Pao & Moy (No 2)

[2024] FedCFamC1F 643

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Pao & Moy (No 2) [2024] FedCFamC1F 643

File number(s):

MLC 6493 of 2011

Judgment of:

WILLIAMS J

Date of judgment:

23 September 2024

Catchwords:

FAMILY LAW – PROPERTY – Application for property adjustment between the husband and wife – Where there is a judgment debt arising from the husbands misappropriation of company funds when he was a director of the intervenor – Where the asset pool of the husband and wife is insufficient to satisfy the judgment debt – Where the intervenor claims the wife’s application is an attempt to defeat the intervenor’s capacity to recovery the judgment debt from the husband – Consideration as to whether it is just and equitable to alter the property interests – Assessment of notional addback of funds – Rights of a creditor – Where the contributions are assessed in a proportion of 45/55 in favour of the wife – No adjustment for future needs – Where the assets in the overall pool will be adjusted and divided in the proportion of 40% to the wife and 60%/ to the husband/intervenor

Legislation:

Evidence Act 1995 (Cth) s 140

Family Law Act 1975 (Cth) ss 75, 79, 90AE, 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 6.01, 6.06

Cases cited:

Bevan & Bevan (2013) FLC 93-545; [2013] FamCAFC 116

Black & Kellner (1992) 15 Fam LR 343

Candle & Falkner [2021] FedCFamC1A 102

Chancellor & McCoy (2016) FLC 93-752; [2016] FamCAFC 256

Commissioner of Taxation & Worsnop & Anor (2009) FLC 93-392; [2009] FamCAFC 4

Degan & Nader (No 2) [2024] FedCFamC1F 544

Dickons & Dickons (2012) Fam LR 244; [2012] FamCAFC 154

Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania) v Fish (2005) 191 FLR 294; [2005] FamCA 158

In the Marriage of Biltoft (1995) FLC 92-614; [1995] FamCA 45

In the Marriage of Hickey (2003) FLC 93-143; [2003] FamCA 395

In the Marriage of I & I (No 2) (1995) 22 Fam LR 55

Lenova v Lenova (Costs) (2011) FLC 93 – 467

Massalski & Riley (No. 2) [2021] FamCAFC 152

Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664; [2015] FamCAFC 157

Omacini & Omacini (2005) FLC 93-218; [2005] FamCA 195

Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52

Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173

Trustee of the Property of G Lemnos, a Bankrupt & Lemnos and Anor (2009) FLC 93-394; [2009] FamCAFC 20

Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48

Division:

Division 1 First Instance

Number of paragraphs:

209

Date of hearing:

13–15 March, 8 April, and 12 July 2024

Place:

Melbourne

Counsel for the Applicant:

Dr Smith

Solicitor for the Applicant:

Kennedy Partners

Counsel for the Respondent:

Ms Borger

Solicitor for the Respondent:

BSP Lawyers

Counsel for the Intervener:

Mr Byrne

Solicitor for the Intervener:

McDonald Lawyers

ORDERS

MLC 6493 of 2011

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS MOY

Applicant

AND:

MR PAO

Respondent

B PTY LTD

Intervener

ORDER MADE BY:	WILLIAMS J
DATE OF ORDER:	23 SEPTEMBER 2024

THE COURT ORDERS THAT:

1.All previous orders be discharged.

2.The parties hereby irrevocably authorise and direct BSP Lawyers, the former lawyers for the husband, to forthwith disburse the remaining monies of $9,423, held from the sum of $30,000 paid pursuant to the orders made on 5 December 2023, to reduce the balance outstanding on the Westpac loan account number 27 (the Westpac loan).

3.Within 14 days of the date of final orders being made, B Pty Ltd (the intervener) do all such acts and things and sign all such documents as may be necessary to:

(a)Seek the discharge of the freezing order made by the Supreme Court of Victoria in 2012 (as extended in 2016) with respect to the sale proceeds of the property at G Street, Suburb H in the State of Victoria held in Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd (the freezing order); and

(b)Withdraw the warrant of seizure and sale issued with respect to Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd.

4.The parties be at liberty to provide a copy of these orders to Commonwealth Bank of Australia.

5.Within seven (7) days of the discharge of the freezing order:

(a)The husband do all such acts and things and sign all such documents to transfer to the wife at the expense of the wife all his right, title and interest in J Pty Ltd; and

(b)The husband and the wife do all such acts and things and sign all such documents as may be necessary to apply the funds held in Commonwealth Bank of Australia account number ending #41 (the Commonwealth bank account) in the name of J Pty Ltd in the following manner and priority:

(i)The sum of $32,500 to Ms K, in satisfaction of the deed of settlement dated 2012;

(ii)The balance of approximately $265,030 to Kennedy Partners, the lawyers for the wife for payment out to the wife, or at her direction.

6.The parties hereby irrevocably authorize and direct Kennedy Partners, the lawyers for the wife, to disburse the monies held in the controlled monies account on their behalf in the following manner and priority:

(a)The sum of $24,460 to the lawyers for the wife, Kennedy Partners, to be held on behalf of the parties and paid to the Australian Taxation Office (“ATO”) to meet the husband’s Capital Gains Taxation liability arising from the sale of L Street, Suburb M,(“the Suburb M property”) upon the husband providing to the wife and the intervener a copy of his amended tax return and notice of assessment for the financial year ended 2023;

(b)The sum of $237,285 to Kennedy Partners for payment to the wife or to be distributed at her direction;

(c)The balance to the intervener, estimated at $195,607.

7.The husband forthwith do all acts and things to prepare and lodge his Australian taxation return for the relevant financial year to include the capital gain realized from the sale of L Street, Suburb M and forthwith upon compliance, provide a copy to the wife’s solicitors to enable payment by them to the ATO.

8.The husband be liable for and indemnify the wife with respect to the judgment debt and any accrued interest owing to the intervener.

9.All previous orders preventing the intervenor from enforcing the Warrant of Seizure and Sale against the property situated at N Street, Suburb O, including the orders of Bender J made 16 May 2017, are hereby discharged.

10.The husband be and is hereby restrained from enforcing the costs order made on 15 February 2022 in the sum of $36,966 against the intervenor.

11.Unless otherwise specified in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders:

(a)The husband and wife be solely entitled to the exclusion of the other to all other property (including choses-in-action and superannuation benefits) in the possession or legal or beneficial ownership of such party as at the date of this order;

(b)Any monies standing to the credit of the husband and the wife in any joint bank account are to become the property of the wife and the husband and the wife do all such acts and things and sign all such documents as may be necessary to close any such bank account;

(c)All insurance policies belonging to the husband or the wife shall remain the sole property of the owner named thereon;

(d)Each party be solely liable for any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

(e)Any joint tenancy of the husband and the wife in any real or personal estate is hereby expressly severed.

12.All extant applications be dismissed.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pao & Moy has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

WILLIAMS J

INTRODUCTION

1. This is an application for property adjustment pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”) between the husband and wife, taking into account the claim of the intervenor.

2. The intervenor, B Pty Ltd, is a creditor of the husband pursuant to orders made in 2016 in the Supreme Court of Victoria (“the Supreme Court”), which require the husband to pay the intervenor $4,165,981, together with interest. The judgment debt arises from the husband’s misappropriation of company funds when he was a director of the intervenor. The asset pool of the husband and wife is insufficient to satisfy the judgment debt.

3. Neither the husband nor wife deny the existence or validity of the judgement debt. The wife asserts she did not receive any benefit from the misappropriated funds, except for $181,000 which she was paid by way of backpay of salary, nor did she have any knowledge of how the husband applied the misappropriated funds or the circumstances giving rise to the misappropriation of the funds. The husband does not explain in his material before the court how the funds were applied by him.

4. The husband and the wife are in agreement about the wife’s chronology of events, as described in her Outline of Case filed 8 March 2024, as well as their respective contributions to the acquisition, conservation, and improvement of the marital assets, and their future needs. Both agree it is just and equitable to adjust property between them so that; the wife should receive 75 per cent of the marital assets, excluding the judgement debt and the husband should receive 25 per cent, with him retaining his shareholding in the intervenor.

5. B Pty Ltd seeks orders for the husband and wife to retain assets currently in their respective possession and there be no further adjustment of property in favour of the wife. Any further adjustment of the marital property to the wife would deplete the assets available to satisfy the judgement debt.

6. For the reasons that follow, I have determined the net non-super asset pool, excluding the judgement debt and identified liabilities, should be divided such that the wife receives 40 per cent and the husband receives 60 per cent.

   BACKGROUND

7. The wife is aged 52 years and the husband is aged 65 years. Both were born in Country P. The husband moved to Australia in 1988 and thereafter, met the wife in Country P in 1996. The parties commenced cohabitation in 2001 when the wife travelled to Australia, and they married in 2001. There are two adult children of the marriage.

8. The husband and wife separated in August 2008, and the wife and children returned to Country P. They divorced in 2011.

