Nguyen v Corbett (No 4)

[2019] NSWSC 712

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Nguyen v Corbett (No 4) [2019] NSWSC 712

Hearing dates:

7 December 2018; further written submissions ending 21 December 2018

Date of orders:

19 June 2019

Decision date:

19 June 2019

Jurisdiction:

Equity

Before:

Parker J

Decision:

The cross-claimant’s Notice of Motion filed 13 December 2018 be dismissed.
The cross-claim be dismissed.
The cross-claimant pay the second cross-defendant’s costs of proceedings on the cross-claim, including the costs of the Notice of Motion.

Catchwords:

FAMILY LAW — Property — Application for property settlement orders under the Family Law Act 1975 (Cth) (“FLA”) to replace property settlement orders earlier made by consent and subsequently set aside under FLA, s 79A – whether wife’s contributions during the marriage gave rise to proprietary interest by common interest constructive trust or “unjust enrichment” – whether otherwise “just and equitable” under FLA s 79 to make further provision for the wife out of the property.

 

FAMILY LAW — Property — Marriage — Adjustment of property interests – operation of FLA, ss 79 and 90AE - whether prior order under s 37A Conveyancing Act 1919 (NSW) that wife make property available to satisfy husband’s debts presents a bar to the cross-claim by way of Anshun estoppel – whether prior order could be set aside under s 79 FLA – whether prior order created security interest which cannot be displaced aside from exercise of the Court’s power under s 90AE - where prior order in effect equivalent in operation to security over the property or an order to charge the property with the liability – whether prior order could be set aside under r 36.16(3) Uniform Civil Procedure Rules 2005 (NSW) – whether prior order could be set aside under UCPR r 36.15 - where necessity to set order aside raised by the Court and no claim under FLA s 90AE pursued – where no application made to vary “make available” order under UCPR, r 36.16(3A).

 

EQUITY — Trusts and trustees — Constructive trusts — Common intention – where at time property was acquired wife was bankrupt and made no contribution to the purchase – where no pooling of assets – where wife’s sole contribution homemaking and care of children – no Baumgartner constructive trust.

FAMILY LAW — Property — Marriage — Adjustment of property interests – property adjustment order under FLA s 79 – whether costs of unsuccessful proceedings arising from husband’s business dealings should be included in the net family assets or solely attributed to husband – where proceedings arose out of husband’s business dealings from which the wife received financial benefit over extended period –
where husband and wife physically separated but continue joint financial affairs – where no information available to the Court regarding husband’s assets and liabilities held in country of residence.

Legislation Cited:

Conveyancing Act 1919 (NSW), s 37A
Family Law Act 1975 (Cth), ss 79, 79A
Family Law Rules 2004 (Cth)
Uniform Civil Procedure Rules 2005 (NSW), rr 36.15, 36.16(3), 36.16(3A)

Cases Cited:

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1
Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59
Browne & Green (1999) 152 FLR 417; (1999) 25 Fam LR 482; [1999] FamCA 1483
Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389; (1991) 6 ANZ Ins Cas 61-042
Johnson & Johnson (1999) 26 Fam LR 475; (2000) FLC 93-039; [1999] FamCA 369
Jones v Dunkel (1959) 101 CLR 29
Milling v Hardie [2014] NSWCA 163
Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78
Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589; [1981] HCA 45
Re Kowaliw (1981) FLC 91–09
Trustee of the Property of Lemnos v Lemnos (2009) 223 FLR 53; [2009] FamCAFC 20

Category:

Principal judgment

Parties:

Ai Nhon Nguyen (Plaintiff/Second Cross-Defendant)
Avelina Corbett (First Defendant/Cross-Claimant)
James Edmund Corbett (Second Defendant/First Cross-Defendant)

Representation:

Counsel:
RW Tregenza (Plaintiff)
IR Coleman SC/SM Foda (First Defendant)

  Solicitors:
GJ Gooden (Plaintiff)
Hicksons Lawyers (First Defendant)

File Number(s):

2015/226458

Publication restriction:

Nil

Judgment

1. The parties to these proceedings and the nature of their disputes are set out in the three judgments I have already delivered. The three judgments are: Nguyen v Corbett [2017] NSWSC 1689; Nguyen v Corbett (No 2) [2018] NSWSC 441; and Nguyen v Corbett (No 3) [2018] NSWSC 890. What follows assumes familiarity with, and uses the terminology used in, those judgments.

2. This judgment concerns Mrs Corbett’s application (made by cross-claim filed after the delivery of my second judgment) for property settlement orders under the Family Law Act 1975 (Cth) (“FLA”). The application seeks fresh orders to replace earlier consent property settlement orders which I set aside after I found that the parties had misled the Family Court: see my first judgment at [102]-[103].

3. The consent orders which I set aside related to the former matrimonial home at Baulkham Hills. The property was acquired and held during the parties’ marriage by Mr Corbett. At the time of the Corbetts’ divorce, Mr Corbett transferred a half interest to Mrs Corbett. As well as finding that the consent orders were liable to be set aside under FLA s 79A, I found that the transfer of the initial half share and the transfer of the remaining half share following the making of the consent orders were independently liable to be set aside under the Conveyancing Act1919 (NSW), s 37A.

4. A hearing took place in February 2018 about the appropriate form of orders to reflect my conclusion and I dealt with this in my second judgment. The argument for both parties proceeded on the assumption that the order to be made under s 37A would require Mrs Corbett to transfer the Baulkham Hills property back to Mr Corbett, in whose hands it would be amenable to enforcement action by his creditors, the Nguyens. I decided in the end that the proper course was to leave the property in Mrs Corbett’s hands but to order her to make it available to satisfy Mr Corbett’s debts to the Nguyens. I will refer to this as the “make-available” order.

5. Questions arose about enforcing the make-available order, and whether it should be stayed pending the determination of Mrs Corbett’s cross-claim. In my third judgment I made an order in aid of the make-available order providing for the appointment of a receiver to sell the Baulkham Hills property, but stayed that order. The stay was granted only for a short period of time. A hearing date was then fixed by agreement of the parties and I extended the stay until the cross-claim had been heard.

6. The hearing took place on 7 December 2018. At the end of the hearing, counsel for Mrs Corbett sought an adjournment to present some further submissions and to formulate amendments to the statement of cross-claim, and a related notice of motion, which I had indicated I would grant leave to file. Counsel for the Nguyens then presented supplementary written submissions in opposition to the motion.

7. The stay continued after the hearing, pending delivery of my judgment. There was little, if any, concern about this expressed by counsel for Mr Nguyen, no doubt because the value of the property amply covers the debts owed to the Nguyens. As a result, delivery of this judgment has received less priority than it would have otherwise.

Issues for determination

8. Mrs Corbett’s cross-claim named Mr Corbett as first cross-defendant and Mr Nguyen as second cross-defendant. On behalf of Mr Corbett a statement of financial position was filed in accordance with the Family Law Rules 2004 (Cth). But no evidence was filed on behalf of Mr Corbett in accordance with the Court’s directions and he did not participate in the hearing. For practical purposes the hearing was a contest between Mrs Corbett on the one hand and the Nguyens as creditors on the other.

9. The main relief sought for Mrs Corbett was “an order” that she “is entitled absolutely and beneficially to the whole of” the Baulkham Hills property. The peculiar form of this prayer for relief is, of course, explained by the fact that Mrs Corbett actually owns the Baulkham Hills property now, but the property is subject to the make-available order. The relief was sought under FLA s 79 or s 79A. In substance, what Mrs Corbett was seeking was to have the Court give Mrs Corbett an entitlement to the property which would prevail over the make-available order.

