NORTH & NORTH

[2015] FCCA 416

FEDERAL CIRCUIT COURT OF AUSTRALIA

NORTH & NORTH [2015] FCCA 416

Catchwords:
FAMILY LAW – Whether husband has retained and not disclosed matrimonial property – whether undisclosed matrimonial property retained by husband should be included as an asset.

Legislation:

Family Law Act 1975 (Cth), ss.75(2), 79

Mezzacappa v Mezzacappa [1987] FamCA20, FLC 9-853
Weir & Weir [1993] FLC 92-338
Chang & Su [2002] FamCA 156

Applicant: MS NORTH

Respondent: MR NORTH

File Number: DGC 2547 of 2013

Judgment of: Judge Phipps

Hearing date: 11 June 2014

Date of Last Submission: 11 June 2014

Delivered at: Dandenong

Delivered on: 27 February 2015

REPRESENTATION

Counsel for the Applicant: Mr Stanley

Solicitors for the Applicant: Chris Woods & Associates

Counsel for the Respondent: Mr Hone

Solicitors for the Respondent: Ian G Hone

ORDERS

1. The husband pay the wife the sum of $122,000 (the payment) on or before 28 April, 2015 (the date).

2. That upon the husband making the payment the husband is declared to have the sole right and title and interest in the property situate at and known as Property V (the property).

3. That in the event that the whole of the payment has not been made by the date then the husband do all things necessary to sell the property.  Upon the completion of the sale, the proceeds of the sale be applied:

   (a)first to pay all costs, commissions and expenses of the sale;

   (b)secondly to discharge the mortgage and any other encumbrances affecting the real property;

   (c)thirdly so much of the payment as is then outstanding together with interest thereon at the rate of 8.5% per annum adjusted monthly from the date to the wife;

   (d)fourthly the balance to the husband.

4. That pending completion of the sale the husband has the sole right to possession and occupancy of the property.

5. That in the event that the net proceeds of the sale is insufficient to make the whole of the payment plus any interest then owing to the wife the husband remains liable to pay the amount of the payment then outstanding plus interest at 8.5% per annum to the wife

6. That the husband retain his Nissan utility, Ford motor vehicle, Nissan Navara and Toyota Hilux motor vehicles.

7. That the wife retain her Ford motor vehicle.

8. That that the husband retain sole ownership of the business (omitted) (the business).

9. That the husband remain responsible for and indemnify the wife against:

   (a)any tax liability of the business;

   (b)his own tax liability.

10. That unless otherwise specified in these orders and save for the purposes of enforcing any monies due under these or any subsequent orders each party be solely entitled to the exclusion of the other to all superannuation and other property (including choses in action) owned by or in the possession of such party as at the date of these orders.

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

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT DANDENONG

DGC 2547 of 2013

MS NORTH

Applicant

And

MR NORTH

Respondent

REASONS FOR JUDGMENT

Issues

1. The husband and wife disagree on the distribution of their matrimonial assets.  The issues are:

   a)what is the value of the husband’s Nissan Navara motor vehicle.  The husband values it at $6,000 while the wife values it at $15,000;

   b)is the husband’s taxation debt $13,479, as alleged by the wife, or $29,259 as alleged by the husband;

   c)should the husband be treated as having already received $97,000.  This is the total of funds withdrawn by him from the parties residential mortgage account between 15 May 2013 and 13 June 2013;

   d)how should contributions be assessed;

   e)what, if any, adjustment should be made for s.75(2) matters.

2. The parties agree that it is just and equitable to make an order under s.79 of the Family Law Act 1975 (Cth). Their marriage and relationship has come to an end and the basis on which they conducted their financial affairs together is finished.

3. Otherwise they agree on the assets and liabilities:

   Property V $335,000 less mortgage $213,000 - net value $122,000;

   Husband’s Nissan utility $4,000;

   Wife’s Ford motor vehicle $5,000;

   Husband’s Ford motor vehicle $3,500;

   Husband’s Toyota Hilux $3,000;

4. The wife accepts that the husband’s tax liability is $13,479.

Background

1. Both parties were born in (country omitted), the wife on (omitted) 1985 and the husband (omitted) 1975.  The wife lived in (country omitted) from about seven years old.  The husband came to Australia in 1999 and she remained living in (country omitted) with her siblings.