9. Below I adopt the chronology of events referred to in the wife’s Outline of Case filed 8 March 2024:

1959	[…]	The husband is born.
1971	[…]	The wife is born.
1988	The husband enters Australia.
1992	The wife acquires property in [City Q], [Country P] for [Country P currency] 400,000.
1996	The husband and wife meet in [City R], [Country P].
2001	[…]	The wife sells her property in [City Q] for [Country P currency] 820,000.
2001	[…]	The commencement of cohabitation. The wife enters Australia […]. At the commencement of cohabitation: -     The husband works [in] and [is a] part-owner of a [business] in [Suburb M]. He has one child from a previous marriage, aged about six. -     The husband's assets comprise his share in the [business] (which he retains as part of his property settlement from his first wife). -     The wife previously worked as a […] manager. -     The wife's assets comprise [Country P Currency] 1,930,000 being: sale proceeds from her property in [City Q], [Country P]; […] dowry from her family; and Savings.
2001	[…]	Marriage. The husband and wife are married at [Suburb M], Victoria.
2002	[…]	[Mr S] is born.
2002	July	The husband and wife acquire vacant land at [N Street], [Suburb O] for $78,000 and subsequently construct the family home. The acquisition and building costs ($300,000 to $400,000) are financed as follows: -     Approximately $130,000 from [T Bank] secured by mortgage, and -     The balance from the wife’s pre-relationship assets. [Suburb O] is initially registered in the name of the husband's parents. Several months after the settlement of the purchase, the title is transferred to the names of the husband and his parents as joint tenants.
2002	22 July	The husband and [Mr D] commence a business importing [goods] from [Country P] and establish [U Pty Ltd]. -     The husband is the sole director of [U Pty Ltd] and owns 50% of the issued shares. -     [Mr D] owns 50% of the issued shares. -     At one stage, [Mr V] holds one of the issued shares.
2002	[…]	The husband’s father passes away.
2003	[…]	[Ms W] is born.
2005	[…]	The husband’s mother passes away.
2006	The husband ceases operating [U Pty Ltd].
2006	May	The husband and wife acquire [X Street], [Suburb Y] (the [Country P] property) for […] 1.9 million [in Country P currency] as follows: -     […] 1.5 million [in Country P currency] by way of bank loan; and -     […] 400,000 [in Country P currency] borrowed from the wife's relatives. The [Country P] property is registered 99% in the wife's name and 1% in the husband's name.
2006	4 July	The husband incorporates [B Pty Ltd] -     The husband is a director and owns 50% of the issued shares. -     [Mr Z], [Mr D]’s relative, is a director and owns 40% of the issued shares. -     [Ms BB], the wife of [Mr Z]
2006	14 September	[Suburb O] is registered in the husband's sole name pursuant to a survivorship application.
2006 2007	The husband borrows [Country P currency] 1.1 million from the wife’s relatives in [Country P].
2007	12 August	[U Pty Ltd] is deregistered.
2007	4 October	The husband and [Mr D] establish [J Pty Ltd] as trustee for the [J Trust], for the benefit of their respective families. The wife and [Ms K], [Mr D]’s wife, are co‑directors and equal shareholders of [J Pty Ltd].
2007	[…]	[J Pty Ltd] acquires [G Street], [Suburb H] for $296,000.
2008 2012	The husband borrows [Country P currency] 1.5 million from [Mr DD].
200	August	Separation. The husband and wife separate. The wife and children return to [Country P]. The initially live with the wife’s family before moving into the [Country P] property.
2009	The husband agrees to pay the wife $181,000 in two instalments as backpay for her work in [B Pty Ltd].
2009	October	The wife and husband agree to pay $135,000 to [Ms K], for her 50% interest in [J Pty Ltd].
2011	[…]	[J Pty Ltd] sells [G Street]. The net proceeds of sale of $298,000 are paid into a Commonwealth Bank account in the name of [J Pty Ltd].
2011	[…]	The husband acquires [L Street], [Suburb M] for $550,000 as follows: -     $250,000 borrowed from Westpac and secured by mortgage registered against [Suburb O]. -     $330,000 borrowed from [EE Bank] and secured by mortgage registered against [L Street].
2011	June	[Ms K] resigns as a director of [J Pty Ltd] and transfers her interest in the entity to the husband, on trust for the wife.
2011	19 July	The husband and wife sign a minute of proposed consent orders prepared […] on the instructions of the husband providing: -     Transfer of [Suburb O] to the wife subject to mortgage. -     The husband retains all other property in his name or possession. -     The wife receive the husband's superannuation benefits.
2011	[…]	The wife institutes proceedings in the County Court of Victoria against [Ms K], after [Ms K] claims an entitlement to 50% of the sale proceeds of [G Street].
2011	[…]	The husband and wife are divorced by way of divorce application granted [in] 2011.
2012	June	The husband and wife assign their beneficial interest in the [Country P] property for [Country P currency] 3 million to [Mr DD], against the wife’s wishes. The entirety of the funds is applied to discharge the bank loan and loan outstanding to [Mr DD]. The wife and the children are forced to vacate the [Country P] property.
2012	[…]	The wife and [Ms K] settle the County Court proceedings pursuant to which the net sale proceeds of [G Street] are to be distributed: -     The sum of $32,500 to [Ms K]; -     The balance to an account nominated by the wife (a Westpac account in the husband’s name from which the loan repayments for [Suburb O] are paid by direct debit).
2012	[…]	[B Pty Ltd] institutes proceedings in the Supreme Court of Victoria against the husband to recover misappropriated funds in the sum of $5,680,193 plus damages.
2012	[…]	ORDER made ex parte by the Supreme Court of Victoria freezing the assets of the husband and the wife up to an unencumbered value of $5.6 million (the freezing order).
2012	[…]	ORDER made by the Supreme Court of Victoria extending the freezing order until the determination of the proceeding, such order not to preclude the transfer to the wife of the husband’s superannuation entitlements.
2013	[…]	The wife returns to Australia with the children.
2016	[…]	ORDERS made by the Supreme Court of Victoria; -     Requiring the husband to pay [B Pty Ltd] the sum of $4,165,981 plus interest of $1,596,364 (the Supreme Court judgment); and -     Extending the effect of the freezing order until further order.
2017	[…]	Warrant of seizure and sale registered against the title of [Suburb O] and [L Street].
2017	20 March	The wife files an Initiating Application in the Federal Circuit Court of Australia seeking inter alia: -     Leave to proceed out of time for an application for alteration of property interests. -     To restrain [B Pty Ltd] from enforcing the Supreme Court judgment against the husband.
2017	16 May	ORDERS made by the Federal Circuit Court of Australia, inter alia: -     Granting the wife leave to institute property proceedings out of time; -     Granting [B Pty Ltd] leave to intervene in the proceeding; -     Restraining [B Pty Ltd] from enforcing the Supreme Court judgment against the husband.
2018	13 July	ORDERS made by the Federal Circuit Court of Australia listing the matter for final hearing on 1 May 2019. The final hearing is subsequently re-listed by the court to 8 May 2019.
2019	[…]	The husband issues an originating process in the Federal Court of Australia against [B Pty Ltd] (the first Federal Court proceeding).
2019	24 April	ORDERS made by the Federal Circuit Court of Australia vacating the final hearing on 8 May 2019 and adjourning the final hearing to 17 February 2020.
2019	[…]	The husband issues an originating process in the Federal Court of Australia against [Mr D], [Mr CC and] [Ms K] […] (the second Federal Court proceeding).
2019	24 September	ORDERS made by the Federal Circuit Court of Australia vacating the final hearing on 17 February 2020 and adjourning the final hearing to 15 June 2020.
2020	20 May	ORDERS made by the Federal Circuit Court of Australia transferring the proceedings to the Family Court of Australia.
2021	10 May	The proceedings are listed for final hearing before the Honourable Justice Wilson.
2021	13 May	The final hearing is adjourned on the application of [B Pty Ltd].
2021	13 July	ORDERS made by the Family Court of Australia dismissing applications for costs made by the wife and husband against [B Pty Ltd].
2021	9 August	The husband and wife file a Notice of Appeal with respect to the orders made on 13 July 2021.
2022	15 February	ORDERS made by the Federal Circuit and Family Court of Australia (Division 1) (FCFCOA) Appellate Jurisdiction, inter alia: -     Setting aside the orders made on 13 July 2021. -     Requiring [B Pty Ltd] to pay the costs of the wife (and husband) thrown away as a result of the adjournment of the final hearing. -     Requiring [B Pty Ltd] to pay the costs of the wife (and husband) of the appeal.
2022	[…]	The wife issues: -     An Application in a Proceedings seeking leave to proceed undefended against [B Pty Ltd]. -     A statutory demand for payment of the costs order made on 15 February 2022 (totalling $42,553.30).
2022	[…]	[B Pty Ltd] issues an originating process in the Federal Court of Australia seeking to set aside the wife’s statutory demand.
2022	14 June	The matter is listed for mention before the Honourable Justice Wilson for the purpose of relisting the matter for final hearing. ORDERS made: -     Removing the matter from His Honour’s docket; -     Referring the matter to the National Assessment Team for ongoing case management.
2022	[…]	ORDERS made in the Federal Court of Australia: 1.   Dismissing the originating process filed by [B Pty Ltd] [in] 2022; 2.   Requiring [B Pty Ltd] to pay the wife’s costs fixed in the sum of $15,000
2022	19 September	ORDERS made by the FCFCOA inter alia: -     Requiring [B Pty Ltd] pay the sum of $59,040.80 to the wife in payment of the costs orders made by the FCFCOA on 15 February 2022 and the Federal Court [in] 2022. -     For the parties attend a mediation [in] 2022 at their shared expense.
2023	[…]	The parties attend private mediation convened by [Mr FF].
2023	[…]	ORDERS made in the Federal Court of Australia inter alia: -     Listing the first and second Federal Court proceedings for trial at the earliest opportunity after […] 2023.
2023	14 February	ORDERS made by the FCFCOA, inter alia: -     Listing the matter for final hearing before the Honourable Justice Williams commencing 4 September 2023; -     For the sale of [L Street].
2023	4 September	The matter is listed for final hearing before the Honourable Justice Williams.

Brief procedural history of family law proceedings

1. The current application for property settlement was commenced on 20 March 2017, some eight and a half years after separation. The wife filed an Initiating Application in the Federal Circuit Court of Australia (as it then was) seeking inter alia, leave to proceed almost five years out of time for an application for property settlement vis-à-vis the husband, and to restrain B Pty Ltd from enforcing the Supreme Court judgement debt against the husband.

2. On 16 May 2017, orders were made by consent between the husband and wife inter alia, granting leave to the wife to commence property proceedings out of time, and for B Pty Ltd to intervene in the proceeding. Procedural and injunctive orders were also made on that date including an order for a one-day hearing on 6 October 2017. The injunctive orders restrained the husband from dealing with N Street, Suburb O (“the Suburb O property”) and L Street, Suburb M (“the Suburb M property”) pursuant to s 90AE(2) of the Act, restrained the Sheriff’s Office of Victoria from taking any action, and restrained the intervenor, until further order, from enforcing the Supreme Court judgment against the husband.

3. Thereafter, the matter was listed for various mentions and new trial dates, prior to orders made 20 May 2020 transferring the proceeding to the Family Court of Australia (as it then was).

4. On 14 February 2023 procedural orders were made by me, with the trial eventually commencing on 13 March 2024.

   THE PROPOSALS OF THE PARTIES

   The wife’s proposal and documents relied upon

5. The orders which the wife seeks are set out in the proposed Minute of Final Orders provided to the court on 12 July 2024, and are Annexure A hereto.

6. The wife relied upon the following documents:

   (a)Further Amended Initiating Application filed 29 June 2023;

   (b)Affidavits of the wife filed 29 June 2023 and 31 August 2023;

   (c)Financial Statement of the wife filed 29 June 2023;

   (d)Affidavit of Mr GG filed 29 June 2023; and

   (e)Outline of Case document filed 8 March 2024.

   The husband’s proposal and documents relied upon

7. The husband proposed the court should make orders in accordance with the wife’s proposed Minute of Final Orders dated 12 July 2024 (Annexure A hereto).

8. The husband relied upon the following documents:

   (a)Amended Response to Final Orders filed 27 May 2020;

   (b)Affidavit of the husband filed 1 September 2023;

   (c)Amended Financial Statement filed 1 September 2023;

   (d)Outline of Case document filed 9 June 2022 and 1 September 2023; and

   (e)Documents tendered by counsel during the trial.

   The intervenor’s proposal and documents relied upon

9. The intervenor’s proposed orders are set out in the Minute of Proposed Final Orders provided to the court on 12 July 2024, and are Annexure B hereto.

10. The intervenor relied upon the affidavit of Mr D filed 25 August 2023, and documents tendered by counsel during the course of the trial.

