Novak and Novak - [2008] FMCAfam 1364

FEDERAL MAGISTRATES COURT OF AUSTRALIA

NOVAK & NOVAK

[2008] FMCAfam 1364

FAMILY LAW – Property – initial and later contribution – non-disclosure – inheritances – s.75(2) considerations – just and equitable order.

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

Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143
Norbis v Norbis (1986) 161 CLR 513
Pierce v Pierce (1998) FLC 92-844
Weir (1993) FLC 92-338
Williams & Williams [2007] FamCA 313

Applicant:

MS NOVAK

Respondent:

MR NOVAK

File Number:

WOC 396 of 2007

Judgment of:

Altobelli FM

Hearing date:

6 November 2008

Date of Last Submission:

6 November 2008

Delivered at:

Sydney

Delivered on:

19 December 2008

REPRESENTATION

Counsel for the Applicant:

Mr Moss

Solicitors for the Applicant:

Robert Webley & Associates

Counsel for the Respondent:

Mr Tockar

Solicitors for the Respondent:

Bahlmann Burke Lawyers

ORDERS

I Direct the solicitor for the wife to provide to my associate and the solicitor for the husband a minute of order which gives effect to this judgment within 28 days.
If any application for costs is to be made then written submissions not exceeding 500 words be provided by the applicant for costs within

28 days. Any response to the costs application and/or form of order relating to Order 1 above be provided to the court 14 days thereafter.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
WOLLONGONG

WOC 396 of 2007

MS NOVAK

Applicant

And

MR NOVAK

Respondent

REASONS FOR JUDGMENT

Introduction

The matter before me is an application for alteration of property interests, commonly known as a property settlement. The applicant wife is 47 years old, and the respondent husband 48 years old. They married in January 1982 and separated, whilst continuing to reside under the same roof, in June 2003. By this time they had been cohabiting 21 years. They divorced in September 2007. The parties had five children between the age of 14 and 26. The minor children seemed to enjoy the benefit of an arrangement which equates to equal time with both their mother and father. The family resides in the Illawarra region of New South Wales.