2. The parties became engaged in (country omitted) in 2001.  The wife remained living in (country omitted) and the husband in Australia.  They married in 2004 in (country omitted) and the wife came to Australia on 22 September 2005.  There is one child of the marriage X born (omitted) 2008.  They separated on 5 May 2013.  The child lives with the wife.

3. When the wife moved to Australia the husband was living in rented accommodation and had a few household goods and a Toyota Camry motor vehicle.  He was working as a (omitted) and then changed his employment to that of a (omitted) working as a (omitted) to (business omitted).  He employed others, as well as working himself.

4. The wife could not work in Australia until she was granted permanent residency in 2007.  She studied English as a second language.  She commenced a (course omitted) in (course omitted) in 2011 and worked for two weeks at (employer omitted) in (omitted) for work experience.  Other than that she has not worked.  The wife’s role in not working and being a full-time carer of the child and homemaker was supported by the husband.

5. The husband says he stopped working in July 2013 and now receives the Newstart allowance.

6. The parties purchased the home in Property V in 2008.  The deposit was about $30,000 and they received a home loan from (omitted) Bank of $238,000.  Between 2008 and 2013 the mortgage was reduced to $116,000.  The balance on 21 April 2013 was $116,391.

7. The parties had a (omitted) Account with the (omitted) Bank.  At separation it had a credit balance of $23,783.95.  Immediately on separation the wife withdrew $10,000 and the balance has gone to the husband.  Neither party proposes these amounts be taken into account other than as part of the history.

$97,000 withdrawal

1. The home loan account with the (omitted) Bank is in the name of the husband alone.  On 29 April 2013, the last entry in the bank statement before separation on 5 May 2013, the balance was a debit of $116,931.91.  Commencing on 15 May 2013 over a period of 28 days the husband withdrew a total of $97,000 as follows:

   15 May 2013                   $10,000

   31 May 2013                   $5,000

   31 May 2013                   $15,000

   3 June 2013  $9,000

   3 June 2013  $20,000

   5 June 2013  $20,000

   13 June 2013  $13,000

   13 June 2013  $5,000

2. On the bank statement the 13 June 2013 debit of $13,000 is described as “Repayment Redraw (omitted)”.  The rest are described as “Withdrawal of special repayments”.  There were two repayments of $1,047 each on 21 May 2013 and 21 June 2013.  With the addition of interest the balance on 30 June 2013 was $213,232.55 the amount, rounded to $213,000, which the parties accept as the mortgage loan for the purpose of this case.

3. Submissions for the wife relied on Mezzacappa v Mezzacappa [1987] FamCA 20,FLC 9-853 a decision of the Full Court of the Family Court of Australia. There the trial judge had found that the husband had received proceeds of sale on properties and other monies amounting to $262,418.01. The trial judge found that he had accounted for only $60,000 and so that he had in his possession $202,418. The respondent’s submission was that since the money could not be traced only the identified assets could be included for the purpose of making orders. The Full Court said at [7] and [8]:

   The present case is quite different. There was a finding that the husband had received the proceeds of the sale of various properties and other monies and that the amounts received in 1984 amounted to $262,418.01. This finding now remains unchallenged. There was a further finding that the husband had accounted for an expenditure of $60,000.00 and that he had retained the balance. There was therefore a finding that in May 1985 the husband had in his possession $202,418.00 of the property of the parties. His Honour concluded in the absence of an acceptable explanation as to the disposition of this large sum that the husband had retained it and that the money had been invested by or on behalf of the husband. Consequently, there was a finding identifying the assets, viz the balance of the monies received by the husband in 1984 from sale of properties and other defined sources, and he identified real property and there was an express finding as to their value. The fact that the husband had hidden the money and refused to disclose its whereabouts did not make the funds unascertained or unascertainable. See Abdullah and Abdullah (1981) FLC 91-003 and Giunti and Giunti (1986) 91-759.