11. Counsel for the husband and intervenor tendered documents during the trial as follows:

Exhibit Number	Description
H-1	ASIC search of [B Pty Ltd] as of 9 February 2021.
H-2	ASIC search of [B Pty Ltd] as of 12 March 2024.
I-1	Historical title search.
I-2	Transfer of land relating to QLD property, dated […] 2007.
I-3	Transfer of land relating to QLD property, dated […] 2011.
I-4	Westpac mortgage statement dated 25 September 2009 – 26 October 2009.
I-5	[EE Bank] mortgage statement dated 1 April 2011 – 30 April 2011.
I-6	Historical title search of [HH Street].

EVIDENCE

1. The standard of proof in this case is the balance of probabilities (s 140 Evidence Act 1995 (Cth)).

2. Section 140 of the Evidence Act 1995 (Cth) provides:

   (1)In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.

   (2)Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account:

   (a)       the nature of the cause of action or defence; and

   (b)       the nature of the subject matter of the proceeding; and

   (c)       the gravity of the matters alleged.

3. The wife and husband relied upon their respective affidavits. The intervenor relied upon the affidavit of Mr D, a director of the company. I have examined that evidence and do not propose to repeat it in these reasons. It is not necessary for a trial judge to refer to every piece of evidence or argument presented during a trial.

4. In Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at [62], Gleeson CJ, McHugh and Gummow JJ said:

   …A judge’s reasons are not required to mention every fact or argument relied on by the losing party as relevant to an issue. Judgments of trial judges would soon become longer than they already are if a judge’s failure to mention such facts and arguments would be evidence that he or she had not properly considered the losing party’s case.

   Credibility of witnesses

5. The wife gave evidence and was cross-examined by counsel for the intervenor. She gave evidence over the course of two days with the assistance of an interpreter. The wife’s answers were mostly non-responsive, and she provided little additional detail. It was clear her evidence was given through a prism of what she considered to be most advantageous to her case. Her purported lack of knowledge as to what was occurring around her, and wilful blindness defies belief. One example of this was the wife’s evidence that she was unaware of the purported loans given from her family to the husband, despite having a good relationship and regular communication with her mother. The wife also gave evidence that despite separating from the husband in 2008, she was still prepared to sign documents in late 2011 in English, despite not being fluent in English, absent any curiosity and knowledge about what she was signing. Her evidence was entirely unconvincing, and I do not accept her as a forthcoming witness of truth.

6. The husband gave evidence and was cross-examined by counsel for the intervenor. He similarly gave evidence over the course of two days with the assistance of an interpreter. The husband appeared to be making things up on the run, an example being his joint ownership of the Queensland property, which he failed to disclose and was unable to provide any credible explanation as to why his former wife was included in the transaction, other than a supposed first home buyer concession. His evidence about why the property was sold was also entirely unconvincing, and he was unable to remember the name of his friend’s son on whose behalf he supposedly bought the house, nor the institution in Queensland that the son had purportedly attended. I do not consider the husband to be a helpful, truthful or reliable witness.

7. Mr D was cross-examined by counsel for both the wife and husband. He was cross-examined over the course of two days with the assistance of an interpreter. He impressed as a truthful witness and where the evidence of Mr D and the husband and wife differs, I generally prefer the evidence of Mr D. I make this comment notwithstanding the obvious difficulties arising from the fact that they all gave their evidence through an interpreter.

   RELEVANT LEGISLATION

8. Property proceedings between parties to the marriage are governed by the provisions of s 79 of the Act.

9. Section 79(1) provides that the court may make such orders as it considers appropriate altering the interests of the parties in the property.

10. Section 79(2) provides as follows:

    The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.

11. If the court is satisfied that it is just and equitable to make an order altering the interests of the parties in property, s 79(4) of the Act sets out the matters which the court must take into account when considering what order (if any) should be made.

12. Section 79(4) provides as follows:

    In considering what order (if any) should be made under this section in property settlement proceedings, the court shall take into account:

    (a)the financial contribution made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

    (b)the contribution (other than a financial contribution) made directly or indirectly by or on behalf of a party to the marriage or a child of the marriage to the acquisition, conservation or improvement of any of the property of the parties to the marriage or either of them, or otherwise in relation to any of that last-mentioned property, whether or not that last-mentioned property has, since the making of the contribution, ceased to be the property of the parties to the marriage or either of them; and

    (c)the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent; and

    (d)the effect of any proposed order upon the earning capacity of either party to the marriage; and

    (e)the matters referred to in subsection 75(2) so far as they are relevant; and

    (f)any other order made under this Act affecting a party to the marriage or a child of the marriage; and

    (g)any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage.

13. Prior to the decision of the High Court of Australia (“the High Court”) in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), the preferred approach to determine property matters was set out by the Full Court in the matter of In the Marriage of Hickey [2003] FamCA 395 (“Hickey”).

14. The approach, as set out in Hickey may be summarised as follows. Firstly, the court should make findings as to the identity and value of the property pool. Secondly, the court should determine the contributions of the parties both direct and indirect, including financial and non‑financial contributions and then determine the contribution-based entitlements of each of the parties, as a percentage of the value of the property of the parties. Thirdly, the court should determine whether any further adjustment should be made to the contribution-based entitlements of the parties, after giving consideration to the relevant matters referred to in s 75(2) of the Act. Fourthly, the court should consider the effect of those findings and decide what order for division of property is just and equitable.

15. In Stanford, the High Court noted that s 79(1) enables the court to make such orders as it considers appropriate. However, prior to making any orders for the adjustment of parties’ interests in property, the court must determine whether it is just and equitable to make any property orders, or to alter the parties’ interests in property.

16. At paragraph [36] of Stanford, the High Court said:

    [36]The expression “just and equitable” is a qualitative description of a conclusion reached after examination of a range of potentially competing considerations. It does not admit of exhaustive definition. It is not possible to chart its metes and bounds.

17. In Bevan & Bevan [2013] FamCAFC 116 (“Bevan”), the Full Court considered which matters might be taken into account in determining whether it is just and equitable to alter existing property interests.

18. At paragraphs [84] and [85], Bryant CJ and Thackray J said:

    [84]Just as the expression “just and equitable” does not admit of exhaustive definition, it is not possible to catalogue the “range of potentially competing considerations” that may be taken into account in determining whether it is just and equitable to make an order altering property interests. However, in our view, it would be a fundamental misunderstanding to read Stanford as suggesting that the matters referred to in s 79(4) should be ignored in coming to that decision. Indeed, such a reading would ignore the plain words of s 79(4) which make clear that in considering “what order (if any) to make, the court must take into account the matters referred to in that subsection.

    [85]This requirement to consider the s 79(4) matters, in determining whether it is just and equitable to make any order provides fertile ground for potential conflation of the two different issues, which the High Court has warned against. However, this potential will not be realised in many cases because of what the plurality said at [42] about the “just and equitable” requirement being “readily satisfied”. But there will be a range of cases, of which arguably the present is a good example, where determining whether it is just and equitable to make any order altering property interests will not be so clear cut and will therefore require not only separate but very careful deliberation.

19. In Bevan, Finn J stated at [169]:

    [169]Findings of fact concerning of the parties financial history (i.e. the contributions) and their present circumstances and future prospects made in the context of s 79(4) will also assist, but such findings cannot (according to Stanford) be conclusive in determining whether or not it is just and equitable to make an order altering any particular property interest.

20. The Full Court in Chancellor & McCoy [2016] FamCAFC 256 said at paragraph [42]:

    [42]In adopting the approach she did, her Honour proceeded in accordance with what the Full Court said in both Bevan and Chapman, namely that it is open to a trial judge to take into account the matters stated in s 79(4) (or s 90SM) of the Family Law Act 1975 (Cth) ("the Act") when determining whether it is "just and equitable" to adjust existing property interests. However, consistent with Stanford, her Honour also recognised that it was not open to her to decide that issue merely by reference to those matters.

21. The High Court stated in Stanford at [37]:

    [37]First, it is necessary to begin consideration of whether it is just and equitable to make property settlement order by identifying, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property… The question posed by s 79(2) is thus whether, having regard to those existing interests, the court is satisfied that it is just and equitable to make a property settlement order."

22. At paragraph [40] of Stanford, the High Court stressed that the question of whether it is just and equitable to make property settlement orders should not be answered by starting with an assumption:

    [40]…that one or other party has the right to have the property of the parties divided between them, or has the right to an interest in a marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised "in accordance with legal principles, including the principles which the Act itself lays down". To conclude that making an order is "just and equitable" only because of and by reference to various matters in s 79(4) without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

23. The High Court further stated at [42] that:

    [42]In many cases where an application is made for a property settlement order, the just and equitable requirement is readily satisfied by observing that, as the result of a choice made by one or both of the parties, the husband and wife are no longer living in a marital relationship. It will be just and equitable to make a property settlement order in such a case because there is not and will not thereafter be the common use of property by the husband and wife. No less importantly, the express and implicit assumptions that underpinned the existing property arrangements have been brought to an end by the voluntary severance of the mutuality of the marital relationship. That is, any express or implicit assumption that the parties may have made to the effect that existing arrangements of marital property interests were sufficient or appropriate during the continuance of their marital relationship is brought to an end with the ending of the marital relationship and the assumption that any adjustment to those interests could be effected consensually as needed or desired is also brought to an end. Hence it will be just and equitable that the court make a property settlement order. What order, if any, should then be made is determined by applying s 79(4).

24. In summary, in the majority of matters the decision as to whether or not it is just and equitable for the court to make property orders is resolved by the breakdown of the marital relationship and the mutual applications of the parties to the court for orders altering their respective interests.

    IS IT JUST AND EQUITABLE TO ALTER THE PARTIES’ PROPERTY INTERESTS?

25. I will now consider whether it is just and equitable to make an order adjusting property in this case. To do so, I am required to adopt the pathway set out in the relevant authorities and to embark on a separate, but very careful deliberation. As previously referred to, Stanford requires the first step of that inquiry to identify, according to ordinary common law and equitable principles, the existing legal and equitable interests of the parties in the property.

    THE PARTIES’ EXISTING INTERESTS IN PROPERTY

26. The Joint Balance Sheet of assets and liabilities of the husband and wife, was provided by counsel for all three parties at the commencement of the hearing and a slightly amended version was produced just prior to final submissions.

