Morcos & Lindon (No 2)
[2025] FedCFamC1F 7
•20 January 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Morcos & Lindon (No 2) [2025] FedCFamC1F 7
File number(s): MLC 209 of 2020 Judgment of: BENNETT J Date of judgment: 20 January 2025 Catchwords: FAMILY LAW – PROPERTY – alteration of property interests – where proceedings commenced by the husband seven years after separation and the wife contended that no property adjustment should be made – Stanford – where both parties ultimately sought an alteration of property interests at final hearing.
FAMILY LAW – PROPERTY – alteration of property interests – where major issue was identification of property interests, in particular, real property that existed in the name of the husband’s mother – where husband engaged in significant deceptions and forgeries with a view to keeping a property out of the pool of divisible interests – where wife sought declaration that a property was beneficially the husband’s property – where declaration made.
FAMILY LAW – PROPERTY – alteration of property interests – where husband engaged in fraud and forged documents – where s128 certificate granted in relation to forgery – where mortgagee bank and bankruptcy trustees given a copy of the orders – where application must be made in relation to release to any non-party of reasons for decision.
FAMILY LAW – PROPERTY – alteration of property interests – where parties agreed on the value of the properties – where one property must now be sold – where actual proceeds of sale will be taken into account instead of the agreed valuation.
FAMILY LAW – PROPERTY – alteration of property interests – where contributions were held to be 60/40 in favour of the wife and an adjustment of 10% made in favour of the husband pursuant to s 75(2) factors.
FAMILY LAW – PROPERTY – add backs – where adjustment made for wanton and reckless assumption of liabilities on behalf of the husband.
Legislation: Bankruptcy Act 1966 (Cth)
Evidence Act 1995 (Cth)
Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Legal Profession Act2004 (Vic)
Cases cited: In the Marriage of V R & N Gould (1993) 17 Fam LR 156
Kennon v Kennon [1997] FamCA 27
Kowaliw and Kowaliw (1981) FLC 91-092
Legal Services Commissioner v Mr M (Legal Practice) [2013] VCAT …
Morcos & Lindon [2023] FedCFamC1F 1010
Robb & Robb (1995) FLC 92-555
Stanford v Stanford [2012] HCA 52
Whisler & Whisler [2010] FamCAFC 18
Division: Division 1 First Instance Number of paragraphs: 304 Date of last submission/s: 23 August 2024 Date of hearing: 18 September 2023, 22 April 2024, 23 April 2024, 26 April 2024, 7 May 2024, 8 May 2024, 29 July 2024, 30 July 2024, 31 July 2024, 1 August 2024 Place: Melbourne Counsel for the Applicant: Litigant in Person Counsel for the First Respondent: Ms Alison James Solicitor for the First Respondent: Zeno Lawyers Counsel for the Second Respondent: The Applicant appearing on behalf of the Estate ORDERS
MLC209 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR MORCOS
Applicant
AND: MS LINDON
First Respondent
EXECUTOR OF THE ESTATE OF THE LATE MS B
Second Respondent
ORDER MADE BY:
BENNETT J
DATE OF ORDER:
20 JANUARY 2025
Amended pursuant to rule 10.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 21 March 2025.
THE COURT ORDERS THAT:
1.Pursuant to section 78 of the Family Law Act 1975 (Cth) (“the Act”), the Court declares MR MORCOS as the proprietor and legal and beneficial owner of the property situated at D Street, Suburb E in the State of Victoria (the “[D Street] property”).
2.The wife retain the property situated at G Street, Suburb H in the State of Victoria (the “[G Street] property”) for her sole benefit, and indemnify the husband against all past and current mortgage repayments, outstanding council rates, land tax liabilities, in respect of the G Street property.
3.The parties do all acts and things necessary to place the D Street property on the market for sale, as follows:
(a)With the wife having conduct of the sale subject to any right by the mortgagor bank to exercise a power of sale over its security;
(b)To list the D Street property for sale with a selling agent of the wife’s choice (“the Agent”);
(c)With a legal practitioner chosen by the wife to prepare all documents and act on the sale (“the conveyancer”), such conveyancer to provide copy documents and correspondence to the husband as well as the wife;
(d)To be sold by way of auction to be held in not more than 45 days or by such other method as is recommended by the Agent and the parties agree to adopt;
(e)For a reserve price of $2,850,000 or as otherwise recommended by the Agent; and
(f)With the date for settlement of the sale to be as agreed and, failing agreement, 30 days from the date of sale.
4.The husband co-operate in every way with the Agent including (without limiting the generality of the foregoing):
(a)Making the keys available to the Agent and ensuring that no rooms or areas are locked or are otherwise inaccessible;
(b)Allowing inspection of the property at all reasonable times requested by the Agent;
(c)Ensuring the property, including the grounds are in a neat and clean condition at the time of inspection by the Agent and prospective purchasers; and
(d)Signing all documents as required by the Agent in relation to the listing for sale of the property.
5.The wife do all acts and things necessary to engage a conveyancer to have the conduct of the sale on behalf of both parties at the sole expense of the wife in the first instance and thereafter be recoverable by the wife from the proceeds of sale.
6.If any party fails or refuses to comply with the requirement to execute documents and such failure or refusal continues for a period of seven (7) days, the solicitor for the wife be appointed pursuant to section 106A of the Act and authorised to do all acts and things necessary to give validity and operation thereto.
7.Immediately prior to settlement, the wife do all such acts and things and sign all such documents as may be required, at her own expense, to withdraw all caveats lodged by her or on her behalf over D Street, Suburb E.7.Within 28 days of the Orders the Husband do all acts and things and sign all documents required, at his own expense, to withdraw all caveats lodged by him or on his behalf over G Street Suburb H including but not limited to caveat ….
8.On completion of the sale of the D Street property, the proceeds be paid in the following manner and priority:
(a)First, in payment of all costs, commissions, adjustments due to the purchaser and expenses of sale;
(b)Second, in payment and discharge of any amount due under the mortgage(s) encumbering the property; inclusive of penalties, interest and default charges
(c)Third, to the wife for reimbursement of any conveyancing expenses in relation to the sale paid by her;
(d)Fourth,
50% be allocated to the wife (“the wife’s allocated amount”) ; andthe balance to be distributed in the following order:(i)First, the Wife shall receive a lump sum payment equating to the value of F, in accordance with the formula at paragraph 9 below, less ($1,644,000 (the total of items A, B and C) (“the Wife's allocated amount”).
(ii)Second, the Husband shall receive the balance (“the Husband’s allocated amount”), subject to Order 10.
(e)50% be allocated to the husband (“the husband’s allocated amount”).
9.From the wife’s allocated amount, the sum of $1,644,000 be allocated to the husband’s allocated amount (representing the sum of $1,484,000 being the agreed net value of 228 G Street plus $12,000 for the wife’s car and $148,000 for the wife’s paid legal fees);9.The following formula shall be adopted for the purposes of Order 8(d) above: A ($1,484,000 G Street) + B ($12,000 Wife's motor vehicle) + C ($148,000 Paid Legal Fees) + D (net sale proceeds from the sale of D Street Suburb E) = E. Thereafter E divided by 2 = F (one half of the net asset pool).
10.From the husband’s allocated amount, the sum representing 50% of the husband’s wanton borrowings and penalties, interest and charges for all borrowings be allocated to the wife’s allocated amount. The amount of wanton borrowings and penalties, default charges and arrears be calculated by subtracting from all monies required by the bank at settlement the sum of $540,000 (being the original borrowings described in [119] to [120] of the reasons).
11.When the sale process of the D Street property and the allocation of funds has been concluded the wife do all acts and things as may be necessary to:
(a)Pay to the husband the whole of the husband’s allocated amount as calculated pursuant to these Orders; and
(b)Pay to herself the whole of the wife’s allocated amount as calculated pursuant to these Orders;
12.Pending the settlement of the sale;
(a)Subject to further order of the Court, the husband have sole right to use and occupy the D Street property; and
(b)During such occupation the husband be liable to pay, as and when they fall due all instalments payable pursuant to the mortgages encumbering the property; and all rates and taxes and other outgoings on the property.
13.That there be no adjustment to the superannuation interests of the parties.
14.Unless otherwise specified in these Orders and save for the purposes of enforcing the payment of any monies due pursuant to these Orders:
(a)Each party retain and be solely entitled to the exclusion of the other to all real and personal property (including choses-in-action and superannuation benefits) in their respective legal or beneficial ownership or possession;
(b)All insurance policies remain the sole property of the owner named thereon;
(c)Each party be solely liable for and indemnify the other against any liability;
(d)Each party be restrained from encumbering any item of property to which that party is entitled pursuant to these orders save for the purpose of compliance with this Order; and
(e)Each party be solely responsible, as between the parties, for any liabilities in that party’s name including but not limited to credit cards, loans and lease agreements; and
(f)Any joint tenancy of the parties in any real or personal property is hereby expressly severed.
15.All parties are at liberty to provide a copy of this Order to the Proper Officer of Westpac Bank and the bankruptcy trustee of the husband’s second bankruptcy.
16.I reserve liberty to the parties to apply urgently in relation to:
(a)Implementation of this Order including any application pursuant to s 106A of the Act;
(b) For matters allegedly requiring correction under the slip rule, and
(c)For permission to provide a copy of these reasons for decision to Westpac Bank, the husband’s trustee in bankruptcy or any other person.
17.Anyone wishing to make an application for costs may do so in accordance with the Rules of court. Any application for costs be supported by an estimate of costs drawn in accordance with the Court’s scale of costs without prejudice to claim that costs be calculated on any other basis.
AND THE COURT NOTES THAT:
A.Section 114Q of the Family Law Act 1975 (Cth) provides that it is an offence punishable by imprisonment for up to one year to communicate to the public an account of family law proceedings which identifies a party to the proceedings, a witness in the proceedings, a person related to, or associated with, a party to the proceedings, or a person who is, or alleged to be, in any other way concerned in the matter to which the proceedings relate, unless specifically authorised by the court.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
[1]
THE PARTIES & OTHERS
[4]
The husband
[4]
The Estate of Ms B
[14]
C Pty Ltd & the Morcos Family Trust
[16]
PROCEDURAL HISTORY
[17]
THE LAW
[34]
ONUS OF PROOF AND FINDINGS OF FACT
[42]
DOCUMENTS RELIED UPON
[44]
RELEVANT HISTORY INCLUDING FINDINGS AS TO CERTAIN FACTS
[49]
IDENTIFICATION OF THE LEGAL AND EQUITABLE INTERESTS OF THE PARTIES
[165]
Is D Street, Suburb E a legal or equitable interest of the husband and/or wife which is divisible in this proceeding?
[165]
Other interests not taken into account
[176]
Property in City J, Country K
[177]
Gold
[181]
Cash at bank
[184]
TABLE OF ASSETS & LIABILITIES
[185]
THE APPLICATIONS
[188]
The husband
[188]
The wife
[213]
IS IT JUST AND EQUITABLE TO MAKE AN ORDER ALTERING PROPERTY INTERESTS?
[217]
SECTION 79(4) FACTORS
[219]
Contributions generally
[220]
Financial Contributions direct (s79(4)(a)) and indirect (s79(4)(b)
[225]
Contributions to the welfare of the family (s79(4)(c))
[239]
Assessment of contributions
[242]
The effect of the proposed order upon the income earning capacity of either party
[249]
Considerations under s 75(2)
[255]
The age and state of health of each of the parties (s 75(2)(a)) and the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment (s 75(2)(b))
[256]
Commitments of each of the parties that are necessary to enable the party to support himself or herself and a child or other person that the person has a duty to maintain and the responsibilities of either party to support another person (s 75(2)(d) and (e))
[261]
Eligibility of either party for a pension, allowance or benefit from the government or from a superannuation fund or scheme (s 75(2)(f))
[263]
A standard or living that is in all circumstances reasonable (s75(2)(g))
[268]
The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration (s75(2)(k))
[273]
Any fact or circumstance which, in the opinion of the court, the justice requires to be taken into account (s75(2)(o))
[274]
CONCLUSION ON ADJUSTMENT OR MATTERS UNDER SECTION 75(2)
[285]
ARE THE ORDERS JUST, EQUITABLE AND APPROPRIATE?
