NGO & HAN (No.2)
[2020] FCCA 2617
•17 September 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| NGO & HAN (No.2) | [2020] FCCA 2617 |
| Catchwords: FAMILY LAW – Property – whether it is just and equitable for orders to be made – contradictory evidence – lack of disclosure – several cash transactions – differing evidence – credit of the parties – date of separation – the existence of previous agreements – previous costs order – orders made. |
| Legislation: Evidence Act 1995 (Cth), ss.128, 140 Family Law Act 1975 (Cth), ss.79, 79(2), 79(4), 90G |
| Cases cited: Aleksovski v Aleksovski [1996] FamCA 111 Stanford v Stanford [2012] HCA 52 Weir & Weir [1992] FamCA 69 |
| Applicant: | MR NGO |
| Respondent: | MS HAN |
| File Number: | MLC 9190 of 2009 |
| Judgment of: | Judge Carter |
| Hearing dates: | 9 & 10 June 2020 and 13 & 14 August 2020 |
| Date of Last Submission: | 14 August 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 17 September 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Howe |
| Solicitors for the Applicant: | RRR Lawyers |
| Counsel for the Respondent: | Mr Thomas |
| Solicitors for the Respondent: | Verduci Lawyers |
ORDERS
Within 28 days, the Wife elect in writing whether she shall pay the Husband pursuant to order 2 hereof, or sell Property A in the State of Victoria (“Property A”) pursuant to order 3 hereof.
In the event the Wife elects to retain Property A, then within 60 days of her making such an election (“the date”), the Wife pay to the Husband the sum of $178,000, being 25% of the equity of Property A, together with the sum of $23,000 (being the costs ordered on 11 June, 2019) (“the payment”).
In the event that the Wife:-
(a)elects to sell Property A; or
(b)fails to make an election pursuant to order 1 hereof; or
(c)elects to retain Property A but fails to make the payment by the date pursuant to order 2 hereof;
the Wife shall forthwith do all acts and things and sign all such documents as may be necessary to place Property A on the market for sale, on terms and conditions as agreed, and the proceeds be divided as follows:-
(d)firstly, to pay the costs, commission and expenses of the sale;
(e)secondly, to discharge the mortgage and any other encumbrance affecting Property A;
(f)thirdly:-
(i)in the event the Wife failed to make the payment pursuant to order 2 hereof, such amount of the payment as is outstanding together with interest thereon calculated in accordance with the Family Law Rules 2004 (Cth) to the Husband; or
(ii)otherwise, an amount equal to 25% of the remaining proceeds of sale together with a further $23,000 to the Husband; and
(g)fourthly, the balance to the Wife.
Unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders:-
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) owned by or in the possession of such party as at the date of these orders (the furniture, personal possessions and like chattels in Property A being deemed to be in the possession of the Wife);
(b)monies standing to the credit of the parties in bank accounts in their sole name be retained by them;
(c)insurance policies remain the sole property of the owner or beneficiary named therein;
(d)each party retain for their sole use and benefit their superannuation entitlements (if any);
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
All extant applications are dismissed and the matter removed from the pending list of cases maintained by the Court.
AND THE COURT NOTES THAT:
A.The Court is satisfied that the final property orders are a just and equitable division of the property in these proceedings.
IT IS NOTED that publication of this judgment under the pseudonym Ngo & Han (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 9190 of 2009
| MR NGO |
Applicant
And
| MS HAN |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties in this matter have been unable to reach an agreement regarding the division of their property following the breakdown of their relationship.
This matter has a complicated history, with the parties unable to agree on many issues, including:-
a)when they separated;
b)their contributions during the relationship and post-separation;
c)how joint funds have been expended by them;
d)whether there have been agreements between them as to how their assets are to be divided; and
e)whether money has been exchanged between them – and how much – on the basis of those asserted settlement agreements.
Determining the history of this matter has been made markedly more complicated by the failure of the Husband to make full and frank disclosure. Additionally, each of the parties assert that many of the transactions between them were cash payments, which the other party simply denies. Without proper records it is extremely difficult to untangle the parties’ competing narratives of their financial relationship.
At the conclusion of the proceedings, the Husband sought orders for the sale of the property situated at Property A in the State of Victoria (“Property A”), and that the net proceeds, anticipated to be in the vicinity of $600,000, be divided 60% to the Wife and 40% to him. He proposed that the parties otherwise retain any assets and liabilities currently in his or her possession, inclusive of superannuation.
The Wife opposes the sale of Property A. It is her case that it is not just and equitable for any order to be made. She says each party should retain the assets and liabilities in their own possession.
Procedural history
The matter has had a somewhat lengthy procedural history. In summary:-
a)the Husband issued an Application for Divorce on 12 October 2009. That application was heard and granted on 1 December 2009;
b)the property proceedings were instituted by way of Initiating Application filed by the Husband on 23 December 2016;
c)it was the Wife’s case that the parties entered into a Binding Financial Agreement in 2009. That issue was ultimately heard in August 2018 before his Honour Judge Curtain;
d)his Honour delivered judgment and made orders on 21 December 2018 pursuant to which he held that there was no Binding Financial Agreement entered into by the parties in 2009;
e)the Wife then sought that the Husband not be given leave to issue proceedings out of time. That matter came before Judge Curtain on 11 June 2019 and leave to proceed was granted. The Court ordered that the Wife “pay the applicant [sic] costs of $23,000 with the style of payment being determined at trial”. The matter was listed for a Final Hearing to commence on 5 September 2019;
f)the matter was transferred to my docket and came before me on 5 September 2019. It was not able to be reached and was adjourned for Final Hearing with priority to 9 June 2020. Both parties were ordered to file updated Financial Statements no later than 14 days prior to the Final Hearing. The Wife did not comply with that order; and
g)by the time of the Final Hearing, the COVID-19 pandemic had resulted in all trials being conducted remotely via Microsoft Teams. The matter proceeded before me on 9 and 10 June 2020 and then resumed part-heard on 13 and 14 August 2020.
Although there were at times some difficulties with sound, those matters were able to be addressed and overcome. I am satisfied neither party was prejudiced by the matter proceeding electronically. Indeed, both parties sought that the matter to be heard and determined. At one point it seemed there may have been some consideration being given to making an application for an adjournment, however, that was not pressed. I am also satisfied I was able to understand and assess the evidence as it was lead before me.
Background
The Husband is 47 years of age. He migrated to Australia in 1977 as a refugee from Vietnam. He has generally operated food business, although most recently he was employed in transport. He says his employment has been affected by the COVID-19 pandemic, and as a result he is now unemployed and in receipt of the ‘Jobseeker’ payment of $550 per week. The Husband has re-married Ms C (“Ms C”), and they have a four year old daughter, E, together. The Husband deposes that Ms C earns approximately $500 per week as a cleaner.
The Wife is also Vietnamese. She is almost 48 years of age and is currently unemployed. She has re-partnered and lives with a Mr D (“Mr D”). The Wife does not set out Mr D’s income in her material. In an affidavit filed on 2 September 2019, Mr D deposes that he is a tradesman and was at one point earning around $120,000 per annum. The Wife says she works part time and is also in receipt of Centrelink monies. Her income from those sources according to her Financial Statement filed on 2 September 2019 is $579 per week.
The parties married in 1993 in Vietnam and commenced living together in Australia later that year.
There are three children of the marriage, two of whom are adults. Ms A is nearly 24 and Ms B is nearly 21 years of age. Their youngest child, X, is almost 16 years of age. At the commencement of the Final Hearing, X resided with the Wife. However, in June 2020, after the first two days of hearing, the Wife says that the parties’ eldest daughter, Ms A, removed X from the Wife’s care. The Wife says she has had almost no communication with X since that time, which has been quite distressing for her. It unfortunately seems X and Ms A have become embroiled in their parents’ conflict. On 29 July 2020, Ms A filed an affidavit in support of the Husband’s application, and on the third day of the Final Hearing the Husband sought to adduce evidence from Ms A. It was not made clear to me what the proposed care arrangements are for X in the longer term.