10. At the hearing, counsel for Mrs Corbett recognised that it was unrealistic for Mrs Corbett to expect to receive, as against Mr Corbett, an entitlement to the whole of the Baulkham Hills property. Counsel submitted that Mrs Corbett’s proper entitlement was seventy-five per cent of the property. Counsel also sought for Mrs Corbett an opportunity, should she succeed in her claim, to buy out the other twenty-five per cent of the property to allow her to continue to live there.

11. Mrs Corbett’s cross-claim also sought an order requiring Mr Corbett to discharge the debt to the Nguyens out of his other assets, up to the value of any residual entitlement he might be found to have in the property. This prayer for relief was not pursued on Mrs Corbett’s behalf at the hearing. Nor was any claim made to any assets Mr Corbett might have outside Australia. Although in form the proceedings involved a claim against Mr Corbett for division of the matrimonial assets, all Mrs Corbett was really seeking to do was to secure the Baulkham Hills property, or as much of it as she could, for herself.

12. Mrs Corbett’s claim was put on two bases. The first was that Mrs Corbett already had a proprietary interest in the property as a result of the contributions made by her during the marriage. This proprietary entitlement was said to arise by way of constructive trust or “unjust enrichment”. Counsel submitted that the interest would amount to fifty per cent of the property.

13. Additionally, or alternatively, Mrs Corbett claimed that it was “just and equitable” for the purposes of FLA s 79 to make further provision out of the property in her favour, taking the total to seventy-five per cent. The orders sought by Mrs Corbett make no provision for her to discharge any part of the liability to the Nguyens, leaving that liability to be paid out of Mr Corbett’s twenty-five per cent remaining share (and any assets Mr Corbett might have offshore, if the costs liability could be enforced against him there).

14. FLA s 90AE permits the Court to make an order varying the incidence of an obligation owed by a party to the marriage to an external creditor. This power can only be exercised if it will not prejudice the ability of the creditor to recover the debt. Initially, Mrs Corbett’s cross-claim sought relief under s 90AE. But a twenty-five per cent share of the Baulkham Hills property is unlikely to satisfy the whole of the debt owed by Mr Corbett, and expert evidence led by Mr Nguyen at the hearing established that enforcement against Mr Corbett in Vietnam would be questionable at best. The relief sought would thus prejudice the Nguyens. In the light of this evidence, the application under s 90AE was not pressed.

15. It seemed to me that to grant the relief sought on Mrs Corbett’s behalf in the cross-claim would be contrary to the make-available order. Certainly there is an inconsistency in practical effect. The make-available order was made and entered in April last year as part of my second judgment. Mrs Corbett filed an appeal against the orders made in that judgment, but that appeal has been adjourned pending the outcome of the cross-claim. I thought that this might pose a threshold problem for Mrs Corbett’s cross-claim, under the principle in Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. While the make-available order stands, it arguably prevents Mrs Corbett, in further proceedings, from obtaining orders inconsistent with it.

16. In the course of the hearing, I raised this point with counsel for Mrs Corbett. Eventually counsel sought leave to amend the cross-claim so as to contend that the power under FLA s 79 could be used to override the make-available order. Counsel also sought leave to apply, in the alternative, to set the order aside. There was no objection and I granted leave accordingly.

17. I find it convenient to consider first the entitlements Mrs Corbett would have under the proprietary claim and the claim under FLA s 79, if the Baulkham Hills property remained vested in Mr Corbett. I will then consider whether the make-available order stands in the way of making the orders Mrs Corbett seeks, and if so whether the order should be set aside.

Summary and analysis of the evidence

18. The hearing which preceded my first judgment took place in August 2017. In that judgment I summarised the evidence and made findings on the factual issues which arose. The parties agreed that the evidence on the hearing of the cross-claim would include the evidence given at the August 2017 hearing. I was not asked to reconsider any of the findings I made, based on that evidence, in my first judgment.

19. At the December 2018 hearing, further affidavits were read from Mrs Corbett and her daughter, Helen. Both Mrs Corbett and Helen were briefly cross-examined. As I have mentioned, there was no evidence from Mr Corbett. Nor was there any evidence from the Corbetts’ other two children, Ben (who lives in Vietnam) and Mark (who lives at the Baulkham Hills property).

20. As already mentioned, there was no evidence from Mr Corbett in response to the cross-claim. It was agreed that I could have regard to the statement of position filed on Mr Corbett’s behalf as evidence of what his claims were, but not as evidence of the truth of those claims.

21. Except where indicated, the findings below are based on Mrs Corbett’s affidavit evidence, as supplemented by Helen’s, at the December 2018 hearing. That evidence was largely unchallenged.

Mr and Mrs Corbett’s marriage

22. Mr and Mrs Corbett first met in England in about April 1974. They came to Australia in September 1975 for a holiday but decided, after about three months, to get married and live permanently in Australia. They married in Australia in March 1976.

23. At the time she married Mr Corbett, Mrs Corbett was 25 years old. She was born in the Philippines in August 1948. She moved to England in early 1974 to study nursing but discontinued her studies and became a live-in nanny.

24. Mr and Mrs Corbett rented an apartment in Sydney when they came to Australia in September 1975. They lived there until August 1976. They then lived with Mr Corbett’s parents until about May 1978. They did not pay rent but contributed to household expenses.

25. In about May 1978 Mr and Mrs Corbett moved to a house which they bought at Five Dock. Then they moved to a house which they bought at North Rocks. That property was bought in Mrs Corbett’s name. They lived there until 1997.

26. Mr and Mrs Corbett’s first child, Ben, was born in September 1976. Helen was born in November 1977. This was while they were living in Crows Nest. The Corbetts’ third child, Mark, was born in April 1983, after they moved to Five Dock.

27. Mrs Corbett stopped working before Ben was born. While the children were growing up she devoted herself to looking after them and maintaining the household. Mr Corbett worked full time and was the family breadwinner.

28. There is little evidence about the nature of Mr Corbett’s work, or his business activities. According to Mrs Corbett, when they first met Mr Corbett was a sub-contractor working as a stone mason. Mrs Corbett said he worked very long hours running his business. She said that from about 1994 he started travelling regularly to Vietnam to “run and develop” a business there. The evidence does not reveal the nature of that business, other than that it involved some sort of manufacturing process.

29. In May 1997 the Corbetts moved to the house at Baulkham Hills which is the subject of Mrs Corbett’s claim in these proceedings. That property was purchased in Mr Corbett’s name. I say more about this below.

30. At the August 2017 hearing, both Mr Corbett and Mrs Corbett gave evidence that Mr Corbett spent increasing time in Vietnam working on business projects there from the 1990s onwards. Mrs Corbett said that in 2000 Mr Corbett told her that he had decided to live permanently in Vietnam to run his business. He asked her to come and live with him, but she refused.

31. Mr Corbett went back to Vietnam and Mrs Corbett remained in Australia. Also in 2000 (and the events may be connected) Mrs Corbett returned to work. She obtained part time employment as a cleaner. She continued doing this work until about 2006 when, for reasons not explained in the evidence, she stopped.

32. Mrs Corbett described a progressive estrangement between herself and Mr Corbett. They spoke less and less, and Mr Corbett came less often to Australia. Mrs Corbett said that by about 2006 they were leading separate lives.

33. The evidence before me at the August 2017 hearing about when this happened was vague, and, to some extent, conflicting. In his affidavit, Mr Corbett said that he commenced a relationship with another woman in Vietnam towards the end of 2000. But in cross-examination, he said that his business only became permanently settled in Vietnam when he began to manufacture his own products there in 2003. The evidence at the December 2018 hearing took matters no further.

34. At some point, Mr Corbett asked Mrs Corbett for a divorce and she refused. At the August 2017 hearing, Mr Corbett said that this was in “about” 2008. Mrs Corbett said that it was “later in 2008”.

35. Mr Corbett did continue to visit Australia, among other things because of his litigation against the Nguyens, which had begun in 2004. But according to Mrs Corbett his visits became even shorter and further between. Eventually, Mr Corbett stopped staying at the Baulkham Hills property when he returned to Australia and instead stayed with his mother at Crows Nest.