27. Below is the final version of the Joint Balance Sheet which identifies disputed items.

Description	Value	Debt	Net H&W	Intervenor
Joint
Funds in Wife’s Solicitor’s Trust Account	$457,352	$457,352
Funds in Husband’s Solicitors Trust Account	$9,423	$9,423
Total Joint	$466,775	$466,775
The Wife
50% interest in [J Pty Ltd]	$148,765	$148,765
Beneficial interest in Husband's 50% interest in [J Pty Ltd]	$148,765	-
County Court sett. funds to be paid to [Ms K] by [J Pty Ltd]	($32,500)	($32,500)
Add-back sought by [B Pty Ltd] against Wife ([…] 2009)	$100,000
Add-back sought by [B Pty Ltd] against Wife ([…] 2009)	$81,000
Add-back sought by [B Pty Ltd] against Wife (99% [Country P] prop proceeds […] 2016)	$973,770
Total Wife	$297,530	$1,271,035
The Husband
50% interest in [J Pty Ltd] (on trust for Wife)	$148,765
50% interest in [B Pty Ltd] (not valued)	Not known
[N Street], [Suburb O]	$817,500	($306,022)	$511,478	$511,478
Outstanding Costs Order against [B Pty Ltd]	$36,966	$36,966
Judgment Debt in favour of [B Pty Ltd] (incl interest per judgment dated […] 2016)	($5,762,345)	($4,165,981.43)
Interest on Judgment Debt (calculated by [B Pty Ltd])	($3,037,575.40)
Outstanding C.G.T on sale of [L Street]	($24,460)	($24,460)
Add-back sought by [B Pty Ltd] against the Husband (1% [Country P] prop proceeds)	$9,836.07
Total Husband	($5,238,361)	($6,520,971.76)
TOTAL NET NON-SUPER POOL	($4,474,056)	($4,783,161.76)
Superannuation
Wife’s Australian Super	$13,180	$13,180
TOTAL NET POOL INCL SUPER	($4,460,875)	($4,769,981.76)

1. The husband and wife were in agreement about the balance sheet, but the intervenor was not. The disputed items are as follows:

   (a)whether the husband held his 50 per cent interest in J Pty Ltd on trust for the wife;

   (b)should the following be notionally added back into the pool:

   (i)$181,000 received by the wife in two instalments in 2009.

   (ii)$973,770 being 99 per cent of the proceeds of the Country P property when it was sold to a third party in 2016 (notionally attributable to the wife);

   (iii)$9,836.07 being 1 per cent of the proceeds of sale of the Country P property (notionally attributable to the husband).

   (c)The interest payable on the judgement debt.

2. All parties agreed the value of the husband’s interest in B Pty Ltd should be included in the balance sheet, although it was impossible to quantify the value of that interest because there was limited discovery between the intervenor and the husband wife, and no steps had been taken by any party to value B Pty Ltd.

3. I now turn to the contentious assets.

4. First, the funds in the J Pty Ltd bank account. In the Outline of Case filed 1 September 2023 by the intervenor, the Table of Assets, Liabilities and Financial Resources referred to the wife’s entitlement to J Pty Ltd, as $300,000, being approximately the whole of the proceeds in trust. There was no reference to the husband’s entitlement to those funds, despite him still being an equal shareholder in the company.

5. The wife’s evidence about this issue is at paragraph [48] of her affidavit filed 29 June 2024, where she deposes to a restructuring of the shareholding in the company, to sever the interests of the other shareholders and an inadvertent transfer of shares to the husband, instead of to her.

6. According to counsel for the wife, the first time there was any divergence from that position, was when the balance sheet was prepared during the early days of the trial. Prior to that, the intervenor had accepted the wife’s position. There was no evidence before the court which contradicted the position of the husband and wife, that the husband held his shareholding in the company on trust for the wife, no evidence about this issue was in the affidavit of Mr D, and neither the husband nor wife were challenged about this issue during cross-examination.

7. For these reasons, I find the wife is the beneficial owner of the funds in the bank account of J Pty Ltd.

8. Secondly, I turn to the notional addback of funds, as sought by the intervenor.

9. Notional addback of funds expended by parties into the pool of assets, is the exception rather than the rule. It is a matter for the discretion of the primary judge, and what is crucial is an assessment of the reasonableness or otherwise of the expenditure: see Omacini & Omacini (2005) FLC 93-218; Trevi & Trevi (2018) FLC 93-858 and Candle & Falkner [2021] FedCFamC1A 102.

10. As to the $181,000, which was paid to the wife in two instalments in 2009, counsel for the wife submitted the wife’s application of the funds received by her for living expenses, in circumstances where she had been primarily responsible for the care of the children of the marriage with nominal support from the husband, could not be considered as anything other than reasonable. Her expenditure of the funds was not within the category of usual exceptions, which include reckless expenditure, legal fees, or premature distribution of assets. If the payment to the wife is added back into the asset pool, it would be double counting because the amounts paid to the wife are included in the judgement debt.

11. I accept the submission of counsel for the wife, particularly that it would be double counting to add back into the asset pool the payments to the wife. I do not intend to include the sum of $181,000 as a notional asset in the asset pool.

12. Counsel for the intervenor initially sought a sum equivalent to the sale price of X Street, Suburb Y City R Country P (“the Country P property”) should be included in the asset pool as a notional add back. The value adopted was the sale price of the property when it was ultimately sold to a third party in 2016, after the husband and the wife allegedly notionally transferred their interest to Mr DD. According to Mr D, he had personally advanced funds to either the husband or the wife, to assist them to purchase the Country P property. He asserts, in 2006 he advanced 20,000 in Country P currency for the deposit and 816,771 in Country P currency for part payment of the purchase price, and a further 83,667 in Country P currency as part payment of purchase in 2007.

13. During his final submission, counsel for the intervenor conceded the funds personally advanced by a director of the intervenor should not be intermingled with the claim of the intervenor and should not be notionally added back into the asset pool. Instead, the personal contributions of Mr D to the Country P property should be treated as a contribution by him to the asset pool, which diminishes the wife’s asserted contributions. There were no submissions as to how that personal contribution should be quantified or otherwise considered in the exercise of discretion.  

14. I accept the value of the Country P property, including the reference to the husband’s one per cent share, should not be added back into the asset pool and will refer below to the asserted contribution of Mr D.

15. Lastly, the husband and the wife did not agree with the intervenor about the quantum of interest accruing on the judgement debt. It is not necessary to determine the exact amount of interest accrued, as it is obvious the net asset pool for distribution between the parties (excluding the judgement debt) falls well short of the judgement debt, before interest is even considered.

    Conclusion as to the existing legal and equitable interests of the parties – adjusted balance sheet

16. As a result of my findings as to disputed assets, and the treatment thereof, the existing legal and equitable interests of the parties, is as follows:

TABLE OF ASSETS
Description	Ownership		Value
Funds in wife’s solicitors trust account	Joint		$457,352
Funds in husband’s previous solicitor’s trust account	Joint		$9,423
Total joint			$466,775
50% interest in [J Pty Ltd]	Wife		$148,765
Beneficial interest in husband’s 50% interest in [J Pty Ltd]	Wife		$148,765
Total wife			$297,530
50% interest in [B Pty Ltd] (not valued)	Husband		Not known
Equity in [N Street], [Suburb O].	Husband		($817,500 - $306,022) = $511,478
Outstanding costs order against [B Pty Ltd] pursuant to orders made […] 2022	Husband		$36,966
Total husband			$548,444
Total non-super pool	$1,312,749
Wife’s Australian Super	Wife		$13,180
Total pool including super	$1,325,929
TABLE OF LIABILITIES
County Court settlement funds to be paid to [Ms K] by [J Pty Ltd]		Wife		($32,500)
Outstanding CGT on sale of [L Street]		Husband		($24,460)
Total liabilities excluding the judgement debt		($56,960)
Total net non-super pool		$1,255,789
Judgement debt
Judgment debt in favour of [B Pty Ltd] (including interest per judgment dated [2016])		Husband		($5,762,345) (H&W) ($7,203,556.83) (I)

1. In this matter, the parties have separated, and both parties have made applications to the court seeking orders altering their respective property interests, and submit it is just and equitable to make such orders.

2. The parties are no longer living in a marital relationship, and as stated at paragraph [42] of Stanford (supra), there will not “thereafter be the common use of property by the husband and the wife”.

3. I am satisfied that it is just and equitable to alter the parties’ property interests. The case was run by all three parties on the basis that when adjusting the interests of the husband and wife in the net asset pool for distribution, the judgement debt and any accrued interest should be disregarded.

4. Having satisfied myself that it is just and equitable to make an order altering the interests of the parties in the property, and having identified the existing legal and equitable interests of the parties, the approach and considerations I must make are as follows:

   (a)Identify and give weight to the various contributions of each of the parties as set out in s 79(4)(a)–(c) and make an assessment as to the entitlements of the parties based on their respective contribution;

   (b)Identify the relevant considerations as set out in s 79(4)(d)–(g), including the matters set out in s 75(2) so far as they are relevant, and then decide whether any further adjustment is appropriate; and

   (c)Consider whether the proposed orders are just and equitable.

5. I now turn to consider the relevant s 79(4) factors.

   Contributions

6. Both the husband and wife were in heated agreement about their respective contributions and the wife’s future needs. Both agreed their matrimonial property should be divided 75 per cent in favour of the wife and 25 per cent in favour of the husband, excluding the husband’s interest in B Pty Ltd, the value of which was unable to be ascertained and excluding the judgement debt and interest. B Pty Ltd would be at liberty to seek recovery of the judgement debt from the husband’s assets.

7. Both parties assert the wife’s contributions should be assessed at 65 per cent and the husband’s contributions at 35 per cent.

8. According to the wife’s Outline of Case Summary filed 8 March 2024, with which the husband agrees, and her trial affidavit filed 29 June 2023, the relevant contributions of the parties and acquisition of properties, is as follows.

9. At the commencement of the relationship the wife contended she had assets worth approximately 1,930,000 in Country P currency (approximately AUD400,000) comprising proceeds of sale of her property in Country P, a dowry from her family of 1,000,000 in Country P currency (approximately AUD200,000), and savings.

10. The wife contends at paragraph [15] of her trial affidavit that when she emigrated, she managed to bring to Australia “at least USD236,000”, and sometime thereafter she managed to bring the balance of her savings in Country P to Australia.

11. In 2002, the husband and wife purchased the Suburb O property and constructed a family home, which was financed using the wife’s pre-relationship assets (between AUD250,000 to AUD350,000) together with a bank loan of AUD130,000.

12. Between 2006 and 2007, it is asserted the wife’s relatives in Country P provided the sum of 1,100,000 in Country P currency (approximately AUD220,000) to the husband by way of loan, which the husband has not repaid. The wife asserts she had no knowledge of the loan advanced to the husband by her family.

13. During the marriage, the husband operated a business, initially through U Pty Ltd, and subsequently through B Pty Ltd. According to the wife, she assisted the husband by undertaking some duties. I further refer to the wife’s role in the business below.

14. According to the parties, the wife made significantly greater contributions as homemaker and parent both during the marriage and following separation in August 2008. Subsequent to separation, the wife and children returned to Country P when the children were five and six years of age. Thereafter, the husband had little contact with the children and provided limited financial support to the wife.