Purchase of Property B in 1996
The parties purchased a block of land at Property B (“Property B”) in 1996 for approximately $50,000 and then constructed a small town house on the property. The parties borrowed $85,000 from the Commonwealth Bank to build that home and otherwise funded its construction with savings.
Ms A was born 1996. It is common ground that the Wife was Ms A’s primary carer and attended primarily to home duties. At that time, the Husband was employed full-time as a labourer in Suburb F.
The parties’ second child, Ms B was born 1999.
The Husband continued to be engaged in full-time employment, although he says he had flexible hours allowing him to spend more time assisting in the care of the children. The Husband asserts that at this time the Wife was frequently attending venue G and neglecting her responsibilities as the primary homemaker. That is denied by the Wife.
The establishment of Company C in 2001
In 2001 the parties established Company C bar in Suburb H, at a cost of approximately $50,000 to set up. The parties borrowed against the mortgage and used savings to fund the commencement of this business and the purchase of a truck. The Husband’s nephew worked in the business with him.
The Husband says the business initially ran at a loss, however after approximately six months, the business was making about $200,000 gross per annum.
The Husband asserts that the Wife’s involvement in the business was minimal, deposing that it was “quite rare and unusual” that the Wife would come in to work. That is disputed by the Wife, who asserts that she worked full time in the business from around 2004 until 2007.
It is common ground that the Husband worked long hours at Company C and the Wife continued to be the children’s primary carer.
The parties’ third child, X, was born 2004.
The 2005 separation
It is common ground that the parties separated in around 2005.
The establishment of Company D in 2007
In approximately 2007, the Husband established a second food business, Company D, in the Melbourne CBD. The Husband asserts that it cost around $80,000 to establish this business. He said he used savings, together with $70,000 that was the re-paid to him by a friend, Mr I, to whom he had previously loaned that money.
The alleged agreement in 2007
It is the Wife’s case that the parties entered into an agreement in 2007 pursuant to which:-
a)the Wife paid the Husband $100,000;
b)the Husband retained the business Company D; and
c)the Husband transferred to the wife Company C and Property B.
The Wife has been unable to produce a copy of this alleged agreement entered into by the parties. The Husband denies that such an agreement even exists. However, it is clear that on 11 July 2007 a registered Transfer of Land document was completed and Property B was transferred into the Wife’s name.
It is also clear that according to the Current & Historical Company Extract, the Wife is recorded as being the sole director of Company C from 30 May 2007 until 19 December 2012. This is consistent with the Wife’s evidence regarding this agreement, and inconsistent with the Husband’s evidence that the Wife took over Company C in around 2010.
It is the Husband’s evidence that although Property B was in the Wife’s name, he continued to contribute to that mortgage. He says he paid the Wife $1,800 each month in cash, for her to contribute to the mortgage. He said he continued to do that until Property B was sold in 2013.
The Wife says following the property being transferred into her name in 2007, she was responsible for the mortgage payments and any outgoings on the property. She denies the Husband has made any contributions towards the mortgage since that time.
The parties’ reconciliation
The Husband’s evidence is that the parties reconciled and lived together in Property B in around 2008, and that he continued “coming to the Property B home for the period up until mid-2009”.
The Wife acknowledges that the Husband did attend at Property B but denies the parties resumed their relationship. She says he attended for the sole purpose of him visiting the children, and that he never resumed living there.
The Wife says in her affidavit affirmed on 27 August 2019 that “There was a brief period where we attempted to reconcile from May 2008 to June 2009, but it did not work out” and that “The attempt to reconcile was futile”. She says the Husband did not at any stage return to live in Property B.
I am satisfied for the reasons to which I will shortly turn, that the parties reconciled between about May 2008 and June 2009, before finally separating on 12 June 2009.
Purchase of Property A
In October 2008 the parties purchased Property A as an investment property in their joint names. The parties paid $591,000 for the property. The parties used approximately $150,000 from the mortgage encumbering Property B and otherwise borrowed the monies by way of mortgage to effect the purchase. That mortgage was also in joint names.
The Husband says he was the one who found Property A and suggested that the parties purchase it. He says it was intended to be a joint venture. The Husband also asserts the Wife was not working at this time, and that accordingly he made all payments from his business towards the mortgage.
The Wife denies this was purchased to be a joint asset. She says she only requested the Husband to assist her in purchasing Property A as her English is poor. She says it was always intended to be her property, and it was only purchased in joint names as the Husband said the bank would otherwise not approve the purchase. The Wife says she accepted what he told her and she trusted him. She says although the mortgage was in joint names, he made no contributions to the mortgage repayments which have always been and continue to be paid by her.
Final separation
For the reasons which I record below, I am satisfied the parties separated on a final basis in June 2009.
Sale of Company D
At around the time the parties separated in 2009, the Husband sold Company D for $250,000. There are no documents produced to support that assertion, nor to demonstrate how those funds were applied.
In his affidavit filed on 23 October 2017, the Husband appears to assert that there were no proceeds remaining after he used the $250,000 “to pay business and personal debts that had been incurred to pay the mortgages upon Property A and Property B”.
The Husband says in his affidavit filed on 12 August 2019 that he paid rental arrears of “at least $100,000” and recalled receiving net proceeds of approximately $60,000 or $70,000 from that sale. He says later in that same affidavit that “at least $125,000” was paid in rental arrears and outgoings and suppliers. The Husband also says he contributed some of the funds from that sale to the mortgages on both Property A and Property B. The Wife disputes that he retained as little as he says.
The Husband gave evidence that prior to selling the business, he was struggling to meet the outgoings. He said he had fallen behind in rental payments and owed a lot of money to suppliers.
The Husband filed an application for divorce on 12 October 2009.
The 2009 deed
The Wife asserts that the parties entered into a further agreement in 2009 as to how their property should be distributed between them (“the 2009 Deed”). The 2009 Deed is exhibited to the Wife’s affidavit filed on 29 May 2017.
According to the terms of the 2009 Deed the Husband would retain:-
a)the proceeds of the sale of the Company D business;
b)the $100,000 given to him by the Wife as cash pursuant to “the first executed financial agreement”;
c)his motor vehicle 1; and
d)any savings or superannuation in his possession.
The 2009 Deed provided the Wife would receive or retain:-
a)Company C;
b)Property B;
c)Property A;
d)her motor vehicle 2; and
e)any savings or superannuation in her possession.
The Husband denied that the parties entered into the 2009 Deed.
I note that whilst the Wife asserted that the 2009 Deed was a Binding Financial Agreement, she has been unable to produce a copy of the 2009 Deed signed by her. The only copy produced bears the Husband’s signature and that of Ms M, solicitor, who appears to have witnessed the Husband’s signature.
I note that Ms M has also signed the Certificate of Independent Legal Advice, which she has dated 11 September 2009.
The 2009 Deed has been held not to be a Binding Financial Agreement pursuant to the judgment of his Honour Judge Curtain on 21 December 2018.
Events in 2010
In or around 2010 the Husband commenced a relationship. He and his then-partner commenced another food business, Company E, in Suburb J. He has not explained how he funded the establishment of that business.
I note that in the 2009 Deed it is recorded that “The Husband owns and has sold the “Company D” business and intended to use the proceeds of the sale to setup [sic] a new food business elsewhere.”
At that time, the Wife took over the operation of Company C. The Husband said he gave that business to the Wife to help her support the children. It is common ground that the Husband did not transfer the lease for the premises to the Wife.
These events appear to be consistent with the matters contained within the 2009 Deed.
VCAT proceedings regarding Property A
It is common ground that some efforts were made to subdivide and develop Property A, to build two two-storey dwellings on the site. The process was somewhat protracted, with the permit having been lodged with Council K (“the Council”) in approximately April or May 2009, which the Council declined to grant.
In her oral evidence, the Wife said the development was her project. She said the Husband did initially attend with her at the architect’s office, but that was only to act as translator. The Wife said she paid for all the costs of the architect, and all costs with respect to the planning process.
The Council initially refused to grant a permit for the development on a number of grounds. The matter proceeded to a VCAT hearing on … 2011. Orders were made on … 2011, with an order being made for amended plans to be submitted by the Applicant within two months, to correct various deficiencies in the plans as identified by the Member.