36. Mr Corbett said that from “about 2009” he “generally” stayed with his mother when he visited Australia. According to Mrs Corbett, however, Mr Corbett’s visit to Australia in 2011 was the first time he stayed with his mother rather than at the Baulkham Hills property. It seems that the visit Mrs Corbett was referring to took place in February 2011, when Mr Corbett visited Australia for the purposes of an interlocutory hearing in the proceedings (see my first judgment at [37]).

37. Mr and Mrs Corbett made a joint application for divorce which was lodged in May 2013. The divorce order was made on the papers in August, with effect from September.

38. The Corbetts’ divorce application gave the separation date as 1 January 2003. In his evidence at the August 2017 hearing, Mr Corbett placed the date of separation as 2000. In her evidence at the December 2018 hearing, Mrs Corbett also identified the date of separation as 2000.

39. In circumstances such as these, identifying a date of separation is somewhat arbitrary and artificial. In an emotional sense the parties may have separated when, in 2000, Mr Corbett asked Mrs Corbett to go to Vietnam with him and she refused. Or it may have been later, in about 2006, by which time Mrs Corbett thought they were living separate lives. But, as will be seen, the joint financial relationship continued right up to, and after, their divorce in 2013.

Mr Corbett’s costs liabilities to the Nguyens

40. Mr Corbett’s legal action against the Nguyens which resulted in the costs orders against him began in May 2004. The proceedings arose out of a transaction in which Mr Corbett transferred his shareholding in a company called Abaco Machines (Australasia) Pty Ltd to Mr Nguyen and his brothers. The transaction was the subject of a deed of agreement between the parties in July 2001.

40. According to his Statement of Claim, Mr Corbett was a director and an employee of Abaco from June 1999 to July 2001. He claimed superannuation benefits on the termination of his employment. There was an issue about the quantum of that entitlement. The other issue was whether Mr Corbett was, as he claimed, entitled to a further sum of $50,000 under the deed. The Nguyens filed a cross-claim against their former solicitor seeking damages in the nature of an indemnity from him against Mr Corbett’s claim under the deed, on the basis that the solicitor was negligent in preparing it.

41. Mr Corbett appears throughout to have dealt directly with the solicitors who were acting for him in the proceedings. His visit to Australia in February 2011 for an interlocutory hearing in the proceedings took place during a period when the solicitors had temporarily withdrawn from acting because of a dispute about payment of their fees, and on that occasion he seems to have represented himself. There is no evidence that Mrs Corbett was involved in any of this. At the August 2017 hearing, she said that she had little or no knowledge of the proceedings. Although I found it difficult to accept that she was completely unaware of them, I did accept that Mrs Corbett had little interest in Mr Corbett’s business activities in general, and the litigation in particular: see my first judgment at [162].

42. The proceedings eventually went to trial in May 2012 and Windeyer AJ delivered judgment later that month. Mr Corbett recovered the sum of approximately $24,000, representing the balance of his superannuation entitlements, which had been agreed between the parties in the course of the trial. His claim for the additional $50,000 under the deed was dismissed. As a result, the Nguyens’ cross-claim against their solicitor was dismissed.

43. Evidence before me at the December 2018 hearing established that in November 2011 Abaco paid out a superannuation benefit of $50,000 to Mr Corbett. I assume that the $24,000 which was later the subject of Windeyer AJ’s judgment was in addition to this.

44. Windeyer AJ delivered a separate costs judgment in June 2012. His Honour ordered Mr Corbett to pay ninety per cent of the costs of the proceedings (subject to there being no costs for a particular day of the hearing). He ordered the Nguyens to pay their solicitor’s costs of the cross-claim, but ordered Mr Corbett to indemnify the Nguyens against those costs. He ordered Mr Corbett’s costs liabilities to be set-off against the judgment sum and the costs of the security application which had been awarded in favour of Mr Corbett.

45. There were two costs assessments. The first concerned the solicitor’s costs, against which Mr Corbett was obliged to indemnify the Nguyens pursuant to Windeyer AJ’s order. The Nguyens obtained judgment against Mr Corbett for these costs in December 2013. The remaining costs were the subject of a judgment in favour of the Nguyens in February 2018.

Mr and Mrs Corbett’s finances during their marriage

47. During their marriage Mr and Mrs Corbett maintained a joint bank account. All household and family expenses were paid out of this account. This included mortgage repayments.

48. According to Mrs Corbett, the joint bank account was held with whichever bank was providing the finance for the matrimonial home. From 1997 onwards, it was therefore with the Commonwealth Bank of Australia (“CBA”).

49. Mrs Corbett said that Mr Corbett was the “main income earner” and his earnings were paid into the joint bank account. Mrs Corbett did not refer to receiving any income during the period between when she stopped work in 1976 and when she resumed work in 2000. Mr Corbett must have been the sole income earner over this twenty-four year period.

50. At some point after he began to live in Vietnam Mr Corbett must have ceased to deposit his earnings (or at least all his earnings) in the joint bank account, but he did not give evidence about this. Mrs Corbett said that from about 2000 onwards, Mr Corbett would bring cash with him when he visited from Vietnam. Later, Helen would bring cash from Mr Corbett when she visited. Mrs Corbett said that she would deposit this money in the joint bank account. She said the payments were usually about $5,000 a time.

51. Mrs Corbett also said that she also paid her work income into the joint bank account. She provided the following figures for her income (presumably before deductions of income tax) from the 2001 to 2006 financial years:

2000 – 2001      $22,078

2001 – 2002       $21,778

2002 – 2003      $23,762

2003 – 2004      $24,973

2004 – 2005      $24,581

2005 – 2006      $5,399

Total         $122,571

52. It would seem from these figures that Mrs Corbett worked for most, if not all, of the 2001 financial year but for only a quarter or so of the 2006 financial year.

53. According to Mrs Corbett, in about November 2009 she received a superannuation payment of approximately $10,000 which she deposited into the joint bank account. This was the only contribution she said she made to the account after she stopped part-time work in about 2006.

54. At some point, Mr Corbett stopped providing cash to Mrs Corbett and instead started transferring USD 2,000 per month into the joint bank account. According to Mrs Corbett, this change occurred in June 2012.

55. In August 2013, just before the divorce order took effect, Mr Corbett transferred a half share in the Baulkham Hills property to Mrs Corbett as joint tenant. This required the refinance of the home loan on the Baulkham Hills property with another bank: see my first judgment at [55]. The loan was refinanced with Westpac Banking Corporation (“WBC”). At that point the principal amount outstanding was approximately $100,000.

56. Mrs Corbett turned 65 in August 2013. After turning 65 she went on to the aged pension. The monthly payments of USD 2,000 ceased in February 2014 and the joint bank account with the CBA was closed.

57. In March 2014 the Corbetts made their joint application for consent orders transferring the remaining half share of the Baulkham Hills property to Mrs Corbett. The order was made by the Family Court in May 2014. The transfer was eventually effected in early July 2015: see my first judgment at [94], [97]-[98].

58. The WBC loan was a conventional principal & interest mortgage loan repayable over 12 years. But Mr Corbett set about repaying it much faster than was required. By April 2014 the amount outstanding had been reduced to about $30,600. At this point, Mr Corbett knew that the Nguyens had obtained judgment against him and were seeking to enforce it; see my first judgment at [68]-[73]. The loan was fully repaid before the transfer took place in 2015.

Financial contributions to Baulkham Hills property

59. Mrs Corbett had been made bankrupt in October 1995. This had resulted in the forced sale of the North Rocks property, which was in her name. The sale of the North Rocks property was completed by the bank in the exercise of its power of sale in August 1997. A caveat had been lodged on the property by the Official Trustee in Bankruptcy, which was withdrawn to allow the sale to take place. There is no evidence about whether there was any surplus, or if so, what happened to it. Presumably the Official Trustee would not have withdrawn the caveat unless there was no surplus or arrangements were made for the surplus to be paid over.