15. In 2011, the husband purchased the L Street property using the equity in the Suburb O property and a further bank loan. A further amount of approximately AUD250,000 was required to settle the purchase of the L Street property. The relevant bank statements, Exhibit H-5, demonstrate the husband borrowed AUD579,000 from EE Bank to complete the purchase. The husband did not explain how the additional borrowed funds of approximately AUD329,000 were applied by him.

16. The husband and wife contended, in 2011, they reached an agreement for the wife to retain the Suburb O property subject to the mortgage and receive the husband’s superannuation entitlements. They signed a Minute of Proposed Consent Orders to that effect, although the Minute was never submitted to the court for approval to formally finalise a financial settlement between them.

17. The wife also claims as a contribution, the loan from her family to the husband, allegedly advanced in 2006 and 2007, because she does not admit the loan is enforceable or likely to be pursued.

18. There was no evidence to contradict the parties’ asserted contributions, except the claim of Mr D, who is not a party to the proceedings, about his asserted contribution to the acquisition of the Country P property, and it would be almost impossible for any such evidence to be adduced by the intervenor.

19. The husband and wife are in agreeance the wife made greater financial contributions to the relationship, particularly the acquisition of the Suburb O and Suburb M properties, and her greater non-financial contributions as homemaker and parent during the relationship and post‑separation. Although the children are now both over 18 years old, they are still engaged in tertiary studies and dependent upon the wife for financial support, to which the husband does not contribute.

20. Counsel for the intervenor cross-examined the wife about the assets she asserted she had at the commencement of the relationship and her capacity to accumulate assets, given the nature of her employment. She was also cross-examined about her knowledge of the loan of approximately AUD220,000 purportedly advanced by her family to the husband between 2006 and 2007, which coincided with the period the husband and the intervenor operated the business together.

21. During cross-examination, the wife said she had managed to discharge the mortgage over the property she had purchased in Country P, during the period of 1992–2000 using her income, whilst also accumulating additional savings. Her evidence was that she was employed as a manager and received substantial income, which was well in excess of an average income for someone in her position. She apparently managed to bring USD236,000 into Australia in cash with the assistance of family members.

22. The funds the wife managed to bring to Australia from Country P in or around 2002, were used to purchase the Suburb O property, which was registered in the name of the husband’s parents. According to the wife, at the time of purchase and subsequent construction, she was pregnant and was content for the property to be purchased in the name of the husband’s parents, because the husband was an only child and eventually the property would pass onto her children. As deposed at paragraph [21] of the wife’s June 2023 affidavit, following the death of the husband’s parents, the husband became the sole registered proprietor of the Suburb O property.

23. The claim by Mr D that he contributed to the purchase price of the Country P property in 2006 and thereby contributed to the acquisition of marital assets, is vehemently denied by the wife. At paragraph [30] of her trial affidavit, she deposes to acquiring the property in 2006 with funds borrowed from her relatives in Country P and from the JJ Bank of Country P. Further, at paragraphs [51]-[56], she deposes to the circumstances of the informal transfer of the property to Mr DD because of debts incurred by the husband. When the property was ultimately sold in 2016, the title was transferred to the new owners with Mr DD receiving all the proceeds of sale.

24. The wife was cross-examined by counsel for the intervenor about the purchase and disposition of the Country P property, and she remained steadfast in her answers. I am unable to make a finding as to the veracity of the circumstances of the purchase and disposition of the Country P property, as it is property that no longer exists, and as conceded by counsel for the intervenor, the value of the property upon disposition should not be notionally added back into the asset pool.

25. The husband’s intentional and reckless misappropriation of funds belonging to the intervenor has resulted in a judgement debt from which the wife apparently received no benefit other than the sum of AUD181,000 in back pay.

    Conclusion as to contributions

26. I do not intend to attach percentages to the parties’ initial contributions, those made during the marriage, and post separation.

27. As the Full Court said in Dickons & Dickons [2012] FamCAFC 154:

    [23]We wish also to refer to the approach of the Federal Magistrate in attributing percentages to differing periods within the relationship, or types of contribution made. There is in our view little to be gained, and much to be said against, approaching the task of assessing contributions by attaching percentages to components of it. (The same, it might be said, applies to attributing a percentage to each of the relevant s 75(2) factors).

    [24]There can be little doubt that the classification of contributions by reference to terms such as "initial contributions", "contributions during the relationship", and "post-separation contributions", can be helpful as a convenient means of giving coherent expression to the evidence in a s 79 case and to giving coherence to the nature, form and extent of the parties' respective contributions. However, the task of assessing contributions is holistic and but part of a yet further holistic determination of what orders, if any, represent justice and equity in the particular circumstances of this particular relationship. So much is clear from the terms of s 79 itself and, in particular, s 79(2). The essential task is to assess the nature, form and extent of the contributions of all types made by each of the parties within the context of an analysis of their particular relationship.

28. Both the husband and wife agreed the wife had made overwhelming financial contributions to the assets of the marriage and that she should receive proper recognition of her contributions, including the significant initial contribution which enabled the family to build their first marital home. The husband also acknowledged the greater non-financial and indirect contributions made by the wife in relation to home duties and care of their two children.

29. Both parties contended the court should find the wife’s contributions should be assessed at 65 per cent in her favour and 35 per cent in favour of the husband.

30. The court is not bound by the submissions of the husband and wife as to their respective contributions, and having regard to and assessing the myriad of contributions of the parties, both financial and non-financial, direct and indirect, at the commencement of the relationship, during the relationship, and post separation, and their contributions as homemaker and parents, I assess the parties contributions as 55 per cent in favour of the wife and 45 per cent in favour of the husband.

31. I now turn to the future needs of the husband and wife.

    Section 75(2) factors and future needs

32. As to the future needs of the parties, according to the wife and the husband, the wife has significant future needs and there should be a further adjustment in her favour of 10 per cent as a result.

33. Until 2020 the wife was unemployed, and her source of income was unemployment benefits from which she supported herself and the two children. She has recently secured full-time employment and earns approximately $1,300 gross per week. She does not speak fluent English and contends her capacity to earn more than her current wage is poor.

34. Counsel for the intervenor cross-examined the wife about her current income as disclosed in her Financial Statement, and she agreed she was currently earning around $60,000 per annum, although her Financial Statement stated her present income exceeds her expenses.

35. Counsel for the intervenor also cross-examined the wife about the husband’s current income, as deposed in his Financial Statement. The wife denied any knowledge about the husband’s income and was unable to offer an opinion as to whether the husband received income from any other source, other than the rental income, which he disclosed in his Financial Statement.

1. The husband was cross-examined about his income, which according to his Financial Statement filed 13 March 2024, comprises of $630 in rent which he receives from the Suburb O property. When asked about his future income prospects, the husband said the last time he was in full‑time employment was approximately more than ten years ago, when he worked for the intervenor. Despite the debt owing to the intervenor, apparently the husband had not contemplated declaring bankruptcy, and considered he would be able to find a job and pay a little bit of the debt every week. He anticipated being able to find a job which would enable him to repay the personal loans from friends to enable him to meet his legal fees, which amount to $400,000. When asked why he had been unable to find a job during the previous ten years, despite trying, he maintained confidence he would be able to obtain employment in the future.

   Conclusion as to future needs

2. The husband and the wife sought an adjustment of 10 per cent in her favour for future needs.

3. I do not accept that submission is appropriate. It is impossible to reconcile why there should be any adjustment to the wife for her future needs, let alone an adjustment of 10 per cent of the asset pool. The uncontested evidence was that the wife is in receipt of an income of approximately $60,000 per annum, although she deposes that is insufficient to meet her needs. The husband, after the conclusion of these proceedings will not receive rental income and if he is eligible, his income will be Centrelink benefits. The husband has not been in employment for the past ten years or so, and although his evidence was that he was optimistic about securing employment in the future, there is no basis on which that optimism is founded. The adjustment of property which I propose to make must be just and equitable, both in terms of percentage adjustment, in real terms and the orders implementing the adjustment must also be just and equitable.

4. Additionally, after the conclusion of these proceedings the wife will be in a significantly superior capital position than the husband, who will have no capital assets, other than his shares in the intervenor, the value of which is not known, because any entitlement he may have to capital assets, will be subsumed by the judgement creditor.

5. After considering and balancing the future needs of the parties, I am satisfied it is not appropriate to make any adjustment to the wife for her future needs.

6. I now turn to consider the claim of the intervenor.

   INTERVENOR’S CLAIM

7. In 2012 the intervenor issued proceedings against the husband in the Supreme Court of Victoria. The basis for the proceeding was the husband’s misappropriation and misuse of funds, in contravention of his statutory and fiduciary duties as a director of the intervenor.

8. A trial took place in 2016, with Mr D, the husband, and wife giving evidence. The judge found in favour of the intervenor and published reasons.

9. The background to the dispute, in the following paragraphs, is extracted from the judgement in the Supreme Court proceedings, (“the Supreme Court judgment”). Counsel for the wife referred me to the reasons and provided a copy in his bundle of authorities, although it was not tendered in this proceeding.

10. Counsel for the husband and wife did not object to the facts stated in paragraphs 1-7 of the Supreme Court judgement. I refer to the following paragraphs of the Supreme Court judgement, in order to provide a background to the proceedings between B Pty Ltd and the husband:

    [1]This is a claim by the plaintiff against its former director, the defendant, for breach of […] duty. The plaintiff alleges that the defendant [is] in breach of duty […].

    [2]During the period […] 2006 to […] 2009, the plaintiff, [B Pty Ltd], carried on the business of importing [goods] from [Country P] and wholesaling them in Victoria.

    [3]During the period that it traded, the directors of [B Pty Ltd] were, the defendant ([Mr Pao]), [Mr Z] and [Ms BB]. [Mr Pao] held 50% of the shares. [Mr Z] held 40% and [Ms BB] held 10%.

    [4][Mr Z] and [Ms BB] are respectively the [relatives] of [Mr D]. Although there is some contest about this, [Mr Z] and [Ms BB] are clearly [Mr D]’s nominees.

    [5]Prior to the incorporation of [B Pty Ltd], [Mr Pao] and [Mr D] were equal shareholders in [U Pty Ltd]. [Mr Pao] was its sole director and ran the business in Australia and [Mr D] sourced and provided the [goods] in [Country P].

    [6]It was common ground that the global financial crisis had a profound effect on the business of [B Pty Ltd]. During […] 2009, it was decided (by [Mr Pao] and [Mr D]) to cease trading.

    [7][Mr Pao] took steps to deregister [B Pty Ltd]. It was deregistered [in] 2010. The reason given by [Mr Pao] was that all the shareholders had resolved to deregister the company and it had no external debt.

    (Footnotes omitted)

11. The intervenor seeks orders for the wife’s application for property adjustment to be dismissed, to enable it to enforce the judgement debt against all matrimonial assets.

