PEARCE & PEARCE

[2014] FamCA 1120

FAMILY COURT OF AUSTRALIA

PEARCE & PEARCE [2014] FamCA 1120

FAMILY LAW – PROPERTY – Final Orders – Application to set aside consent orders pursuant to s 79A – where wife asserts husband failed to disclose information relating to negotiations and proposals for the acquisition of a business at the time the consent orders were made in 2005 – whether a miscarriage of justice has occurred – where wife would have made further enquiries had she been aware of these matters – a miscarriage of justice has occurred due to the husband’s failure to disclose relevant information – orders made varying 2005 consent orders.

FAMILY LAW – PROPERTY – Final Orders – re-exercise of discretion – just and equitable – husband acquired assets post separation the value of which have increased – consideration of the assets at the time of separation – contributions to be assessed as equal up until separation – adjustment in favour of the husband for contributions made following separation – orders made for just and equitable property settlement.

Family Law Act 1975 (Cth) s 79, 79A

Barker & Barker (2007) 36 Fam LR 650
Bevan & Bevan (2013) FLC 93-545
In the Marriage of Gebert (1990) 14 Fam LR 62
In the Marriage of Holland (1982) 8 Fam LR 233
In the Marriage of Pelerman (2000) 26 Fam LR 505
In the Marriage of Prowse (1993) 18 Fam LR 348
Stanford v Stanford (2012) 247 CLR 108
Suiker & Suiker (1993) FLC 92-436

APPLICANT: Ms Pearce

RESPONDENT: Mr Pearce

FILE NUMBER: DNC 462 Of 2009

DATE DELIVERED: 12 December 2014

PLACE DELIVERED: Adelaide

PLACE HEARD: Darwin

JUDGMENT OF: Dawe J

HEARING DATE: 8-9 April 2013;
23-24 & 30 September 2013;
1-3 Oct 2013; 
13-17 & 20-22 Jan 2014;

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Looney, QC
with Ms Farmer

SOLICITOR FOR THE APPLICANT: Withnalls Lawyers

COUNSEL FOR THE RESPONDENT: Mr Lloyd, SC
with Ms Giacomo

SOLICITOR FOR THE RESPONDENT: Cater & Blumer

Orders

1. The Consent Orders of 20 July 2005 are varied by the addition of the following orders:

   (a)in full and final property settlement within ninety [90] days from the date of this Order the husband do pay to the wife the sum of ONE MILLION AND NINE HUNDRED AND SIXTY SEVEN THOUSAND DOLLARS [$1,967,000.00];

   (b)each party otherwise retain to the exclusion of the other party all real and personal assets in their respective ownership, possession and control;

   (c)each party shall otherwise be solely responsible for all their individual personal liabilities and liabilities encumbering any property which they retain and indemnify the other party in relation to such liabilities.

2. The Initiating Application filed by the wife on 25 June 2012 is dismissed and removed from the active pending cases list SAVE AND EXCEPT in relation to any application for costs.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pearce & Pearce has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT ADELAIDE

FILE NUMBER: DNC 462  of 2009

Ms Pearce

Applicant

And

Mr Pearce

Respondent

REASONS FOR JUDGMENT

Introduction

1. The wife, Ms Pearce, (“the wife”) filed an Amended Initiating Application in which orders were sought setting aside the property settlement orders made by consent on 20 July 2005 and seeking a further property settlement “on a 50 / 50 basis”.

2. In the Outline of Case documents the wife maintained her claim pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”) and sought various orders in relation to the division of assets of the parties.

3. The husband, Mr Pearce, (“the husband”) sought that the proceedings be dismissed and that the wife pay his costs on an indemnity basis. 

Relevant Background

1. The respondent husband was born in 1969 and is therefore aged 45.  The wife was born in 1973 and is therefore aged 41.  The parties commenced cohabitation in late 1992 at which time the husband had already purchased vacant land at H Drive, Town T in the State of Queensland.

2. The parties were married in 1997.  By that time the husband had already commenced his business and had purchased the vacant land at K Street, Town S in the Northern Territory.  Work had also been carried out on the construction of the house on the T property.

3. There are two children of the marriage, B who was born in 1998 and Y who was born in 1999.  At one time there were proceedings between the parties concerning the children, but these concluded prior to the commencement of the trial concerning financial matters.

4. After the parties were married and living together there were various transactions in relation to businesses and real estate, together with renovations to properties. 