[294]
MACHINERY PROVISIONS
[304]
ANNEXURE “A”
ANNEXURE “B”
BENNETT J
INTRODUCTION
These are proceedings for an alteration of property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) following the breakdown of the 21-year relationship between the husband, Mr Morcos, and the wife, Ms Lindon. The husband and wife separated eleven years ago, in April 2013. There is a divorce order dated early 2020.
The applicant husband appears on his own behalf, despite there being a grant of funding pursuant to s 102NA of the Act. The respondent wife is privately funded and is represented by Zeno Lawyers who briefed Ms Rosner of Counsel for the first day of final hearing and then Ms James of Counsel for the remaining nine days of the hearing. This was not an easy hearing. The husband would probably characterise his behaviour as ‘cheeky’, but he was consistently disruptive and discourteous. In the face of obvious difficulty, Ms James remained diligent and dignified.
When the proceedings commenced, the wife’s position was a Stanford & Stanford[1] argument that it would not be just or equitable to alter the legal and equitable interests of the husband and the wife. However, the husband and the wife each closed their case seeking an alteration of property interests. The wife seeks a declaration that the husband has legal and equitable ownership of a commercial property at D Street, Suburb E (“[D Street]”) of which the husband’s mother was the registered proprietor on her death in 2010, and now forms part of her undistributed estate. The husband, who is also the second respondent in his capacity as executor and trustee of his mother’s estate, opposed any order which would bring any of the estate property into the property interests divisible between himself and the wife in this proceeding. Having considered all of the evidence I am satisfied that the property at D Street is property to which the husband is beneficially entitled and the true owner. There is a need to make some adjustments in favour of the wife on account of the elaborate steps that the husband took to try to keep the property out of the interests which are altered in these property settlement proceedings.
THE PARTIES & OTHERS
[1] Stanford v Stanford [2012] HCA 52.
The husband
The husband is 76 years old and lives above the former business at D Street. Currently, nothing is operating out of the business premises although it was previously the premises of C Pty Ltd . The business closed “before Corona” [the COVID-19 Pandemic in 2020-2021].[2]
[2] Transcript of proceedings 23 April 2024, page 54 line 9.
The husband is unemployed/retired and is in receipt of a government pension. He has received a disability pension/Centrelink since 2000, and this transitioned to an old-age pension in approximately 2013 upon the husband attaining the age of 65. He rents out some rooms upstairs of the property to one or two women and receives rental income, although he claims it is not his and instead belongs to his mother’s estate.
The husband had hearing difficulties and was provided with a hearing loop device. He also told the Court he is awaiting operation on his cataracts, having difficulty with reading documents put to him by Counsel or from the two large monitors in the Court room.
The husband was self-represented for all 10 days of the final hearing despite there being a s102NA order made on 20 November 2023. He appeared dishevelled on all hearing days. He is not in good health. After the Court was adjourned part-heard in May, the husband went into hospital for multiple weeks and suffered a medical episode in mid-2024. However, at a Case Management Hearing on 26 July 2024 he assured the Court of his capacity and willingness to finalise the case and the matter proceeded from 29 July 2024. When the hearing resumed, there was no change in his manner. He continued to present as alert, astute, intemperate, and accusatory.
The husband described his English skills at “80 per cent”. He had the assistance of an interpreter provided by the Court throughout the hearing. He says that he can read and write English with the assistance of the spell-check function on the computer. I asked him to read aloud a part of his affidavit, and he was able to do so accurately. He says he wrote his own documents, and he is confident that he understands them. I found his written evidence difficult to follow. The husband was evasive and non-responsive in the witness box. He tended to physically wave questions away with his hand or to respond with questions of his own. He frequently said “I don’t recall” without appearing to give the question any consideration. This lack of recollection impressed me as disingenuous. I warned the husband on multiple occasions to answer the question. He said that he would follow my directions but then proceeded not to do so. I am satisfied that the husband intentionally portrayed himself as cheeky and irascible in order to deflect questions and to distract Ms James and the Court from relevant evidence or lines of enquiry. His manner and presentation was typically that of an elderly man with an outdated chauvinistic attitude but a good heart. His presentation concealed a firm resolve to stonewall and evade proper questions. The husband conducted himself in a loud manner. He spoke over Counsel for the wife and was disrespectful. When I warned him or asked him to be quiet, he said he was “sorry” but did not desist. In response to questions, he frequently said that the wife was aggressive at home and oftentimes swore at him and the children which was a completely non-responsive answer.
The husband took every opportunity in the witness box to pontificate about how aggressive and unreasonable the wife has been in her treatment of him and his relationship and business dealings with Mr N and his son, Mr M. The husband has a propensity to blame others and is blind to his own flaws. For instance, he believes that he has been cheated by the person who sold him C Pty Ltd for $140,000 because he subsequently realised it was “worth nothing, because the business is the [tradesperson] was doing the job, not the building and some junk inside the [business]”. He is angry about the dealings with the Mr N and Mr M and blames solicitors for ruining his life.
On the second day of the final hearing (22 April 2024) I made an Order under s128 of the Evidence Act 1995 (Cth) to cover the husband’s evidence that he forged his mother’s signature. The granting of the s 128 certificate was uncontroversial. The certificate will cover responses to questions and his evidence about the husband having forged his mother's signature.
The wife is 68 years old, lives at G Street Suburb H and has done so since separation. She is a manager, with an annual salary of approximately $140,000. She was not cross-examined by the husband pursuant to the s102NA Order made on 20 November 2023.
Following separation, the wife was the sole carer of the children and did not receive any contributions by way of child support from the husband.
The wife’s material is well-ordered but gives the impression of being reconstructed from documents. Her case was well prepared. Due to the s102NA cross-examination ban, I did not see her in the witness box save for a short examination-in-chief of 10 minutes duration on the penultimate day of hearing.
The Estate of Ms B
In June 2021, the Executor of the Estate of Ms B, who is the husband’s mother, was joined to the proceedings pursuant to orders of Wilson J. The joinder was on the wife’s application and for the purpose of the wife’s application to have real property, which is registered in the sole name of the husband’s mother and her estate, declared under s 78 of the Act, to be the husband’s property and divisible in these proceedings. The husband is the sole executor of the Estate and appears on its behalf as well as on his own behalf. None assert a conflict of interest.
The Will of Ms B dated 2009 is an important document. A photocopy of the Will formed part of the application for Probate which was tendered in its entirety as Exhibit “W18”. The Will is discussed in detail below. A photocopy of the Will in its entirety is Annexure “A” to these reasons for ease of reference.
C Pty Ltd & the Morcos Family Trust
The business, C Pty Ltd was operated by the Morcos Family Trust which is a discretionary trading trust. The trust deed is not in evidence. The husband admits that he controls the Morcos Family Trust.[3] The associated ABN was cancelled in late 2023. There is a second relevant ABN under the name of L Pty Ltd which was registered to Ms B as a sole trader and cancelled in mid-2012. The wife contends that both C Pty Ltd and L Pty Ltd were conducted by the husband for his own benefit. The husband contends that his mother owned the business and the property from which it operated at D Street.
[3] See transcript of proceedings, 23 April 2024, p.2, from line 30.
PROCEDURAL HISTORY
The proceedings were commenced by the husband by way of an Application for Final Orders filed on 9 January 2020. The wife responded on 4 April 2020. Both now seek orders at variance with their original documents.
Several persons received notice of these proceedings including the husband’s three oldest daughters from a previous relationship: Ms O, Ms P and Ms Q. They are named as primary beneficiaries in the Will of the husband’s mother. The husband’s trustee of his second bankruptcy (January 2013 to April 2016) was also on notice. The trustee is Mr U of T Company (Exhibit W57). Notice was given by the wife’s solicitor by way of email on 7 August 2023. The Trustee did not appear during the proceedings nor seek to intervene.
The matter was allocated to my docket on 18 March 2022. I set the matter down for a final hearing date of 21 November 2022, estimated to take three days. The husband did not appear on 18 March 2022 and did not comply with my directions for filing material made on that date, nor with directions for disclosure made on 9 August 2022. Consequently, the final hearing was vacated on 13 October 2022 and further directions made.
A letter dated 29 January 2023 was sent to the wife’s solicitors by the husband’s oldest daughters of his previous relationship. It is Exhibit H14/H76 and reads as follows:
Dear Sir/Madam
This letter is provided in our capacity as Beneficiaries of the Estate of the Late [Ms B].
We, the undersigned, confirm that:
1. We have always understood and are aware that the [business], situate at [D Street, Suburb E], Victoria, was owned by our late grandmother, [Ms B].
2. The Will written by our grandmother left the [business] to us three as beneficiaries and would be inherited by us, subject to the terms of her Will.
3. To date, our interests, as beneficiaries of the Estate, have been represented by [Mr Morcos], in his capacity as the Executor of the Estate.
4. In accordance with the terms of the Will, [Mr Morcos], in his capacity as the Executor of the Estate, is entitled to postpone administration of the Estate and since the passing of our grandmother, has done so with our knowledge. We understand the basis for [Mr Morcos’s] decision to postpone administration of the Estate in this manner and have no objection to that decision.
5. Given the current factors impacting on the property market and climate, we have no objection to [Mr Morcos] continuing to postpone administration of the Estate and remaining in the [premises] until such time as we are able to reassess this position.
Regards
[Ms O]
[Ms P]
[Ms Q]
On 8 February 2023 the husband’s daughter, Ms O, wrote a further letter to the wife’s solicitor in the following terms (Exhibit H15):
Dear Samira
I am writing on behalf of my sisters, [Ms P] and [Ms Q] and I.
First, I wish to highlight that my sisters and I are not a party to the family court proceeding, despite being aware of same.
Second, we note that no matters have been put directly to us, as beneficiaries. To date, our interests, as beneficiaries of the Estate, have been represented by [Mr Morcos], in his capacity as the Executor of the Estate. If you wish for us to address matters directly, then the matters which you require us to address, should be explicitly stated to us. In this regard, I note that you contacted [Ms Q] and I on 24 October 2022, by phone, and were provided with my email. During that call you advised us that mediation could not proceed because the bneficiaries [sic] had not been put on notice and accordingly, you needed to provide us with documents, as it related to the Estate. Prior to your email below, on 27 January 2023, neither [Ms Q] nor I have received any correspondence or further communication from you.
Given the above, should you now be suggesting, two days before the next hearing date, that the beneficiaries should have obtained legal advice and be ready to have this matter set down for a hearing is extremely unreasonable and prejudicial, especially in the circumstances where nothing has been put to us specifically or be given the opportunity to seek legal advice (as required) in that context.
Third, for the avoidance of doubt, we note for the record that all three of us have always understood the [business premises] belonged to our grandmother and would be inherited by us, subject to the terms of her Will.
Please see attached written letter signed by all the Benficiaries [sic], which we believe will be submitted to the Court at tomorrow's hearing.
Regards
[Ms O]
on behalf of [Ms O], [Ms P] and [Ms Q]
After several further mentions, the matter was listed on 28 February 2023 to a final defended hearing commencing on 6 September 2023 with an estimated hearing time of three days.
At a trial management hearing on 30 June 2023, I observed that the affidavit evidence and attachments upon which the husband sought to rely upon comprised hundreds of pages and were incomprehensible. I made orders for the husband to attend a Financial Case Assessment Conference with Judicial Registrar McGee on 7 July 2023 for the purpose of the husband putting his case in order. The husband attended.