60. A transfer of the Baulkham Hills property to Mr Corbett was in evidence at the August 2017 hearing. It was dated May 1987 and showed a consideration of $186,500. A mortgage was registered on the title from the Commonwealth Bank, but the mortgage itself was not itself in evidence.

61. At the August 2017 hearing, Mr Corbett’s evidence was that a “deposit” of $57,000 was paid. There was some vague mention of Mr Corbett borrowing money from Mrs Corbett’s sister Ms Lyons ($20,000) and from his mother ($10,000). Mrs Corbett gave evidence that she received $25,000 from the sale of the North Rocks property which she contributed to the purchase of the Baulkham Hills property. In my first judgment I did not accept that this could have been correct. I pointed out that Mrs Corbett was bankrupt at the relevant time and that the sale of the North Rocks property was not settled until several months after the purchase of the Baulkham Hills property. I concluded that the “deposit” must have come from Mr Corbett, perhaps assisted by loans from Ms Lyons and Mr Corbett’s mother.

62. In her affidavit for the December 2018 hearing, Mrs Corbett repeated her assertion that she received $25,000 from the sale of the North Rocks property which she contributed to the “deposit” on the Baulkham Hills property. Mrs Corbett’s statement that she received $25,000 from the sale of the North Rocks property was admitted without objection, but the remainder of her evidence was objected to and not pressed. The issue was taken no further in Mrs Corbett’s oral evidence.

63. I maintain the view which I formed on the evidence at the August 2017 hearing. I am not satisfied that Mrs Corbett made any contribution to the purchase of the property. The $57,000 contribution to the purchase price came from Mr Corbett, perhaps assisted by loans from Ms Lyons and Mr Corbett’s mother. If such loans were made, they would have been made to Mr Corbett.

64. If Mr Corbett contributed $57,000 towards the purchase, then the remaining $129,500 was presumably borrowed from the CBA. There is no direct evidence to confirm this amount. What is known is that the mortgage principal outstanding was approximately $100,000 when the property was refinanced with WBC in August 2013.

65. If the initial borrowing was about $130,000 then approximately $30,000 in principal would have been paid off over the sixteen years between 1997 and 2013. This would have come out of the joint bank account, as part of the regular mortgage payments.

66. Mrs Corbett contributed her earnings to the joint account for a period of about five and a quarter years between 2000 and 2006. She also contributed her superannuation payout in 2009. She thus would have made an indirect contribution to the reduction in principal and the payment of interest during those periods. All other contributions to the joint account over the period from May 2007 until August 2013 would have come from Mr Corbett.

67. It is not exactly clear when Mrs Corbett first went on the pension, but there was no suggestion that her pension payments were paid into the joint bank account, which had been closed in any event by February 2014. It is clear that, at least from that point, Mr Corbett must have been paying the loan off directly to WBC; it seems likely that in fact he did so from the time of refinancing in August 2013 and that the joint account maintained with the CBA was not used for mortgage payments after the refinancing took place. In any event I think it is safe to infer that Mr Corbett paid off the whole of the $100,000 outstanding mortgage principal from August 2013.

68. According to Mrs Corbett, she carried out a number of renovations between 2006 and 2013. These were as follows:

October 2006         Roof restoration            $4,600

December 2006      Installation of ducted air conditioning      $6,550

March 2012         Installation of solar panels         $2,700

October/November 2012   Kitchen renovation            $24,250

December 2013      Carpet                  $4,500

Total  $42,600

69. Mrs Corbett said she did these renovations without reference to Mr Corbett and he did not pay for them. Mrs Corbett said that her sister Ms Lyons lent her money “towards” the renovations between 2006 and 2012. The joint account was open throughout this period and Mr Corbett was contributing to it. It is not clear whether, in saying that Mr Corbett did not pay for the renovations, Mrs Corbett was saying that none of the money in the joint account was used for them. Nor is it clear whether there was any contribution from Ms Corbett’s son, Mark, who appears to have been living in the property throughout this period.

70. For reasons I have given, I am not satisfied that Mrs Corbett made any contribution to the $57,000 “deposit” paid on the purchase of the Baulkham Hills property, or to the repayment of the $100,000 mortgage principal after August 2013. Her only contribution to the capital cost of the property were her share of principal repayments attributable to the earnings she contributed to the joint bank account from 2000 to 2006, and to the superannuation payout she contributed in 2009. Allowing a contribution period of six years (five and a quarter years of earnings, rounded up to take account of the superannuation payment), that is still less than forty per cent of the period between acquisition in May 2007 and refinance in August 2013.

71. Assuming a constant rate of principal repayments over the sixteen year period, and crediting Mrs Corbett with the whole of the repayments of principal over a period of six years, her contribution to the capital cost of the property would have been only six per cent. The assumption that she was the sole contributor over the six years is, of course, unrealistic. The evidence establishes that Mr Corbett did make cash contributions during that period. If Mr Corbett contributed equally to the joint bank account over that period, Mrs Corbett’s percentage contribution falls to three per cent. If interest payments are added to the principal payments, then, assuming a six per cent interest rate over the sixteen years, Mrs Corbett’s contribution would rise to between nine and eighteen per cent.

72. Crediting Mrs Corbett with the full amount of the renovation and repair works claimed from 2006 to 2013 results in a range of twenty to twenty-eight per cent. But the upper end of this range is unrealistic for at least three reasons. First, I am not satisfied that the renovation costs were exclusively paid for by Mrs Corbett. Second, the evidence before me does not address the possibility of comparable works having been undertaken prior to 2006, and especially in the period prior to 2000 when Mr Corbett was the sole contributor to the joint bank account. And third, there is a difference between a contribution to the capital cost of a property asset on the one hand and repairs and renovations on the other. Often, repair and renovation work only replaces existing features for the property, and the renovation and repair works themselves depreciate in value over time. Arguably, if renovation and repair works are to be included at all, there should be some discount for depreciation: cf, in a proprietary estoppel case, Milling v Hardie [2014] NSWCA 163 at [55(3)], [69].

73. The evidence before me does not allow for any precise assessment of Mrs Corbett’s share of the cost of purchasing the property. The calculations which I have done all involve assumption and guess-work. All that I can say is that the contribution would have been, at most, somewhere between an eighth and a quarter.

The Aardwolf business

74. Evidence at the August 2017 hearing showed that Mr Corbett’s business in Vietnam is conducted through a Vietnamese company called Aardwolf Industries LLC. That company is a wholly owned subsidiary of a company incorporated in the British Virgin Islands called Aardwolf Vietnam Limited. That company was incorporated in November 2006 with Mr Corbett the owner of the sole issued share. In June 2008, eleven further shares were issued, nine to Mr Corbett, one to Helen and one to Ben. In October 2008, Mr Corbett transferred his ten shares to Helen.

75. The effect of this was to divest Mr Corbett of any formal interest in the business, but it appeared that for practical purposes Mr Corbett still controlled its affairs. In the course of evidence before me, when challenged about his ability to satisfy the costs orders in favour of the Nguyens, he stated that he could always “pay [himself] a bonus”.

76. The evidence showed that all three of the Corbetts’ children were involved in the Aardwolf business. Ben was living in Vietnam and working in the business in some unspecified role. From about 2008, Helen had also been living in Vietnam and working as the finance and administration manager of the business. Mark was apparently handling the Australian end of the business.

77. Shortly before December 2018, Helen had her third child. She and her husband moved back to Australia. She said that following the birth she expected to go back to work on a part-time basis as Aardwolf’s financial controller, working from Australia.