5. The husband alleges the parties separated in December 2003.  The wife alleges the parties separated, but continued to live under one roof, in early 2005.

6. On 20 July 2005 consent orders were made which included final property settlement orders.

7. There is a significant dispute about the circumstances relating to the consent order which brings about the application pursuant to s 79A.

8. The wife alleges that the parties reconciled in January 2006.  The husband alleges that this was in February 2006.  The husband alleges the parties finally separated and lived under the one roof at the D Street property in November 2006, but the wife maintains that the parties finally separated in January 2007.  They ceased to live under the one roof when the wife and children moved to Suburb R in early March 2007.

9. The parties were divorced in January 2010.

10. There have been significant dealings with various pieces of real estate, improvements to the real estate, acquisition and sale of businesses, various companies and trusts during the relationship of the parties and since their separation.

Summary of Issues in Dispute at Trial

1. At the commencement of the further dates fixed for the trial in September 2013, the wife sought orders pursuant to s 79A (1) (a) setting aside the consent order made on 20 July 2005 and that within sixty days the husband pay the wife an amount of $3,000,000 which was described as equating to her receiving approximately 43 per cent of the net assets of the parties, including superannuation.

2. The wife maintained that there was a miscarriage of justice in the making of the consent orders because of the suppression of evidence by the husband, or some other circumstance. 

3. The other circumstances were the assumptions of the wife concerning the matters disclosed by the husband and an assumption on her part that the husband would honour an oral agreement to carry out certain work on her property without charge.

4. The wife maintained for various reasons that once the consent order is set aside the final property settlement should be on the basis of the current net assets of the parties and superannuation, taking into account their contributions and needs.  On this basis she submitted that contributions should be attributed 60 per cent to the husband and 40 per cent to the wife and a further adjustment of three per cent in her favour made in relation to s 75(2) factors, including the disparity in income between the parties and the care of the children.

5. In final submissions on behalf of the applicant wife at the conclusion of the trial in January 2014 it was submitted that contributions should be considered equal up until the date of final separation and, that, taking into account the period since then and the contributions to the property currently owned by the parties 65 per cent should be attributed to the husband and 35 per cent to the wife.

6. It was further contended that the wife should receive an adjustment of two per cent (or the equivalent of approximately $200,000) pursuant to s 75(2) factors being the disparity of income and the arrangements for the care of the two children.  It was submitted that this would result in the wife receiving 37 per cent of the current net assets of the parties equating to approximately $3,000,000.

7. Throughout the case it was maintained on behalf of the husband that the final orders made in July 2005 should not be set aside as the requirements of s 79A had not been met. The husband therefore sought the dismissal of the proceedings brought by the wife and foreshadowed an application for significant indemnity costs to be ordered to be paid by the wife.

Hearing Details

1. In June 2012 Federal Magistrate Turner (as she then was) vacated the final hearing dates for the matter which had previously been listed for five days in August 2012.  The matter was then transferred to the Family Court of Australia.  Following directions made by the Registrar, the matter was initially listed for final hearing in the Family Court of Australia in Darwin commencing on 8 April 2013.  At the compliance check in March 2013 it was indicated that the trial would take approximately four to five days.

2. The matter commenced before me in Darwin on 8 April 2013, when the parties were represented by Senior Counsel and Queen’s Counsel and their instructing solicitors.

3. On the first day the Court dealt with issues concerning objections to subpoenas, objections to affidavit material and valuations. On that day the husband withdrew his Application in a Case which sought a summary dismissal of the wife’s application under section 79A.

4. On that day counsel for the husband requested the trial be adjourned.  The matter was stood down and on resuming the wife’s counsel indicated that he did not oppose the adjournment of the trial. 

5. When the matter came on for mention on 9 April 2013 the trial was listed for 10 days commencing on 23 September 2013.  A consent order was made concerning procedural matters, including single expert valuation and other updated evidence.

6. When the matter resumed on 23 September 2013, counsel for the husband, Mr Lloyd, SC, was not available due to personal medical issues.  The solicitor for the husband appeared with the appropriate information.  Part of the day was used for consideration of interim matters and the parties discussing valuations. 

7. On 24 September 2013 after further discussion of procedural and interim matters, the proceedings were adjourned to 30 September 2013.

8. On the resumption of the trial the Court heard evidence of the wife, the husband and the various witnesses.

9. The trial continued until Thursday 3 October 2013 when there was an oral application by the wife’s counsel to adjourn the trial. After hearing argument the Court granted the wife permission to rely upon amended particulars of the s 79A case. The adjournment of the trial was granted to enable the wife to issue subpoenas and present further evidence.