Notably, the first order made by the Member was to amend the application to change the name of the Applicant for review to the Husband’s name. The Wife says that was no reflection on his involvement with the development project.
I do not know what action, if any, was taken to advance the development in accordance with the VCAT ruling after those orders were made on … 2011.
The Wife commenced a relationship with Mr D in about 2011. She said that Mr D then acted as her interpreter when she had further meetings with various professionals regarding the proposed development.
The Wife and children then moved in with Mr D. The Wife said she has not had to contribute to rent or mortgage payments on the home she occupies with Mr D.
The sale of Property B and the transfer of Property A to the Wife
In February 2013:-
a)the Husband transferred his interest in Property A to the Wife, who refinanced the mortgage into her name; and
b)the Wife sold Property B for $571,000. After paying the mortgage and expenses of the sale, and discharging a personal loan of the Husband’s in the sum of $50,000, the proceeds of sale were approximately $240,000. Of that, the bank required $110,000 to be paid into the mortgage encumbering Property A.
The Husband conceded through his Counsel that funds were paid into Property A mortgage and that the Wife was then left with approximately $130,000 by way of net proceeds from the sale of Property B.
There is a significant dispute between the parties as to the basis for the transfer and refinancing of Property A into the Wife’s sole name. The Husband deposes he transferred his interest as the parties had agreed she would either pay him $300,000 or she would oversee the construction of two townhouses on the land, and then retain one herself and sell the other, providing him with the remaining proceeds of sale following the discharge of the mortgage.
The Wife denies there was ever any agreement that she would pay the Husband $300,000 or that there were any other terms or conditions attached to the transfer of Property A into her sole name. She says the transfer was undertaken as this reflected the parties’ agreement as set out in the 2009 Deed.
For the reasons set out below, I prefer the Wife’s evidence over the Husband’s in this regard.
In her affidavit affirmed on 2 September, 2019, the Wife says she applied the proceeds of sale of Property B as follows:-
a)she paid $110,000 towards the mortgage over Property A, thereby reducing the mortgage to $490,000; and
b)the balance, of $130,000 was used by her to meet her “general living expenses” until she started working in 2015.
In her oral evidence the Wife said she was paying around $2,850 per month towards the mortgage over Property A. She says she was unemployed for approximately two and a half years and agreed with Counsel for the Husband’s estimate that she would have applied approximately $85,500 of the proceeds of sale from Property B to the mortgage over Property A. She says she was otherwise in receipt of Centrelink monies.
Company C returned to the Husband
It is common ground that in 2013, the Husband resumed operating Company C. Initially, the Husband asserted that occurred in 2015, but during the course of the trial he conceded that did occur in 2013.
The Wife says she was unable to continue operating Company C as the Husband never transferred the lease to her in 2010, which resulted in her being unable to negotiate with the landlord when the lease expired. She says in her affidavit affirmed on 27 August 2019 that he “took back” the business from her in around 2013.
At some point the Husband relinquished his interest in that business to his then-partner.
The closure of Company E
The Husband said he surrendered the lease on his business Company E in Suburb J, in July 2018. He did not sell the Company E business, nor explain whether he made any attempts to do so beyond deposing “I was not able to sell the business. I just surrendered the lease”.
The Wife says that if any orders are to be made, the Husband’s decision to simply walk away from what appeared to be a profitable business should be taken into account. Effectively, she says he has wasted an asset that would otherwise have been available to him, and at the same time, he has reduced his income.
Credit
Both members of Counsel made submissions that I should prefer the evidence of their client over the evidence of the other party where that evidence differed. Regrettably, this is not a case in which I can simply accept one party over the other. It is clear that the parties have each sworn affidavits in this Court that are not the whole truth, and their own evidence is, at times, inconsistent with the evidence given in subsequent affidavits, in their oral evidence, or with the information provided to third parties.
The Wife’s evidence regarding her work history was inconsistent and changed significantly between the affidavit she swore in May 2017 and her oral evidence at Court. She initially deposed that she was engaged full time in homemaker responsibilities. At trial, she asserted she worked full time at Company C between 2004 and 2007, starting work after delivering the children to school and day care each morning, and collecting them at 6.00pm each evening. She said she was paid $49,000 per annum in cash by the Husband.
I also note the Wife was insistent that the Husband never moved back into Property B after the parties’ separation in 2005. This is inconsistent with the Recitals to the 2009 Deed, which specifies that the parties lived together from May 2008 to June 2009. Those Recitals must have been prepared on her instruction. The Wife seeks to rely on other parts of those Recitals which she says are accurate. She was not able to adequately explain this inconsistency.
The Wife also gave evidence that she received Centrelink between 2004 and 2007, despite telling the Court she was working full time. She acknowledged, after the granting of a certificate pursuant to section 128 of the Evidence Act 1995 (Cth) (“Evidence Act”) that she did not tell Centrelink she was working full time.
Similarly, the Husband’s evidence was at times evasive. At times, the Husband gave inconsistent, and plainly incorrect evidence. For instance, he was the Applicant in the divorce proceedings in 2009. His sworn Application for Divorce says the parties finally separated in 2005. He now says the parties did not separate until 2009.
The Husband was unable to explain a number of discrepancies in his own evidence, and in his financial records. He was cross-examined regarding multiple applications he made for motor vehicle finance. For instance, on 14 October 2013 in relation to an application he made for finance, the Husband signed a Statement of Assets and Liabilities in which he asserted he had:-
a)$25,000 cash;
b)a place of residence valued at $760,000;
c)$150,000 worth of motor vehicles;
d)$100,000 worth of home furniture and fittings; and
e)$100,000 worth of furniture and fitting in his business.
He said his total liabilities were $250,841, mostly made up of a mortgage of $240,000. At that time, the Husband was not the registered owner of any properties. He said he could not explain that he had said he had a residence worth $760,000. He declined to answer how he came to say he had $100,000 worth of furniture and fittings in either his house or business.
Similarly, in July 2014, he sought to secure another loan through L finance service for another vehicle. According to that application, he asserted that he had:-
a)an investment property worth $1,000,000;
b)$500,000 worth of furniture and fittings in his home;
c)motor vehicles valued at $250,000; and
d)other investments worth $400,000.
He said he owed around $250,000, bringing his net total to approximately $1,900,000.
Again in January 2015, the Husband told L finance service he had in his possession:-
a)$400,000 worth of investments;
b)$100,000 worth of motor vehicles; and
c)some $500,000 in furniture and fittings in his home;
with liabilities of just $65,000.
In March 2016, the Husband told L finance service he had:-
a)$10,000 in cash;
b)$400,000 worth of investments;
c)$250,000 worth of motor vehicles; and
d)some $500,000 in furniture and fittings in his home;
with liabilities of $290,000.
The Husband declined to answer questions about the accuracy of these documents.
I do not accept that the Husband ‘merely inflated his income’ as was suggested in closing by Counsel for the Husband. He deliberately mislead a financial institution to procure funding. In relation to the 2013 application, he did not have any property registered in his name despite asserting that he did so. In relation to the 2014 application, he said the investment property was “probably” Property A. At that time, the property had been in the Wife’s sole name for around 18 months. He could not explain what furniture or fittings he had that amounted to $500,000. He further declined to answer questions as to the January 2015 application.
In the circumstances, I am unable to wholly accept one parties’ version of events and reject the other parties’ version. I must therefore evaluate the evidence in relation to each disputed fact and make a finding where required. I note that a number of the disputed facts do not impact on the determination that I must make.
I note also that all of the payments they each assert they made to the other were made in cash. This has meant there are almost no contemporaneous records that corroborate what each party asserts to be true.