78. At the hearing before me, some questions were asked in cross-examination of Helen about Aardwolf Vietnam. She said that she owns fifty per cent of the company and Ben owns the other fifty per cent. She said that Aardwolf Vietnam owns ninety-six per cent of Aardwolf Industries; she and Ben own the remaining four per cent between them. Helen confirmed that the business remains profitable. She was not asked for any further details.

Mrs Corbett’s circumstances

79. Mrs Corbett continues to live at the Baulkham Hills property. She is now 71 years old. She has Type 2 diabetes; high blood pressure and scoliosis. Mark also lives at the property. He is 36 years old. His daughter, Mrs Corbett’s granddaughter, is 18 years old. She is a university student. She stays at the house part of the time, and at her other grandmother’s house at other times.

80. In about 2012, Mrs Corbett had a fall from a ladder and hurt her back. Since then she has had trouble with pain and numbness. In June 2018 she went to Vietnam, staying with Helen, so as to have spinal fusion surgery. She returned to Australia in September 2018. The surgery appears to have been a success.

81. Mrs Corbett currently receives $850 per fortnight from her pension. She has no other income.

82. Mrs Corbett said that from time to time she borrows money to make household purchases from her sister, Ms Lyons. In my first judgment, I also referred to loans made by Ms Lyons to Mr Corbett and Mrs Corbett. According to Mrs Corbett’s evidence, when she borrows money from Ms Lyons she repays the debt.

83. The Corbetts’ younger son, Mark, continues to live at the property. He pays no rent, but he does contribute to household expenses. Ben and Helen also provide the money for some major items of expenditure for Mrs Corbett. These have included travel to Vietnam and the costs of Mrs Corbett’s back surgery in Vietnam in 2018 ($13,000). Helen also paid $12,000 to cover the costs order made against Mrs Corbett in earlier preliminary discovery proceedings brought by Mr Nguyen (see my first judgment at [95]-[96]). The amounts Mrs Corbett receives are gifts, not loans.

84. It also emerged in Mrs Corbett’s cross-examination that her legal costs for defending these proceedings are being funded by her family. Mrs Corbett’s evidence initially suggested that she paid for some of the costs herself, but was very vague as to details. Given the likely level of costs involved, they clearly could not be met out of Mrs Corbett’s pension receipts. I am satisfied that most, if not all, of the costs are being paid for her by Helen or Ben. I infer from counsel’s request on Mrs Corbett’s behalf for an opportunity to buy out the remaining twenty-five per cent share of the Baulkham Hills property if she succeeds in her claim that further family money would be available to Mrs Corbett for this purpose.

85. It also emerged in cross-examination that the expenses paid for Mrs Corbett as gifts by her children to cover major items of expense are in turn derived from the Aardwolf business. In particular, Helen gave evidence under cross-examination that profits from Aardwolf’s business were underwriting Mrs Corbett’s legal costs.

Assets and liabilities of the Corbetts

86. In evidence were two “kerbside valuations” of the Baulkham Hills property by a local real estate agent. The first, undertaken in July 2018, stated that there would be “strong buyer interest” in the range of $1 million to $1.1 million. The second, undertaken by the same agent in November 2018 stated that there would be “buyer interest” in the range of $950,000 to $1 million.

86. Both appraisals were undertaken from the street only, without internal access, and stated that the range could change depending on inspection of the house itself. This is somewhat surprising. Throughout the period Mrs Corbett was living in the property. There seems no reason why the agent could not have been provided with access so as to provide a more accurate assessment.

87. Mrs Corbett valued her home contents at $10,000 to $15,000. There was no specification of what these contents were, nor any evidence of the amount they are insured for. Mrs Corbett said that she had no other assets.

88. The outstanding costs orders which were made by Windeyer AJ have now been quantified at a total of $381,000. Interest accrued up to the December 2018 hearing amounted to approximately $55,000. Interest continues to accrue at approximately $80 per day.

89. In his Financial Statement (which, it will be recalled, was expressly received on the basis that it was not evidence of the facts asserted in it), Mr Corbett stated that he owned two home unit properties in Vietnam, with a total value of $265,000, and had $43,000 in Vietnamese bank accounts. He stated he was employed by Aardwolf Industries at a gross weekly salary of $1,435 with Aardwolf Industries also paying for his car. Apart from the Baulkham Hills property and the liability under the costs order, he said that he had no other assets or liabilities. Neither Mrs Corbett nor Helen gave any evidence on this subject.

90. Shortly before the hearing, an affidavit was served by Mrs Corbett’s solicitor, Chloe May Ellis. Annexed to that affidavit was a search of a company called Corbett Industries (India) Pty Limited, apparently from an Indian Government website. There was also a minute of a meeting of the company, the provenance of which was not stated. Ms Ellis was asked about this in cross-examination but was unable to add anything. The documents suggest that Mr Corbett may not have been correct in his Financing Statement when he said that he had no other assets apart from those in Vietnam, but that is as far as they go.

91. At least in form, the ownership of the Aardwolf Vietnam business has passed from Mr Corbett to Helen and Ben. The Court has no information whatever about what further financial resources could be made available to Mrs Corbett from this source.

92. In my first judgment, I concluded that Mr Corbett has no intention whatever of satisfying his costs liabilities to the Nguyens if he can help it. Having regard to the determined defence which has been put forward on behalf of Mrs Corbett in these proceedings, whoever now controls the family finances appears to maintain the same attitude.

93. I have concerns about the way in which the evidence of the resources available to Mrs Corbett came forward at the hearing. While I do not necessarily doubt the accuracy of what Helen did tell me, I thought her demeanour under cross-examination was very defensive. The fact that the family was supporting Mrs Corbett by paying her costs was not referred to in the affidavit evidence. Nor was the fact that the family was paying these and other expenses for Mrs Corbett with money from the Aardwolf business. I suspect that I have not been told everything which the witnesses know on this subject.

94. Nor is there any evidence to confirm or refute what Mr Corbett says about his assets in his financial statement. Just from having lived in Vietnam, one would expect that Helen would be able to say something about the nature of her father’s property holdings and their likely value. But in fact, Helen has acted in effect as the financial controller for the family group for more than ten years. The evidence from the August 2017 hearing showed that she was intimately involved in the refinance of the property and the transfer of the half share to Mrs Corbett in August 2013, and the subsequent transfer of the rest of the property. She would apparently have been the ideal person to give evidence about Mr Corbett’s, and Aardwolf’s, affairs.

95. It is true that counsel for the Nguyens could have asked Helen about this, but he had no obligation to do so. A Jones v Dunkel inference is available from Helen’s failure to give evidence in chief: Commercial Union Assurance Co of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389 at 418E-419G per Handley JA. This was acknowledged by counsel for Mrs Corbett in final submissions.

Proprietary entitlement

97. Counsel for Mrs Corbett confirmed that no reliance was placed upon proprietary estoppel. Mrs Corbett’s proprietary claim was based solely on the common interest constructive trust recognised in Muschinski v Dodds (1985) 160 CLR 583; and Baumgartner v Baumgartner (1987) 164 CLR 137.

98. In Baumgartner (at 148) the Court quoted and approved the following passage from the judgment of Deane J in Muschinski (at 620):

… the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit of money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specially provided that that other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him so to do…

99. A common interest constructive trust is one which arises on the acquisition of property. Any such trust must come into existence, and its terms must be fixed, at the date the property is acquired.

100. In the present case, I am concerned with an alleged trust over the Baulkham Hills property which was acquired by Mr Corbett in May 1997. At that time, Mrs Corbett was bankrupt. She was not working and not contributing to the joint bank account. In fact she had not been doing so for over twenty years since she gave up work before the Corbetts’ eldest child, Ben, was born in 1976.

101. On the test propounded in Baumgartner, a common intention constructive trust only arises if there is no agreement to the contrary. I take that to include not only an express agreement but also an agreement which arises by necessary implication.