10. The part heard trial was adjourned to 13 January 2014 allowing a further nine days.

11. After further interim procedural orders made by the Registrar and myself, the matter resumed on 13 January 2014.  At that time there were further procedural and interim arguments, including an oral application by the husband’s counsel on behalf of the husband to permanently stay the proceedings.  This application was dismissed.

12. Further directions were made in relation to the evidence to be relied upon and particulars of the witnesses that were proposed to be called.

13. The Court received the further updated affidavit and exhibits.  The wife then commenced her further evidence.

14. Thereafter the trial continued with evidence in chief and cross-examination of further evidence of the parties and other witnesses.  The trial continued throughout the week and the following week concluding on Wednesday 22 January 2014 with closing submissions.

15. Judgment was reserved on Wednesday 22 January 2014.

The Law

1. Section 79A of the Act provides:

   Setting aside of orders altering property interests

   (1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance;

   …

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

2. In this matter the wife is relying, not only upon the suppression of evidence (including failure to disclose relevant information), but also upon “any other circumstance”. 

3. It was conceded on behalf of the wife that although the consent order may not reflect a party’s actual entitlement pursuant to s 79 that would not of itself necessarily indicate a miscarriage of justice. (See In the marriage ofHolland (1982) 8 Fam LR 233 at p 239).

4. It was appropriately conceded on behalf of the wife that it is the applicant who bears the onus of proof to satisfy the Court that there has been a miscarriage of justice and also that it is appropriate for the Court to exercise the Court’s discretion to set aside the original orders and consider making further orders under s 79.

5. It was also conceded that issues such as delay and hardship would be factors to be considered but were not necessarily decisive in the exercise of discretion.

6. In the matter of Suiker & Suiker (1993) FLC 92-436 at 241 and 242 the Full Court stated:

   241. In our opinion, the necessity for full and frank disclosure of financial matters to the court and the other party are basic to the process of the court and the fundamental aims of the financial legislation contained in s 79 of the Family Law Act 1975.

   242.    It is implicit in these passages that the consent to an order must be informed consent. The consent to the order is part of the judicial process on which the court places reliance.  If that consent is based on misleading or inadequate information, then there may, in our opinion a miscarriage of justice either by reason of ‘suppression of evidence’ or by reason of ‘any other circumstance’.

7. The Full Court held In the Marriage of Pelerman (2000) 26 Fam LR 505 that

   The Ground of “any other circumstance” appearing in s79A(1)(a) for the purpose of establishing a miscarriage of justice pursuant to that Section has been the subject of interpretation in a number of Full Court decisions.…

8. The Full Court then referred to the decision of In the Marriage of Gebert (1990) 14 Fam LR 62 and referred to the summary in which it was stated:

   The passage is important in that it stresses that the words ‘any other circumstance’ are not of unlimited scope but governed by the words ‘miscarriage of justice’.  It also elucidates the proposition that ‘justice means justice according to law’, i.e. it relates to the integrity of the judicial process.

9. The exercise of the judicial discretion set out in s 79A was discussed by the Full Court In the Marriage of Prowse (1993) 18 Fam LR 348. At page 359 the Full Court stated:

   In our opinion, having regard to all of those matters, it was open to his Honour, in the exercise of his discretion, to dismiss the wife’s application under s 79A (1) notwithstanding his assumption (or implied finding) that a ‘miscarriage of justice’ had occurred in relation to the making of the original consent order.

10. In the matter of Barker & Barker (2007) 36 Fam LR 650 the Full Court said:

    120. A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process” … the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation. As the Full Court said in Holland (supra):

    To succeed in an application under s 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under s 79 does not, of itself, show that there has been a miscarriage of justice. There may be cases where the order consented to is so far outside the ambit of what is just and equitable that the court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice.

    …

    123. As previously discussed, in order for a claim under s 79A(1) to succeed, the Court must be satisfied that a miscarriage of justice has resulted. It is not sufficient to merely establish the existence of one or more of the stated grounds, such as suppression of evidence. In Livesey v Jenkins (supra), Brandon LJ had this to say about the nexus between non-disclosure and setting an order aside (at 445-6):

    I would end with an emphatic word of warning. It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them, or, if they are legally aided, against the legal aid fund.

    We agree with this statement.