Issues in dispute
The issues in dispute are:-
a)when the parties separated;
b)whether the Wife paid the Husband $100,000 cash in 2007, and if so, what effect, if any, does that have on the ultimate division of the parties’ assets;
c)what is the effect, if any, of the 2009 Deed;
d)whether the parties acquired Property A as a joint venture, and whether joint funds were applied to purchase Property A and to pay the mortgage;
e)whether the Husband has contributed to the mortgages over Property A or Property B until 2013 or at any time after 2007;
f)how the proceeds of sale of Property B, of which $110,000 was applied to the mortgage over Property A, and $130,00 retained by the Wife, should be treated, noting that her evidence was that she used approximately $85,500 of those monies to pay the mortgage encumbering Property A;
g)whether the Husband has provided financial assistance to the support of the parties’ children post-separation;
h)the quantum of proceeds received by the Husband upon the sale of Company D and the application of same;
i)the basis of the transfer of Property A to the Wife in 2013;
j)what contributions the Husband made to Property A and the proposed development of same;
k)whether the Husband paid the Wife the sum of $50,000 in 2013 when he resumed operating Company C;
l)whether the Husband has wasted assets by purchasing and leasing luxury vehicles beyond his means, and by closing Company E;
m)whether the Wife has wasted assets by gambling; and
n)what inferences, if any, the Court can draw from the Husband’s failure to meet his obligations for full and frank disclosure.
Findings of fact
It has not been possible to include every aspect of the parties’ evidence. However, just because I have not referred to something in these reasons does not mean that I have not considered it, and I have taken all of the evidence into account.
Section 140 of the Evidence Act sets out that the standard of proof in these proceedings is to a balance of probabilities.
The chronology as recorded in the 2009 deed
The 2009 Deed is clearly deficient in terms of the requirements as set out in section 90G of the Family Law Act 1975 (Cth) (“the Act”), such that it is not a Binding Financial Agreement. Indeed, the 2009 Deed was found not to be so by his Honour Judge Curtain on 21 December 2018.
As is clear, I have significant reservations as to the veracity of each party. Each of them has been prepared to mislead the Court or third parties to gain an advantage.
The Husband says he does not recall signing, or receiving legal advice in relation to, the 2009 Deed. In any case, he says that the 2009 Deed as exhibited to the Wife’s affidavit is not the document that was presented to him in 2009. He acknowledges that the document does bear his signature on one page. He deposes “I do not recall any negotiations in relation to distribution of the matrimonial assets in 2009” [emphasis added]. He also gave evidence that he was not sure that the document now before the Court was the one that he signed, and perhaps additional parts had been added. It is difficult to accept that he cannot recall signing the 2009 Deed or receiving any advice on it, or that there were no negotiations about a settlement whilst simultaneously accepting that he signed a document and asserting the 2009 Deed is materially different from the document presented to him in 2009.
The Recitals in the 2009 Deed do not sit entirely comfortably with the Wife’s history of the parties’ relationship. Whilst the Wife continues to assert the parties separated in 2005, the 2009 Deed records that the parties were separated “on or about August 2004”, but that:-
E. The parties have reconciled and attempted to live together as Husband and Wife between the periods from May 2008 to 12 June 2009.
F. The parties finally separated on 12 June 2009. The Husband moved out of the matrimonial home namely Property B.
The 2009 Deed was prepared by lawyers instructed by the Wife. Those Recitals contradict the Wife’s evidence as set out in her affidavit of August 2019, namely that the Husband never moved back into, or lived at Property B after 2005. I also note that the Recitals are also in contradiction with the Wife’s evidence from her affidavit of May 2017, in which the Wife says that as at August 2008, when the parties purchased Property A, they were living separately and apart.
Curiously, the Wife says the 2009 Deed is accurate where it refers to matters that accord with her evidence. For instance, clause 4.c. of the 2009 Deed refers to the Husband retaining “$100,000 cash given to him by the Wife as pursuant the [sic] first executed financial agreement”. However, the Wife could not adequately explain how Recitals E and F, which are specifically incorporated into the 2009 Deed, fit with her evidence that the parties never lived together after 2005.
On the balance of probabilities, I am satisfied that the Wife attended upon her solicitors who drafted the 2009 Deed on her instructions. I am also similarly satisfied that the Husband attended upon his solicitors and signed the 2009 Deed. I note his signature was witnessed by his solicitor who has also signed the Certificate of Advice. I do not accept the Husband would have signed the 2009 Deed without reading it. He is an astute businessman.
Little turns on what the parties may have considered an appropriate division of assets in 2009. The matter is now before me some 11 years later. However, in the circumstances of this case, where there is so little other reliable, contemporaneous evidence, I am satisfied on the balance of probabilities that the chronology as set out in the 2009 Deed, and the Recitals therein, are substantially accurate.
Whilst the 2009 Deed, as observed, falls well short of being a Binding Financial Agreement, it sheds considerable light on the parties’ marital and financial relationship.
I am satisfied on the balance of probabilities as follows:-
a)the parties initially separated in around August 2004;
b)the parties reached an agreement in 2007 after their first separation, pursuant to which the Wife retained Property B and Company C and the Husband retained $100,000 cash and the Company D business;
c)in accordance with that agreement:-
i)the parties then transferred Property B to the Wife and executed documents pursuant to which she became the sole director of Company C in 2007; and
ii)the Husband received $100,000 in cash and retained the Company D business;
d)I do not accept, as was submitted to me, that there is no evidence of an agreement in 2007. It is referred to in the Recitals to the 2009 Deed that was drawn on the Wife’s instructions and signed by the Husband. Moreover, the parties transferred the home to the Wife, and executed documents to transfer Company C to the Wife as contemplated;
e)whilst the parties were separated, they continued to intermingle their finances. The parties jointly contributed to the mortgage repayments and other outgoings of Property B;
f)the parties then reconciled and lived together from May 2008 to June 2009. In June 2009, the Husband moved out of Property B;
g)the parties purchased Property A as a joint venture whilst they were reconciled. During that reconciliation, the parties both contributed to the costs of the household, the payment of the mortgages and the support of the children;
h)the Wife took over all payments on the properties from around the time the 2009 Deed was executed. I note that clause 4.f. of the 2009 Deed records in relation to the mortgage encumbering Property A that “The Wife will continue paying the existing mortgage repayment” [emphasis added]. It is conceded the mortgage repayments were physically deducted by the bank from the Wife’s accounts; and
i)the Husband sold Company D in 2009. It seems to me probable that he used the proceeds of that sale to establish Company E in 2010.
The Wife’s income and employment history
At trial, the Wife asserted that she worked full time at Company C between 2004 and 2007, saving her wages paid to her in cash into four term deposits that she later redeemed to pay the Husband the $100,000 in 2007.
As observed, there were significant inconsistencies in the Wife’s evidence as to her employment and income. In her affidavit filed 29 May 2017 she deposed that for the duration of the marriage, she did not work but remained at home to look after the children assisting in the business only from time to time. That evidence changed significantly, with the Wife asserting at trial that she worked full time from 2004 to 2007, and that she was paid $49,000 per annum in cash by the Husband. In her oral evidence she said she dropped the children at school or day care, worked for the duration of the day and then collected the children at 6.00pm. She said she returned to work when X was just seven weeks old. That evidence was given for the first time under cross-examination.
The Wife relied on an undated letter signed by the Husband in his capacity as Manager of Company C, stating that the Wife has been employed at Company C since 1 March 2004 “on a permanent full time basis as chef”. She also relied on three Wages Payment Advice slips for the periods of 4 to 10 October 2007, 11 to 17 October 2007 and 18 to 24 October 2007. Those wage slips record that the Wife was paid $1,104 net per week. Those wage slips also record that the Wife was paid superannuation. It is common ground that the Wife does not have any superannuation.
On the third day of the Final Hearing, the Husband sought to adduce evidence from Ms M, who had been a chef at Company C between December 2004 and September 2006. I allowed the Husband to re-open his case for that evidence to be adduced, as the Wife’s oral evidence had changed substantially from her previously sworn evidence regarding her role at Company C.
Ms M said the Wife did not work at Company C during the time Ms M was employed there. Ms M said she was the only chef who worked there at the time. I note the letter upon which the Wife relies says the Wife was employed as a chef. Ms M said she saw the Wife come and go on occasion, but never properly greeted her, and was not properly introduced to her. She said there were a few casual staff who worked at the business, with only two other staff with her at any time. Ms M said she worked from 7.00am until 3.00pm. She said she could clearly see from the open kitchen who else was in the premises.
I found Ms M to be a witness of truth. She answered each question put to her directly. She was articulately able to explain she recalled the exact dates she worked at Company C as she regularly updated her curriculum vitae. She was able to give details about the staff members who worked with her, and the layout of the shop. Ms M was clear that the kitchen was open and she could see the other staff members from where she was working.