   8. The last submission was that as the money could not be traced to particular assets it was not identifiable as property of the parties. However, this submission ignores the finding that the husband was in control of the funds. The funds had been traced and found to be his possession. He was the only person who knew their precise whereabouts and he refused to disclose them. In this situation the fact that the funds had been traced no further than to being in his possession or under his control is of no significance.

4. In Weir v Weir [1993] FLC 92-338 the Full Court said at [70]-

   "This Court has pointed out in a line of cases leading up to the recent decision of the Full Court in Black and Kellner (1992) FLC 92-287, that it is the duty of a party involved in property proceedings in this jurisdiction to make a full disclosure of their financial affairs. See also Giunti and Giunti [1986] FamCA 15; (1986) FLC 91-759 , and Mezzacappa and Mezzacappa [1987] FamCA 20; (1987) FLC 91-853 . It is clear enough from his Honour's findings in the present case that the husband had not done so and had in fact pocketed the proceeds of a substantial number of cash sales. It is obvious that in most cases of this nature it is difficult enough for the other party to establish that fact let alone establish the quantum of what has been taken.

   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.

   It is true that in the case of Monte and Monte [1986] FamCA 1; (1986) FLC 91-757, the Full Court said that to found jurisdiction under s. 79 in relation to property other than that which had been identified, the trial judge was obliged to make a finding as to the existence and value of other undisclosed property, even though the unsatisfactory nature of the evidence made it necessary to express that finding in the most general terms both as to identify and value.

   We confess to some difficulty with this proposition. We should have thought that 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.

   The difficulty then arises as to what order should be made. However, we are troubled by the proposition which seems to arise from Monte and Monte that if a party is either cunning enough or vague enough to cover his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been disclosed, then the other party fails. We do not believe this to be the law and in so far as the decision in Monte and Monte supports such a proposition, we do not believe that it should be followed.".

5. Both Mezzacappa and Weir were endorsed by the Full Court in Chang v Su [2002] FamCA 156.

6. The husband’s explanation is that he paid the receipts he received from his business for work done for (omitted) into the home loan account to offset the interest.  He then withdrew it to pay his business and other expenses.  He annexes to two affidavits documents which he says show the payment of these expenses from the withdrawals he made after separation.

7. The first of these affidavits was filed on 18 November 2013.  The file copy does not have a swearing or affirmation clause but the husband confirmed it as correct when he gave evidence at the hearing so its contents are in evidence.  The husband says that exhibit “2” are copies of financial records concerning these business liabilities.  There are 18 documents which are printed forms headed “TAX INVOICE/ STATEMENT “or “TAX INVOICE”.  They are completed by hand and the husband says they are from his workers.  They total $19,410.78.

8. Some of the statements are from Mr A.  The husband says these are workers compensation payments and the husband’s evidence and other documents show that he was receiving Worksafe payments/ reimbursements for Mr A throughout this period.  The husband’s evidence is that he used the payments from the insurer to pay Mr A.  Therefore the payments did not come from the money the husband withdrew from the mortgage loan account.

9. One payments is well outside the time when the money was withdrawn from the mortgage account  When the statements from Mr A and one from Mr H dated 20 April 2013 for $5,000 are excluded the total is a little under $3,500.

10. The husband says that he owed $10,000 to Mr Q his business partner before 2010.  The husband says a family friend put $8,000 into his account in early 2013 and he paid that back.  Among the documents in a large bundle attached to the husband’s financial statement filed 18 November 2013 is a statutory declaration by Mr I dated 23 September 2013 which states that he lent $8,000 to the husband in April 2012 and that he paid the money back on 3 September 2013.  I have not seen any other documents concerning the amounts said to be owed to Mr Q.

11. The bank statements do not show payments identifiable as coming from the husband’s business going into the home loan account.  The parties joint account, which describes the husband and wife as trading as (business omitted), shows deposits into this account from (business omitted) paid in on a regular basis.  For instance $7,409.05 was deposited on 26 April 2013.  The mortgage loan account shows a credit of $10,000 on 2 January 2013 and $5,000 on 11 January 2013 with a “Withdrawal of special repayments” of $2,000 on 3 January 2013.  Otherwise there are monthly credits of $1,047.