102. In my opinion, the present case is an instance of an implicit contrary intention. The parties cannot have intended that Mrs Corbett would have had a half ownership of the property (after repayment of contributions). That would have allowed her trustee in bankruptcy to make a claim to her half share. In my view the parties would both have been aware that it was Mr Corbett who was buying the property and that Mrs Corbett was bankrupt, must have intended that the property would belong to Mr Corbett entirely, so that it would be beyond the reach of Mrs Corbett’s bankruptcy trustee.

103. Furthermore, there was at the time of acquisition of the property no pooling of assets. If there had previously been a pooling of assets, this would have been terminated by Mrs Corbett’s bankruptcy. In fact, Mrs Corbett’s only contribution to the “joint endeavour” at the time was homemaking and the care of the children. Of course that would have entitled her, in the event of the failure of the marriage, to make a claim for a property settlement under s 79. But we are concerned at the moment with proprietary rights and interests deriving from financial contributions. I was not referred to any authority in which a common intention constructive trust arose in favour of a party who made no financial contribution to the purchase, and at the time of the purchase was making no financial contribution to the household.

104. For these reasons, I consider that no common interest constructive trust arose on the acquisition of the Baulkham Hills property. Mrs Corbett’s proprietary claim fails.

105. If I had concluded that the property was subject, in Mr Corbett’s hands, to such a trust, it would have been necessary to define Mrs Corbett’s interest. For completeness, I will briefly consider that question.

106. In Muschinski, the order ultimately made by the High Court provided for the property to be sold, with the proceeds to be applied first towards repayment of contributions made by the parties and the balance then to be divided equally (see at 623-624 per Deane J). The idea behind this is that there is a joint endeavour, even if the parties’ financial contributions to it are unequal. Equity favours equality, and after the parties’ contributions have been repaid, any surplus should belong to the co-venturers jointly.

107. The orders made in Baumgartner reflect a slightly different approach. The purchase of the property in that case was financed from pooled funds. It was agreed between the parties that the contributions between the appellant and the respondent to the pooled funds had been 55:45. The High Court ordered that upon sale of the property and discharge of the mortgage, there should be deducted a separate contribution made by the appellant to the purchase price from the sale of his own unit, and also expenditure by the appellant after the relationship had come to an end. Subject to those deductions, the proceeds were to be shared in the ratio 55:45.

108. Neither approach could readily be applied in the present case. On the Muschinski approach, it would be necessary to quantify both parties’ contributions, so that those contributions could be deducted, leaving the surplus to be divided 50:50. Mr Corbett appears to have contributed the $57,000 paid on acquisition of the property and the $100,000 paid after August 2013 to discharge the remaining $100,000 on the mortgage debt. But the remaining $30,000 of reduction in principal (and interest, if that is to be included) came out of the joint bank account and the parties’ proportionate contributions to that account are unknown (although Mrs Corbett’s would in all probability have been less, and perhaps much less, than forty per cent). On the Baumgartner approach it is the contribution to the joint account which would define the residual entitlement to the property, and the problem would be even more difficult.

109. There is a further potential complication on the facts of this case. The initial contributions all came from Mr Corbett. Those contributions were made over twenty years ago, and the value of the property has, it would appear, increased greatly since then. Arguably it would not be just to simply repay the capital amount originally contributed by Mr Corbett, leaving Mrs Corbett to receive a half share of all of the increase attributable to inflation in the meantime. This question was not raised in Muschinksi or Baumgartner.

110. Counsel for Mrs Corbett submitted that the appropriate recognition of her proprietary interest would be 25%. But this was only faintly put. Even treated as a figure representing the parties’ percentage contributions to the acquisition of the property, it is insufficiently supported by the evidence. The Court would only be justified in making such an order if satisfied on the probabilities that Mrs Corbett’s contribution was not less than the specified share. For reasons I have given above, the correct figure would not be 25% (which is a maximum) but, at most, half that figure.

Property adjustment orders under FLA s 79

111. It was common ground that the Court’s task under s 79 involves determining the assets and external liabilities of the parties to the marriage; striking a net figure; and then making a division reflecting the factors identified as relevant in s 79.

112. Counsel for Mrs Corbett contended, however, that Mr Corbett’s costs liability to the Nguyens should be excluded from the s 79 analysis. Counsel pointed out that Mrs Corbett had little or nothing to do with the conduct of Mr Corbett’s litigation against the Nguyens. Counsel submitted that the litigation was a separate venture by Mr Corbett alone, undertaken after the parties separated.

113. In Re Kowaliw (1981) FLC 91–09, Baker J said (at 76,643–4):

Marriage is for most couples an economic partnership. Married couples live together and work together with the ultimate object of purchasing a home, paying it off, acquiring other assets with the overall object of attaining a higher standard of living. The reported decisions in respect of applications for settlement of property under sec. 79 of the Act are unanimous that both parties should share the economic fruits of a marriage, having regard to the provisions of sec. 79(4) and sec. 75(2), although not necessarily equally.

Is not, however, the converse equally sustainable? In other words, should not financial losses incurred by parties to a marriage or either of them, whether incurred jointly or severally, be shared by them in the same manner as the financial gains?

As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:

(a)   where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or

(b)   where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

Conduct of the kind referred to in para (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.

114. In Browne & Green (1999) 152 FLR 417 the Full Court of the Family Court endorsed his Honour’s remarks as a “well accepted guideline” that, having been endorsed by successive Full Courts, ought to be applied in the interests of consistency within the jurisdiction: at 495 [41], 496 [44]-[46], 497 [49]. In that case the question was whether the husband should bear sole responsibility for financial losses arising from a failed business venture on the basis that he initiated and controlled the project. The wife had willingly participated alongside him in the venture. But that was not decisive. The Full Court said (at [40]):

A practical difficulty … arises in relation to the recognition of contributions to a project which has failed, or to property which may no longer exist, if the overall pool of property ultimately available for division between the parties has been reduced by the failure of the project in question, or the absence of the property previously in existence, and to which project or property the contributions have been made. It is in this context that the court has to turn its mind to the question of whether one party, or alternatively both parties, should as a matter of justice and equity bear the financial loss in question.

115. The Court concluded (at [53]):

[53]    There can be little doubt that had the [venture] succeeded, the wife would have sought to share in the fruits of that success, and there would seem to be no reason why she would not have been entitled to do so. It is this last-mentioned consideration, being that parties generally expect to share the economic profits of a marriage, which, in our view, requires that there should be good and substantial reasons for departing from the principle that where there are economic losses incurred in a marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party. No such good and substantial reasons are apparent to us in this case.

116. In Johnson v Johnson (1999) 26 Fam LR 475, the Full Court found that the primary judge’s exercise of discretion miscarried when he found that the husband should bear sole responsibility for income taxation penalties which he incurred for having wrongfully claimed substantial deductions for the renovation and lease of two properties. The Court said (in a portion which does not appear in the published extracts of the Court’s judgments but is quoted in the later judgment of Lemnos (see below) at [244]):

20.5   In our view the fact that the wife was or was not involved in the tax avoidance process which may lead to the imposition of penalties was only one consideration that his Honour needed to weigh up when determining liability for the penalties as between the parties. The benefits indirectly gained by the wife in having the pool of assets otherwise increased as a result of the availability of funds which would otherwise have been paid out in tax also have to be considered.

20.6   In the context of an examination of twenty years of financial dealings by the parties, which dealings were almost entirely within the province of the husband, in our view, unless there were compelling circumstances to the contrary, a just outcome demanded that the wife take the good with the bad. Whilst there is a sense of culpability about the penalties, they represent no more in this case than an outgoing incurred in creating the asset pool.