On 5 August 2023 the husband filed an Amended Initiating Application seeking 19 orders which I will discuss below. On 7 August 2023 the wife filed a Further Amended Response. The case was adjourned to 18 September 2023 for final hearing, estimated to take three days. The matter commenced on 18 September as scheduled. Unfortunately, on the first day of hearing I was ill and was unable to continue with the final hearing. A Cost Certificate was issued to the parties and the matter set down for continuation of hearing on 4 December 2023, later revised to 15 January 2024.
On 20 November 2023 I made an order pursuant to s 102NA of the Act and explained the operation of the Order to the husband. As a result of judicial unavailability and the need to allow Victoria Legal Aid time to appoint a s102NA lawyer if the husband made an application, the continuation of the hearing was adjourned to 22 April 2024, estimated to take a further three days. I delivered ex-tempore reasons on 20 November 2023: Morcos & Lindon [2023] FedCFamC1F 1010. I incorporate those reasons into these reasons.
The husband maintains that solicitors and lawyers have ruined his life and his case in this Court. Such is his disdain for lawyers that he will not avail himself of the services of a lawyer free of charge under the s102NA scheme. In light of the husband’s inability to cross-examine the wife on 20 November 2023, I made an order that any specific questions be filed and responded to prior to the continuation of the hearing in April 2024. Despite my warnings as to the limitations of a s 102NA order, and the ex-tempore reasons, the husband did not make an application for a s 102NA lawyer, and none was appointed.
The matter proceeded as scheduled on 22 April 2024, 23 April and 26 April 2024 as a fully attended hearing. A further two days of hearing were allocated for 7 and 8 May 2024. I reminded the husband again of the restrictions of a s102NA order on the first day of trial and throughout the hearing. He remained steadfast that he did not want a lawyer because he does not trust lawyers. He understood that he could not cross-examine the wife and was told that the lack of ability to test the wife’s evidence by cross examination was a significant limitation.
On 1 May 2024, the wife filed a second Further Amended Response in which she sought the sale of the property located at D Street. The wife relied on the husband’s evidence given in the week of 22 April 2024, to the effect that the mortgage instalments were being met from further borrowings which was not sustainable because the further borrowings were finite. The husband gave evidence about the Westpac Bank Business Loan (account number ending …50) in the name of C Pty Ltd as Trustee for the Morcos Family Trust. Payments in relation to the Business Loan (account ending …50) as well as rates and outgoings are paid from the Westpac Business Loan Facility (account number ending …69) in the name of C Pty Ltd. The outgoings for the mortgage payments and other property charges are reducing the equity in the property at D Street at rate of approximately $5,000 a month. The husband’s evidence was that C Pty Ltd has not generated an income since before 2020, and any rental payments he receives from tenants are applied to outgoings and any balance is then deposited into the Business Loan Facility, although no rental was quantified by the husband.[4] In the absence of the husband having adduced evidence to the contrary, I will regard the income from tenants as minimal.
[4] Transcript of proceedings, 26 April 2024, page 28 line 36.
The Business Loan has a maximum facility of $600,000. The balance as at August 2024 was overdrawn at $633,591.43. The Business Loan Facility has a maximum facility of $450,000. The balance as at 15 April 2024 was -$412,926.22 (Exhibit W48). Accordingly, at the time of hearing the husband has less than $40,000 remaining in the Business Loan Facility, which pays the mortgage instalments for the Business Loan. At the current rate of interest, the husband has likely already overdrawn the Business Loan Facility Loan. Further borrowings are not considered an option. The husband opposes the sale of the D Street property.
On 7 May 2024, one of the husband’s daughters from his first marriage, Ms P, attended Court. She was visiting from overseas. She was not called as a witness in this case but identified herself to the Court. She is a beneficiary of the Estate of her paternal grandmother. I addressed the following comment to Ms P:[5]
HER HONOUR: […] Your father had the benefit of what’s called a 102NA Order. Because there have been allegations of violence in the past, he’s not permitted to cross-examine the wife in the proceedings, which is a very big thing. It’s like hand – tying two hands behind your back –
[MS P]: Yes.
HER HONOUR: - - - particularly when you want to disprove her case or, as he says, he wants to find out where some money has gone. Right. So months ago, I told him that he was – would be at a significant disadvantage doing it this way, but he insists on doing it this way. So there’s not much I can do about that.
[5] Transcript of proceedings, 7 May 2024, page 92, line 35.
Cross-examination of the husband continued on 7 and 8 May 2024 and the matter remained part heard at the end of 8 May 2024 and set down for three further days to commence 22 May 2024. The husband’s eldest daughter Ms O wrote to the Court on 16 May 2024:
My name is [Ms O] and I am the daughter of [Mr Morcos] .
I understand that he has a hearing listed next week on 22 May 2024 and 23 May 2024.
Unfortunately he was admitted to hospital [earlier this week] with some significant health concerns and is unsure he will be out of hospital or well enough to proceed with the hearing. He has asked me to contact you and ask that the hearing is postponed and once he is out of hospital, he will contact you.
The matter was subsequently relisted to 29 July 2024 for three days. On 26 July 2024 the husband wrote to my Chambers saying that his medical episode “just caused a little [sensation to my] hand, otherwise I am ok, I am intending to join the hearing on Friday 26 July 2024. Please I DO NOT WANT TO DELAY THIS CASE ANYMORE.it is nearly five years now [sic]”
The matter continued on 29, 30, 31 July and 1 August. Counsel for the wife continued to cross-examine the husband until the afternoon of the 30th of July. Final submissions were received on 31 July and 1 August.
THE LAW
Section 79 of the Family Law Act 1975 (Cth) (“the Act”) defines the Court’s responsibilities in determining applications for property settlement. First, I am required to identify, to the extent that there is evidence that enables me to do so, the legal and equitable interests of the parties in property. Property includes superannuation interests.
Second, I must be satisfied that it is just and equitable, within the meaning of s 79(2), to make an order altering the interests of the parties in property. If I am not satisfied, the property application would be dismissed.
In Stanford v Stanford [2012] HCA 52 the High Court noted the requirement of s 79(2), saying, inter alia, that:
39 … whether it is "just and equitable" to make the order is not to be answered by assuming that the parties' rights to or interests in marital property are or should be different from those that then exist. All the more is that so when it is recognised that s 79 of the Act must be applied keeping in mind that "[c]ommunity of ownership arising from marriage has no place in the common law"[26]. Questions between husband and wife about the ownership of property that may be then, or may have been in the past, enjoyed in common are to be "decided according to the same scheme of legal titles and equitable principles as govern the rights of any two persons who are not spouses"[27]. The question presented by s 79 is whether those rights and interests should be altered.
…
42. In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship. And the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).
Third, the Court must assess the contributions made by the parties as defined in section 79(4)(a) to (c). That is, direct or indirect, financial and non-financial contributions to property and contributions as a homemaker and to the welfare of the family.
Fourth, I will consider the effect of any proposed alteration of property interests on the income earning capacity of either party within the meaning of s 79(4)(c).
Fifth, I will consider the matters contained in section 75(2) in so far as they are relevant. By virtue of s 75(2)(o), the matters include any fact or circumstance which, in the opinion of the Court, the justice of the situation requires be taken into account shall be taken into account. In this case, that may adjustments in respect of money or property of which one party has had the benefit or legal costs which have been paid.
Finally, I must be satisfied that, in all of the circumstances, the order which I propose to make is just and equitable within the meaning of s 79(2) of the Act and appropriate within the meaning of s 79(1).
Subject to s90AE(3), orders can be made under s 90AE(2) that direct a “third party to do a thing in relation to the property of a party to the marriage” or alter “the rights, liabilities or property interests of a third party in relation to the marriage.” The husband, in his capacity as Executor of the Estate of the late Ms B, is joined as the second respondent and is a third party within the meaning of s90AE.
ONUS OF PROOF AND FINDINGS OF FACT
Section 140 of the Evidence Act 1995 (Cth) provides the relevant test for the court’s assessment of evidence in this matter: the facts in issue are to be proved by the party with the persuasive onus on the balance of probabilities.
In these reasons, a statement of fact is a finding of fact.
DOCUMENTS RELIED UPON
The husband relies on his:
·Amended Application for Final Orders dated 5 August 2023;
·Affidavit sworn 10 September 2023, as amended by the Court on 18 September 2023;
·Outline of Case dated 28 June 2023;
·Financial Statement sworn 26 May 2023;
·Unfiled affidavit in reply dated 20 August 2023 (tendered as Exhibit H73).
The wife relies on her:
·Second Further Amended Response filed on 1 May 2024;
·Trial affidavit of the wife sworn 7 August 2023;
·Financial statement sworn 30 May 2023; and
·Affidavit of Mr V (valuer) made 14 September 2023.
The husband did not specify any documents relied on by the Estate.
The husband spent the better part of the trial under cross-examination, from 2pm on day 2 (being 22 April 2024) until 12pm on day 8 (30 July 2024). The wife was not cross-examined pursuant to s 102NA. There were no other witnesses.
There were numerous Exhibits, H1-H96, W1-W85. Several exhibits were erroneously tendered more than once and, where that is so, I refer to all exhibit numbers. The husband’s exhibits were tendered in bulk, however on review of them after the close of proceedings very few are relevant to a fact in issue in this matter. I have considered all of the relevant evidence and have commented on specific documents where they were particularly useful. The fact that I have not mentioned a fact, a document in evidence or a submission does not mean that I have not taken it into account: Whisler & Whisler [2010] FamCAFC 18 (Warnick J).
RELEVANT HISTORY INCLUDING FINDINGS AS TO CERTAIN FACTS
The husband and wife commenced their relationship in 1992, when the husband was 44 years old, and the wife was 36 years old. They were married in 1995 and separated in April 2013 when the husband left the family home. A divorce order was made in 2020. In their relationship, which spanned nearly 21 years, the husband and/or wife acquired four and disposed of three residential properties, ran a business, weathered two bankruptcies, dealt with the Legal Services Board over misconduct by their solicitor and featured in VCAT proceedings. For most of this, the husband and wife gave different versions of relevant events.
The real properties, the business C Pty Ltd and the joint venture are dealt with in this part. For ease of reference, they are also identified and briefly explained in a Summary of Property – including property which has ceased to be property of the parties to the marriage or either of them which is located at Annexure “B” to these reasons.
There are three adult children of the relationship between the husband and wife. They are Ms W, born 1995, Ms X, born 1997 and Ms Y born 1999.
The wife was previously married and had three children from her first marriage, Mr Z (born 1979), Mr AA (born 1987) and Ms BB (born 1989). The two youngest of the wife’s children lived with the wife and were aged 8 and 6 respectively at the time of the commencement of the wife’s relationship with the husband. The eldest child, Mr Z, lived with his father. The wife and her former husband had separated and reached a property settlement in 1992. The wife received $25,000 in funds from the sale of their former matrimonial home in New South Wales. After paying her legal fees and other debts, the wife received a net total of $13,500 from this settlement.
As indicated, the husband also has three children from his first marriage, Ms O (born 1984), Ms P and Ms Q (born 1985).
When the husband and wife met, the wife was employed with a government department and received child support payments from her former husband for Mr AA and Ms BB. She resided in a rental accommodation in New South Wales. The husband was living with his brother in New South Wales. Following the relocation of the husband’s bother to Perth in 1993, the husband moved to reside with the wife and her two youngest children at her rented accommodation. The wife’s evidence was that the husband disclosed to her that he had previously owned a property with his ex-wife, and “sold the property in 1989 without the knowledge of his ex-wife and absconded with the net sale proceeds to [Country K], where he resided for approximately two years”.[6] The husband denies telling the wife anything about his former wife.[7]
[6] Trial affidavit of the wife filed 7 August 2024, paragraph 14
[7] Transcript of proceedings, 7 May 2024, page 170 line 4.