    124. But s 79A is a remedial section designed to avoid a miscarriage of justice. Where there is some intervening factor known to one party, but not the other, this may lead to a result which is unfair and unjust and can be characterised as a flaw in the judicial process by which the orders were made. There may also be circumstances in which the judicial process could be impugned by a sale after orders were made and in the absence of bad faith by either party or suppression of some relevant fact, if it led to a significant miscarriage of justice.

Evidence relied upon by each party

1. The following is a summary of relevant evidence received by the Court.  It is not in chronological order because some witnesses were interposed and some witnesses recalled.

2. The wife filed a trial affidavit setting out the evidence upon which she relied on 28 February 2013.  This was subject to corrections and removal of matters after rulings on admissibility.

3. The detailed affidavit contained the history of the relationship and their financial arrangements.  Many of the matters contained in the affidavit were not in dispute.  The matters that were in dispute related to the state of completion of the works on the D Street property, the verbal agreement, if any, reached between the parties at the time of the consent orders and the wife’s knowledge of and participation in the E Pty Ltd business.  There were minor matters in dispute in relation to the time and date of the parties’ cohabitation, both before and after the consent orders.

4. The wife commenced her evidence on 30 September 2013 with brief evidence in chief followed by cross-examination by counsel for the husband.

5. In her evidence in chief the wife agreed that the written formal consent order did not refer to the verbal agreement she had with the husband that he would assist with the air-conditioning and electricity work for the building at V Street, Suburb N.  She said that was left out because of “the tax implications”.

6. During cross-examination by Counsel for the husband she was asked frequent and detailed questions concerning her relationship with Mr U and the dates in which she was in a relationship with him, rather than in a relationship with the husband.

1. During the cross-examination the wife conceded that the separation date given as December 2003 in the Application for consent orders was wrong. 

2. She conceded that she had read the minutes of the consent orders in its final form and had signed the consent order (Exhibit 2). 

3. During further cross-examination the wife was consistent in maintaining that the verbal agreement between herself and the husband concerning the work he had agreed to do for the air-conditioning and other works on her properties had not been included because the husband did not want it in the consent orders because of tax issues.  Also during the cross-examination of the wife she admitted that an application for a loan (Exhibit 12) had been completed and signed by her knowing that it was untrue.

4. During cross-examination she gave inconsistent evidence about the estimated cost of the air-conditioning and electrical work, at one time saying $20,000 and another conceding that she could have told her solicitors “about $50,000”.

5. A further affidavit of the wife was filed on 20 November 2013 indicating that she was unaware that the husband had entered into a Sales Share Agreement or any Shareholders’ Agreement with Mr and Mrs O for the purchase of shares in E Pty Ltd prior to her signing the consent orders.  It also states that she was unaware that the husband had signed documents or paid money to Mr and Mrs O for either E Pty Ltd shares or the W Street, Suburb L property, nor did she have any knowledge of the husband owing money to his mother or father, or money owed by them to the husband.  She also maintained in the affidavit she had no knowledge of any deposit in Westpac Bank in the sum of $40,000.

6. Another affidavit of the wife filed on 13 January 2014 stated she had not been shown relevant documents referred to in Mr A’s report.  The affidavit also indicated that at no time prior to receiving a copy of Mr A’s affidavit had she been aware of any information concerning the alleged current earnings for the seven months ended 31 January 2005 for E Pty Ltd at $757,144 or the net profit before tax and the current year’s earnings for E Pty Ltd for 11 months ended 31 May 2005 was $623,250. 

7. In particular her affidavit says:

   Had I been aware prior to the making of the Court Orders on 20 July 2005 of the year to January 2005 profitability or the year to May 2005 profitability I would have obtained advice from my solicitor and sought further information regarding the business and then a valuation of it. (Paragraph 6).

8. When cross-examined about photographs concerning the completion of the renovations or a stage of the renovations, she conceded that her affidavit which said that the roof was not completed in March 2006, was wrong.  She said words to the effect “No.  In light of those Google photos, I obviously got the date wrong”.

9. During this cross-examination she conceded that “probably” the next door neighbour, her mother and brother may have been wrong about the dates also.

10. On the afternoon of Tuesday 14 January 2014 the wife maintained that she did not agree any of the values referred to in the application for consent order and that the only discussion had been about the split of the assets, not the value of them.

11. She was shown Exhibit 39 relating to correspondence and documents prepared in relation to the husband purchasing an interest in E Pty Ltd.  She maintained that she had not seen the documents before that morning (Wednesday 15 January 2014).