Background

At the time of marriage the husband was 22 years old, and the wife 21 years old. The marriage commenced in the same way as the marriage was thereafter continued - in an industrious manner. Even before the wedding the husband and the wife had purchased a house at Property M and each contributed their accumulated savings towards its acquisition.
Children came along shortly after the marriage. Throughout the marriage, for the most part, both the husband and the wife were either in full or part time paid employment and/or unpaid employment in the home, or a combination of both.
The parties' first property at Property M was sold in 1987 and they purchased vacant land at Property C with the intention of constructing a home. There is an issue between the parties as to how, precisely, the purchase of the land was financed. The husband asserts that his father contributed $10,000 in cash to complete the purchase of the land. The wife denies this and asserts that it was funded entirely from the sale proceeds of the first property. I will need to decide this issue.
The husband and the wife borrowed from the Commonwealth Bank in order to construct their home. The wife says this loan was fully repaid within about 10 years. The husband says that his mother provided him with about $6,000 for the bricks for the house during its construction, and that in 1993, his father provided him with $80,000 to pay off the amount owing to the Commonwealth Bank. The wife disputes both the husband's assertions, and this is another issue I will need to determine.
Late in 1994, the husband and the wife purchased a home unit in Wollongong, which was almost entirely financed by way of a loan from the ANZ Bank.
Late in 1999, the parties also purchased in the husband's name another home unit in Sydney that was entirely financed by way of bank loans secured over the property purchased, as well as what had then become the matrimonial home at Property C. The husband asserts that in October 2001 his father provided to him $65,900 to pay out the mortgage over the Wollongong home unit.
Moreover, he asserts that in 2002 his father had provided a further $5,364 which enabled the parties to actually discharge the mortgage over the Wollongong home unit. The wife disputes this contribution by the husband's father. This is another issue I will need to determine.
After separation, though the parties continued to reside under the same roof, there were further borrowings which are contentious as between the parties and in respect of which I will need to make a determination.
After separation, the husband asserts that his father provided further funds to reduce mortgages and to fund renovations to the former matrimonial home. Some of these sums were quite substantial including $88,000 that the husband asserts his father gave him in October 2006 and $62,500 in February 2007. These are disputed by the wife.
In June 2007, the husband's father died and the husband became an equal beneficiary with his brother in the father's estate. The net value of the estate is just under $900,000.
In July 2007, the husband left the former matrimonial home and moved to rental accommodation. Since then, the wife and the minor children have lived in the former matrimonial home though, as I indicated above, the children enjoy about equal time with both parents.
On the husband's case his father provided to him in excess of $380,000 and thus, it is submitted on his behalf, that he has made an overwhelming greater contribution in a financial sense, as compared to that of the wife. Whether this is so, or not, depends on the findings that I make, based on the evidence, in relation to the contributions provided by the husband's father.
There is a further dispute between the parties about the assessment of any adjustment under s.75(2) of the Family Law Act in favour of the wife.
There are some minor issues about the constitution of the asset pool, particularly as regards post separation liabilities, and how the inheritance received by the husband from his father should be characterised and treated in the present property settlement.
On behalf of the wife it is asserted that there are significant doubts about the credibility of the husband's evidence as regards financial matters. From the wife's perspective, there are serious issues about non disclosure raised in this case. From the husband's perspective, however, whilst his counsel conceded that the husband's independent recollection of facts was somewhat hazy at times, there was more than adequate documentary evidence to corroborate his assertions as regards many of the sums allegedly contributed by his own father.
In terms of evidence I had affidavits from the husband and the wife as well as the benefit of hearing and observing their evidence in Court. The proceedings were conducted efficiently.
After hearing all the evidence, Mr Moss, Counsel for the wife, submitted that there were such doubts about the nature of debts secured against the former matrimonial home that these liabilities should be sheeted home solely to the husband, and not to the wife. He asserts that if findings were made in his client's favour about the contributions allegedly provided through the husband's father, then the Court's overall assessment of contribution would be 50:50.
He then submitted that there would be a further adjustment of 20 per cent for the section 75(2) considerations operating in favour of the wife. Mr Moss conceded, however, that a 70:30 split in favour of his client would apply to the pool of assets consisting of superannuation and non superannuation assets, but which excluded the husband's post separation inheritance.
In his closing submissions for the husband, Mr Tockar submitted that if findings were made in favour of the husband in relation to the contribution issues, this would result in a finding of significantly greater contribution in his favour, with a minimal adjustment to s.75(2) considerations in favour of the wife.
Mr Tockar submitted that with the inheritance coming in after separation, it was appropriate to actually approach the exercise from the perspective of three pools of assets: a post separation inheritance pool, a superannuation pool, and a non superannuation pool. The precise percentage entitlement of the husband depended on which approach was adopted to the characterisation of the pools of assets. The Court is indebted to Mr Tockar for his comprehensive case outline and summary of argument, dated 7 November 2008.
Finally, I must determine what the just and equitable order to make on the facts of this case is, having regard to the circumstances of this family, and the evidence before me.

Issues

Accordingly, this case raises the following issues:
(1)Issue relating to the asset pool. There are three specific matters to be considered here. Firstly, there was a question about the value of the husband's superannuation entitlement. Secondly, the wife contends that not all of the mortgage secured over the former matrimonial home and over the Property B, Sydney home unit should be attributed to her. Thirdly, there are a number of post separation credit card and lease liabilities in respect of which I need to decide whether they should be on the balance sheet, or off the balance sheet but still taken into account.
(2)The second major issue is the assessment of contribution having regard to what the husband asserts was very significant financial assistance provided to the parties through his father, and his mother.
(3)The third issue to be determined in this case is assessing s.75(2) considerations and the extent to which they favour the wife.
(4)The fourth issue is formulating an order that is just and equitable under the circumstances of this case.

Applicable Law

The preferred approach to the determination of an application under s.79 of the Family Law Act is set out in a passage found in the Full Court’s decision in Hickey & Hickey & Attorney-General of the Commonwealth of Australia (Intervener) (2003) FLC 93-143 at 39.
The Full Court states that there are four inter-related steps:
a)Identify and value the property, liabilities and financial resources of the parties; and
b)Identify and assess the contributions of the parties and express them as a percentage of the net value of the property; and
c)Identify and assess the other facts relevant under s.79(4)(d)-(g) including s.75(2) and determine the adjustment (if any) to be made to the contribution entitlements at step two; and
d)Consider the effect of the above and resolve what order is just and equitable in all the circumstances.
One of the legal issues that arises is whether I should adopt a global or asset-by-asset approach to contribution. The authority in this regard is, the High Court’s decision in Norbis v Norbis (1986) 161 CLR 513 per Wilson and Dawson JJ at 534-5. It is clear from this statement of the law that either approach is available to me, in part or in whole.