The wife states that, in or around August 1993, the husband travelled to Melbourne. He spent October 1993 with the wife in Sydney before travelling to Country K alone. The husband denies this and says he travelled to Country K in mid-1993. The wife says she understood the husband travelled to Melbourne in August 1993 to purchase C Pty Ltd. The husband disputes travelling to Melbourne for this purpose and his evidence is that the business C Pty Ltd was acquired after his return from Country K.
The husband travelled to Country K on a holiday to visit his mother, Ms B. Shortly after, in late 1993, the wife travelled to meet the husband, and stayed with the husband’s family in Country K, before returning to Australia in early 1994. The husband says he paid for “everything” as the wife was his guest. The wife disputes this and deposes to paying their travel expenses in Country K by giving the husband approximately $3,500. The husband disputes having received $3,500. When pressed, his evidence was the wife handed him $3,000 to cover her travel expenses and he returned $500 to the wife when she left Country K, from which I conclude that $2,500 was expended. I cannot reconcile the payment of $3,000 to the husband with his assertion that he paid for “everything”. He paid for the wife with the wife’s money. This is an example of the husband’s evidence being unreliable.
Following her return from Country K in early 1994, the wife obtained a promotion and transfer within the public service and relocated herself and her children to Melbourne. The relocation put the wife closer to her family who were based in Melbourne. She rented accommodation in Suburb CC, Victoria, in her sole name, for herself and her children. The total relocation expenses, of approximately $6,000, were covered by her employer.
The wife’s evidence is that the husband returned to Australia from Country K in around August 1994 and moved into her rental property in Suburb CC, Victoria. The wife says he paid her $70 a week at this time as his contribution to the rent and household expenses. The husband’s evidence is that he returned from Country K in June 1994, which is the date stamped in his passport (Exhibit H37). I accept the husband’s contention that he returned to Australia in June 1994, as opposed to August 1994 as stated by the wife.
Uncontroversially, when the husband and wife commenced cohabitation on the husband’s return to Australia, the husband had no assets in Australia. The wife had retained some of her property settlement money, household furniture, a car, was in secure employment and had a superannuation interest with Superannuation Fund 1 to which she had been contributing for at least 10 years, since before 1983.[8]
[8] Exhibit W60/W70.
Upon the husband’s return to Australia, he met up with Mr DD,[9] who was selling the C Pty Ltd business. C Pty Ltd was a commercial business (Exhibit W26). C Pty Ltd was operating from EE Street, Suburb FF, a property of which Mr DD owned the freehold. The wife states that the husband funded the purchase of the C Pty Ltd business, being $140,000, from the sale of some assets in Country K and/or investments from Europe and the US. At the hearing, the husband denied having European investments. There is no evidence corroborating the wife’s assertion of investments in Europe or the US. His evidence was that the money, $140,000, was advanced to him by his mother pursuant to a loan agreement dated June 1994. The translated loan agreement appears as Exhibit H95. The certified translation of the loan agreement states as follows:
THE TWO PARTIES AGREED UPON THE FOLLOWING:
As the second party is residing at the city of Melbourne, Australia, and deems to initiate his own business, the mother who is the First Party, agreed to lend her son who is the second party, the sum of AU$ 140,000 (one hundred and forty thousand Australian Dollars) to purchase the Commercial Name:
[C Pty Ltd]; located at [EE Street, Suburb FF], VIC, Australia.
This loan is interest free. The Second Party shall pay it back when the business progress allows, with unlimited period of time. In the matter, GOD ALMIGHTY FORBID, the death of the mother, this loan shall be transferred to the son, [MR MORCOS], without any opposition, objection, or dispute from anyone of the relatives.
[9] Mr DD is a relative of Mr Morcos’s first wife but no relation to the husband’s mother Ms B.
On the wife’s case, the loan agreement is a fiction, if not a sham (being an agreement between the husband and his mother neither of whom intended to give the document legal effect).[10] It provides for the advance of $140,000 to be interest free, repayable at the will of the husband “when the business allows, with unlimited period of time”. Upon the death of Ms B the loan is transferred to the husband and, thereby, effectively forgiven. A further difficulty with the loan agreement is that it is dated and purports to have been made in early June 1994 when, according to both the husband and the wife, the husband was still in Country K. In her Outline of Case, the wife says that he returned to Australia in August 1994, but the husband’s more specific evidence is that he returned in mid-June 1994, reflected in his passport and I have accepted that is correct (see [58] above). This places the husband and his mother together in Country K for execution of the loan agreement in early June 1994 but stretches credulity as far as details recited in the alleged loan agreement are concerned. The loan agreement specifies the purchase price and the name and address of the business months before the purchase was completed by contract between Mr DD and the husband dated September 1994.
[10] See, e.g. Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 82 ALR 530, 536-40 (Lockhart J); Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337, 354 (Gibbs J), cited in this Court in In the Marriage of V R & N Gould (1993) 17 Fam LR 156 (Nicholson CJ, Fogarty and Finn JJ).
In support of the wife’s assertion the loan is a sham document, Ms James, of Counsel cross-examined the husband as follows:[11]
[11] Transcript of proceedings, 8 May 2024, page 188, line 28.
MS JAMES: You created this loan document during these proceedings to assist you and your case, didn’t you?
THE HUSBAND: Completely wrong.
MS JAMES: If we go back to the [GG Language] version of this document. The signatures at the end, you forged your mother’s signature on this document, didn’t you?
THE HUSBAND: No.
MS JAMES: You did not borrow $140,000 from your mother, did you?
THE HUSBAND: 140.
THE HUSBAND: I borrowed this money from my mother to purchase the company. I was broke.
MS JAMES: Your mother did not have any money to lend you, did she?
THE HUSBAND: That’s why you have the bank statement from New South Wales that she has hundreds of thousands there. So how come that she didn’t give me 140,000 to buy this company? So it is contradicting each other.
MS JAMES: In - - -
THE HUSBAND: One thing, there is hundreds of thousands in New South Wales, and the other thing, she has no money.
MS JAMES: In 1994, your mother did not have any property in [Country K] to sell to lend any money to you, did she?
THE HUSBAND: My grandfather, from my mother’s side, was a very rich man, and my mother inherited a lot of money from him.
MS JAMES: There are no documents that show your mother had any assets in [Country K], are there?
THE HUSBAND: No.
MS JAMES: There are not any documents - - -
THE HUSBAND: Because I cannot get it.
MS JAMES: There are not any documents that show [Ms B] had any money in [Country K], are there?
THE HUSBAND: So what?
MS JAMES: When you bought this business, you always referred to this business in conversation with the respondent as your business, didn’t you?
THE HUSBAND: It’s very common. Even if someone is working in a shop, he says “my shop”, “my shop, which I’m working in”. It does not mean that you own the business. Big difference.
MS JAMES: You never referred to it as your mother’s business, did you?
THE HUSBAND: It was not anybody’s business.
[…]
MS JAMES: This loan of 140,000, if it was indeed a loan, was discharged when you became bankrupt, wasn’t it?[12]
[12] A reference to s 153 of the Bankruptcy Act 1966 (Cth).
THE HUSBAND: There is a huge difference between someone who wanted to steal my money and I borrowed money from someone and I supposed to repay it again.
THE HUSBAND: Even if I have a bankruptcy .....
MS JAMES: [In] September 1994, you and [Ms Lindon] are appointed as the directors of [C Pty Ltd], aren’t you?
THE HUSBAND: This has been according to the instructions by the accountant, and he told me, “Give her one share for all of the company shares.”
THE HUSBAND: Okay, and I did that as the wife and husband.
THE HUSBAND: And I did that - sorry.
MS JAMES: And if we go to the ASIC document, which is wife’s Exhibit 16, it confirms that you and [Ms Lindon] were registered as the directors and appointed as the directors of [C Pty Ltd], doesn’t it?
THE HUSBAND: This is according to what the accountant has done.
MS JAMES: And your mother could not have known the details of the name of the company at the time of your loan agreement [in] June 1994, could she?
THE HUSBAND: What does it mean, I don’t understand?
MS JAMES: At the time – well, you forged the document because the timing of the translation – sorry, timing of the purported document [in] June 1994 could not have been known in that level of detail for the purchase of the commercial name, if we scroll down, [C Pty Ltd], located at [EE Street, Suburb FF], Victoria, Australia.
THE HUSBAND: He said, could you repeat that please?
MS JAMES: Your mother could not know the detail of the purchase of what she was purporting to loan money for on this date, [...] June1994.
THE HUSBAND: Even myself, I didn’t know the case myself and why the money has been given in order to purchase a business. In order to help me to start a business.
MS JAMES: And this contract, this purported contract is then – sorry, the contract for the purchase of the business is signed [...] September 1994, wasn’t it?
THE HUSBAND: ..... business.
MS JAMES: [I]n [...] September 1994, both you and [Ms Lindon] are appointed shareholders of [C Pty Ltd], aren’t you?
THE HUSBAND: As I mentioned actually to you, that was the accountant. He told me, “Give her one share.” If she were a partner in the company, she’s supposed to pay 50%. But - - -
THE HUSBAND: Stupid husband.
The premise of Ms James’ question to the effect that the husband created the loan agreement during these proceedings is contradicted by a certification of the agreement in GG Language which purports to be dated “[late]/1996” (Exhibit H95). This does not mean the document is genuine, However, even if it is genuine, the wife contends that the $140,000 paid by the husband created a debt and the debt was discharged as part of his first bankruptcy, commencing mid-1999 and concluding in mid-2002, or forgiven on Ms B’s death in 2010.
The wife deposed to lending the husband $10,500 of funds received from her property settlement and savings from her employment to assist the husband to purchase stock for the business. She says the husband repaid these funds by providing the deposit used when they purchased a property in Suburb HH. The husband denies knowing anything about the wife’s finances in this period and denies borrowing or receiving $10,500 from the wife. In cross-examination he said:[13]
THE HUSBAND: This is wrong. And she didn’t loan me anything, and she hasn’t had any money. And she has always problem with the credit card. And she was borrowing money from her father.
[13] Transcript of proceedings, 8 May 2024, page 190, line 42.
The wife and the husband were appointed as directors of C Pty Ltd in late 1994 and were registered as shareholders in the company, with the wife holding one share and the husband holding 99 of the 100 shares in C Pty Ltd.
The husband commenced working at C Pty Ltd soon after purchase. Following a dispute between the husband and the owner of the property (Mr DD) about rent for the Suburb FF premises, the husband relocated C Pty Ltd to JJ Street, Suburb E.
The husband and wife married in 1995 and continued to reside at the wife’s rental property in Suburb CC and the husband continued to pay the wife $70 a week. The wife’s evidence was that the husband paid to her an additional $20 on weekends on which the husband’s three daughters from his previous relationship stayed at the Suburb CC property. The wife’s position is that this amount increased to $100 a week upon the birth of their second child (Ms X born 1997) and to $300 a week in 2004 following the refinance of the properties and the Mr N deal investment (discussed later from [102]). The husband disputes this and says he paid the wife $350 per week from at least 1999.[14] The wife’s evidence is that she paid all expenses not covered by the money given to her by the husband including mortgage repayments, children’s expenses, groceries, and bills. Her source of income was from child support paid by her former husband and any income she earnt from part time employment. The husband’s evidence is that he bought groceries every week from Suburb H market. The wife stated he only did this when his brother was visiting for a period in the late 1990s. Neither the husband nor the wife have documentary evidence of bank transfers or withdrawals to corroborate their respective positions. I cannot make a finding as to the financial contribution by the husband to the household from 1995 onwards save that, at a minimum, he paid the amounts deposed to by the wife which increased with the birth of each child.