117. In Trustee of the Property of Lemnos v Lemnos (2009) 223 FLR 53; [2009] FamCAFC 20, the husband incurred penalties for wrongfully claiming deductions with respect to the income from the rental of an investment property. It was accepted that the wife was not complicit in incurring the liabilities and the primary judge found that the husband completed the tax returns in a reckless and negligent manner. But this was not enough to require the husband to bear sole responsibility for the liability. Thackray and Ryan JJ reasoned that the husband’s conduct was designed to increase, not decrease, the matrimonial assets. Their Honours said (at [243]):

…Having had the benefit of the funds flowing from the husband's conduct, it would seem to us to be neither just nor equitable for the wife to escape all responsibility for payment of the primary tax that would otherwise have been paid.

118. In reaching this conclusion, Thackray and Ryan JJ expressly adopted the reasoning of Ellis, Kay and Dessau JJ in Johnson and Johnson (1999) 26 Fam LR 475 (which shortly preceded Browne & Green). Their Honours said:

[245]     The views expressed in Johnson relate to allocation of responsibility for income taxation penalties. Although in the instant case it is accepted the husband was “on a frolic of his own” we do not accept that the wife’s lack of knowledge or complicity in the husband’s wrongful deductions is determinative of whether she should ultimately share responsibility for the payment of primary taxation on his income earned during the marriage. In our view, to adopt their Honours’ description, the proposition that spouses should generally “take the good with the bad” has even more force when applied to allocation of responsibility for primary taxation.

[246]     We do not suggest that the “principle” identified in Johnson is of universal application. The Full Court itself allowed for the possibility of “compelling circumstances” leading to a different outcome. In this matter, however, the trial judge appears to have given no consideration to the significance of the fact that the wife had undoubtedly enjoyed the benefits flowing from the income taxation deductions. This was, in our view, a necessary matter for his Honour to have considered alongside his finding that the wife was not complicit in the husband’s conduct.

119. The same reasoning is applicable in this case. I think there are three features of the case which are particularly important.

120. First, the proceedings against the Nguyens ultimately arose out of Mr Corbett’s employment with Abaco. That employment began in 1999 which on any view was before the parties separated.

121. Second, as I have already explained, the date of separation adopted by the parties (some time in 2000) is arbitrary and artificial. It involves a degree of hindsight and fails to take account of Mrs Corbett’s perception that it was only later that she and Mr Corbett came to lead separate lives. Furthermore, the joint relationship continued after 2000, at least in a financial sense. The parties continued to maintain the joint bank account right up to 2014, and Mrs Corbett was regularly contributing to it, alongside Mr Corbett, throughout the period from 2000 to 2006. While she was contributing her earnings, Mr Corbett was also making contributions, even if irregular ones. Those contributions must have come from Mr Corbett’s business.

119. Third, after 2006 Mr Corbett was effectively supporting Mrs Corbett in the former matrimonial home. Indirectly Mrs Corbett was depending on Mr Corbett’s business activities to generate the funds he was paying into the joint bank account to sustain the mortgage payments and other expenses associated with maintaining the Baulkham Hills property as her home. And then when Mr Corbett paid off the remainder of the mortgage in 2013-2014, he did so in an attempt to put the Baulkham Hills property beyond the reach of the Nguyens as his creditors.

120. It must be remembered that Mrs Corbett’s claim is essentially a claim to the Baulkham Hills property. Whether Mrs Corbett was involved in, or even knew the details of, Mr Corbett’s business activities in general, and the litigation against the Nguyens, in particular, is not important. What is important is that without Mr Corbett’s contributions derived from his business, the equity in the property would not have been built up in the way it has been since 2000. It would be wrong for the Court to award Mrs Corbett a share of that equity without taking into account Mr Corbett’s liability to the Nguyens.

121. I therefore reject Mrs Corbett’s contention that the costs liability to the Nguyens should be excluded from consideration. Any division of assets between Mr Corbett and Mrs Corbett for the purpose of s 79 should take place after settlement of that liability.

122. This conclusion would not of itself prevent Mrs Corbett from contending that, on a proper application of the relevant s 79 factors, the cost liability to the Nguyens should fall on Mr Corbett’s share of the net matrimonial assets. But as already noted, no claim was pressed on behalf of Mrs Corbett for orders requiring Mr Corbett to discharge the Nguyens’ debts from his own resources. Mrs Corbett was not seeking in these proceedings to have the Court make a full assessment of all of the matrimonial assets with a view to bringing assets owned or controlled by Mr Corbett offshore to account for the purpose of a s 79 assessment. All she really sought to do was to obtain the Baulkham Hills property, or the lion’s share of it, free of the debt to the Nguyens. As that endeavour has failed, there is no basis for any further exercise of the Court’s power under s 79. Mrs Corbett’s claim against Mr Corbett should be dismissed.

123. Had I accepted the contention that the costs liability to the Nguyens should be excluded from the s 79 analysis, it would have been necessary for me to go on to determine whether Mrs Corbett was entitled to 75% of the matrimonial assets (on that analysis, consisting of the Baulkham Hills property, free of any liability to the Nguyens). For completeness, I will briefly address this question.

124. In an ordinary case, the Court would proceed to identify the assets of the parties to the marriage, any other liabilities and make a division between Mr Corbett and Mrs Corbett. But that would not be possible in this case. The Court has no evidence before it to establish what Mr Corbett’s offshore assets and liabilities actually are.

125. Counsel for Mrs Corbett submitted that this made no difference. Counsel pointed to decisions which have accepted that the Court may be bold in cases where a party does not disclose assets to the Court. Counsel submitted that Mrs Corbett should not suffer because of Mr Corbett’s failure to do so.

126. But these cases concern disputes between spouses. As a matter of substance, the present dispute is a dispute between Mrs Corbett and the Nguyens. The Nguyens should not be prejudiced by Mr Corbett’s failure to produce evidence. This is especially so when I am not satisfied that Mrs Corbett has put all of the evidence available to her before the Court about Mr Corbett’s financial position.

127. On the figures before the Court, the assets of the marriage (the property and the contents) are worth around $1 million. I can see no reason to award Mrs Corbett more than 50% of the net assets of the marriage. That would be a disproportionate outcome, given Mr Corbett’s much greater contribution to the Baulkham Hills property. Even if I had concluded that the debt to the Nguyens should fall entirely on Mr Corbett’s share, in my view, Mrs Corbett would have been entitled to receive only half the value of the property at most.

128. On this basis there would be no point in making any further order against Mr Corbett. Mrs Corbett has already received the whole of the property. Out of that she will be required to discharge the debt to the Nguyens. There is nothing before the Court which establishes that she should be entitled to more than the remaining share of the property (slightly more than half) which she will retain after the Nguyens are paid.

129. In undertaking this assessment, I have not taken into account Mrs Corbett’s liability for the Nguyens’ costs of these proceedings. It was not suggested that I should do so. Clearly that costs liability results from Mrs Corbett’s own decision to defend the proceedings, ultimately unsuccessfully.

Effect of the make-available order

133. Counsel for Mrs Corbett put forward two contentions. The first was that the Court, in the exercise of its jurisdiction under FLA s 79, could make an order which overrode the make-available order. By amendment, Mrs Corbett’s cross-claim sought a declaration that:

… the continuation of [the make-available and receivership orders] does not preclude or constrain the power of the Court to make orders under section 79A of the Family Law Act 1975 in accordance with the Cross-Claim.

134. Counsel for Mrs Corbett accepted that in exercising the power under s 79, the Court must take the assets and external liabilities of a party to a marriage as it finds them: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 355 per Gibbs J. Counsel acknowledged that if liabilities the Nguyens had, at the outset, been secured on the property, then the Court could not, by an order under s 79, displace the security. At most, the Court could order Mr Corbett, if he had the resources and it was otherwise appropriate for him to bear the liability, pursuant to s 79, to discharge it.