My discretion in this regard should be exercised having regard to the facts of this case.
Another issue in this case is how, precisely, I should weigh and assess the initial contribution made by the husband in bringing property into the marriage. In this regard, I need to consider the decision of the

Full Court
in Pierce v Pierce (1998) FLC 92-844. A useful recent decision of the Full Court examines its earlier decision in Pierce v Pierce together with a later case. In Williams & Williams [2007] FamCA 313 the Full Court states as follows at paragraphs 26, 27, 28, 29 and 32:
26. We think there is force in the proposition that a reference to the value of an item as at the date of the commencement of cohabitation without reference to its value to the parties at the time it was realised or its value to the parties at the time of trial, if still intact, may not give adequate recognition to the importance of its contribution to the pool of assets ultimately available for distribution between the parties Thus where the pool of assets available for distribution between the parties consists of say an investment portfolio or a block of land or a painting that has risen significantly in value as a result of market forces, it is appropriate to give recognition to its value at the time of hearing of the time it was realised rather than simply pay attention to its initial value at the time of commencement of cohabitation. But in doing so it is equally as important to give recognition to the myriad of other contributions that each of the parties has made during the course of their relationship.
27. In Pierce v Pierce when speaking of the relevance to be paid to initial contributions the Full Court (Ellis, Baker and O’Ryan JJ) referred to Fogarty J in Money v Money (1994) FLC 92-485 at 81,054; (1994) 17 Fam LR 814 at 816:
…respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party…ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be latter factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
28. The Full Court (Ellis, Baker and O’Ryan JJ) then said at [28]:
In our opinion it is … a question of what weight is to be attached, in all the circumstances, to the initial contributions. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.
29. Pierce v Pierce was a case in which the husband brought in $200,000 cash into the relationship. He applied that money towards the purchase of a matrimonial home. He was employed throughout the marriage and supported the wife who, whilst in some paid employment primarily attended to domestic tasks and taking care of the children. The Full Court assessed the parties’ respective contributions to a pool of $320,000 as 70 per cent in favour of the husband and 30 per cent in favour of the wife at the end of a 10 year relationship.
32. In Hunt v Zuryn (2005) FLC 93-226; (2005) 34 Fam LR 169 the Full Court (Kay, May and Boland JJ) allowed an appeal in a property case where a pool of assets of $1.12million had been assessed for contribution purposes as 75 per cent in favour of the husband and 25 per cent in favour of the wife. The Court in allowing the appeal indicated that an assessment of 75:25 fell outside the realms of an acceptable range saying at 79,730; 170:
Such an assessment ought adequately recognise that much of the parties’ wealth can be attributed to the capital growth in the assets introduced by the husband at the commencement of the marriage but at the same time bringing into consideration a myriad of other contributions each made in the course of their relationship.
Accordingly, I must not only identify the contributions of each party, but also assess the weight to be attributed to these contributions having regard to many factors including what has occurred afterwards.
A significant issue in this matter was the alleged non-disclosure of both parties. Attempting to deal with non-disclosure often puts the other spouse to considerable difficulty with regards to investigating their financial affairs. The Full Court in Weir (1993) FLC 92-338 at 79,593–4 made the following statement regarding the duty to disclose and the Court’s powers where non-disclosure has been found:
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) FLC 91-759, and Mezzacappa and Mezzacappa (1987) 11 Fam LR 957; (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…
We appreciate that this is something of a broad brush approach, but, as we have said, where there is clear evidence of non-disclosure as there was here, the Court should not be unduly cautious about making findings in favour of the other party. It has been said by one commentator (O'Ryan and Broadfoot, 5th National Family Law Conference Handbook, p 249) the failure to disclose undermines the whole process of adjudication of proceedings for a settlement of property in that the court is unable to identify the property of the parties, to properly assess contribution, or to properly assess s 75(2) factors.

Asset pool

In his final submissions, Mr Moss, on behalf of the wife, submitted that because of the grave doubts that he submitted the Court should have about the husband's credibility, there were significant issues about the amount secured against the former matrimonial home. He submitted that this amount was, essentially, borrowed by the husband, received by the husband, and of which he has been the sole beneficiary. He submitted that there was no satisfactory evidence before the Court as to what, precisely, the money was used for. Having regard to these matters, the liability should not be sheeted home to the wife.
Mr Moss made no similar submission in relation to the mortgage secured over the Property B, Sydney property, and accordingly, I will accept that the wife believes this is a joint liability.
Before I can rule on the issue raised by Mr Moss on behalf of the wife, I need to consider the evidence overall. Accordingly, I propose on a provisional basis to include the liability in the balance sheet but then to revisit this issue once I have explained in these reasons my view about credit issues.
In relation to the husband's NAB Visa card, and the wife's ANZ Mastercard and Coles Myer credit card, together with the wife's lease commitments to St George Bank, all of these liabilities were, clearly, accumulated after separation. Separation took place more than five years before the date of the hearing. There is an irresistible inference that these are post separation liabilities incurred by each of the parties individually.
No submission was made by either party to suggest that the other should share in the liability. Accordingly, I propose that these liabilities not be included in the asset pool though, of course, their existence will be taken into account in considering section 75(2) matters, as well as in formulating a just and equitable order.
I record that there was a minor issue, at one stage during the hearing, about the precise amount of the husband's superannuation entitlement with State Super. I am satisfied from the documents produced in evidence that its value is $168,800.