I accept that although she was not formally introduced to the Wife, she knew from other staff members, and from the way the Wife took funds from the till on the few occasions she attended at the premises that she was the “boss wife”. Her evidence had a ring of truth about it.
Ms M’ evidence regarding the Wife attending at Company C on occasion and taking funds from the till up until 2006 is also consistent with my finding that the parties were not, at that time, separated on a final basis.
Accordingly, I do not accept the Wife’s oral evidence that she worked full time at Company C from 2004 to 2007. It is inconsistent with the evidence of Ms M. It is inconsistent with the Wife’s previously sworn material. It is also inconsistent with what she told Centrelink at that time.
In my view, it is most likely the letter signed by the Husband and the pay slips were created for some other purpose. That may have been for the purpose of the Wife being able to refinance the mortgage encumbering Property B so that it could be transferred to her in 2007. At that time, the Wife said the mortgage was approximately $260,000 or $270,000. She would have needed some documentary evidence as to her income to persuade the bank to refinance mortgage over Property B into her sole name. In my view, it is likely both parties were involved in this deception.
Payment of the $100,000 in 2007
It is the Wife’s evidence that she paid the Husband $100,000 in accordance with the 2007 agreement. She says she has no documents evidencing that the money was paid as it was paid to the Husband in cash. She says she redeemed four term deposits to make that payment to the Husband. She was able to produce evidence that she had a term deposit at the relevant time of around $30,000. She said she had been unable to find other bank statements showing she had amassed those savings.
The Husband denies that the Wife paid him $100,000, or any other amount at that time.
In her oral evidence, the Wife said she paid him the funds in cash, over two or three exchanges, when he came to the home. She said he sat in his car and counted the cash. She said she did not require him to provide her with a receipt as she trusted him and did not expect he would later deny he had been paid the funds. She said she saved the monies from her wages paid to her at Company C and that she was also in receipt of Centrelink monies at that time.
As already observed, I am satisfied on the balance of probabilities, that the Husband did receive cash of $100,000. It also seems most likely that the Husband then used these funds to establish the Company D business.
The only source from which the $100,000 could have been accumulated was from Company C. The Wife became sole director of Company C in 2007. Prior to that, I accept the evidence of Ms M that the Husband continued to operate the business, and that the Wife attended there from time to time as well, and that both of them took funds from the till. Accordingly, any funds the Husband received in 2007 were effectively joint funds.
In my view, whether the Husband received or retained $100,000 in 2007 is not materially relevant to the determination I now make, some 13 years later, in the context of the parties’ reconciliation in 2008/2009 and all the other contributions made in those intervening years.
Property A
I am satisfied the parties were reconciled at the time that Property A was purchased in 2008, and that it was purchased as a joint endeavour. It was purchased in joint names, with a mortgage in joint names. The Wife acknowledged in her oral evidence that the Husband had negotiated the purchase price. I do not accept the Wife’s explanation that she effectively did not understand the process of property ownership, and had insufficient skills in English to arrange to purchase the property on her own. The Wife had successfully navigated the transfer of Property B into her sole name in 2007.
I am satisfied that post-separation, and until around 2011, the Husband was involved in the attempts to develop the property. I accept the Wife’s evidence that the Husband had assisted her by attending meetings with the architect as her translator.
The Husband was also substituted as the Applicant for the purposes of the VCAT application. However, he did not give any evidence that contradicted that of the Wife’s that his role was really only to act on behalf of the Wife given her language limitations. He made no other mention of playing any significant role in the proposed development in any of his affidavits filed in these proceedings nor in his oral evidence.
Whilst the Husband deposes in his affidavit of October 2017 that he expected the building of the townhouses to go ahead as the Wife had the necessary building permits, there is no evidence that the building permits were ever issued. The VCAT decision the Husband annexes to that affidavit, when actually read, sets out that the Applicant is being given an opportunity to submit amended plans, and the Tribunal will either list the matter for a further hearing or determine the matter on the papers once the amended plans have been provided and submissions made. There is no evidence before me that any amended plans were drawn up or submitted, or that VCAT made any further ruling, or that plans were ultimately accepted and a building permit issued. As the Husband was named as the Applicant pursuant to the first order made by the Member, I would have expected he could have adduced that evidence if it existed.
I do not know what amount of funds the Wife expended on architects’ fees, planning fees, or the VCAT proceedings. I accept that she made all the payments. That was her oral evidence, and the Husband was silent on that point.
At any rate, the development never went ahead. There is no evidence that either party has otherwise improved Property A, or made any contributions to it beyond the mortgage being paid.
On the balance of probabilities, I am satisfied that Property A was initially purchased as a joint venture, and that the Husband contributed to that by being on title and on the mortgage, and being involved to a limited extent in the development project which has ultimately not proceeded.
I do not accept the Husband’s evidence that he transferred Property A to the Wife in anticipation of being paid $300,000 or the proceeds of sale of one of the townhouses once completed. There is no evidence that further steps were taken to advance the development project between early 2011 when the matter was before VCAT, and February 2013 when the property was transferred to the Wife. In those circumstances, where there is little evidence the development was moving forward, it makes little sense that the Husband was prepared to transfer his interest to the Wife in anticipation of that development proceeding. It is also difficult to understand how the Husband could have expected the Wife to be able to raise sufficient capital to go ahead with the development unless he remained involved in the project.
I note further that the transfer of Property A to the Wife is relatively contemporaneous to the Husband resuming operation of Company C.
The sale of Company D in 2009
There is no documentary evidence produced by the Husband to support his assertions that:-
a)he sold the business for $250,000;
b)he had rental arrears and outstanding accounts to suppliers;
c)he only retained proceeds of $60,000-$70,000; or
d)he contributed any of those remaining funds to Property A or Property B.
I do not accept his evidence as to the application of those proceeds. The Husband’s evidence was unconvincing in this regard. I note that the Husband established Company E in 2010. I am satisfied on the balance of probabilities that he used the proceeds of the sale of Company D to establish Company E.
Payment of mortgages
The Wife deposed that the Husband made no financial contributions to her or to the children since 2005. However, in her oral evidence, she conceded that between 2004 and 2007 he continued to pay half of the mortgage on Property B as well as half of the rates and outgoings. She said both parties were working in Company C and their wages were used to jointly pay the mortgages and outgoings.
I am also satisfied that during the parties’ reconciliation between 2008 and 2009 they continued to mingle their finances.
I am satisfied that from around 2009, when the parties finally separated, the Wife took over responsibility for the payment of the mortgages without assistance from the Husband. This is consistent with the Recitals in the 2009 Deed which refers to the Wife continuing to pay the existing mortgage repayments. That supports a finding that the Wife was by then making the mortgage repayments. My finding is also consistent with the Husband’s earlier affidavit filed on 20 February 2018 in which he deposes “I continued to make payments until 2009 following the Divorce Order”. By 2010, the Husband had commenced a new relationship, and had established Company E in Suburb J. In 2011, the Wife moved in with her current partner Mr D.
I am satisfied the Wife would have been generating sufficient income from Company C to meet the mortgage repayments. The Wife operated Company C between 2010 and 2013.
It is common ground that upon the sale of Property B, $110,000 of the proceeds were paid directly into the mortgage over Property A.
I further accept that during the period the Wife was unemployed, from approximately 2013 to 2015, that she used approximately $85,500 of the proceeds of sale of Property B to meet the mortgage repayments over Property A.
I do not accept the Husband’s evidence as set out in his affidavit of August 2019 that “I made all the mortgage payments upon Property B and Property A until January 2013”. His other assertions regarding his contributions towards the mortgages are similarly vague and unparticularised. When cross-examined, he conceded that the payments to the bank came out of the Wife’s accounts, but said he gave her cash to make the payments.
The Husband deposes in his affidavit filed in August 2019 that he would provide the Wife “approximately $1,800 every month in cash from my business. This amount would cover the necessary mortgage repayments for Property B”. He said he would go to Property B “often” to see the children and that was when he would give her the cash payments. He did not otherwise provide a specific timeframe.