[14] Trial affidavit of the husband sworn 10 September 2023, [56].
The parties jointly purchased their first property, KK Street, Suburb HH (the “[Suburb HH] property”) for $125,000 in mid-1995. The deposit was approximately $13,500. The wife’s evidence is that the husband paid $10,500 towards the deposit but that it was repayment of the $10,500 owed to her by the husband, and that the husband paid the further $3,000. The husband disputes this and says that he paid $12,500 towards the deposit plus extra from his savings, and that there was no loan of $10,500 to repay to the wife. The Suburb HH property was registered under joint names. LL Limited took a mortgage over the Suburb HH property as security for a loan of $112,500. The wife says she was responsible for the $368 fortnightly mortgage repayments for the Suburb HH property and household expenses. I am satisfied that the husband made $13,500 or $12,500 available for the deposit and that those funds were earnings from the C Pty Ltd business as he had no other income. I am also satisfied that the wife had advanced $10,500 to the husband for the purchase of stock which she considered was repayable by the husband. It may not have been the husband’s intention to set off the deposit against the disputed cost of stock, but I am satisfied that the transactions can be regarded in that way. In short, I find that the wife contributed $10,500 to the purchase of the property as well as ongoing mortgage repayments, and the husband contributed $3,000 by way of initial deposit.
In mid-1995, the wife was granted an Intervention Order (IVO) against the husband for a period of 12 months following an allegation of assault. In her affidavit the wife deposes that she applied for the IVO, but in submissions her Counsel said the police applied on her behalf. Nothing turns on the inconsistency. I have little to no evidence as to the relationship between the wife and husband around the time the IVO was granted.
The husband and wife’s first child together, Ms W, was born in 1995.
Evidence of the arrivals and departures of the husband’s mother to and from Australia is before the Court by way of immigration records produced on subpoena and tendered as Exhibit W1. The husband’s mother entered Australia for the second time in 1996 (with the first time being from early 1992 to mid-1992 which was prior to the husband and wife meeting). Ms B resided with the husband and wife at the Suburb HH property. The husband says in or around late 1996, the wife “kicked” him and his mother out of the Suburb HH property and he and his mother thereafter lived in the back of C Pty Ltd at Suburb E.
The husband’s evidence is that in February 1997, his mother opened her own account with NAB, “to keep her personal money”. It was the Account BSB … Number …50. The account was in the name of Ms B with the husband listed as a third party which gave the husband access to deposit and withdraw money from that account independently of his mother, including when she was not in Australia. The wife says there is no evidence that the husband’s mother ever deposited money into that bank account, or indeed, operated that account.[15]
[15] Transcript of Proceedings, 31 July 2024, page 447, line 4.
The parties’ second child, Ms X was born in 1997. The wife took maternity leave from her employer.
In or around August 1997, the husband relocated C Pty Ltd from JJ Street to 2 D Street, Suburb E. The husband says that he and his mother lived in the back of the business premise at 2 D Street.
In 1997, the wife’s maternity leave ran out. She returned to work but took a redundancy package. The wife received $27,354.03 non-taxed and was paid out her annual leave of $4,929.76 (Exhibit W59/68). She received a further $126,734 by way of Superannuation Fund 2 benefit (Exhibit W60/W70) of which $101,030.19 was paid to the wife directly, $25,704.00 was deducted by way of tax and $15,419.16 was rolled over to her Superannuation Fund 5 account.
The wife resigned as a director of C Pty Ltd in September 1997. She says she transferred her one share in the company to the husband, at his request. She says she does not know why he requested it.
The husband had been involved in a motor car accident in 1997 which gave rise to a property damage claim. He considered that the other driver and/or the panel beater authorised by the other driver’s insurer were claiming too much for the cost of repair and he refused to pay the $3,500 demanded. It was apparent to the wife that the husband could be sued and, if sued, a successful claimant might seek to recover monies due by forcing a sale of the husband’s share in the Suburb HH property. The wife was concerned she would lose the Suburb HH property. The wife’s evidence was that she “demanded” that the husband transfer his interest in the Suburb HH property to her. She stated:
…I was concerned that I would lose my house due to [Mr Morcos’s] poor decision, and as such I demanded [Mr Morcos] transfer his interest of the [Suburb HH] property to me. [Mr Morcos] was not making any contributions towards the mortgage, and cared very little about what would happen to the children and I if he were to become bankrupt. This infuriated me, as I was raising the children, attending to the business at no pay, and financially responsible for the day to day living expenses of myself and the children. The [Suburb HH] property was transferred to be [in mid-]1997. This was done with the consent and knowledge of [Mr Morcos].[16]
[16] Trial affidavit of wife sworn 7 August 2023, [114].
The Suburb HH property was transferred to the wife’s sole name in mid to late 1997. The husband’s evidence is that he signed the transfer of the Suburb HH property to the wife “without taking any money to keep the roof on top of my family”. His evidence was that he was hopeful that he and the wife would reconcile (which they did).
In 1997, the wife applied all her superannuation of $101,030 to pay off credit card debts and to purchase a property situated at MM Street, Suburb E (the “[MM Street] property”) for $206,100. The MM Street property was registered in the wife’s sole name in late 1997. The husband’s evidence is that he moved back to live with the wife and children following settlement of the MM Street property.
The wife’s evidence was that the husband made no contribution to the mortgage repayments for the MM Street property, which were initially $285 per fortnight. The husband, in response, maintained that he paid $350 per week to the wife for “house expenses and to pay for mortgage”. The husband’s earlier evidence was that he paid $350 from 1999. The wife’s evidence in the same context was that the husband paid her $100 per week in 1999. I have insufficient evidence upon which to make a finding as to contribution in this regard.
The wife’s evidence was that the Suburb HH property was rented out from late 1997 and rental income serviced the mortgage repayments for that property. She claimed that any shortfalls or repairs on the Suburb HH property were paid by her. The husband disputes this and his evidence is that the rental income received from Suburb HH covered all the mortgage instalments and there was money left over for family expenses.[17] Again, neither the husband nor the wife have documentary or other corroboration for his/her version of events. I have insufficient evidence upon which to make a finding as to contribution in this regard.
[17] Affidavit of the husband sworn 10 September 2023, [78(a)].
The wife asserts that the husband opened a second bank account with ANZ in the name of his mother, in December 1997. This account, BSB … and account number ending …33, was not disclosed to the wife by the husband prior to the final hearing and only came to light by way of bank statements produced on subpoena issued by the wife. This was the second Australian account (the first being with NAB) which was opened for the husband’s mother. Ms B was in Australia at the time the account was opened. The account records the husband’s mother as the sole account holder and her address as NN Street, City OO New South Wales. The account number (but not the BSB) is verified by Exhibit W74. In cross-examination the husband denied knowledge of this account and said that, if the account was opened in Sydney, his brother must have opened it. Notably, the husband did not assert that his mother could have opened a bank account independently and without assistance from himself or his brother. The husband’s mother would have been 78 years old at the time and it is common ground that she did not speak English.
From 1996 to November 1997 the wife applied for and received a single parenting pension of fortnightly payments of $362 in one week and $285 in the alternative week. These payments continued until in or around 2002 or 2003 when Centrelink investigated the wife and ceased the single parenting payments. The wife’s evidence was that husband’s first wife initiated the investigation by Centrelink. The wife was subsequently notified that she was required to repay $3,500 to Centrelink. The wife successfully reviewed the relevant administrative decision, which was reversed, and she was not required to repay $3,500 or any other amount. I infer that Centrelink was satisfied that the wife was found to be rightfully in receipt of the single parenting payment. Thereafter, the wife received Family Tax Benefits but did not reapply for, or receive, single parenting payments. The husband’s evidence was that the Centrelink payments stopped due to the wife receiving $190,000 from the sale of the Suburb HH property. I conclude that Centrelink was satisfied that the husband was not a member of the wife’s household for the period that she was eligible for and in receipt of the single parent payment.
In January 1998, the husband’s mother executed a Power of Attorney in favour of the husband (Exhibit W24). Ms B departed Australia and returned to Country K in mid-1998.
The property situated at D Street was purchased for $365,000 in late 1998. The wife’s evidence was that, before the auction, she told the husband that she could not afford the property and did not want to bid. The wife says that, ultimately, she bid at the auction because she had better English skills than the husband and a better understanding of the auction system. The contract was signed by the wife at auction, but it was intended that ownership and registration implications would be explored with the parties’ financial advisor and the contract contained a nomination clause. It was intended by the husband to use the property for C Pty Ltd as a business premises, being its fourth location. The husband paid a deposit of $100,000 in cash. The wife says the $100,000 was accumulated income from C Pty Ltd. The husband says the $100,000 was funds belonging to his mother and lent to him. The husband relies on the NAB passbook (Exhibit W25/H32) which evidences a $104,000 cash withdrawal from an account in the name of his mother in late 1998. The husband relies on international transactions recorded in the NAB passbook (Exhibit H97) for NAB account number ending …50 that was opened in early 1997 which records the husband as a third party. The husband’s status as a third party gave him access to operate the account independently of his mother.
In early 1999, D Street was settled with the husband’s mother as the nominated purchaser. The husband executed the Transfer of Land as his mother’s attorney under power. The transfer has the notation “signed by the power of attorney dated [early] 1998 [Mr Morcos] for the transferee” and signed as “[Mr Morcos] P.A.” (Exhibit W54).
The first Bankruptcy Sequestration Order was made against the husband in mid-1999. It was referrable to the motor vehicle accident in 1997 and brought about by the husband’s refusal to pay $3,500 for car repairs. This was the husband’s first bankruptcy. The husband’s bankruptcy trustee in respect of the first bankruptcy was Mr AL of AM Company(Exhibit W15).
There is mention of “The [Morcos] Family Trust” but little substantive information in the evidence before me. The ABN is …. A tax return from 2008 is in evidence (Exhibit W53). Juxtaposed with the husband’s bankruptcy in mid-1999 (Exhibit H8), the following occurred:
(1)In mid-1999, the husband’s mother, Ms B, was appointed as director of C Pty Ltd. She was in Country K at the time.
(2)Effective mid-1999, the husband resigned from his directorship in C Pty Ltd.
(3)Shortly after, the husband ceased to be a beneficiary of the trust over which C Pty Ltd acted as trustee, being the Morcos Family Trust.
In mid-2002, the Bankruptcy Sequestration Order for the husband’s first bankruptcy was discharged.
In cross examination the husband was not forthcoming about the Morcos Family Trust but did concede that he had control of the trust. For example:[18]
[18] Transcript of proceedings, 23 April 2024, p2, line 30.
MS JAMES: Yesterday in evidence, you said that you had produced to the solicitors for the applicant the trust deed for the [Morcos] Family Trust, didn’t you?
THE HUSBAND: Yes, she ask for it, so I supplied it.
MS JAMES: You have not produced a trust deed for the [Morcos] Family Trust in these proceedings, have you?
THE HUSBAND: I can’t remember.
HER HONOUR: Sorry, what was your response?
THE HUSBAND: I can’t remember.
MS JAMES: You haven’t produced any trust deed for the [Morcos] Family Trust because if there is a trust, you are the appointor of that trust, aren’t you?
THE HUSBAND: Can you repeat, please.
MS JAMES: If there is an [Morcos] Family Trust, you control the trust, don’t you?
THE HUSBAND: Yes.
MS JAMES: And if you control the trust, you control the assets of the trust, don’t you?
THE HUSBAND: There was no asset in the trust. It’s only the building, and the building ... to my mother. The company has nothing under the name. It was only a– a very old truck and had been stolen from the street. There was no other things.
MS JAMES: If the property at [D Street, Suburb E] is in the trust, then it is controlled by you, isn’t it?
THE HUSBAND: Who is the owner in the title for the property?