The final issue relating to the asset pool is to how, precisely, the husband's post separation inheritance entitlement should be treated. It should be noted that the parties have agreed about the value of the husband's entitlements. The issue here is whether the husband's inheritance assets should be included in the combined pool of non superannuation assets, or whether they should be included in a separate inheritance asset pool.
On behalf of the husband, Mr Tockar submits that the three pool approach is appropriate and convenient on the facts of this case.

Mr Moss did not submit to the contrary and, indeed, his submissions about the wife's overall entitlement were framed in terms of excluding the husband's inheritance assets.
I note it was never part of the wife's case that she made a contribution to the inheritance received by the husband after separation. Whilst it is not technically or legally correct to create a separate pool for post separation inheritance, the Court agrees with Mr Tockar that on the facts of this case it is a convenient method to adopt. Indeed, this approach was adopted implicitly, if not explicitly, by Mr Moss for the wife.
Accordingly, on the facts of this case there will be three pools of assets, the constitution of which is largely agreed to between the parties. The three pools will, therefore, be as follows:

Pool A: Non-Superannuation and Non-Inheritance Asset Pool

Asset	Value	Ownership
Property C	$475,000	Joint
Property W, Wollongong	$170,000	Joint
Property B, Sydney	$270,000	Husband
2006 Honda Jazz Vehicle	$15,000	Wife
1993 Mercedes 280E vehicle	$12,150	Husband
2002 Mercedes CLK 430 vehicle	$44,350	Husband
Household Contents	$4,700	Wife
Household Contents	$5,000	Husband
Macquarie Bank Shares	$1,133.45	Husband
TOTAL ASSETS:	$997,333.45
Liabilities
Home mortgage	$142,258.91	Joint
Property B property mortgage	$220,092.29	Husband
TOTAL LIABILITIES:	$362,351.20
NET ASSETS:	$634,982.25

Pool B: Superannuation Asset Pool

Item	Value	Ownership
Rest Superannuation	$67,125	Wife
State Super	$168,800	Husband
TOTAL:	$235,925

Pool C: Inheritance Asset Pool

Item	Value	Ownership
ING Term Deposit	$72,061.64	Husband
Estate Property	$334,500	Husband
TOTAL:	$406,561.64

Combined Asset Pool

Net Assets	$634,982.25
Superannuation Assets	$235,925
Inheritance Assets	$406,561.64
TOTAL ASSET POOL	$1,277,468.89

