Mariani and Mariani

[2012] FamCA 518

FAMILY COURT OF AUSTRALIA

MARIANI & MARIANI [2012] FamCA 518

FAMILY LAW – PROPERTY - Referral of parties and documents to Australian Taxation Office

Family Law Act 1975 (Cth)

Malpass &Mason (2000) FLC 93-061
P & P [Tax Evasion] (1985) FLC 91-605
T & T (1984) FLC 91-588

APPLICANT: Ms Mariani

RESPONDENT: Mr Mariani

FILE NUMBER: MLC 5568 of 2011

DATE DELIVERED: 28 June 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 28 June 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Dr Ingleby

SOLICITOR FOR THE APPLICANT: Forte Family Lawyers

COUNSEL FOR THE RESPONDENT: Mr O’Shannessy

SOLICITOR FOR THE RESPONDENT: Stephen Farmer & Associates

Orders

1. That the Registry Manager of Melbourne Registry of the Family Court of Australia provide to the Deputy Commissioner of Taxation of the Australian Taxation Office the following:

   (a)a copy of the reasons for judgment this day;

   (b)a copy of the affidavits of the husband, the wife and the single expert witness Mr M

   with a request that the Australian Taxation Office note that the husband asserts that the taxation returns as lodged are not accurate.

2. That all outstanding applications for final orders are adjourned part-heard to resume at 10.00am on 26 November 2012 (for a further three days).

3. That the matter be listed for mention at 9.00am on 5 November 2012 (if necessary by telephone).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Mariani & Mariani has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5568 of 2011

Ms Mariani

Applicant

And

Mr Mariani

Respondent

REASONS FOR JUDGMENT

1. On the second day of this property and parenting trial, the wife has been cross-examined.  I have read her affidavit and that of the husband and it is abundantly clear from the cross-examination of the wife how the husband puts his case.  At 12.30 today, an application was made by counsel for the wife that I should refer the papers for investigation by the Australian Taxation Office.  The basis of that application was that the husband is asserting that there is undeclared cash and that expenses have not been properly dealt with in the books of accounts of the parties.

2. The assertion comes directly from the husband.  Counsel for the husband says that the husband is simply correcting the evidence put by the wife.  It is put by the wife that if there is a finding that the books of accounts are not correct then the valuation is not correct.  Counsel for the husband says that the expert is largely unremarkable because of the fact that the husband and the wife are both making admissions against interest to the value of the business and they will pay more than what the expert says.

3. The difficulty, obviously, is that neither of the parties agrees on what the correct figure is and, therefore, the only expert evidence I have is that provided by Mr M.   The evidence in this case is unashamedly vague, but the cross-examination and the position of the husband is abundantly clear.  He asserts that there has been a position taken by the wife such as to control the finances and effectively defraud the revenue.  Such was his position that at the outset of the case he indicated that if he was given the business, which is a disputed issue in the proceedings, he would correct the tax returns.  As I pointed out, he has not done so to date.  There is a very clear allegation being made and I am not in a position to determine who is right or who is wrong at this particular point in time. 

4. In T & T (1984) FLC 91-588 it was said that there can be no doubt that where evidence or material discloses breaches of the Commonwealth laws, a judge is entitled to bring those breaches to the notice of the relevant Commonwealth authorities.

5. In that same decision it was said by Simpson and Bartlett SJJ, that it might even be suggested that if it had not been brought to the notice of the authorities, the trial judge might have failed in his public duty.  I am not in that position here because of the fact that I do not know whether there has been a blatant tax evasion.  It is put by the wife, as has always been her position, that this whole argument is about a very small portion of a fairly substantial pool.  It may be that one of the parties is correct when the dust settles.

6. The reality, however, is that it is a clear allegation being made by the husband that the wife has participated in an attempt to defraud the revenue.  In P & P [Tax Evasion] (1985) FLC 91-605 Lindenmeyer J said that in his opinion, as a court exercising the judicial power of the Commonwealth, it had a duty to protect the revenue of the Crown and that duty extended to requiring the court to take steps as it was able to take to ensure the revenue laws of the Commonwealth were not defrauded or evaded by litigants or others who came before it.

7. It is not sensible for the court to simply turn a blind eye to findings of fact which might assert or might find that breaches of the Commonwealth laws have occurred.  The unusual feature here is that I have one party asserting the laws have been broken and the other denying it.  It seems to me that rather than me try to decipher whether the laws have been broken, there are authorities who can do that.  The simple solution from my perspective is to put the Australian Taxation Commission on notice that they have a person who is saying, “What you have been told is not correct”.

8. It is a matter then for the tax authorities to decide whether, in fact, that has occurred.  It may well be that the tax authorities require the parties to produce some sort of audit to sort the matter out.  It is also clear from the authorities of this court that the court ought not to descend into the minutia in relation to breaches of the laws.  In Malpass &Mason (2000) FLC 93-061 Nicholson CJ, Murray and Kay JJ said that whilst the power was there, it was not necessary in every case to bring breaches of the law to the notice of the Commonwealth.

9. In this case all I am intending to do is to have the Australian Taxation authorities put on notice that they have someone putting his hand up to say that the law has been broken, not that it may have been broken. 

10. On that basis I propose that these reasons, together with a copy of each of the affidavits of the parties, be made available to the Australian Taxation Office to do what they will with them.  I do not see, however, that that is absolutely necessary for me to delay the continuation of the property proceedings. 

I certify that the preceding ten (10) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 June 2012.

Associate: 

Date:  9 July 2012