MS JAMES: I’m asking you about the trust. If the - - -
THE HUSBAND: It’s not inside the – the trust is the company. The company has nothing with the property.
MS JAMES: If the [Suburb E] premises and building and [business] is in the trust, then it is controlled by you, isn’t it?
THE HUSBAND: I don’t have any knowledge with the legal stuff. Whatever has been done, it has been done with an accountant, with a solicitor. I don’t know. They do the stuff. Sign. Like [Mr M] did with me. Sign. Just sign.
MS JAMES: The reason that you’ve not produced the [Morcos] Family Trust deed is because it would show that you control the [Morcos] Family Trust.
THE HUSBAND: So what’s the problem that .... have a power of attorney. I am the one – the manager for [C Pty Ltd], which under the [Morcos] Family Trust. So what is my – what my – what – what – what what’s my job when I am the manager for a company?
MS JAMES: If - - -
THE HUSBAND: Just to say I know nothing. I’m not responsible.
MS JAMES: [Mr Morcos], you control all of the assets - - -
THE HUSBAND: There was - - -
MS JAMES: - - - in the family trust.
THE HUSBAND: - - - no assets. There was no assets. Where is the assets?
MS JAMES: The property at [D Street, Suburb E] - - -
THE HUSBAND: Yes.
MS JAMES: - - - is in the family trust, isn’t it?
THE HUSBAND: This property is belong to [Ms B], not [Mr Morcos].
MS JAMES: It is owned by the trust, isn’t it?
THE HUSBAND: No. No.
MS JAMES: And it is – the trust is controlled by you.
THE HUSBAND: I have nothing with [Ms B].
MS JAMES: It - - -
THE HUSBAND: She is the mother. She is the owner of [D Street, Suburb E]. That’s why 100 document here to say everything is [Ms B], [Ms B]. The land tax. The rate. The bank statement. The bank ..... okay. The title. Is there anything here to say trust or to say [Morcos]?
D Street was registered in the name of the husband’s mother. As will become apparent, the husband acquired his interest in D Street through his mother’s Will, not through the Morcos Family Trust.
In late 1999, whilst living at the MM Street property, the wife purchased another property in her sole name, G Street, Suburb H (“[G Street] Property”), for $330,000. The wife says she paid $1,000 towards the deposit and the husband paid $19,500. The husband stated that he did not take exception to not being on title. On my calculation the husband was in the first year of his first bankruptcy. The husband’s evidence is that the deposit was a combination of two cheques totalling $15,000 and $4,500 advanced from L Pty Ltd, a business registered in his mother’s name under the umbrella of C Pty Ltd. The wife’s evidence is that she obtained finance from VV Ltd in the sum of $430,000, of which $98,000 was applied towards discharging the balance of mortgage on the MM Street property and the rest was put toward the acquisition of the G Street property. [19]
[19] Trial affidavit of the wife sworn 7 August 2023, [143].
The wife, the husband and their children moved out of the MM Street property in early 2000 and into the G Street property, which was a considerably more comfortable abode. At that stage the household included the children of the husband and wife, Ms W (aged approximately 4 years), Ms Y (aged approximately 3 years) and Ms X (aged approximately 1 years). The wife’s older children were also living with them, Mr AA aged approximately 13 years and Ms BB approximately 11 years. The wife received child support for Mr AA and Ms BB until 2005.
The wife’s evidence was that she worked at the C Pty Ltd business around this time, including taking calls, making bookings, and selling goods, to assist the husband. The wife’s evidence is that she did not receive any remuneration. The husband disputes that the wife ever worked at C Pty Ltd and that she ever had keys or the alarm code that would have facilitated her access to the business premise to work. Under cross examination, the father said that the wife was too busy to work at C Pty Ltd, in particular, the husband referred to how busy the wife was: [20]
THE HUSBAND: No. How come. How come she can take the kids. Open the business seven days a day - a week and looking after five kids and doing [work] and doing after-school care and doing all of this, she - how many hands does she have.
[20] Transcript of proceedings, 29 July 2024, page 310, line 1.
The wife’s evidence was that she was also solely responsible for the mortgage repayments over the G Street property and Suburb HH property, and the day to day living expenses for the parties and the children. The wife’s evidence was that she worked at C Pty Ltd every weekday and some weekends, without pay, as agreed between herself and the husband, to pay back the husband’s contribution of $19,500 to the deposit for the G Street property in 1999. The husband denies the wife worked at C Pty Ltd and his evidence, as above, was that he paid the wife $350 per week for the mortgage and house expenses. The husband’s case is that the $19,500 was accumulated earnings from C Pty Ltd which is a business entirely owned by his mother. The wife’s case is that the C Pty Ltd was purchased by the husband with money sent from Country K which belonged to the husband and that his mother had no interest in the funds or in C Pty Ltd.
In around late 2000, while the wife was purportedly working at C Pty Ltd, she also enrolled and completed a course at University. The wife opened a business from the family home in late 2000. The business operated until early 2009. Her evidence was that she operated the business whilst working five to six days per week at C Pty Ltd. The wife says that the income generated from the business was below tax threshold and was a means to gain extra money to cover the day-to-day costs of living. Again, the husband denies that the wife ever worked at C Pty Ltd
I accept that if the wife did work at C Pty Ltd and may have done so with the subjective intention to “pay back” the $19,500, which intention was not known to or shared by the husband. Alternatively, she may be reconstructing events so that she can claim the $19,500 was a contribution by her to the G Street property. I cannot make a finding. This is an example of when cross-examination of the wife may have provided clarity. Likewise, I cannot make a finding about the husband’s contribution to household expenses in the sum of $350 per week. However, it is worth noting that the husband and wife had been in a relationship for approximately six or seven years at this point and had three children together. On any view of the facts, it is artificial to regard the $19,500 as a contribution by the husband alone. I do not accept that there was no income stream available to the husband from C Pty Ltd. There was an opportunity for him to draw income and he did so to pay a housekeeping contribution and some other expenses. I will say more about s 79(4) contributions later but, at this stage, my impression was that each party was contributing as best they could to the care and financial support of the family, operating C Pty Ltd, earning income and accumulation of assets and that it is artificial to characterise the advances as “loans” granted by one party to the other.
The wife’s evidence is that the husband’s mother visited Australia for the third and final time between early 2001 and late 2002. Ms B was granted Australian Citizenship in late 2002. The wife says that during her mother-in-law’s stay, she (the wife) did not work at C Pty Ltd. The wife’s evidence was that she, rather than the husband, cared for the husband’s mother who was unable to maintain herself. The wife’s evidence was that she washed her mother in law’s clothes which were frequently putrid. The household had a washing machine, but I accept that the mother in law’s clothes required particular attention and were not just a small addition to regular washing chores.
The Suburb HH property was sold in early 2003 for $280,000. The wife says she spent $12,000 on renovations to the property on her credit card prior to sale and applied some of the sale proceeds to repaying that credit card debt. She says she also spent $45,000 on renovations to the G Street property including installation of fans in the children’s bedrooms, painting of the property, electrical rewiring works and installing new light fittings.[21] The wife also organised further works in the post-separation period 2013-2022, discussed below.
[21] Trial affidavit of the wife sworn 7 August 2023 [150].
The wife’s evidence was that, in 2011, the husband was again abusive of Ms W for playing sport with her elder daughter Ms BB, for whom the wife says the husband displayed a particular dislike (see above at [137]-[139]). On this occasion, Ms BB’s friend called the police. The wife says the husband slapped Ms Y twice in 2012 when she was twelve, forcing Ms W to move to protect all her siblings on that occasion. The wife says the husband’s behaviour made her scared for the children and worried about ever leaving the children at home with the husband alone. The husband deflected cross examination on these incidents by alleging bad behaviour, usually swearing, by the wife to him and the children. There was no convincing denial. I take both sets of allegations into account. I am satisfied that the husband’s behaviour made the wife’s contributions more onerous to make than they would otherwise have been and that warrants some adjustment to contributions in favour of the wife.[52]
[52] Kennon v Kennon [1997] FamCA 27.
I am not satisfied that the wife’s superannuation interest of approximately $454,000 can be regarded in the same way as the other property interests of the parties. Those monies were largely received as an inheritance by the wife from her father well after separation. The wife’s counsel submitted that the wife’s superannuation should be left out of the divisible interests. I have not done so. I consider it proper to have regard to the wife’s superannuation interest in the context of s79(4)(e). Having regard to the small balance of the wife’s superannuation interest at the time of separation, about $25,000, and the current value of $454,000, I assess the husband’s contribution at somewhere between trifling and nothing. To assess his contribution at even 5% would be too much. I assess the husband as having made no contribution to the wife’s superannuation interest.
As to the parties’ non-superannuation assets, the direct financial contributions made by the husband are less than the contributions of the wife through her previous marital settlement, her greater and regular income, her liquidated superannuation and redundancy entitlement. The contribution of $140,000 by the husband at the commencement of cohabitation allowed for the purchase of C Pty Ltd. C Pty Ltd is worth nothing now, but it did produce income during the marriage as well as the deposit of $100,000 for the acquisition of D Street.
The parties non-superannuation interests are valued at $3,261,000 before assessment of addbacks. I assess the wife’s contribution to non-superannuation interests at 60% and the husband’s contribution at 40%. Therefore, the wife’s contribution-based entitlement to non-superannuation assets is $1,956,600. The husband’s non-superannuation entitlement $1,304,400.
The superannuation and non-superannuation interests together total $3,715,000. The contribution based entitlements of the parties are as follows:
·The wife $2,410,600.
·The husband $1,304,400.
The effect of the proposed order upon the income earning capacity of either party
D Street was the final premises for the C Pty Ltd business. It is the husband’s evidence that he is too unwell to re-open the business, which closed during the COVID-19 pandemic. The husband does generate some rental income from “one or two” boarders who live with him at the property. However, he did not particularise the amount or how often that rent was paid. He implied in one answer that the income was paid to him and then transferred to the C Pty Ltd account.[53] It is not clear what that income is used for, although the husband implied it was applied to bills:
MS JAMES: Where does that income get paid?
THE HUSBAND: This income might sometimes – it’s nothing more than $200 or 220 and then it goes towards the – my account at Commonwealth and then I do pay out of that account the water, the electricity. There is something – there is third item which is water, electricity and gas. Yes. And then, whatever accumulated I then transfer it over to Westpac and it’s written in the statement.[54]
[53] Transcript of proceedings, 23 April 2024, page 67, line 5.
[54] Transcript of proceedings, 26 April 2024, page 28, line 34.
Counsel for the wife submitted that:[55]
MS JAMES: … The husband alleges that he has been unemployed since 2000 and has relied on Centrelink benefits and, more specifically, the pension since 2000. The wife asserts that the husband has continued to receive rent from the upstairs rooms at [D Street] and has derived income from that, including from [commercial tenants] and your Honour may remember that during the evidence, the telephone number of the applicant is linked to a website for a [commercial tenancy].
The evidence of the husband is that those women are students and, again, it’s my submission that that should not be believed.
[55] Transcript of proceedings, 1 August 2024, page 478, line 12
In the course of cross-examination, Counsel for the wife put the names of various businesses to the husband as businesses that had been operating out of the premises at D Street including “[…]” and “[…]”. He denied that any businesses were continuing to operate and further that he received any income from those businesses.
To the extent that it was put to the husband that a business operated as an illegal business, the husband denied that he ever received any income from workers. In fact, he said, albeit somewhat sarcastically: “…and I hope that I could do it to make some money. If this is the way I can make money in this country, I hope that I can do it. I hope that I can do drugs – sell drugs to make money.”[56]
[56] Transcript of proceedings, 23 April 2024, page 62, line 4.