12. Part of the bundle of documents with the husband’s financial statement are statements for a (omitted) Bank account called a (omitted) Account.  It shows following separation these deposits by cheque, the last one described as “fast deposit”:

    27 May 2013  $3,040

    16 August 2013                   $3,276.80

    22 August 2013                   $3,311.28

    22 August 2013                   $3,296

    13 September, 2013            $3,131.20

13. The total of these amounts is $16,055.28.

14. There are regular ATM cash withdrawals over this period many of them for $1,000.  The last date on the statements produced is 25 October 2013 showing a closing balance of $301.16.  There are no statements after this date.

15. Unless these are Worksafe payments, from the husband’s evidence the only source of these payments are the work he did in his (omitted) business which he says continued until July 2013.  I cannot identify any of them as Worksafe payments from the documents annexed to the second of the husband’s affidavits.  The amounts of a little over $3,000 are similar to a number of the amounts in the joint account on earlier occasions which are identified as coming from (business omitted).

16. There is no evidence from the husband about the source of these payments.  The inference I draw is that they are payments for (omitted) work performed by the husband.  If statements after 25 October 2013 show no similar deposits that would assist in a finding that the husband had ceased his (omitted) business.  Since there are no accounts after 25 October 2013 produced the only evidence is the husband’s which is that he ceased work in July 2013.  There are no financial records.

17. The withdrawals from the home loan account after separation are in large round sum amounts of thousands of dollars.  The husband did not give an explanation of where he kept the money after he withdrew it despite being asked to do so.

18. The amounts the husband says he paid in total are about $37,000.  These include the alleged re-payment of $8,000 lent by a friend and the alleged payment of $10,000 to his former partner.  There is no admissible evidence from either of these people.  There is no detail given by the husband.

19. The payments to Mr A must be subtracted and the husband has said nothing about the (omitted) Bank money.  His statement that payments he received from his business went into the home loan account is at least partly wrong.  Nothing other than regular repayments are credited to that account after January 2013.  Despite being asked specifically to do so the husband has not said where he kept the various amounts of money which total $97,000 after he withdrew them from the mortgage loan account.  I can give no credit to the husband’s evidence.  On the most generous view of the husband’s evidence he has accounted for about $37,000 of the money if the payments to Mr A are included and receipts from Worksafe are ignored.  He claims other expenses, such as insurance but nothing like $60,000.  His duty of disclosure requires that he account for all of the $97,000 and he has not.

20. The inference I have drawn from the (omitted) Bank records that the husband received $16,055.28 for work done in his (omitted) business after separation and that only about $3,500 of the payments alleged can be debts of the business means that the husband has not accounted for any of the $97,000 unless the $8,000 loan and $10,000 to the former partner is can be taken into account.  From the various bank statements I have not been able to identify the $8,000 loan going into a bank account in April 2012, the date the statutory declaration identified it as having been made.  This is not necessarily conclusive because the husband seems to have dealt to a large extent in cash payments.

21. Since I cannot give any credit to the husband’s evidence and there is no other admissible evidence of the loan or the amount due to the business partner, I cannot make a finding that the amounts were paid.  In making this finding I take into account what the Full Court said in Weir v Weir [1993] FLC 92-338 about the approach a court should take when there has been a deliberate nondisclosure: I “should not be unduly cautious about making findings in favour of the innocent party.”

Tax liability

1. The wife accepts that the husband’s tax debt is $13,479.13.  This is the amount shown on a statement from the Australian Taxation Office dated 26 October 2013.  This statement names (business omitted) as the taxpayer.  Annexed to the same affidavit is a Notice of Amended Assessment for year ended 30 June 2012 to Mr North.  It is for an amount of $14,590.75.  The husband’s Statement of Account from the Australian Taxation Office shows a closing balance of $13,590.75 on 30 June 2014.  The total of these two amounts is $27,069.88 and I accept that they have not been paid.