    Legal principles

12. Section 79(4)(e) of the Act requires the court, in considering what order should be made in property settlement proceedings, to take into account the matters referred to in s 75(2) of the act, so far as they are relevant.

13. Section 75(2)(ha) of the Act requires the court to take into account the effect of any proposed order on the ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant.

14. In In the Marriage of Biltoft (1995) FLC 92-614 the Full Court of the Family Court considered the interrelationship between a claim under s 79 of the Act by spouses, and a claim by a creditor. The principles which can be gleaned from the decision are as follows:

    (a)It may be proper for the court not to take into account or to discount an unsecured liability in circumstances, including but not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred.

    (b)There is no requirement for the court to consider and deal with the rights of an unsecured creditor or a claim by third-party prior to making an order under s 79, nor is there a rule of priority as between a creditor claimant and a spouse.

    (c)The rights of a creditor cannot be ignored; they must be recognised, taken into account, and balanced against the rights of the spouse.

15. In Trustee of the Property of G Lemnos, a Bankrupt & Lemnos and Anor (2009) FLC 93-394, the Full Court of the Family Court held, (Coleman J at [96] and Thackray & Ryan JJ at [202]) the mere fact that there are insufficient funds to discharge a liability to a creditor does not bar the making of orders pursuant to s 79 of the Act.

16. In cases involving a third-party creditor, the following factors are relevant to the exercise of the court’s discretion:

    (a)The use to which the funds from the creditor were put and the benefits received by each party from those funds;

    (b)The knowledge of the other spouse with respect to the circumstances giving rise to the debt to the creditor.

    See Commissioner of Taxation & Worsnop & Anor (2009) FLC 93-392.

    Wife’s contentions as to the claim of the intervenor

17. In this proceeding, the wife contends the husband acted improperly and recklessly in misappropriating the funds and breaching his directors’ duties, with the effect of significantly reducing the value of assets otherwise available for division between the parties. She claims she was unaware of the husband’s conduct and activities.

18. The misappropriation of funds occurred between 2006 and 2009, during which time the intervenor carried on a business of importing goods to Australia from Country P, and then wholesaling the goods in Victoria.

19. Following the breakdown of the marriage in August 2008, the wife and children returned to Country P and remained living there until 2013, except for three periods of time during which she travelled to Australia. The wife was not present in Australia for the majority of time during which the husband misappropriated the funds. Her evidence is accepted by the husband, who maintains that he did not provide her, nor the children, with any financial support other than in a nominal way subsequent to separation.

20. The wife concedes she received AUD181,000 directly from the husband, from B Pty Ltd funds. She asserts the husband told her the funds represented “backpay” of salary, for the period when the wife worked for the intervenor but did not receive a wage.

21. According to the wife, there is no evidence before the court as to how the balance of the funds misappropriated by the husband were applied. She asserts it is uncontroversial that:

    (a)The Suburb O property was purchased in 2002, prior to the misappropriation of funds by the husband and the acquisition costs were funded almost entirely from the wife’s pre-relationship assets; and

    (b)The acquisition of the Suburb M property was funded entirely by the equity in Suburb O and the mortgage obtained to complete the purchase of the property.

22. The wife’s position, in the context of the circumstances referred to in the preceding paragraphs, together with her lack of fluency in English and involvement in the business of the intervenor, other than as directed by the husband, is that the court should conclude that she had no knowledge of, or involvement in the husband’s actions in misappropriating funds from the intervenor, nor has she benefited from those funds. It is therefore just and equitable for her to receive 75 per cent of the net assets of the parties, excluding the judgement debt and corresponding asset of the husband, namely his 50 per cent shareholding in the intervenor.

    Husband’s contentions as to the claim of the intervenor

23. The husband agrees with the wife, that she had no knowledge or involvement in the husband’s misappropriation of the funds, and except for the AUD181,000 of backpay, the wife did not benefit from the funds. The husband did not provide any explanation about the disposition of the misappropriated funds.

    Intervenor’s contentions

24. The intervenor contends the wife’s application to this Court is an attempt to defeat the intervenor’s capacity to recover the judgement debt from the husband. The wife’s initial application to the court was filed in March 2017, a few months after a date in 2016, when an enforcement warrant was registered against the Suburb O and Suburb M properties, in circumstances where the husband and wife had been separated for more than eight years.

25. The intervenor levels a number of allegations about the wife’s conduct. First, it asserts the wife was not an innocent bystander to the husband’s misappropriation of funds, because she was actively involved in the business and was in fact the company bookkeeper. Secondly, payment of AUD181,000 to the wife was not back pay, but rather an attempt by the husband to transfer to the wife part of the misappropriated funds.

26. I will consider the relevant factors, as identified in Commissioner of Taxation & Worsnop & Anor (2009) FLC 93-392.

    The use to which the funds from the creditor were put and the benefits received by each party from those funds

27. First, the use to which the funds from the creditor were put and the benefits received by each party from those funds.

28. It is accepted by the wife, the husband has failed to disclose what he did with the misappropriated funds, other than he paid the wife AUD181,000 in two tranches, in 2009, which he describes as “backpay”.

29. The wife contends she applied the funds to support herself and the children, although she did not precisely elaborate how this was so, or over what period the funds were expended.

30. During the proceedings the wife did not discover any Australian tax returns, in which she disclosed the AUD181,000 as income received by her. Following enquiries, counsel for the wife submitted in his final address that the wife was unable to produce her tax returns for the financial years ending 2009 and 2010 (Transcript 12 July 2024 p. 23 lines 12-16).

31. That position is contrary to the wife’s evidence in the Supreme Court proceedings, as noted at paragraphs 106 of the judgement:

    [106]In addition, her income tax return, which she signed, for the year ended […] 2009, showed a total income to her of $17,800. When this was pointed out to her in cross-examination, she immediately simply blamed [Mr Pao], notwithstanding that she had signed the document.

32. Further, the wife was also apparently unaware of the basis of the calculation of the amount paid to her by the husband. When it was put to her that the intent of the payments was not salary, but rather to distribute funds to her from her husband with regard to their separation, her answer was “so when [the husband] paid me this, he told me, ‘This is your wages’” (Transcript 14 March 2024, p.97 lines 4-5).

33. The husband was cross-examined about how he calculated the amount of $181,000 as being owing to the wife over a seven-to-eight-year period. He was evasive and nonsensical in his answers and referred to figures submitted to the ATO, during times when the wife was in Country P. He denied the proposition that the payment to the wife had nothing to do with employment arrangements and was an attempt by him to get money out of the company to pay to her, and the best way to do that was to pretend it was payment for her work with the company.

34. It was Mr D who gave evidence about the wife’s salary. At paragraph [9] of his affidavit filed 25 August 2023, he deposes to paying the wife a weekly wage from the intervenor’s Westpac account No.04. In 2007, she was paid $400 per week, from 2008 she was paid $500 per week, and in 2009 she was paid $650 per week. A copy of the wife’s tax return for the financial year ended 2009 is annexed to his affidavit which demonstrates she received income of $17,800 in that financial year. It was asserted by counsel for the husband that the “backpay” figure of $181,000 is consistent with this agreement.

35. When it was put to the wife by counsel for the intervenor that she received approximately $17,000 in wages in the 2009-2010 financial year, she said “I’m not quite sure. I – I think he needed to ask his accountant, because I never received any wages” (Transcript 13 March 2024, p.68 lines 36-37). Counsel for the husband cross-examined Mr D on this issue and he maintained his affidavit was correct, and that he and the husband “had a discussion about how the wife should get paid, and the agreement was… for her wages to be transferred from the business account” (Transcript 8 April 2024, p.276 line 47 to p.277 line 2). For the reasons above, I prefer the evidence of Mr D to that of the wife or the husband.

    The knowledge of the other spouse, the wife, with respect to the circumstances giving rise to the debt to the creditor.

36. The wife’s evidence is the husband told her about the Supreme Court proceedings after it commenced in 2015. She thought “they had nothing to do with me and [B Pty Ltd] did not seek to join me as a party or make any claims against me”. She further states the husband asked her to give evidence in the proceedings as the ‘bookkeeper’ for B Pty Ltd, and she complied, even though she had never been the bookkeeper.

37. The wife gave evidence in the Supreme Court proceedings about the payment to her, which is referred to in the judgement. Paragraphs [103]–[105] of the judgement states as follows:

    103.[Mr Pao] says that $81,000 paid to him from [B Pty Ltd] [in] 2009 was on account of wages for his former wife, [Ms Moy]. Further, he says that $100,000 paid to her [in] 2009 was likewise on account of her wages. [Mr D]’s evidence was that [Ms Moy] was not receiving a salary from [B Pty Ltd] in 2009 and there was no reason why those amounts of money would have been paid to her. [Mr D]’s evidence on this was not challenged.

    104.[Mr Pao] gave evidence in chief that he decided on $50,000 per year for his wife’s salary. No documentation was produced in respect of that, such as an employment agreement or any memorandum to indicate what her salary was. [Ms Moy] also gave evidence that her salary at [B Pty Ltd] was $50,000 annually. She said it was paid in two instalments: one of $100,000 and one of $80,000ish. Again, she produced no documentation in relation to this.

    105.This precise recall by [Ms Moy] was curious. The payments were made over six years ago. She is divorced from [Mr Pao]. She gave evidence that she was “not sensitive to numbers” by which he appeared to mean she was not good with numbers. She went on to say that her mind was full of her two children, so she can’t think of much detail now. Further, whilst giving evidence that she was currently residing in shared accommodation, [Ms Moy] was unable to say how many people she lives with or what their names are. Yet she purported to recall that she was paid these two sums of money on account of her wage at [B Pty Ltd] of $50,000 per year, where she worked while married to [Mr Pao].

    (Footnotes omitted)

38. In these proceedings, much effort was devoted to the wife attempting to describe her role as anything other than a bookkeeper. She attempted to portray her role as purely administrative in nature. She could not adequately explain why she gave evidence in the Supreme Court proceedings on behalf of the husband.

39. According to the wife, she has no qualifications nor training as a bookkeeper and does not have fluent English language skills. Her role in the business was menial work under the husband’s direction, and she had no understanding nor knowledge of the overall financial position of B Pty Ltd and simply completed tasks at the direction of the husband.

40. At paragraph [39] of her affidavit filed 29 June 2023, the wife deposes to returning to Country P with the children in 2008, and at paragraph [41] deposes to continuing to work for B Pty Ltd for six months after she returned to Country P. She says she worked in a more limited role which was restricted to typing data into an Excel spreadsheet. The husband telephoned her to provide her with the relevant data. She understood the business was not performing as well as it had previously “based on the number of shipments from [Country P]”, and the husband told her the business did not operate at all in the first half of 2009.

41. During re-examination, the wife said her involvement with stock was to put it “in a different spot. So when the customer comes asking for certain stock” she would know where it was.[1] Purchasing and other matters were organised by the husband and Mr D, she did not have access to bank accounts and bank statements of the business and all she did was “use the Excel spreadsheets [to record data], something like that”.[2]

    [1] Transcript 14 March 2024, p.135 lines 37-38.