Contribution

Issues of credit permeate findings I make about contribution. On behalf of the wife Mr Moss submitted that, as a general proposition, where the evidence of the husband and the wife conflicts, I should prefer the evidence of the wife. I observe, however, that the difficulty with this proposition is that the wife's evidence about the financial transactions to which I will shortly refer is often framed as a flat denial about what is alleged, or a statement that she did not know, rather than the presentation of contrary evidence.
Moreover, the submission that I should accept the wife's evidence over the husband's evidence when it conflicts must also depend upon the husband's evidence being challenged whenever it is asserted that his evidence was untruthful. Regrettably, this did not always take place. There is only so far that the Court can go with general findings of credit as was asserted by the wife's Counsel. If evidence of the husband was not specifically challenged by the wife, though I might be reluctant to accept parts of the husband's evidence in relation to certain transactions, it would be unfair to the husband that I should disbelieve all of his evidence, when some of it was not challenged.
In relation to issues pertaining to the husband's credit, his Counsel, Mr Tockar, quite frankly acknowledged that "he might be a shocking bookkeeper" but that does not necessarily make the husband dishonest as regards all of this evidence, nor does it necessarily mean that he has failed to disclose funds to the Court or has perpetrated any act of waste.
Mr Tockar submitted that the Court must refer to the documents advanced by the husband in support of the transactions evidencing the contributions made by his father.
I agree that the Court is left in the situation where it must consider the evidence in support of each of the contributions allegedly made by the husband's father, and otherwise.
In his affidavit, filed on 24 October 2008, the husband asserts that the former matrimonial home at Property C was purchased for $35,000, and that $25,500 came from the sale of Property M with $10,000 coming from his father in cash. The husband is unable to provide any documentation to support his evidence. A notable omission in his evidence was the failure to provide to the Court copies of Land Titles Office transfer documents that probably would have evidenced the sale price of Property M, and the purchase price of Property C, and which might have corroborated, at least in part, the husband's assertion that there was a shortfall that needed to be met.
I am unable to accept the husband's evidence on this transaction, on the balance of probabilities. The husband and the wife had been married for five years by the time of this transaction and thus it is equally possible for them to have saved funds to have made up any shortfall in the purchase price. In any event, this transaction took place such a long time ago, and the sums are so small in comparison to the overall asset pool, that I do not think it makes much of a difference in the end result. Nonetheless, the husband bore the onus of proof and he has failed to discharge it.
At paragraph 6 of the husband's affidavit, filed 24 October 2008, he asserts that his mother gave them $6,000 to pay for bricks, as part of the construction of the former matrimonial home on the land that they had purchased at Property C. Again, the husband provides no corroboration. Again, it is equally possible that the cost of the bricks was covered by the loan that the parties obtained to fund the construction of the home, or alternatively, that the cost of the bricks was funded from savings. Again, in this regard, the husband has failed to discharge the onus proof on him.
In paragraph 7 of the husband's affidavit he asserts that in 1993 his father gave him $80,000 that was used to repay the Commonwealth Bank loan which funded the construction of the former matrimonial home. The wife denies this and asserts that it was paid off over a period of time. The husband was specifically challenged in cross-examination about this $80,000 gift but insisted that his evidence was true.
The evidence indicates that construction took place between 1987 and 1989, with the husband and the wife moving into Property C in June 1989. The husband asserts that his father gave him the $80,000 in 1993, about four years later. The wife asserts that the loan was paid off in about 10 years. Once again, a notable omission from the evidence is the absence of Land Titles Office dealings that might have shed light on when the mortgage was registered, and when it was discharged.
It is a significant transaction. If the husband's evidence is accepted, then through his father he has made a substantial contribution towards the equity in the former matrimonial home.
Ultimately, the onus of proof rests with the husband and he has failed to discharge this onus. He has not satisfied me that, on the balance of probabilities, his father provided the funds which he asserts. I find it unusual that the parties would still owe to the Commonwealth Bank the same amount which the husband says they borrowed four years earlier, particularly, having regard to what I find to be their industriousness.
In paragraph 11 of the husband's affidavit, the husband asserts that