There is also a lack of consistency in the Husband’s evidence to which I have already referred. His evidence in 2018 that he paid the mortgage until 2009 is not consistent with his subsequent evidence that he continued to pay the mortgages until 2013.
In 2009, when the parties separated on a final basis, the children turned 13, 10 and five. I am satisfied on the balance of probabilities that from around 2009 the Husband provided some cash to the Wife on occasion. There was no child support assessment in place. In circumstances where the Wife had the care of the parties 3 children, these ad hoc payments could be characterised as child support.
The sale of Property B in 2013
It is common ground that the proceeds of sale of Property B totalled $240,000 after the mortgage, and a personal loan of the Husband’s totalling $50,000, were repaid. I am satisfied the proceeds of the sale were applied as follows:-
a)$110,000 was paid into the mortgage encumbering Property A;
b)of the $130,000 the Wife retained, she applied a further approximately $85,500 to the mortgage over Property A; and
c)the Wife had the benefit of the remaining $44,500.
The Husband asserts the Wife has wasted the proceeds of the sale gambling.
The Wife conceded under cross-examination that she was a member of venue G. She agreed she attended at the casino between 2013 and 2015. She said she went there with friends, who also used her membership card. She said sometimes they played and sometimes they just went to venue G Room to eat at the restaurant there.
In my view, the Husband failed to establish that the Wife caused any diminution in the pool as a result of gambling.
The Wife was not employed between 2013 and 2015. I note that according to the Husband’s evidence, he ceased providing the Wife with any cash payments for the children in 2014 and instead provided cash and in-kind payments directly to the parties’ daughters. Accordingly, I accept the Wife’s evidence that she used the balance of the funds to meet the costs of caring for and supporting the children.
I also accept that the Husband has indirectly contributed to the mortgage repayments over Property A as they have, in part, been met from the proceeds of the sale of Property B.
The Husband’s alleged payment of $50,000 to the Wife for Company C in 2013
At trial, the Husband maintained that he paid the Wife $50,000 in cash when he resumed operating Company C. That is denied by the Wife. The Husband conceded that he resumed operating Company C in 2013, not 2015.
In his affidavit filed on 23 December 2016, the does not depose that he paid the Wife $50,000 to resume operating Company C. He does not even say that he resumed operating the business. He said at some unspecified time:-
The Respondent was not successful in running the food business, despite it having been profitable, and she unsuccessfully sought to transfer the food business, back to me. She was able to transfer the food business to my former girlfriend.
Under cross-examination, he was unable to adequately explain this inconsistency in his evidence.
In his affidavit filed on 23 October 2017, the Husband deposes that the Wife “sold the business to me because she was not making any profits”. He does not say how much, if anything, he paid her. He did not depose that he had paid her $50,000 in cash, or how he sourced any funds to purchase that business from her.
In his affidavit filed on 12 August, 2019, the Husband deposes for the first time that he gave the Wife “$50,000 in cash and took the goodwill of Company C back” in 2015. He then says he and his then-partner renovated the business and built it back up, before selling it to his then-partner for $50,000.
At trial, the Husband said the Wife was struggling to run the business and persuaded him to buy it back from her. He said he did this to help her out financially. The Husband said he paid the Wife of $50,000 in cash at her insistence, which he withdrew from his bank account.
When asked under cross-examination where he obtained the funds to make this $50,000 cash payment to the Wife, the Husband said his then-partner deposited $92,000 into his account, and that from those funds he withdrew and paid the Wife $50,000 and then spent a further $40,000 renovating the business. This was not deposed to in any of the Husband’s affidavits.
The Husband had not, at the commencement of the trial, produced any bank statements showing that he had received funds from his then-girlfriend, or paid the Wife any funds as he asserted. At the commencement of the third day of the Final Hearing, and part-way through the Wife’s evidence, he sought to re-open his case and produce one statement only from a previously undisclosed NAB bank account in his name to show that the sum of $92,000 had been deposited into that account in 2013. I did not allow the evidence to be adduced at this late stage. I note that whilst the bank statement may have corroborated the Husband’s assertion that he had $92,000 in a bank account, it does not show funds being paid into the Wife’s account. Additionally, that evidence could have, and should have, been previously provided to the Wife.
Notably, during cross examination, the Husband was asked from which of his accounts he withdrew the sum of $50,000 in cash to pay to the Wife. The Husband’s evidence was that he only had two accounts, being a business account and a savings account with Westpac, and that he had also had an account with Bank of Queensland briefly. He did not mention that he had any accounts with NAB. He said the funds were most likely withdrawn from his Westpac savings account. It is very troubling that the Husband apparently had an NAB account that he had entirely failed to disclose.
On the balance of probabilities, I am not satisfied the Husband paid the Wife the sum of $50,000 cash in 2013 when he resumed operation of Company C. As observed, the Husband’s evidence was inconsistent and not persuasive.
The Husband’s explanation of why he subsequently left Company C is also inconsistent. The Husband’s oral evidence was that he “ran it for a couple of months” but the business was losing money so he told his then-girlfriend to “take it all” and went back to work at Company E. No further money was exchanged. This is at odds with his affidavit August 2019 as I have set out, in which he said they renovated the business and built it back up before he “eventually transferred and sold to my former partner for $50,000”. He did not explain that inconsistency.
Wastage
The Wife asserts the Husband has effectively wasted or squandered the assets that he retained post separation.
It is common ground that from around 2009, the Husband began leasing a number of luxury motor vehicles and motor cycles, including motorcycle 1, motor vehicle 3, motor vehicle 4, motor vehicle 5, motor vehicle 6, and motor vehicle 7. He entered into multiple contracts to lease these vehicles.
As already referred to, I am satisfied the Husband obtained the finance as a result of deliberately misleading applications by him.
It was put to him that in 2014, he spent approximately $35,657 on motor vehicle repayments, just under $52,328 in 2015, a further $51,291 in 2016, and $32,307 in 2017. The Husband effectively agreed with those figures. He described it as “an addiction” in his oral evidence. He said that he had overspent, that he could not afford the vehicles, and that is why he has ended up with nothing now.
In relation to his income, I note the Husband’s work history is as follows:-
a)from 2001 to 2010 he ran Company C;
b)from 2007 to 2009 he ran the Company D;
c)from 2010 to around 2017 or 2018, he ran Company E; and
d)in 2019 he was employed in transport.
It is agreed that he also resumed operation of Company C in 2013. His evidence at trial was that he only operated that for a few months before giving it up.
The Husband’s evidence as to his income earning capacity is inconsistent with the discovered material. It appears he has suffered a dramatic reduction in his income that the Husband has, in my view, failed to explain.
In 2012, for instance, the Husband’s individual tax return records his total income at $160,112. At that time he was operating Company E. That amounts to $3,079 per week gross, or $2,171 net.
The Husband has not produced his tax return for 2013.
The Husband’s individual tax return for 2014 sets out his total income at $162,018 and his tax paid at $47,893.66. That gives him a net income of $114,124 or $2,194 per week. At that time he was operating Company E.
The Husband has not produced his tax returns for 2015 or 2016.
The Wife tendered a letter dated 23 January 2016 signed by the Husband’s accountant. That letter records that the Husband received a net income of $9,100 per month. That equates to $2,100 net per week, suggesting his income had remained around the same. The Husband said that letter was written to secure a vehicle loan. He declined to answer whether the figure was accurate.
According to his financial statement filed 23 December 2016, the Husband says he was earning $500 gross per week from Company E. He does not explain in his evidence why his income was so dramatically reduced. In his affidavit filed on 23 October 2017, the Husband said Company E was “not making a profit” and he was “in desperate need of money for myself and my new family”.
Curiously, the Husband’s individual tax return for end of year 2017 records the Husband’s annual income as $1 and his spouse’s at $16,500. The Husband did not give any explanation as to how his income could have dropped so dramatically. Oddly, the tax return provided by him for 2018 does not record any income at all for either him or his spouse.
I have no confidence the 2017 and 2018 documents are accurate or complete, or that they reflect the returns that were ultimately lodged. The Husband has not provided any Notices of Assessment. When cross-examined about these tax returns the Husband declined to answer.
