industry was compelling.  His explanation for the different circumstances attaching to his German competitors was entirely believable. 

13. The husband said that the orders from [omitted] (see Annexure 12) were a split order because he did not have enough funds to supply it in one tranche.  The husband admitted spending some $1,700 between late 2012 and May 2013 on musical equipment but asserted this was simply his only vice.  He said that he did not drink or use drugs and had been playing the [instrument omitted] since he was eight years old. 

14. The husband said he was simply unable to say why he had spent $50,000 over the last six months and that he had no records one way or the other to explain it. 

15. In what, in effect, was re-examination, the husband said he had been 30 years in his industry and was “over it”.  He said he had been offered a [occupation omitted] for his family in Queensland and would probably return there because he had a heart condition and needed a warmer climate. 

16. Unfortunately, because the parties were self-represented, a certain amount of the evidence emerged in final submissions.  The wife repeated that the husband simply had not disclosed his accounts.  She said that the amount of work that she had performed for the husband’s business was considerable and she had assisted him in moving factories twice.  She asserted she had done his books for the last 18 months.  She referred to a Fair Work issue and a Child Support issue, both of which had involved a lot of time. 

17. Noteworthily however, the wife said that the husband was not good at paperwork, something I am prepared to accept.  She said that she had helped the husband pay off his personal debts.  This, once again, is something I am prepared to accept given that she contributed a significant amount by way of her WorkCover settlements.  The total amount of these settlements was put in issue by the husband, but on any view they were substantial. 

18. It is noteworthy that the wife seized upon the husband’s offer to give her his car at Court.  She said that he was very fond of the car and this implied that he had another one.  This kind of somewhat demonising insinuation forms a significant part of the wife’s analysis of the husband’s case. 

19. The wife said that the husband had withdrawn $52,000 personally from his bank accounts, but nothing has been put before the Court in such a way as to make it possible to say whether that is the case or not. 

20. The wife sought all her costs and sought an enforcement order in her favour.

21. The wife sought that the husband pay half the rent for the property she lives in and that [A] pay $33,000 owed in superannuation to her benefit as part of the 100 per cent superannuation split that she sought. 

Conclusions about the evidence

1. It is sufficient to say that the wife impressed me as being deeply embittered by the husband’s conduct, although for reasons I have not felt it necessary to traverse, this springs at least in part from a perception of infidelity on the part of the husband. 

2. The wife was not slow to make significant allegations of misconduct on the husband’s part.  Her position, put shortly, is that the husband has dishonestly concealed the [T] sale, the [E] debt and his affairs generally. 

3. While one should approach matters of demeanour with caution, the husband’s demeanour was one of weary resignation.  His various explanations, from time to time, as to the provision of documentation (asserted by the wife to constitute non-provision) in the main struck me as being true.  It is readily apparent that his financial affairs have gone badly.  His evidence was direct and responsive and on every occasion when he was challenged by the wife under cross-examination, his explanations to me seemed to be cogent. 

4. I fully accept, as I have already indicated, that he has not sold the [T] trademark.  I further accept that the debt with [E] is unrecoverable. 

5. While it is clear from the exhibited material that the husband has had sales in relatively recent times, I accept also that this is the tag end of the business, which still has a substantial overdraft.  The husband has been more active in business and achieved greater degrees of sales then he has been prepared to admit, as is apparent for the exhibited documents, but I also accept that after 38 years of relatively (in the circumstances) unproductive behaviour, the husband is worn out. 

6. Put shortly, I do not think that the husband is sitting on large amounts of assets that he is concealing.  I think that his business is, as his expert suggests, valueless. 

7. The husband has annexed a purported valuation from a chartered accountant who is the expert referred to in the preceding paragraph.  It would be subject to numerous obvious objections.  Nonetheless, and to the extent that it says anything, what is says is consistent with common sense.  The fact is that this business has not been successful or productive and is of no purchasable value.  The husband, indeed, is still presently liable for the remainder of his two year lease unless, as he indicates, he is evicted to the landlord’s benefit. 

The pool as it stands

1. Realistically, the pool consists of the cars of the parties.  The wife’s car is valued at $10,000 and the husband’s is valued at $13,000, on the wife’s valuation.  The husband says it is worth $5,000.  There are, of course, no expert valuations of any of these vehicles. 

2. The parties have chattels in their possession, but there are no valuations and these are, in my view, properly to be excluded from the pool accordingly. 

3. The husband has superannuation at $30,000.  It seems reasonably clear that this would owe nothing, or next to nothing, to the wife’s assistance. 

4. Realistically, the parties have no other meaningful property at law.  The few remaining pieces of equipment owned by the husband’s company seem likely to be liquidated for virtually nothing, and one would question whether they will enable him to pay out the lease of his factory.

Is it just and equitable to make a property order?

1. This was a marriage of some five years only.  Little has been said of what the parties brought to it, save the fact that the wife brought a substantial WorkCover payment.  The husband clearly made all such income that was made during the currency of the relationship.  The wife has been provided with accommodation and the necessities of life, save that I am bound to accept, in the absence of challenge, that the wife’s WorkCover payments were subsumed in living expenses. 