his father provided two further gifts to the parties of $65,900 on

11 October 2001
, and $5,364.49 on 22 February 2002. The husband was not challenged about this evidence and, indeed, it is corroborated by documentary evidence. Accordingly, I find that on the dates as stated the husband's father provided for the benefit of the parties a total of $71,264.49, which was used to reduce the mortgage over the home unit in Wollongong.
In paragraph 13 of the husband's affidavit he asserts that his father contributed $43,060, and a further $36,060 towards the acquisition costs of the Property B, Sydney unit. In cross-examination he agreed, however, that the documentation annexed to his affidavit to establish these advances only showed that $43,060 was provided. Indeed, in cross-examination it was not put to the husband that this transaction did not take place, but rather that he had not told his wife about it.
On balance, the evidence satisfies me on the balance of probabilities that the husband's father provided $43,060 on or about 29 April 2005, and this was used as a contribution towards the Property B, Sydney home unit, probably in order to reduce the debt secured by that property.
At paragraph 17 of the husband's affidavit he asserts that on or about 18 October 2006 (several years after separation) his father provided him with $88,000 by way of a cheque which was then used for the purposes set out, including the purchase of a 2002 Mercedes CLK430 Elegance motor vehicle for $56,000 in November 2007, and renovations to the Wollongong home unit in June 2008, as well an overseas holiday in June 2008.
A document annexed to the husband's affidavit confirms that on or about that date there was a transfer into his account of that amount. But this does not necessarily mean that he contributed same to the benefit of the wife or to the current pool of assets.
There was a spirited cross-examination of the husband about this evidence, and in order to understand it completely I must also refer to other evidence of the husband about supplementary loans he obtained from the ANZ Bank, and which were secured over the former matrimonial home.
His evidence in this regard is contained at paragraphs 22, 23, 24 and 25 of his affidavit. The borrowings and expenditure commenced in 1999, well before separation, but also continue well after separation and include, for example, renovations that the husband asserts were effected to the former matrimonial home as late as June 2008. There are a number of significant anomalies in the husband's evidence. For example, at paragraph 22(d) he asserts that on 1 December 2003 $79,035 was drawn down from the ANZ Bank loan to purchase the 1993 Mercedes 300E motor vehicle which he owns. The difficulty for the husband is that the existence of this motor vehicle was disclosed by the husband in a statement of financial position provided to the ANZ Bank on 28 August 2000.
In other words, not only could the $79,000 not have been used in part to purchase the Mercedes Benz, but the said vehicle was an asset that he represented that he owned, to the ANZ Bank, in August 2000. The husband's oral evidence in cross-examination about how the funds drawn down from the ANZ Bank were utilised, was at times quite inconsistent with his affidavit evidence, as well as inconsistent with oral evidence he had previously given. For example, he agreed that renovations at the former matrimonial home had been completed by the date of separation, and that any renovations that had been undertaken before separation had been paid for before separation. Thus, his contention that moneys had been used for that purpose after separation, were clearly untenable.
Insofar as he asserted that moneys drawn were used to pay credit cards, I accept that it is inherently unlikely that he would have used funds to pay off the wife's credit cards, particularly, having regard to her current level of indebtedness. The clouds of doubt hovering over the husband's evidence in this regard culminated in his evidence at paragraph 23 in which he asserts that in 2005/2006 he arranged extensive renovations to the former matrimonial home, which were paid for in cash drawn down from the ANZ loan, but which was provided as to $13,000 by his mother who had, however, been dead for many, many years.
The same error is evident in paragraph 25 of his affidavit. In paragraph 24 he says that he redrew on the mortgage secured over the Wollongong unit to purchase the wife's motor vehicle in 2006, but he agreed in cross-examination that this vehicle had been purchased five years earlier.
The husband's evidence contained, from paragraph 22 to 26, is in a state of shambles. I simply cannot accept anything that the husband says in this part of the affidavit unless it is clearly corroborated by way of independent documentary evidence. The dilemma I have, however, is to decide whether I should characterise the husband as the "shocking bookkeeper" that his own Counsel asserts, or as a man "not of truth" as described by the wife's Counsel.
On balance, to describe the husband merely as a "shocking bookkeeper" would not do justice to the efforts which I believe he has gone to in order disguise what actually happened to the moneys that his father provided him in October 2006, and to the moneys drawn on the parties' mortgage loans.
The mistakes he has made in his evidence are glaring, and obvious. Many of the mistakes are repeated in two affidavits. In cross-examination, when confronted with the reality of the enormous problems in his evidence he insisted that, even though dates might be incorrect, the facts asserted were still correct. But that can hardly be the case. Even if, for example, the husband did get the date of acquisition of 1993 Mercedes wrong, at paragraph 22(d) of his affidavit, it does not explain what the drawn down of $79,035 was, in fact, used for.
If it is the case that his mother could not possibly have provided him with $13,000 towards the cost of paving the backyard of the former matrimonial home, then if this work was carried out, how was it funded? Indeed, I am not satisfied that much of the work that he refers to was, in fact, carried out post separation, which leaves unexplained significant draw downs on the parties' mortgages.
Thus, amongst many dilemmas presented by the husband's evidence, one particular dilemma the Court faces is that I find that the husband's father did, in fact, provide him with $88,000 in October 2006, but I have no explanation for what these funds were used for, and I am not satisfied that draw downs on the bank loan were used for the purposes as stipulated by the husband.
That leaves unanswered, however, the question as to what, precisely, the draw down was used for. Annexed to the husband's affidavit are various bank statements that purport to explain what draw downs were used for. However, the evidence is based on the husband's own handwriting on the statements, purporting to describe what funds were used for. At the very least this evidence is unreliable, and in several instances this evidence was found to be plainly incorrect during the course of cross-examination.
Once again, this is an example of an important issue in the litigation where the husband bore the onus of proof. He has approached this litigation on the basis that the amounts owing on the parties respective mortgages should be treated as joint liabilities and thus shared with his wife. The wife conducted her litigation on the basis that at least some (unspecified) part of these liabilities should be the husband's sole responsibility. It seems to me that both parties could, if they had so desired, provided further corroborating evidence to establish what funds were used, or not used for.
The Court is left in the very unsatisfactory situation where it is not clear from the wife's case what part of the liabilities she asserts should not be sheeted home to her, and it is certainly not clear from the husband's case what part of the liabilities should properly be attributed to both the husband and the wife. The Court should not be left in a position where it needs to make educated guesses about incomplete evidence.
Doing the best I can to understand the wife's case, she does not dispute that there must be some residual liability secured by loan over the properties, but cannot be precise as to how much she should properly contribute to.
Doing the best the Court can in unsatisfactory circumstances, I propose to disallow as a joint debt $110,000 out of the moneys owed to the ANZ Bank. This figure is calculated by reference to the additional advance on 1 December 2003 of $79,035, and then a further advance of $30,000 on 22 October 2004, rounded up to $110,000. I do not accept the husband's explanation for what these funds were utilised for. As I have indicated above, his evidence was unreliable, at the very least, and possibly quite untruthful. This part of the debt will need to be managed by him solely. Moreover, whilst I accept that the husband received $88,000 from his father, I do not accept that he contributed the same to the marriage, and he has failed to establish on the balance of probabilities that it should be treated as a contribution on his part.
But further issues arise from the above discussion. Inherent in the findings I have made must be an acknowledgement that there are issues about the husband's credit, and that there has been possible non disclosure. This was taken further by Counsel for the wife in his cross-examination of the husband about savings disclosed in his financial statements filed 1 June 2007 and 24 October 2008.
The husband agreed that his financial statement of 1 June 2007 discloses total savings of about $144,000 as at May 2007. He agreed that since then he had received $70,000 from his late father's estate. He agreed that this meant he would have had savings at that time of about $214,700. The husband agreed that as at today's date he had about $70,000 left in his ING account. The husband agreed that he had spent the other $144,000. He also agreed that at all relevant times he had been working during this period.
When asked to explain what the funds had been used for he referred to the purchase of a new Mercedes Benz, the funeral costs of his father, outgoings in relation to the properties, moving house, school fees for the children, and servicing the mortgage debts. He agreed, however, that he was in control of the rentals from the investment property, as well as in receipt of the negative gearing taxation benefits.
I find the husband's explanation of his expenditure of $144,000 very difficult to accept. Whilst it is, indeed, likely that some part of the expenditure was used for the stated purposes, there is nothing in the evidence to explain all of the expenditure. And, again, the Court is left in the unsatisfactory situation of having to infer from unsatisfactory evidence that the husband has not disclosed to the Court the full extent of the assets and resources available to the husband.
At paragraph 29 onwards of the husband's affidavit he sets out his evidence which was, I surmise, to support a claim for post separation contribution. He sets out, for example, his expenditure on rental, utilities, the mortgage payments and outgoings on the Property B, Sydney unit. He also refers to payments on the supplementary loans, as well as outgoings on the Wollongong unit, and school fees.
Offsetting this, of course, is the fact that the husband received all of the rental income on the investment properties, had substantial funds available to him at all relevant times, including funds drawn down, savings, gifts from his father, and funds not disclosed to the Court. Given the shambolic state of the husband's evidence as to financial matters, it was not surprising that his Counsel did not advance the claim for post separation contribution with much enthusiasm.
In reality, even if I didn't have concerns about whether the husband is telling the truth in evidence about financial matters, and whether he has properly disclosed to the Court all funds and resources available to him, I would not have allowed an adjustment in his favour for post separation contribution. The wife also contributed in her own right, to the best of her ability. At all relevant times the husband was in a much stronger financial position than she was. In any event, the benefits the husband received by way of rentals and taxation deduction largely offset any claim that he makes.