In his Financial Statement filed on 29 July 2019 the Husband said he was earning $750 per week in transport. He says he is now in receipt of the Job Keeper payment.
The Husband was cross-examined extensively about the income and expenditure of Company E, and the discrepancies between the bank statements produced under subpoena and the Financial Statements completed for the business. The Husband was unable to explain multiple discrepancies, and declined to answer some questions. He said he used cash from the business to pay a lot of suppliers and to pay wages. I gained the distinct impression that the business had substantial cash takings and that a lot of those cash payments were not properly declared.
I note the Husband says he simply walked away from Company E in 2018. It is hard to understand his decision to do so given that in January 2016 his accountant asserted the Husband was drawing an income of $9,100 net per month.
The Husband gave no explanation as to how Company E could have suddenly stopped producing an income, other than saying in his oral evidence that for the last few years the business had struggled. He surrendered the lease. He said he did that as he could “feel” that the business was “not working out”. Similarly, the Husband walked away from Company C.
The Husband has not met his obligations to make full and frank disclosure. Only some of his bank statements and financial documents have been provided. This has put the Wife and the Court in a situation where it is difficult to understand the Husband’s true financial circumstances. I am troubled by what appears to be the Husband’s capacity to generate a good income from at least 2012 to early 2016, and his subsequent abandonment of Company E allegedly for no consideration and his leaving of Company C. This has not been adequately explained by the Husband. One possibility is that the Husband has not been truthful in his account of the ending of those businesses. Another possibility is that he has acted in a way that has diminished the pool and impaired his earning capacity.
Payment of child support by the Husband
It is the Husband’s evidence that he provided child support to the Wife by making cash payments to her up until late 2014, when he says he began making payments directly to the children. He said that continued up until the closure of Company E.
The Husband says prior to 2014, he asked the Wife to give him her bank details so he could make payments into that, but she requested payments be made in cash. He says he regularly made payments to her, generally weekly. He gave evidence that the children contacted him and complained that the funds he was providing the Wife were not being applied by her for their support. He said the children complained they were not being properly fed, although he never reported this to the Department of Health and Human Services.
The Husband says from about late 2014, at times he paid for food which the children then collected, and otherwise paid funds directly into Ms B’s or Ms A’s account which he expected they spent on their needs including groceries.
The Husband produced a list of dates between December 2014 and December 2017 and amounts he paid which he says should be considered as child support. They include amounts paid directly to Ms B and Ms A, as well as significant amounts towards Ms A’s car finance and insurance. I note that Ms A was already over the age of 18 when these payments started. According to the Husband, Ms B started living with him in around September, 2016. She turned 18 in September 2017. Many of the payments are for small amounts, such as $50 or $20. No payments were made to X. Notwithstanding this, the Husband was insistent that all such payments were child support and accordingly, he has met his obligations to support the children. He says the payments should all be considered when weighing up the parties’ contributions to the family.
When the Final Hearing resumed on 13 August 2020, the Husband sought to re-open his case, and that he be permitted to rely on an affidavit sworn by Ms A to corroborate his evidence regarding the payments of funds to the children directly, and his assertion that the Wife did not provide adequately for the children. I did not allow that evidence to be adduced. The Husband is the Applicant in these proceedings, which have been on foot for over three and a half years. He could have adduced that evidence well before the commencement of the Final Hearing on 9 June 2020.
The Wife denies that the Husband provided her with cash for the support of the children. I note the Wife did not make an application for Child Support through the Agency. She said this was because the Husband told her that he did not earn much money and it would not be worth her while making an application.
On the balance of probabilities, I accept that up until 2014 the Husband did provide some ad hoc payments to the Wife but I am not satisfied the Husband consistently provided child support for the children. From at least 2014, even on the Husband’s evidence, he made no payments to the Wife. The concept of child support is that it is paid to a parent, and applied by that parent to meet the costs of providing for the children in his or her care. I am not prepared to regard payments made directly to the children as being child support payments. I note further that many of the payments are for the girls’ cars. I do not regard that as a contribution towards the family.
In circumstances where the Husband was not providing regular child support to the Wife, I accept that her finances would have been limited. This is particularly in the period 2013 to 2015, when the Wife was not engaged in employment. In 2013 the children turned 17, 14 and nine. It is unsurprising that the Wife utilised the proceeds of sale of Property B to support herself and the children. I note that beyond asserting that Ms B moved in to live with him when she was 17, there is little evidence that the Husband provided substantial or significant care for the children himself, which indicates the Wife must have shouldered the vast majority of the responsibility for the children’s care and meeting the costs for same.
Is it just and equitable to make an order?
In these proceedings, the Husband asserts that it is just and equitable that orders be made to alter their interests in property. The Wife asserts that this is not one of the vast majority of cases in which the requirements of section 79(2) of the Act is readily satisfied. She says the parties effected a division of their assets in 2007 and in 2009 and that division should not be interfered with. She says the Husband has frittered away his assets, and now, years after separation, wants to ‘come back for more’.
In Stanford v Stanford [2012] HCA 52, the High Court of Australia made it clear that I cannot conflate my determination pursuant to section 79(2) of the Act with my determination pursuant to section 79(4) of the Act. These are separate enquiries, and I must not start with an assumption that one party or the other has the right to have the property divided between them.
Property A is registered in the sole name of the Wife. The Husband did make some contributions to Property A; by assisting with its acquisition, being on title and as a mortgagor, directly contributing to the mortgage repayments between 2008 and 2009, and indirectly as a result of the proceeds of sale of Property B being absorbed into it. If no orders were made, the Wife would retain that property to the exclusion of the Husband.
Whether the parties effected a division of their assets in 2009 – some 11 years ago – is not determinative of the matter. That agreement was specifically held not to be binding, and accordingly, the provisions of the Act apply.
In my view, it is just and equitable to make an order pursuant to section 79 of the Act in these proceedings for a division of property between the parties.
Non-disclosure
The Wife asserts the Husband has significantly failed to meet his obligations regarding discovery. I agree with that assertion. The Husband had not fully disclosed a number of important documents, including his bank statements, his personal tax information, or the financial returns of the various entities he operated. The majority of the documents the Wife obtained were produced in response to subpoenas she issued to:-
a)Westpac Bank;
b)N accountants;
c)VicRoads; and
d)motor vehicle 1 finance service.
The Husband produced just three tax return forms. He did not produce his Notices of Assessment.
When asked why he had not complied with his obligations as to disclosure, the Husband suggested he was not aware of the Wife having made requests for documents to be produced. He also said he produced what he could, it was difficult to get documents, he tried to get documents through his accountant and he made efforts to obtain the documents. He was unable to explain why he could not produce all his tax returns or completed financial returns. When asked why he did not produce his bank statements, he said he did not think they were relevant, and that he did not think he was obliged to provide them. He said he did not know he was obliged to make full and frank disclosure, and he received many letters from his solicitors and he got confused and did not understand what was required of him.
I do not accept that evidence. The Husband’s failure to provide full and frank disclosure has caused the Wife to have to issue a number of subpoena to try to ascertain the Husband’s financial circumstances. In particular, I am concerned regarding the failure by the Husband to properly explain and account for the closure of Company E, what happened to the plant and equipment in that business, and how it came to stop producing an income for him.
I note the Husband complained in his affidavit material that the Wife had not provided documentary evidence to support her allegations regarding the payment to him of $100,000 cash despite repeated requests that she do so. That undermines his assertion that he did not understand his obligations to produce documents to support his case.
Counsel for the Wife asserts that without proper disclosure, the Court cannot determine the value of Company E, or what funds were generated from that venture. The Wife says this makes it impossible to determine an appropriate ‘add back’ for Company E.
Counsel for the Wife relied on the Full Court of the Family Court of Australia’s decision in Weir & Weir [1992] FamCA 69. In that case, their Honours said that although the Court could not make precise findings about the funds misappropriated by the Husband or about the precise extent of the Husband’s assets, once the Court was satisfied the Husband had hidden or non-disclosed assets, the Court was entitled to make the best estimate it could. Specifically, their Honours said:-
It seems to us that once it has been established that there has been a deliberate non disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
Their Honours went on to say:-
…the Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that the party has not made a full disclosure of his or her assets.