    [2] Transcript 14 March 2024, p.136 lines 6-7.

42. The husband was cross-examined about the wife’s role in B Pty Ltd and why she was required to give evidence in the Supreme Court proceedings. The husband denied the wife was employed as a bookkeeper for the company but was unable to provide a cogent answer as to why an employee, other than a bookkeeper, would be required to give evidence on his behalf in the Supreme Court proceedings. When asked whether he thought her evidence would be helpful for his side of the story, he replied “not necessarily for me, but for the case”,[3] the meaning of which I am unable to understand. The husband’s evidence was mostly non‑responsive, and it was difficult to understand the meaning of his answers.

    [3] Transcript 14 March 2024, p.170 line 38.

43. Even if the wife’s duties were restricted to those she and the husband claimed in evidence, that does not preclude her having any knowledge of the business nor the husband’s activities between 2006 and at least 2008, when she returned to Country P. By her own evidence, she continued to have some form of involvement with the business after her return to Country P for a period of six months or so, prior to the cessation of trade in 2009. Whether her role could be described as bookkeeper or another descriptor, that is not determinative of her knowledge or involvement in the business.

1. The adjustment of property which I propose to make must be just and equitable, both in terms of percentage adjustment, in real terms and the orders implementing the adjustment must also be just and equitable and, in this case, the rights of the creditor cannot be ignored; they must be recognised, taken into account, and balanced against the rights of the spouse.

2. In Degan & Nader(No 2) [2024] FedCFamC1F 544, Austin J said:

   34.In the absence of engagement of Pt VIIIAA of the Act, the Full Court in Biltoft affirmed how creditor’s claims should not be subordinated to the claims between the parties to the matrimonial or the de facto financial cause, other than in the rather confined circumstances identified, saying this at 82,128:

   … There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the Court making an order under s 79 [of the Act], nor is there a rule of priority as between a creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taken into account and balanced against the rights of the spouse.

   35.Observations to the same effect were later made by the Full Court in Trustee of the Property of Lemnos; a bankrupt & Lemnos (2009) FLC 93-394 at [99], [178]–[181] and [200].

3. During his opening submissions, in the context of ascertaining the asset pool, counsel for the wife referred to the unknown value of B Pty Ltd, in the context of the husband’s remaining 50 per cent shareholding in the company. He initially submitted at the very least B Pty Ltd must be worth the value of the judgement debt, which was put on the basis that there had been no proper disclosure from B Pty Ltd in relation to its value. He subsequently submitted the other alternative is to say that it’s simply not known.

4. During final submissions, counsel for the wife attempted to attribute some sort of blame to the intervenor for failing to make disclosure and the consequences which flow thereafter. He referred to the line of authority in Black & Kellner (1992) 15 Fam LR 343 and urged the court to adopt a robust approach to the adjustment of interests, because of the failure of B Pty Ltd to engage in a pretrial process of discovery and to value B Pty Ltd. Although not expressly addressed by counsel, and in the absence of submissions, I infer the argument is a factor to be taken into account under s 75(2)(o) of the Act.

5. Rule 6.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth). (“the Rules”) refers to the duty of each party to a proceeding to give full and frank disclosure of all information relevant to the proceeding, in a timely manner.

6. Rule 6.06(1) of the Rules states the duty of disclosure applies to a financial proceeding. However, rule 6.06(2) states rules 6.06(3)–(9) do not apply to a party to a property proceeding who is not a party to a marriage or de facto relationship, except to the extent that the parties financial circumstances are relevant to the issues in dispute.

7. I was informed by counsel for the wife that the parties had not actively pursued discovery other than an oral application for financial documents of the intervenor before Wilson J, which had been dismissed. There was no satisfactory explanation, to my questions about why discovery and valuation of the intervenor had not been included in the Application in a Proceeding which was resolved in December 2023, if it was a live issue for the parties.

8. Counsel for the wife was unable to point to any correspondence or evidence which demonstrated there were requests for documents from the intervenor or requests for valuations, but rather relied on authority to submit that it doesn’t matter if the non-disclosure is wilful or accidental. It was submitted that the court should not take into account the judgement debt, because the value of B Pty Ltd is not known. I reject that argument as completely unmeritorious, in circumstances where there was an oral application for documents to be produced by the intervenor, which was agitated and dismissed, and where counsel was unable to point to any evidence about further requests between the parties to value B Pty Ltd.

9. After having considered all of the relevant submissions, evidence, and taking into account my findings above pertaining to the  wife’s receipt of the $180,000 ostensibly without questioning why, her involvement with the business throughout the relevant period between 2006 and 2009, irrespective of the nomenclature of her role, the joint financial intertwinement between the husband and wife and the manner in which the case was conducted at trial, I consider the net pool of marital assets, as determined by me, should be divided so that the wife’s entitlement to the net asset pool, should be adjusted 15 per cent against her. The husband’s share will be available to the intervenor. That adjustment will result in the wife receiving 40 per cent of the net non-super asset pool and 60 per cent of the net non-super asset pool being available to satisfy the judgement debt.

10. Whilst the bulk of the judgement debt will remain outstanding, the alteration of interests I propose to order as between the husband and wife, takes into account the interests of the creditor, within the bounds of the justice and equity of the case. 

11. I intend to adopt the orders proposed by counsel for the wife as her alternative position, with the relevant adjustments. I will also include proposed order 2, because that order is in accordance with paragraph 2 of the orders made 15 December 2023. There were no orders proposed pertaining to the outstanding costs payable by the intervener, to the husband which was included in the balance sheet.

12. There is one outstanding issue, which is whether the outstanding capital gains tax (“CGT”) of $24,460 arising from the sale of the L Street property should be paid to the Australian Taxation Office (“ATO”), or whether the husband should assume liability for subsequent payment.

13. I intend to make an order for payment to the ATO, because it is certainly not apparent from the husband’s current financial circumstances, if correct, that he will have the capacity to pay the sum in the near future or at all.

14. I also note there was agreement for the sum of $32,500 to be paid to Ms K, the wife of Mr D, to give effect to the settlement dated 2012. I will make orders accordingly.

15. Nobody suggested the judgment debt should be allocated between the husband and the wife and the case was run on how the net assets, excluding the judgement debt and interest, were to be adjusted. The husband is to remain liable for the balance of the judgement debt and any accrued interest and will retain his shares in the intervenor. Therefore, the judgement debt has been excluded from the table below, which demonstrates the result of the adjusted asset pool. All parties agreed the $9,423 in the husbands’ previous solicitors trust account should be applied to reduce the debt secured against the Suburb O property. There were no orders sought in relation to the wife’s superannuation, so I intend to exclude that modest sum from the assets. The net assets ($1,312,749, in accordance with the table at [63]), will be distributed as follows:

Distribution of Assets and Liabilities

Assets the wife will receive/retain (excluding her superannuation)

Description

Value

Funds ($297,530 available) in the Commonwealth Bank of Australia account number ending #[41] in the name of [J Pty Ltd].

$265,030

Funds ($457,352 available) in the wife’s solicitors-controlled monies account

$237,285

To the wife’s lawyers, Kennedy Partners, to be disbursed at the wife’s direction

Subtotal

$502,315

Assets of the husband which will be paid to and/or available to the intervenor to recover the judgement debt

Funds ($457,352 available) in the wife’s solicitors-controlled monies account. To be paid to the intervenor in partial satisfaction of the judgment debt.

$195,607

Equity in the [Suburb O] property, in the name of the husband, available for satisfaction of the judgement debt.

$511,478

Funds in the husband’s previous solicitor’s trust account, which will be paid to the Westpac bank and increase the equity in [Suburb O] property.

$9,423

Outstanding costs order against [B Pty Ltd] pursuant to orders made 15 February 2022.

$36,966

Subtotal

$753,474

Other distributions

Funds ($457,352 available) in the wife’s solicitors-controlled monies account, to be held on behalf of the parties and paid to the ATO to meet the husband’s CGT liability arising from the sale of [L Street] [Suburb M], upon the husband providing to the wife and the intervenor a copy his amended tax return notices assessment for the financial year ending […] 2023.

$24,460

Funds ($297,530 available) in the Commonwealth Bank of Australia account number ending #[…]41 in the name of [J Pty  Ltd], to be paid to [Ms K]

$32,500

Subtotal

$56,960

Total

$1,312,749

1. The intervenor is at liberty to proceed with enforcement proceedings, including the writ of Seizure and Sale against the Suburb O property. I will therefore discharge all previous orders, which will include the orders of Bender J made 16 May 2017, so the intervenor can proceed pursuant to the Warrant of Seizure and Sale. I will also make an order restraining the husband from enforcing the costs order made on 15 February 2022 of $36,966 against the intervenor.

   WIFE’S CLAIM FOR COSTS OF 14 DECEMBER 2023

2. In her Summary of Argument, the wife sought indemnity costs of $3,489 from the intervenor arising from her Application in a Proceeding filed on 14 December 2023.

3. In Massalski & Riley (No. 2) [2021] FamCAFC 152 at [8], the Full Court said, an order for costs:

   8.…falls to be determined within s 117 of the Family Law Act 1975 (Cth) (“the Act”). Section 117(1) provides that each party to a proceedings under the Act should bear his or her own costs unless the court is of the opinion that there are circumstances that justify making a costs order (s 117(2)). Section 117(2A) sets out matters to which the court should have regard to in determining whether there are circumstances which justify an order for costs, and if so, what, if any, order should be made. As well as the matters listed in s 117(2A), s 117(2A)(g) enables the court to take into account such other matters that are relevant.

4. In the Marriage of I & I (No 2) (1995) 22 Fam LR 557, the Full Court said that the relevant matters in s 117(2A) of the Act:

   “…must all be taken into account and all balanced in order to determine whether the overall circumstances justify the making of an order for costs”

5. No one factor under s 117(2A) of the Act prevails over any other factor. Rather, it is a matter of weight that is accorded to each of the relevant factors in the judge’s discretion: (Medlon & Medlon (No 6) (Indemnity Costs) (2015) FLC 93-664 at 80,400). It is not necessary for each of the factors listed in s 117(2A) of the Act to be met for the court to make a costs order. (Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)v Fish (2005) 33 Fam LR 123 at 124).

6. The matters set out in s 117(2A) of the Act which I consider are relevant to costs in this matter are as follows.

   The financial circumstances of the parties

7. The wife circumstances are set out in her financial statement filed 29 June 2023, where she deposes to receiving wages of $1,330 per week. She also sets out living expenses for herself and the two children who are engaged in tertiary studies. Pursuant to the orders I intend to make, the wife will receive a cash payment of $502,315.