135. Counsel did not, in their submissions, identify why the make-available order was to be treated any differently. I do not think it could, or should, be. The effect of the order is to charge the property with the liability. In my view it is no different from any other charging order which could be made by way of enforcement. Once such an order is made the security interest is created and the order cannot be displaced unless the power under s 90AE can be invoked.

136. For these reasons, the declaration sought in the cross-claim must be refused. While the make-available order stands, it constrains the exercise of any power under s 79. In particular, it prevents the Court from making an order awarding a share of the property, free of the Nguyens’ debt, to Mrs Corbett. By parity of reasoning, the make-available order also prevents the Court from recognising any proprietary interest Mrs Corbett claims to have in the property, at least if there is any possibility of that prejudicing the Nguyens’ recovery under the order.

Set-aside application

137. Counsel relied on two provisions of the rules: UCPR 36.16(3) and 36.15. I will consider them in that order.

138. UCPR 36.16(3) provides:

(3)    In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:

(a)    determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or

(b)    dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.

139. This rule would only be applicable in the current situation if the order made did not determine any claim for relief. Counsel’s submission on this was somewhat sketchy but appeared to be that the order was an interlocutory one. I cannot agree. Like some other types of equitable decree, such as an order for specific performance, the make-available order may need further directions to give effect to it. But the order itself is final and the power to make directions in aid of it is purely ancillary: Australian Hardboards Ltd v Hudson Investment Group Ltd (2007) 70 NSWLR 201 at 213-215 [50]-[57] per Campbell JA (Tobias JA agreeing). In my view r 36.16(3) is not available.

140. This leaves UCPR r 36.15, which provides:

(1)   A judgment or order of the court in any proceedings may, on sufficient cause being shown, be set aside by order of the court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith.

(2)   A judgment or order of the court in any proceedings may be set aside by order of the court if the parties to the proceedings consent.

141. I referred in my third judgment to the circumstances in which the make-available order was made. In argument, what was sought was an order requiring the property on transfer to Mr Corbett, to be made available by him to his creditors, with an ancillary order for receivership. I made the make-available order directly against Mrs Corbett because, in the course of writing the judgment, it seemed to me to better reflect principle in circumstances where Mr Corbett was not seeking to recover any part of the property for himself: see the second judgment at [17], [27].

142. This point was referred to in the Notice of Appeal which was subsequently filed for Mrs Corbett but counsel for Mrs Corbett indicated that the Notice of Appeal was subject to revision and conceded that he did not think of any reason why the make-available order had been inappropriate: see my third judgment at [7]-[9], [45]. Nonetheless I was told at the December 2018 hearing that the appeal against the order is maintained. The ground for maintaining the appeal on this point was not identified.

143. Counsel’s principal argument for setting the order aside was that it could not have been understood as barring Mrs Corbett’s cross-claim. Counsel relied on the fact that at the same time as making the make-available order, I made an order permitting Mrs Corbett to pursue such a cross-claim. The order was:

Direct that the first defendant pursue any claim for an adjustment of property pursuant to the Family Law Act, s 79A, by way of cross-claim in these proceedings, such cross-claim to be instituted within 28 days of today’s date.

144. I reject this argument. At the time the grounds of the cross-claim had not been articulated. When they were subsequently articulated they included a prayer for relief under FLA s 90AE. I have no doubt that the make-available order could have been varied or set aside had the stringent requirements of s 90AE been satisfied; but, as we have seen, the claim has been abandoned. I do not think that the direction permitting the cross-claim to be pursued in any way forecloses an argument that the make-available order defeated the cross-claim in the form in which it was subsequently made.

145. Counsel did, however, faintly contend that the make-available order was irregular because it was made without prior argument on that particular form of order. Counsel presented this contention very diffidently. As he put it in his oral remarks:

… if that log passes by in a flooded river that is one I would latch on to.

146. As a result of UCPR 36.16(3A), it would have been open to the parties, within fourteen days of the making of the make-available order, to make an application to have it varied or set aside. Had counsel sought to reargue the question I would readily have permitted that course. It is most regrettable that it was not taken.

147. It was clear when I raised the question at the hearing that it had not occurred to either side’s counsel. The make-available order may have been an unusual one, and may have been outside counsel’s usual experience. But the inconsistency between that order and the relief later sought in the cross-claim was readily perceived.

148. Having been party to an application for consent orders which resulted in the Family Court being misled, Mrs Corbett is hardly well placed to seek indulgence from the Court in the further pursuit of property settlement orders under s 79. But the fact remains that counsel was not heard on the particular form of the make-available order before it was made. However doubtful it may be that any invitation to counsel to make submissions on the question at the time would have made any difference, it is a possibility.

149. There is also the fact that counsel for Mr Nguyen did not seek the make-available order either. From a practical point of view, the order was not for the Nguyens’ benefit, but for Mrs Corbett’s. Furthermore, counsel for Mr Nguyen did not himself raise the inconsistency with the make-available order as a defence to the cross-claim.

150. On balance, and with much hesitation, I think that the Court should not leave an order on the record where one party might arguably have been disadvantaged as a result of not being fully heard. Had it made any difference to the outcome of these proceedings, I would have been prepared to set aside the make-available order as irregular, and to order instead that Mrs Corbett transfer the Baulkham Hills property back to Mr Corbett, where it would be available to satisfy the debt to the Nguyens, but subject to Mrs Corbett’s entitlements.

151. It is not clear whether this reasoning would flow on to Mrs Corbett’s claim to an equitable proprietary interest in the property. That claim was actually raised at the August 2017 hearing. The contention was that Mrs Corbett had a proprietary interest in the property of at least fifty per cent, and this meant that the Court could not set aside the transfer of the initial half share in the property to her under the Conveyancing Act, s 37A. I rejected that contention in my first judgment. At least that would seem to create an issue estoppel against any contention in the cross-claim that Mrs Corbett had a proprietary interest of fifty per cent or more in the property. Arguably the effect of my earlier decision might go further. In view of the conclusions which I have reached on Mrs Corbett’s proprietary claim in the present proceedings, it is not necessary to discuss this any further.

Conclusions and orders

152. I have concluded that:

(1)   the make-available order, while it stands, takes priority over any order the Court might otherwise make awarding a share in the Baulkham Hills property to Mrs Corbett;

(2)   if Mrs Corbett had entitlements against Mr Corbett which would be prejudiced by the make-available order I would be prepared to set that order aside on the ground of irregularity, and order instead that the property be transferred back to Mr Corbett to allow those entitlements to be enforced; but

(3)   on the facts, Mrs Corbett has no proprietary interest in the property, and in any case such an interest could not exceed 25%;

(4) the debt to the Nguyens should be treated as a liability of Mr Corbett as a party to the marriage for the purposes of FLA, s 79;

(5) even if the debt to the Nguyens were treated as a personal debt of Mr Corbett, he would be entitled under s 79 to retain at least half of the value of the property, which would be sufficient to discharge that debt;

(6) there is accordingly no reason to set aside the make-available order and no justification for making any order under s 79 for further adjustment of the Corbetts’ property rights.

153. It follows that Mrs Corbett’s cross-claim fails and must be dismissed. So too Mrs Corbett’s application to set the make-available and receivership orders aside. I will hear the parties on discharge of the stay of the orders made in my third judgment.

154. I see no reason why costs should not follow the event. I will order Mrs Corbett to pay the costs of proceedings on the cross-claim. Any application for any different order can be made in accordance with the Rules.

155. The orders of the Court are:

1.   Order that the cross-claimant’s Notice of Motion filed 13 December 2018 be dismissed.

2.   Order that the cross-claim be dismissed.

3.   Order that the cross-claimant pay the second cross-defendant’s costs of proceedings on the cross-claim, including the costs of the Notice of Motion.

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Amendments

26 June 2019 - amend typographical errors

Decision last updated: 26 June 2019