Nissan Navara

1. The wife values the Nissan Navara at $15,000, the husband values it at $6,000.  The vehicle was purchased for $27,000.  The husband says it cannot be registered because it does not have a chassis number.  The husband was involved in a motor vehicle accident it seems early in 2014, and this may be why the husband is giving this explanation.  Whatever the case, as there is no expert evidence of valuation I can only value it at $6,000 on the basis that it is admission against interest by the husband.

Assets and liabilities

The assets and liabilities are:

Assets

Property V  $335,000

less mortgage  $213,000

Net value  $122,000

Husband’s Nissan utility  $4,000

Wife’s Ford motor vehicle           $5,000

Husband’s Ford motor vehicle $3,500

Husband’s Nissan Navarra  $6,000

Husband’s Toyota Hilux  $3,000

Amount retained by husband                  $97,000

Total  $240,500

Liability

Taxation  $27,069.88

Net assets  $213,430.12

Contributions

1. The parties had little in assets when they commenced their relationship.  What they have has come about because of the income earned by the husband.  Clearly his business was a successful one.

2. The relationship from the commencement of the marriage until separation was about nine years, eight of that in Australia.

3. The wife did not work because she could not do so until she obtained permanent residency in 2007 and then she had the child in 2008.  The husband did not want her to work preferring her to have the role of homemaker and carer for the child.  Nonetheless, the wife undertook some courses, the most recent being a (omitted) course.  She hopes to be able to work.

4. The question of contributions is uncomplicated.  The parties’ choice was that the husband work and the wife be homemaker and child carer.  The husband’s financial contribution is matched by the wife’s role.  Contributions are equal.

Section 75 (2)

1. The wife is aged 30 and says she suffers from Lupus.  She says this condition prevents her from undertaking any heavy work.  There is no medical evidence about the wife’s condition.  The wife has the ability to earn some income although in addition to whatever health problem she has it is limited by her lack of a work history, experience and her limitations with the English language.  She has the care of the young child.  He spends time with the husband, the wife says about once a fortnight.  The wife’s income is Social Security payments.

2. The husband has a strong work history but says he is suffering from depression which has affected his capacity in maintaining ongoing employment.  He says he has not been fit to work since the end of the 2013 financial year.  As best as I can see from the material he is receiving a Newstart payment, not a disability benefit.  In his financial statement filed on 18 November 2013 he gives his weekly gross salary as $473 and gives the income from the (omitted) business as $138,116.  The conclusion I draw is that the husband’s ability to earn income is much stronger than the wife’s even if limitations imposed by the care of a young child are ignored.

3. The husband pays little by way of child support.

Conclusion

1. Where the husband placed the $97,000 he withdrew from the mortgage loan account is not known.  It is not possible to make any order against that amount.  Consequently, the order must be on the basis that he retains that amount.  He will retain the motor vehicles in his name and he has the tax liability.  The husband therefore will retain these assets and liabilities:

   Assets

   Husband’s Ford motor vehicle          $3,500

   Husband’s Nissan Navarra  $6,000

   Husband’s Toyota Hilux  $3,000

   Amount retained by husband  $97,000

   Total:  $109,500

   Liabilities

   Taxation  $27,069.88

   Net amount retained by husband  $82,430.12.

2. This leaves an amount of $131,000 available to make a distribution to the wife.  This is a 61.3% of the assets.  Given the size of the property pool, the wife’s lesser ability to earn income and care of the child means an adjustment of 15% in her favour would be at the bottom of the range.  The property pool is relatively small and so assessment on the basis of actual amounts distributed rather than percentages may well be more appropriate.

3. The only asset realistically available to finance a payment to the wife is the former matrimonial home with a net value $122,000.  The just and equitable way to make a distribution of the parties property is to order that the husband pay the wife this amount, and in default the property be sold and if the net proceeds are not sufficient to pay the sum of $122,000 to order that the balance be paid by the husband to the wife.

I certify that the preceding forty-four (44) paragraphs are a true copy of the reasons for judgment of Judge Phipps

Date:  27 February 2015