It is the husband’s evidence that his only income is from Centrelink and therefore that he derives no income from D Street. Accordingly, there would be no impact on his income earning capacity if the property was to be sold. On his own evidence, the money received from the boarders is applied to outgoings incurred by the property and is not disposable income.
The proposed orders do not affect the wife’s income earning capacity.
Considerations under s 75(2)
Section 79(4)(e) requires the Court to take into account matters referred to in s75(2) so far as they are relevant. This is the prospective element of the determination of the application for an alteration of property interests. The assessment of contributions during the marriage is the retrospective element. The wife asserts no adjustment needed for s 75(2) factors save to the extent that she seeks to bring the D Street property into account as owned by the husband.[57] However, the wife does seek addbacks which I consider appropriate to deal with under s75(2) rather than on the identification of legal and equitable interests.
The age and state of health of each of the parties (s 75(2)(a)) and the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment (s 75(2)(b))
[57] Transcript of proceedings, 1 August 2024, page 478, line 8.
The wife is 68 years old. She is employed as a manager receiving $140,000 per annum. This is by far the most remunerative employment the wife has had. There was no mention of impending retirement. She is in reasonably good health.
The husband is 76 years old. He says that he suffers from a range of medical conditions. In June 2024 he suffered a medical episode for which he was hospitalised. Thereafter, he suffered another medical episode in July which left no lasting impact except for restricted mobility of one hand.
The husband in his Financial Statement asserts that he earns about $80 a week by way of income or wages before tax, presumably from rental income paid to the C Pty Ltd business by lodgers. He says:
[I] live on nothing. I have no expenses in general. I am a very – I don’t smoke, don’t drink, I don’t do drugs, I don’t go for prostitutes, I don’t go for anything. A family man .... my mistake.[58]
[58] Transcript of proceedings, 22 April 2024, page 32, line 5.
The husband was asked simple questions about which bank account he used for day to day purchases. He said he did not have any money or any expenses. He testified that he lives on nothing:[59]
[59] Transcript of proceedings, 26 April 2024, page 26, line 3.
MS JAMES: It is the Commonwealth Bank […] account, isn’t it?
THE HUSBAND: Yes.
MS JAMES: And it’s the account number that ends in […12].
THE HUSBAND: I can’t recall.
MS JAMES: You have not produced any statements, have you?
THE HUSBAND: Nobody has requested of me, and Ms Zeno [wife’s solicitor] has subpoenaed all the banks.
MS JAMES: Your Centrelink payments are deposited into that bank account.
THE HUSBAND: Yes.
MS JAMES: And your living expenses are paid from that account.
THE HUSBAND: I am living, actually, on nothing. Until yesterday, my friend came over to me and he brought me food from his own house. From day to day, he comes over and brings me the – he has children and he brings to me what’s left over.
MS JAMES: [Mr Morcos], please answer my question. Do you pay for your living expenses from your Commonwealth Bank […] account?
THE HUSBAND: I haven’t got expenses.
THE HUSBAND: I have the same clothes.
MS JAMES: If - - -
THE HUSBAND: I eat little. I take medicine, get it from the pharmacy, and that’s it.
MS JAMES: And you pay for your medicine from the pharmacy from that account, don’t you?
THE HUSBAND: I don’t withdraw money from the account.
MS JAMES: How do you pay for money – how do you pay for the medicine from the pharmacy?
THE HUSBAND: There are some helps.
MS JAMES: It is not free, though, is it?
INTERPRETER: Which is?
MS JAMES: The medicine from the pharmacy is not free.
THE HUSBAND: I know that’s not free.
MS JAMES: How do you pay for it?
THE HUSBAND: As I mentioned, I receive some help.
MS JAMES: So you pay cash?
THE HUSBAND: My friends actually – my friends actually do bring to me. I don’t depart from the [business premises].
MS JAMES: And you pay cash for your living expenses, then?
THE HUSBAND: I don’t have expenses. I got – I have been receiving food, and just I live in the [business premises] and that’s it.
MS JAMES: You have not got any debts to your friends for your living expenses, do you?
THE HUSBAND: These people are doing charity work.
MS JAMES: You are a proud man, [Mr Morcos]. You would not accept charity, would you?
THE HUSBAND: “Yes, I understand,” he has told me.
MS JAMES: You pay for your living expenses, as small as they may be, by cash?
THE HUSBAND: I live in the [business premises] and I don’t get out.
MS JAMES: Could you please answer the question. You pay for your living expenses in cash?
THE HUSBAND: I don’t have expenses, because I haven’t got an income. So I don’t get out, nor spend, nor go anywhere, because I haven’t got money in order to get out. I’m supposed to have surgery in my eyes. I didn’t go, because I haven’t got money.
MS JAMES: How did you come to court today, [Mr Morcos]?
THE HUSBAND: Using the metro card.
MS JAMES: And how do you pay for the metro card?
THE HUSBAND: Yesterday, one of my friends – no. On Wednesday, my friend took me from the [business premises] – took me to Westpac in […], and then we did bring the last statement for the account, and then on our way back there has been a 7-Eleven. He did get into it and he did buy for me a voucher and a card that – I utilise it, actually, to ride the tram today.
MS JAMES: And how did you pay for the metro card?
THE HUSBAND: He is the one who paid.
Prima facie the wife is in a much better position than the husband in regards to income earning capacity, actual income and health. However, the husband was clearly untruthful about his income and expenses and, in my assessment, too shrewd to be so unless he had something to hide. I am satisfied that there should be some adjustment in favour of the husband, but I am unable to have regard to his actual needs because of his blatant refusal to give full and frank evidence.
Commitments of each of the parties that are necessary to enable the party to support himself or herself and a child or other person that the person has a duty to maintain and the responsibilities of either party to support another person (s 75(2)(d) and (e))
The wife has three adult children from a previous relationship and three adult children from her relationship with the husband. The husband also has three adult children from a prior relationship. All children are independent, although Ms X lives with the wife.
Neither the husband or wife has a duty to maintain or be responsible for any other person.
Eligibility of either party for a pension, allowance or benefit from the government or from a superannuation fund or scheme (s 75(2)(f))
The husband receives a Centrelink pension of approximately $582 per week according to his financial statement.
The wife’s superannuation interest is described above. It has been heavily augmented by an inheritance from her father’s estate and partially depleted by legal costs. The wife’s father died in 2018 by which time the husband and wife had been separated for five years. The wife received a partial inheritance from her father’s estate of $100,000 mid-2019 (six years after separation) and a further $250,000 in early 2021 (eight years after separation). In mid-2021 the wife transferred $240,000 to her Superannuation Fund 3. At separation, the wife’s superannuation interest had largely been cashed out. The balance of the wife’s superannuation on 30 June 2013 was $24,437.70.
There is no evidence of a relevant personal relationship between the husband and the wife’s father such that the husband could claim that any part of the wife’s inheritance was attributable to him or he and the wife jointly.[60] I regard the inheritance as solely referrable to the wife.
[60] See, e.g. Wall & Wall [2002] FamCA 257 [31]; James and James (1978) FLC ¶90–487; Calvin & McTier (2017) FLC 93-785; Holland & Holland (2017) FLC 93–798 ; Stella & Stella [2023] FedCFamC1F 1092.
The wife gave the following evidence about having drawn down her superannuation to pay legal fees. She says that she has withdrawn $40,000 or $45,000 from her superannuation fund which at the time of final hearing had an approximate balance of approximated $454,000.
The inheritance was received so long after the husband and wife separated that I am comfortable to take into account as received and expended by the wife but to exclude it from the interests divisible between the husband and wife. However, the wife’s superior superannuation position requires an adjustment in favour of the husband.
A standard or living that is in all circumstances reasonable (s75(2)(g))
There is no absolute entitlement, as between one party and another, for a certain standard of living. The reference to ‘reasonable’ in this sub-paragraph imputes a necessity to cut the cloth to measure, to economise where necessary.
The husband continually said that after the wife excluded him from the family home, for the second time (2013), he was forced to live in dirty premises infested by rats. That is obviously not a reasonable standard of living although there was no explanation as to why he could not clean the property and exterminate the rats.
The D Street property will not be available to the husband indefinitely. The business loan facility account number ending in …69 had about $50,000 left in drawable funds at the conclusion of the hearing. That would have serviced outgoings for between two and nine months whereupon the mortgagee bank will, presumably, agitate for payment and want to make good on the security. The business loan ending in …50 secured over the D Street property is overdrawn. The husband was emphatic that he had no means of paying the instalments due under the mortgages.
I will order a sale. Additionally, the mortgagee bank may step in and exercise its right of sale with vacant possession. Given the husband’s state of health, it is likely that he will be looking for assisted, rather than independent, accommodation in the short to medium term. There is no evidence about the husband’s needs into the future. On his own case, he is not used to celebrious accommodation. Likewise, there is no entitlement that the wife keep the G Street property if, once the orders I make are implemented, she cannot afford to do so.
Both parties will have enough funds to accommodate themselves.
The duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration (s75(2)(k))
Neither party’s maintenance is under consideration.
Any fact or circumstance which, in the opinion of the court, the justice requires to be taken into account (s75(2)(o))
I accept that the wife attended to the personal care of the husband’s mother which is a contribution the wife made on behalf of the husband. Likewise, the wife’s care of the husband’s children from his previous marriage, although not more extensive than weekend access visits, was a contribution by the wife not attended by any legal obligation on her part. The wife’s children lived full time with the parties which outweighs the contributions by the wife to the care of the husband’s mother and children. The husband is entitled to a minor adjustment in his favour: Robb & Robb (1995) FLC 92-555.
The wife contends that there are further factors the Court should take into account pursuant to s75(2)(o).
First, the wife contends that the alleged wastage of $736,000 of joint monies as a result of the failed property development joint venture (Mr N deal) should be considered. The facts are outlined extensively above. The wife contends that it constitutes wastage because the deal was facilitated by the husband and the wife was simply following his directions. I have found that the wife was a willing participant. I do not make any adjustment in favour of the wife in this regard.
The wife alleges a further wastage argument regarding the refinancing of the Westpac account in 2009 and increased borrowings against D Street. The wife contends that the refinance of the loans secured against the business in 2009 amounted to waste by the husband and he continued to borrow against the security of D Street without any intention of redeeming the debt. That is, the husband had no realistic prospect of being able to trade his way out of debt and was depleting the equity in the property by more than $5,000 per month when he could have sold the property and stemmed the loss.
I do not accept the husband’s explanation that he has allowed the erosion of capital “because I am an idiot”. My impression is that the husband perceived that he needed to avoid a sale of D Street because, if it was liquidated, he would have to distribute the proceeds of sale amongst the Primary Beneficiaries and risk them treating the funds as their own. Alternatively, he could retain the funds himself, as I am satisfied he is entitled to do, and abandon the ruse that he has no legal or equitable interest in the property or the proceeds of sale of the property.
I am satisfied that the husband has been wanton and reckless in relation to D Street which has resulted in economic loss and has reduced the value of assets divisible between the husband and the wife. Furthermore that, in doing so, his motivation was to quarantine D Street from the alteration of property interests between the wife and himself. I am also satisfied that the husband embarked upon a course of conduct designed to reduce or minimise the effective value or worth of assets divisible between the wife and himself (Kowaliw and Kowaliw (1981) FLC 91-092). This warrants a significant adjustment in favour of the wife. I recognise that the adjustment need not be dollar for dollar but the husband’s conduct in this case warrants a significant adjustment to reflect his erosion of equity in the property by negotiating borrowings when he knew he could not service them out of income but was determined not to sell the property before the determination of these property settlement proceedings. In the circumstances, I am satisfied that the husband should be wholly responsible for the extra borrowings of $510,000 together with any penalties or default charges and arrears in respect of all of the borrowings.