I am also mindful that a party through being sufficiently cunning or sufficiently vague so as to cover his tracks ought not to benefit from that.
As is clear, it is my view that the Husband has not been transparent regarding his abandonment of Company E and/or Company C. Nor do I find his evidence as to his income satisfactory. He has not properly provided disclosure of his bank statements, his tax returns or the business returns to enable a proper consideration of his financial circumstances.
It would, in my view, be inappropriate for me to add back some arbitrary amount into the pool. Being careful not to double count, I am satisfied the proper way to take these matters into account is by considering:-
a)the Husband’s abandonment of the businesses, and his expenditure on motor vehicles when weighing up the parties’ contributions to the pool; and
b)the Husband’s earning capacity when weighing up the parties’ competing future needs.
The asset pool
The pool currently comprises essentially only Property A, with an agreed value of $1,050,000. The property is subject to a mortgage of $430,000. The Wife also has a motor vehicle, which she says is worth $5,000 and the Husband says it is worth $16,000. I had no evidence to support either parties’ valuation. The Husband does not have a motor vehicle. He has $1,000 in superannuation.
Effectively, and disregarding the very modest superannuation and the motor vehicle, the only asset available for division is the equity in Property A of approximately $620,000. The Husband is only seeking a division of that asset.
Contributions
In determining what orders to make pursuant to section 79(4), as set out by Kay J in Aleksovski v Aleksovski [1996] FamCA 111:-
It is therefore necessary that trial Judges weigh and assess the contributions of all kinds and from all sources made by each of the parties throughout the period of their cohabitation and then translate such assessment into a percentage of the overall property of the parties or provide for a transfer of property in specie in accordance with that assessment.
His Honour went on to say that “What is important is to somehow give a reasonable value to all of the elements that go to making up the entirety of the marriage relationship”.
I am not required to dissect each element of contribution and attach a percentage to it. I must make a holistic assessment taking into account the contributions of all types.
To summarise the findings that I have made as to the parties’ various contributions, I am satisfied as follows:-
a)neither party had assets at the commencement of the relationship in 1993;
b)the parties jointly purchased Property B in 1996. The mortgage for this was jointly paid until 2009. Whilst the Husband asserts he contributed $70,000 of his savings to the purchase of the land, the parties had been married for three years when the property was purchased. I note the Husband’s own evidence at paragraph 11 of his August 2019 affidavit that the funds were saved from 1993, when he worked long hours and did “as much overtime as was offered”. The funds were accordingly saved during the parties’ marriage, and I regard them as joint savings;
c)pending the parties’ final separation in 2009, each of the parties made contributions:-
i)the Wife was the primary carer for the children and undertook the majority of the household tasks. She also assisted from time to time in the business;
ii)the Husband operated Company C and from 2007, Company D, and contributed his income to the household;
d)during the parties’ initial separation in around 2004 to 2008, these arrangements generally continued;
e)in 2007, the Husband had the benefit of $100,000 which was utilised to establish Company D;
f)during the parties’ reconciliation in 2008 to 2009, the parties again continued to contribute as outlined;
g)in 2008, the parties jointly located and purchased Property A. They jointly contributed to the purchase, redrawing on the mortgage over Property B to do so. They also jointly paid the mortgage on that property until around 2009. The Wife has been responsible for the mortgage payments for the last 11 years, although the Husband has made contributions as set out below;
h)the Husband assisted in the purchase of Property A by being on title and registered as a mortgagor. He remained on title and on the mortgage until 2013;
i)the parties considered and took some steps towards developing Property A. The Wife met the costs of the proposed development, which was ultimately abandoned;
j)the Wife was responsible for the mortgage repayments regarding Property B from around the time of the parties’ final separation in 2009 until it was sold in 2013;
k)when Property B was sold, the sum of $110,000 was paid into the mortgage over Property A. The Wife contributed approximately $85,500 more of the proceeds of Property B between 2013 and 2015. Both parties have accordingly contributed to the mortgage repayments over Property A by virtue of $195,500 of the proceeds of the sale of Property B having been paid into Property A mortgage; and
l)the Wife had the benefit of the balance of the proceeds of Property B. I am satisfied she generally applied these to the support of herself and the children during the period she was unemployed and not receiving child support from the Husband.
I also take into account:-
a)the Husband’s cash payments to the Wife for child support prior to 2014 were ad hoc. No child support assessment was in place;
b)the Husband ceased providing the Wife with any cash payments in 2014. Whilst he gave money to the older children, these payments do not constitute child support. The Wife was required to carry the full financial burden of supporting Ms B who was 14 or 15 when the Husband ceased giving the Wife funds, and X who was only nine or 10;
c)Ms B moved to live with the Husband in around September, 2016, when she turned 17 years of age. The Wife otherwise provided the vast majority of the care for the children. When the hearing before me concluded, X was not living with either parent;
d)the Husband had the benefit of the proceeds of the sale of the Company D business in around 2009;
e)the Husband commenced Company E in 2010 before abandoning same in around 2017 or 2018, he says for no consideration. As repeatedly observed, the Husband has not provided full disclosure in relation to this asset;
f)the Husband also abandoned his interest in Company C he said just a few months after taking it back from the Wife in 2013; and
g)the Husband spent at least $170,000 leasing motor vehicles between around 2014 and 2017. This depleted his resources.
Future needs
The Husband is currently in receipt of Job Keeper. The Wife relied on her Financial Statement filed on 2 September 2019, pursuant to which she says she earns $292 per week working part-time in a restaurant. She also receives some monies through Centrelink. Her evidence as to her current income or income earning capacity was not challenged.
Both parties have re-partnered. I note the Wife’s partner has historically earned an income of approximately $120,000. The Husband says his partner earns $500 per week.
I note the Husband has previously earned a decent income, although he now says he is in dire straits financially. In 2012, his taxable income was $160,112. In 2014 it was $162,018. According to a letter from his accountant in January 2016, he was still earning around that amount. He now says he earns almost nothing, and that he walked away from Company E. As already observed, he has not adequately explained why his income has altered so radically. The Husband has not provided sufficient disclosure in this regard. In the circumstances, I am satisfied that the Husband’s earning capacity is greater than the Wife’s.
Neither party has the care of the children. I understand X is currently living with one of his sisters. He is almost 16 years of age. I do not know what arrangements are in place for his support, nor what the proposals are for his long term care. I note the Husband has another child from his current relationship.
Both parties are in good health. They are the same age as each other.
Orders to be made
In my view, taking into account all the competing contributions, and doing my best to give value to the myriad of elements that went into the parties’ relationship, I assess the parties’ respective contributions at 70% to the Wife and 30% to the Husband. That recognises the Husband’s contributions to Property B and Property A, but also appropriately recognises the Wife’s greater contributions post-separation to the properties, as well as her greater responsibility for the support of the parties’ children. It also factors in that the Husband has apparently diminished the pool available for distribution between the parties as outlined extensively in these reasons.
Other than the parties’ earning capacities, and their respective partners’ incomes, the parties are in roughly equivalent circumstances. I note the Husband does have a young child in his care. The Wife’s partner is working, but the Wife does not include his income in her Financial Statement. In his affidavit, Mr D said he earned around $120,000 per annum as a tradesman. The Husband says his partner earns $500 per week. However, I also note that the Husband has historically been able to generate a decent income, in the vicinity of $160,000. He has, as outlined, failed to adequately explain how it is that he stopped being able to generate that income.
Given these matters, I am satisfied there should be an adjustment in the Wife’s favour of 5%. Overall, the Wife will then retain 75% of the equity in Property A and the Husband will be paid an amount equal to 25%.
I will also give the Wife the opportunity to determine if she wishes to retain Property A and pay the Husband out, or if she will sell Property A.
A costs order of $23,000 was made against the Wife on 11 June 2019. The parties agree that the final orders made should include a mechanism for payment of that amount. I shall therefore include that in my orders.
For all of the foregoing reasons, I make the orders as are set out.
I certify that the preceding two hundred and fourteen (214) paragraphs are a true copy of the reasons for judgment of Judge Carter
Associate:
Date: 17 September 2020
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Costs
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Remedies
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Procedural Fairness
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Res Judicata
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Appeal
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