2. In the circumstances, and bearing in mind that this was, on any view, a very short relationship that produced no children, I think that it is appropriate to make an order adjusting the parties’ property interests to the extent that they have any interests to adjust. 

3. It should be noted that the wife’s assertion that she looked after [X] for some nine months and did the husband’s bookkeeping, and was otherwise involved in his business, would not, in my view, of themselves, be sufficient to ground a property adjustment.  The thing that tips the balance is the contribution of her WorkCover payments. 

Contribution issues

1. While the wife was undoubtedly the homemaker during the currency of the relationship, it was of sufficiently short duration as to perhaps not be worthy of so much significance as would have been the case in a longer relationship.  There is obviously a point at which contribution of this sort must be allotted a nil value.  Such would be the case, for example, in the case of a marriage of only one day.  Equally, obviously, there is a point where it becomes of considerable value, such as would be the case in a forty year marriage.  There is no hard and fast rule as to when consortium of this sort achieves a definable, measurable quantum.  Each case has to be judged on its facts. 

2. Nonetheless, it seems to me that the wife got the better of the bargain, apart from her WorkCover payments.  She got somewhere to live, she was provided for, and the things that she put into the husband’s business and the care of his child are of relatively limited moment.  Balancing the fact that the husband provided all the income apart from the wife’s WorkCover payments which were apparently largely consumed in paying off the husband’s debts, but also used to an unquantifiable extent in his living expenses, I would assess the parties’ contributions as almost equal but with a slight balance in the wife’s favour.  It is not, however, necessary to allot a precise percentage because of the unusual facts of this case. 

The section 75(2) factors

1. The husband is slightly younger than the wife but appears to be in worse health.  Neither of them appears to have much by way of future work prospects. 

2. It should be noted that I accept the husband’s position that he has had enough, so to speak, of his prior career.  At his age, and given his lack of productive success, such a conclusion is not unreasonable. 

3. I would not regard either party as being entitled to any loading in this regard. 

Just and equitable

1. The difficulty with this case is that there is simply virtually nothing to divide.  In my view, it is immediately obvious that the wife should not get all or even a significant part of the husband’s superannuation.  Given his age, and its quantum, even in the absence of any evidence whatsoever as to its accrual, it seems to me that it can have owed but little to the wife’s endeavours and support.  In my view, the wife should receive 10 per cent of the husband’s superannuation as a fair and just and equitable compensation for her limited contribution during the short period of the marriage. 

2. So far as chattels are concerned, there is simply nothing much left to divide.  The husband’s overdraft and credit cards are substantially greater than his bank account.  The wife has virtually nothing. 

3. In the particular circumstances of this case, it seems to me that the best I can do to provide an outcome that is fair is to provide, as the husband conceded, that the wife should have his Land Rover.  It may be worth $5,000, as he says, or $13,000 as she says, but the fact is that is all there is. 

4. I resolutely decline to adopt the inference in the wife’s position that the fact that the husband is prepared to forego his car means he has another.  I also decline to accept that the husband has a substantial income stream that he has concealed. 

5. While on one view (and it is, of course, the wife’s view) the husband is simply reserving his position, so to speak, until after these proceedings, and will thereafter rapidly re-establish himself, I do not think that is the case.  I make it clear that I accept the husband’s evidence that his time in his industry is over. 

6. Even if I am wrong, however, and the husband proposes to re-establish himself in his business, that outcome would not, in the circumstances of this case, be an unjust or inequitable outcome.  The parties were married for a very short time and the wife seems to me have made very little input beyond perhaps cooking the meals and keeping the house for a relatively short period of time.  Indeed, there is no clear evidence that that is what she did.  Nonetheless, the wife has asserted that she looked after [X], and I would infer from that that her primary responsibilities were in the household. 

7. Accordingly, the orders that in my view are appropriate to resolve this matter are that the wife receive a splitting order, giving her 10 per cent of the husband’s superannuation, together with the husband’s car.  Each party will otherwise retain the various chattels in their possession. 

8. I accept that the husband’s chose in action in the trademark in [T] and his business will remain his, but as I find, they are of no value. 

9. I note that the husband’s [V] Super account was worth $3,601 at the time of his Financial Statement filed 17 December 2012.  That figure is consistent with the material annexed to his affidavit filed 12 April 2013. 

10. In the Financial Statement, a value of $27,970 was given the husband’s [M] Super.  The combined total is $31,571. 

11. The most sensible way to give effect to my conclusions is to make the splitting order out of [V] Super in the sum of $3,160 (rounded off). 

12. There will be orders accordingly. 

Postscript

1. Since the preparation of these reasons for judgment the Court has received further communication from the husband dated 11 July 2013.  That email appends what is purportedly said to be a letter of demand from the wife dated 11 July 2013.  If it is a true document, there is an ongoing dispute between the parties about the lease of the premises at which the wife lives.  Since I note that the matter foreshadows proceedings in the Magistrates Court of Victoria and since in any event there is nothing the Court could usefully do to intervene in this aspect of the dispute, if it is indeed a dispute, the Court has paid no further regard to the matter. 

I certify that the preceding eighty-two (82) paragraphs are a true copy of the reasons for judgment of Judge Burchardt.

Associate: 

Date:  19 August 2013