The wife seeks an addback against the husband of $180,000 on account of the money he recovered from Mr M. It was submitted that allowance for the husband’s receipt of $180,000 would result in a further payment to the wife of $90,000. The husband took the action against Mr N and recovered $180,000. His unchallenged evidence was that he applied the funds to outgoings for the property at D Street. The funds are no longer in existence. I will allow a modest adjustment in favour of the wife.
Finally, the wife seeks an adjustment and wishes the Court to consider the husband’s conduct in proceedings, his various failures to disclose, his failure to answer questions when giving evidence and the way in which this significantly increased number of days and the costs that wife has incurred. The wife filed a Costs Notice in the order of $250,000, of which Counsel contends a significant amount of funds were incurred unnecessarily as a result of having to subpoena many banks to identify the C Pty Ltd bank accounts and those of Ms B and to clarify the Estate of Ms B. The husband’s acts and omissions have made the proceedings more expensive for the wife than they needed to be. However, I am satisfied that costs should be determined following delivery of this judgment. I will deal with costs without undue formality but will require from any application for costs at least a memorandum of costs claimed which is drawn in accordance with the Rules in addition to any other calculation of costs upon which the applicant seeks to rely.
As regards further addbacks, according to the wife’s Cost Notice filed on 28 July 2024, the wife had paid $148,000 in legal fees as at that date.
In Omacini and Omacini (2005) FLC 92-218 the Full Court comprising Holden, Warnick and Le Poer Trench JJ stated at [30]:
To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-8l6 the Full Court said at 85,262:
" 11. 6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out. "
I am satisfied that the wife’s legal fees of $148,000 should be added back against the wife’s entitlement.
CONCLUSION ON ADJUSTMENT OR MATTERS UNDER SECTION 75(2)
I have resolved to treat the wife’s superannuation interest as a separate pool and the balance of assets and liabilities as a separate pool. I have determined that the wife should receive 100% of the superannuation pool and the second pool should be divided as follows.
I have regard to the s75(2) factors in favour of the husband and the wife.
The allocation of $510,000 of wanton and reckless borrowings against the D Street property is separate from other adjustments under s75(2). The $510,000 will be a liability for which the husband is solely responsible as between himself and the wife and that adjustment will be affected by the husband paying to the wife an amount equivalent to her share of the $510,000 which the bank receives at settlement of the sale together with any arrears and penalties on the total borrowings. I will allow all arrears and default charges because neither of the accounts should be in default. The amount must be paid out directly to the wife from the husband’s share but not pass through the his hands. The calculation of the arrears and penalties is difficult because the wanton borrowings were not isolated to one account, they were drawn from two accounts as described above in [119] and [120]. We don’t know how much will be charged by the bank by way of penalties and default fees and arrears. I propose to set the adjustment payable to the wife at one half of the difference between the total monies collected by the mortgagee at settlement less $540,000, which was the amount secured against the property prior to the wanton borrowings.
The principal s75(2) adjustment to the balance of the second pool is in favour of the husband in respect of the wife’s greater income, superior physical and mental capacity for appropriate gainful employment, better state of health and more valuable property and financial resources (superannuation). Against the husband is his undisclosed receipt of $180,000 which he paid into the accounts secured against D Street, in part to service borrowings which he should not have taken.
I assess that adjustment to non-superannuation interests (the second pool) at 10% in favour of the husband. This adjustment brings the division of non-superannuation assets to 50/50.
A consequence of the order is that D Street will need to be sold. The layers of deception which the husband has been prepared to construct in the running of this case in relation to his interest in D Street, Suburb E, impel me to conclude that he will not abide my order for the property to be sold. It would be a waste of time and money to leave the sale of the property in the hands of the husband. To allow the husband to conduct the sale would very likely produce a sham sale and another round of litigation involving a purchaser. Accordingly, I will make the wife solely responsible for the conduct of the sale of the property. She will have to retain the services of a conveyancer or solicitor. All documents provided to the wife should be copied to the husband. But the wife is to give instructions.
Conduct of the sale by the wife is subject to the rights of the lender Westpac Banking Corporation Ltd to realise its security. If the mortgagee bank steps in the wife is authorised to negotiate with them as well as the husband being able to negotiate. Again, this order does not bind the bank. I will provide that the bank receives a copy of this Order. If one of the parties wants to provide a copy of these reasons to the bank, they will need to apply for such an order.
The Bankruptcy Trustees from the husband’s second bankruptcy ask informally to be “kept informed” of the outcome of the proceedings. I grant liberty to either party to provide the Bankruptcy Trustee with a copy of the orders. Personal privacy matters arise if third parties are given the reasons. The reasons should not be given to a third party without Court permission and consideration of any submissions made by the parties.
The parties agreed on valuation of both real properties. I will adopt the agreed value of the G Street property but will have regard to the actual sale price for D Street which must be sold. I have not allowed for the costs of sale of D Street because there is no evidence in that regard. I will use the agreed value of D Street to calculate indicative entitlements and to assess the fairness and equity of the result but use a formula to divide the proceeds of D Street to take into account the actual sale price and costs.
ARE THE ORDERS JUST, EQUITABLE AND APPROPRIATE?
Non-superannuation assets are notionally valued at $3,409,000 as set out in the below table.
Description Ownership Value ($) Non-superannuation assets (Pool 1) G Street, Suburb H
Valued at $1,650,000 (August 2022)less liability to AG Bank mortgage registered over G Street, Suburb H ($166,000)
Wife $1,484,000
D Street, Suburb E VIC
Valued at $2,850,000 (August 2022)less liabilities of
Business loan ending …50: ($635,000); and Business Loan Facility account ending …69 – ($450,000)
Total: ($1,085,000)Husband $1,765,000 Motor Vehicle 1 Wife $12,000 Add back: Wife’s legal fees Wife $148,000 TOTAL NON-SUPERANNUATION INTERESTS $3,409,000 Superannuation interests (Pool 2) Superannuation Fund 3 Wife $454,000 [61] Nil Superannuation Husband NIL TOTAL PROPERTY $3,863,000 [61] Transcript of proceedings, 30 July 2024, page 415, line 30.
Notionally, each party receives 50% of $3,409,000.
The husband notionally receives $1,704,500 from the sale of D Street. I say ‘notional’ because the sale price of D Street may vary from the agreed value.
The wife receives $1,704,500 made up of $60,500 cash, the G Street property (including liabilities $1,484,000), her car ($12,000) and her paid legal fees ($148,000).
In addition, from the husband’s share, the husband must pay the wife 50% of the whatever the mortgagee bank receives attributable to the $510,000 of wanton borrowings and all arrears and penalties.
The wife retains her superannuation interest intact at $454,000.
Having regard to the agreed values and s75(2) adjustments, the indicative total entitlement of each party will be something like:
·The wife: $60,500 + $1,644,000 (value of G Street, car and paid legal fees) + $255,000 from husband (for wanton borrowing) + $454,000 (superannuation) = $2,413,500.
·The husband: $1,704,500 less $255,000 to the wife = $1,449,500.
The above equates to division of all interests, including the wife’s superannuation (largely from her late inheritance) of about 62.5% to the wife and 37.5% to the husband. If the wife’s superannuation is excluded, save to the extent that I have already made an adjustment for the wife’s superannuation in favour of the husband pursuant to s75(2)(f), the above division equates to about 57.5% to the wife and 42.5% to the husband.
I am satisfied that each party can provide for themselves more than adequately from their respective entitlements.
I am satisfied that, in practical terms, the orders are just, equitable and appropriate.
MACHINERY PROVISIONS
I predict that implementation of these orders will not be straight forward. I reserve liberty to the parties to apply in relation to implementation of these orders. Listings of applications in this regard can be discussed with my Associates via email to …@.... Liberty to apply to any alleged mathematical errors which fall within the operation of the slip rule.
I certify that the preceding three hundred and four (304) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bennett. Associate:
Dated: 20 January 2025
ANNEXURE “A”
The Will of Ms B dated […] 2009
[REMOVED FOR PUBLICATION]ANNEXURE “B”
Summary of Real Properties and Business Interests
In sum, during the course of the marriage, the parties (either jointly or solely) held interests in four real properties and one business entity, namely:
Name Ownership Value Narrative KK Street, Suburb HH
Joint until 8 September 1997, thereafter registered in wife’s sole name. Purchased in 1995 for $125,000.
Sold in 2003 for $280,000.
The wife deposes that the deposit was paid by the husband, comprising of the $10,500 repayable to her and $3,000 from the husband’s savings. The parties borrowed $112,500 from LL Limited to finance the balance of the purchase price. The property was transferred into the wife’s sole name in late 1997.
The wife applied the majority of net sale of proceeds from sale in 2003 towards reducing the mortgage over other properties, MM Street and the G Street property. The sale price and treatment of proceeds of sale is disputed by the husband.
MM Street, Suburb E
Wife Purchased in late 1997 for $206,100.
Sold in 2008 for $851,000.
The wife financed the purchase through a severance package she received from her employer in mid-1997 and her superannuation benefit received in or around late 1997, totalling approximately $130,000. The wife borrowed approximately $100,000 from LL Limited to finance the balance of the purchase price. The wife contends that the husband did not make any financial contributions towards the acquisition or maintenance of this property.
Following the purchase of G Street Suburb H in 1999, the bedrooms at the MM Street property were tenanted individually, with rent paid to the husband and indirectly applied to the mortgage account. Following the failed venture with Mr N, the wife was unable to service the mortgage repayments and the property was sold in 2008 for $851,000.
The proceeds of sale were applied towards discharging home loans. The sale price and treatment of proceeds of sale by the wife is disputed by the husband.
G Street Suburb H
Contested Purchased in 1999/2000 for $330,000.
Not sold, current value approximately $1,650,000, subject to mortgage of $166,000.
The husband and wife lived at this property together from 1999 until separation in 2013.
The wife paid $1,000 towards the deposit and the husband paid $19,500 from his business. The husband claims he paid the full deposit. The wife deposes to working in the husband’s business for no charge in lieu of repayment of the $19,500 advanced by the husband through C Pty Ltd whilst she had care of the children. The home was refinanced (together with the MM Street property) in 2004 to finance the husband’s joint venture with Mr N. The husband made mortgage repayments for approximately two years between 2006 and 2008 until the home loan was discharged following the sale of the MM Street property, but, as above, the wife contends these were interest only payments.
The wife still lives at the property and deposes to having undertaken significant renovation works in the period 2003-2022 which the husband either disputes or says he did not consent to.
D Street Suburb E
(“[D Street]”)
Contested Purchased in 1998 for $365,000.
Not sold, current value approximately $2,850,000, subject to two loans totalling E$1,085,000
The wife bid at the auction and signed the contract for this commercial property which comprises business premise downstairs and a dwelling upstairs. The husband claims it was purchased by his mother (Ms B). It was registered in the name of Ms B in early 1999. The husband operated the C Pty Ltd business from the premises. Since separation (April 2013) the husband has lived upstairs at the premises.
The wife did not make direct financial contributions towards the purchase price, loan repayments or the outgoings associated with this property.
The husband maintains that D Street and the businesses run from it were owned by his mother and now form part of her estate (of which he is executor). Effectively the husband seeks to quarantine D Street from being divisible in this proceeding whereas the wife asserts that the husband is the beneficial owner of D Street.
The instalments in respect of both loans total about $5,000 per month and are being drawn down from one of the loans but that facility will reach its limit by the end of 2024.
C Pty Ltd
(“C Pty Ltd”)
C Pty Ltd the Morcos Family Trust N/A C Pty Ltd, was operated by the Morcos Family Trust which is a discretionary trading trust. The trust deed is not in evidence. There is a second relevant business under the name of L Pty Ltd which was registered to Ms B as a sole trader.
The wife contends that both businesses were conducted by the husband for his own benefit. The husband contends that his mother owned C Pty Ltd and the property from which they operated at D Street, Suburb E.
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