At the end of a relatively long marriage in which both the husband and the wife assiduously worked in the roles and capacities that they had chosen for themselves in their marriage, but for issues of contribution made by the husband through gifts to him by his father, contribution in the broad sense would be assessed as being equal.
I find that the husband made contributions of a financial nature, over and above that of the wife, through gifts made by his father as follows:
$65,900
$5,365
$43,060
TOTAL $114,325
I am satisfied that the evidence indicates, on the balance of probabilities, that these advances benefited the wife, at least in the sense that debt which she would have otherwise have burdened with was paid.
Moreover, as a result of the findings I have made in reaching this conclusion about contribution, I find that approximately $110,000 of the parties' current joint debt secured over the former matrimonial home and investment properties should not be shared as between the husband the wife, and should be borne by the husband solely as he has not provided any adequate information for the usage of these funds.
The total additional contribution provided by the husband, i.e., $114,325, represents about 13 per cent of the superannuation asset pool, plus the non superannuation and non inheritance pool, less the liabilities owed over the former matrimonial home and investment properties. It is a substantial contribution to the parties' assets. And, as I said before, I am satisfied that the wife has derived a tangible benefit from it.
The challenge is to assess the impact of this contribution in a just and equitable manner. The first of the husband's father's financial contribution came in in 2001, a few years before separation, and the last came in April 2005, a year before physical separation. The recency of these contributions, and the direct beneficial impact on the parties of having debt reduced, means that I have to give meaningful effect to them, but I also must take into account the myriad other contributions made by the wife, and the lingering doubts I have about the husband’s evidence.
But for this additional contribution I would have assessed contribution in the broad sense as being equal. Under the circumstances, I assess contribution up until the date of the hearing at 55 per cent in the husband's favour, and 45 per cent for the wife. In making this finding I acknowledge that the written summary of argument provided by the wife’s counsel prior to the commencement of evidence asserts that contribution should be assessed in favour of the wife at 40 per cent. By the time submissions were made the wife’s counsel’s position had changed to reflect the evidence. I believe he was quite entitled to do so under the circumstances.