8. There is no evidence before the court as to the financial position of the intervenor, accept that there is a judgement debt owing to it of in excess of $5,000,000. The wife’s counsel submitted because the intervenor has been able to participate in the proceeding and has been legally represented since May 2017, it is open to the court to infer the intervenor is in a relative position of financial strength. Even if the intervenor’s financial capacity is not before the court, and it does not have the capacity to meet and a costs order, that should not preclude the making of a costs order; Lenova v Lenova (Costs) (2011) FLC 93 – 467 at [12].

   Conduct of the parties

9. According to the wife, the conduct of the intervenor pertaining to the Application in a Proceeding warrants an order for costs. The wife had little choice other than to file the application in circumstances where the Westpac loan secured against the Suburb O property was in default, with the mortgagee threatening enforcement action, there were other outgoings relating to the property which the husband was unable to pay because they were not covered by rental income, the wife endeavoured to place consent arrangements for the discharge of the mortgage arrears and property outgoings by proposing the payment of the expenses from the net proceeds of sale of the L Street property, which was resisted by the intervenor.

10. Rather the intervenor proposed the sale of the Suburb O property, which would have had the effect of defeating the wife’s primary application before the court for the property to be transferred to her.

    Whether any party has been wholly unsuccessful in the proceedings

11. The wife contended she was wholly successful in her Application in a Proceeding to the court.

    Whether either party has made an offer in writing to the other party

12. The wife conceded there were no written offers made with respect to the wife’s interim application because the application was listed for hearing the day after it was filed. The wife has made an offer in writing to the intervenor to resolve her pending costs application.

13. Having considered the statutory criteria, and the ultimate orders made by me in the substantive proceedings, including that the wife was unsuccessful in securing an order for the Suburb O property to be transferred to her, I do not consider there are circumstances which warrant an order for costs against the intervenor on a party/ party basis, let alone indemnity costs as sought by the wife

14. I do not intend to make any order as to costs arising from the wife’s Application in a Proceeding filed 14 December 2023.

I certify that the preceding two hundred and nine (209) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Williams.

Associate:

Dated:       23 September 2024

ANNEXURE A

Applicant’s Minute of Orders Sought

WIFE’S PRIMARY POSITION

1.All previous orders be discharged other than:

1.1Order 10 of the order made on 16 May 2017; and

1.2Orders 13 of the order made on 14 February 2023. 

2.The parties hereby irrevocably authorise and direct BSP Lawyers, the previous lawyers for the husband, to forthwith disburse any remaining monies held from the sum of $30,000 paid pursuant to the orders made on 5 December 2023 to reduce the balance outstanding on the Westpac loan account number 27 (the Westpac loan).

3.Within 14 days of the date of final orders being made, B Pty Ltd (the intervener) do all such acts and things and sign all such documents as may be necessary to:

3.1Seek the discharge of the freezing order made by the Supreme Court of Victoria in 2012 (as extended in 2016) with respect to the sale proceeds of the property at G Street, Suburb H in the State of Victoria held in Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd (the freezing order); and

3.2Withdraw the warrant of seizure and sale issued with respect to Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd.

4.Within 7 days of the discharge of the freezing order:

4.1The husband do all such acts and things and sign all such documents to transfer to the wife at the expense of the wife all his right, title and interest in J Pty Ltd; and

4.2The husband and the wife do all such acts and things and sign all such documents as may be necessary to apply the funds held in Commonwealth Bank of Australia account number ending #41 (the Commonwealth bank account) in the following manner and priority:

4.2.1The sum of $32,500 to Ms K, in satisfaction of the deed of settlement dated 2012;

4.2.2The balance to the Westpac loan or, if the balance outstanding on the Westpac loan is less than the monies held in the Commonwealth bank account, such sum as is necessary to discharge the Westpac loan with the balance of the Commonwealth Bank account to be paid to Kennedy Partners, the lawyers for the wife, and disbursed in accordance with order 5 hereof.

5.The parties hereby irrevocably authorise and direct Kennedy Partners, the lawyers for the wife, to disburse the monies held in the controlled monies account on their behalf in the following manner and priority:

5.1The sum of $24,460 to the lawyers for the wife, Kennedy Partners, to be held on behalf of the parties and paid to the Australian Taxation Office to meet the husband’s capital gains taxation liability arising from the sale of L Street, Suburb M, upon the husband providing to the wife and the intervener a copy of his amended tax return and notice of assessment for the financial year ended 2023;

5.2Such sum as is necessary to reduce the balance outstanding on the Westpac loan to nil (if any);

5.3The sum of $150,000 to Kennedy Partners for payment out to the wife or at her direction;

5.4The sum of $3,489.50 to Kennedy Partners for payment out to the wife or at her direction, in satisfaction of the costs order made pursuant to order 11 hereof; and

5.5The balance to the intervener (including any remaining monies held in the trust account of Kennedy Partners after payment of the husband’s capital gains taxation liability pursuant to these orders).

6.Within 60 days of the date of final orders being made:

6.1The husband do all such acts and things and sign all documents as may be necessary to transfer to the wife all of the husband’s right, title and interest in the property situate at and known as N Street, Suburb O in the State of Victoria (Suburb O), with the transfer to be at the wife’s sole expense save that the husband be solely responsible for his own legal costs and PEXA fees with respect to the transfer (the transfer);

6.2The husband and the wife do all such acts and things and sign all such documents as may be necessary for the wife to discharge the mortgage to Westpac Banking Corporation registered against the title of Suburb O (the mortgage discharge), with the mortgage discharge to be at the wife’s sole expense save that the husband be solely responsible for his own legal costs and PEXA fees with respect to the mortgage discharge; and

6.3The intervener do all acts and things and sign all such documents as may be necessary to:

6.3.1Withdraw the warrants of seizure and sale registered against the title of Suburb O, at the intervener’s expense; and

6.3.2Facilitate the transfer and the mortgage discharge, if required.

7.Pending the transfer:

7.1The intervener be restrained from taking any steps with respect to Suburb O to enforce the judgment against the husband in proceedings in the Supreme Court of Victoria (the judgment debt); and

7.2The husband be restrained from:

7.2.1Encumbering or further encumbering Suburb O; and

7.2.2Drawing down on the Westpac loan.

8.The parties be at liberty to provide a copy of these orders to Commonwealth Bank of Australia and Westpac.

9.The husband be liable for and indemnify the wife with respect to the judgment debt owing to the intervener.

10.Unless otherwise specified in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders:

10.1The husband and wife be solely entitled to the exclusion of the other to all other property (including choses-in-action and superannuation benefits) in the possession or legal or beneficial ownership of such party as at the date of this order;

10.2Any monies standing to the credit of the husband and the wife in any joint bank account are to become the property of the wife and the husband and the wife do all such acts and things and sign all such documents as may be necessary to close any such bank account;

10.3All insurance policies belonging to the husband or the wife shall remain the sole property of the owner named thereon;

10.4Each party be solely liable for any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

10.5Any joint tenancy of the husband and the wife in any real or personal estate is hereby expressly severed.

11.The intervener pay the wife’s costs of and incidental to the application in a proceeding filed on 14 December 2023 on an indemnity basis fixed in the sum of $3,489.50.

12.All extant applications be dismissed.

WIFE’S ALTERNATIVE POSITION

1.All previous orders be discharged. 

2.The parties hereby irrevocably authorise and direct BSP Lawyers, the former lawyers for the husband, to forthwith disburse any remaining monies held from the sum of $30,000 paid pursuant to the orders made on 5 December 2023 to reduce the balance outstanding on the Westpac loan account number 27 (the Westpac loan).

3.Within 14 days of the date of final orders being made, B Pty Ltd (the intervener) do all such acts and things and sign all such documents as may be necessary to:

3.1Seek the discharge of the freezing order made by the Supreme Court of Victoria in 2012 (as extended in 2016) with respect to the sale proceeds of the property at G Street, Suburb H in the State of Victoria held in Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd (the freezing order); and

3.2Withdraw the warrant of seizure and sale issued with respect to Commonwealth Bank of Australia account number ending #41 in the name of J Pty Ltd.

4.The parties be at liberty to provide a copy of these orders to Commonwealth Bank of Australia.

5.Within 7 days of the discharge of the freezing order:

5.1The husband do all such acts and things and sign all such documents to transfer to the wife at the expense of the wife all his right, title and interest in J Pty Ltd; and

5.2The husband and the wife do all such acts and things and sign all such documents as may be necessary to apply the funds held in Commonwealth Bank of Australia account number ending #41 (the Commonwealth bank account) in the following manner and priority:

5.2.1The sum of $32,500 to Ms K, in satisfaction of the deed of settlement dated 2012;

5.2.2The balance to Kennedy Partners, the lawyers for the wife for payment out to the wife or at her direction.

6.The parties hereby irrevocably authorise and direct Kennedy Partners, the lawyers for the wife, to disburse the monies held in the controlled monies account on their behalf in the following manner and priority:

6.1The sum of $24,460 to the lawyers for the wife, Kennedy Partners, to be held on behalf of the parties and paid to the Australian Taxation Office to meet the husband’s capital gains taxation liability arising from the sale of L Street, Suburb M, upon the husband providing to the wife and the intervener a copy of his amended tax return and notice of assessment for the financial year ended 2023;

6.2The sum of $3,489.50 to Kennedy Partners for payment out to the wife or at her direction, in satisfaction of the costs order made pursuant to order 9 hereof; and

6.3The balance to the intervener.

7.The husband be liable for and indemnify the wife with respect to the judgment debt owing to the intervener.

8.Unless otherwise specified in these orders and save for the purposes of enforcing the payment of any monies due under these or any subsequent orders:

8.1The husband and wife be solely entitled to the exclusion of the other to all other property (including choses-in-action and superannuation benefits) in the possession or legal or beneficial ownership of such party as at the date of this order;

8.2Any monies standing to the credit of the husband and the wife in any joint bank account are to become the property of the wife and the husband and the wife do all such acts and things and sign all such documents as may be necessary to close any such bank account;

8.3All insurance policies belonging to the husband or the wife shall remain the sole property of the owner named thereon;

8.4Each party be solely liable for any liability encumbering any item of property to which that party is entitled pursuant to these orders; and

8.5Any joint tenancy of the husband and the wife in any real or personal estate is hereby expressly severed.

9.The intervener pay the wife’s costs of and incidental to the application in a proceeding filed on 14 December 2023 on an indemnity basis fixed in the sum of $3,489.50.

10.All extant applications be dismissed.

ANNEXURE B

Intervenors Minute of Orders Sought

1.All previous orders be discharged.

2.That the Court declare that 50% of the funds held on behalf of J Pty Ltd are the property of the Respondent.

3.That the parties be restrained from distributing funds to the Respondent other than in accordance with Orders made by the Supreme Court of Victoria.

4.That the Intervener be at liberty to enforce the Orders and Warrants made by the Supreme Court of Victoria pursuant to proceedings.

5.That these Orders finalise property proceedings as between the parties.