Assessing section 75(2) considerations

In Mr Tockar's comprehensive case outline and summary of argument he quite frankly, and properly, concedes that there needs to be a s.75(2) adjustment in favour of the wife to reflect a number of factors. Firstly, the husband's income is significantly higher than that of the wife. He is in full time employment, and she works part time, in two jobs. Whilst it is true that both parents share in the care of the children, the financial impacts of this are felt more keenly by the wife, because of her lower income.
The husband has far greater financial resources available to him than does the wife. The inheritance pool was agreed by the parties to have a value of $406,561.64, and the husband has a much greater superannuation entitlement than that of the wife. Moreover, it is quite apparent that because of the financial contributions made on behalf of the husband by his father the terms of the s.79 order will see him in a superior position to that of the wife.
All of the above matters are relatively unproblematic and uncontested. However, Mr Tockar submits that the evidence points to a 5 per cent adjustment in favour of the wife, whereas Mr Moss submits that the evidence points to a 20 per cent adjustment in favour of the wife.
One must measure the impact of any proposed adjustment under s.75(2), on the wife, in financial terms. On the pool of assets constituted by the superannuation pool, plus the non superannuation and non inheritance pool, less the liabilities secured over the properties, a 5 per cent adjustment is under $44,000. A 10 per cent adjustment is just under $88,000, a 15 per cent adjustment is about $132,000, and a 20 per cent adjustment is about $176,000. The differential produced by each adjustment is measured, of course, by doubling them.
I believe that an adjustment in the wife's favour of 15 per cent is appropriate on the circumstances of this case. The financial resources available to the husband (disclosed or undisclosed), and his much greater earning capacity, require that an adjustment of this magnitude be made in the wife's favour.

Just and equitable order

The result of my findings above is that the wife receives 60 per cent of the pool of assets constituted by the superannuation pool, and the non superannuation and the non inheritance pool. From the pool needs to be deducted the liabilities as secured over the matrimonial properties less an adjustment of $110,000 which I will order the husband to be responsible for himself.
The wife proposes that the husband transfer to her his interest in the former matrimonial home at Property C, unencumbered. In addition, she proposed that he pay her a further sum of $50,000, and that she would transfer to him her interest in the home unit at Wollongong. However the wife proceeded from the basis of a pool of assets quite different to the one I found to be the case. However, it is still possible to give effect to the intent of her orders. The outcome of the orders I make will be as follows:

Total superannuation pool	$235,925
Total non-superannuation pool	$997,333
$1,233,258

Liabilities

Home mortgage limited to: $142,258 minus $110,000	$(32,258)
Property B mortgage	$(220,092)
Net combined pool	$980,908
Wife’s share at 60%	$588,544

If she retains Property C, her pool will be:

Property C	$475,000
(less mortgage)	$(142,258)
Honda Jazz	$15,000
Household contents	$4,700
Superannuation	$67,125
$419,567

On this scenario the husband would need to pay her $168,977.

From the husband’s perspective, he receives 40 per cent of $980,908 or $392,363, adjusted of course to reflect that he is bearing a greater proportion of the mortgage secured over the former matrimonial home at Property W. When one has regard to the husband’s earning capacity, the findings of non-disclosure against him, and the availability to him of a substantial inheritance asset pool, I am satisfied that this outcome if just and equitable under the circumstances.
The orders provided on behalf of the wife do very little to assist me in making orders in this matter. I therefore direct the solicitor for the wife to provide to my associate and to the solicitor for the husband, within 28 days, a minute of order which gives effect to this judgment. If any application for costs if to be made, submissions not exceeding

500 words should accompany the said minute of order. The solicitor for the husband will then have 14 days to respond, both in relation to the form of the order and costs.

I certify that the preceding ninety-four (94) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate: Monique Robb

Date: 19 December 2008