12. The affidavit of Ms M filed on behalf of the wife on 1 March 2013 set out her relationship with the husband and the wife and contact with the parties at various places and functions.  Her evidence related to the parties being together as a couple in mid-January 2007.  She was not required to be called for oral evidence.

13. The affidavit of Ms LL filed on behalf of the wife on 28 February 2013 related to her observations of the relationship between the husband and the wife and conversations with the wife.  The most relevant part of her evidence related to the observations of the husband and wife together at a ball in June 2006 and conversations she had with the wife in relation to Christmas 2006.

14. Ms LL was cross-examined by Mr Lloyd, SC about the dates and her visits to the D Street property.  Her evidence was that she could not remember seeing a jarrah staircase or a master bedroom.  She could not remember whether she had inspected the laundry.  She did not think the renovations were complete.  Her evidence was that there were “still a fair bit to do but a lot had been done”. 

15. Part of her evidence included a reference to the wife telling her that she was in a de facto relationship with Mr U, but her evidence was based on the time of “maybe 2009”.

16. Her evidence was given in an acceptable way, however, she was not specific about her memories of the renovations or other definite dates.

17. The wife relied on the affidavit of Mr X, filed on 28 February 2013.  He is the younger brother of the wife.  His affidavit sets out his recollection of the relationship between the husband and the wife and his observations of the status of the repairs and improvements to properties at Town S and D Street.  His evidence also confirmed the details of the parties’ cohabitation and when their separation began.

18. Mr X still resided with the wife at the V Street property.  His evidence in chief related to his attendance upon the property at D Street on Christmas Days in 2003, 2004 and 2005 but not since.  He referred to his observation of construction of the property in December 2005.  His evidence was that at the time there was “nothing really above the block mark”. 

19. During cross-examination by Mr Lloyd, Mr X’s explanation about the omission of the information about the construction of D Street in his affidavit was based upon him not thinking it was necessary or required.  He was cross-examined at length about the plans for the renovations.  He confirmed his evidence that on 25 December 2005 he had not inspected the master bedroom because there was not one at that time.  He could not recall inspecting the study or walking up the jarrah stairs.  His evidence was that there were only “outside stairs” at that time.

20. He was cross-examined about the dates of his visits to the premises.  The challenges to this suggest he was not there in December 2005 but was in January 2006.

21. Most of his evidence was however not challenged and should be considered reliable.

22. The wife relied on the evidence of her mother, Mrs X.  Her affidavit was filed on 28 February 2013.  A number of paragraphs were removed.

23. By consent she gave further oral evidence in chief about her observations of the D Street property in 2005.  She confirmed that in December 2005, the main bedroom was not there.  She referred to it as “walls and a garage outside and bricks that’s all”.

24. During cross-examination she gave evidence that at the time she saw the property in December 2005 there was no internal staircase and there was only an outside staircase.  She denied being confused about dates.

25. Her evidence was consistent and not challenged in any way.

26. The wife relied on the evidence of Mr Z, who was a neighbour of the parties at D Street, Suburb F until May or June 2007.  His evidence relates to his observations of the renovations to the D Street property.  He also confirmed the wife’s evidence that the husband and wife had still been living together at D Street until February 2007.

27. Mr Z gave his oral evidence by telephone link.  He altered parts of his affidavit, in particular correcting dates in the affidavit, confirming that he was a neighbour of the parties until May or June 2007 from some time before 2005.  His evidence was that in October 2005 there was nothing above the garage (no master bedroom).  His evidence was that by April/May 2006 extensive work had been done to the main entrance, the staircase was in the process of being erected and work was being done on the interior of the master bedroom.

28. Mr P, a self-employed builder, also gave evidence in relation to his observations of the renovations of D Street, his observations of the wife and children’s belongings in the property and his conversations with the wife about work to be done on the property.

29. He is not related to any of the family.  In brief examination in chief he confirmed his qualifications.  He gave brief evidence about the stages of construction.  He was not cross-examined.

30. The Court received the affidavit of Mr G, a valuer, filed on 20 November 2013and his supplementary report.  His oral evidence was heard when he was interposed during the cross-examination of the husband.  He was given time to read Mr RR’s and Mr LK’s reports. 

31. The joint valuation of Mr G and Mr SX was received as Exhibit 46.

32. Mr G gave good explanations for his valuation figures and the difficulty of selling buildings which were not complete.  In re-examination he said that if the husband’s evidence about the status of repairs was accepted then the value would be about $645,000.

33. The Court received the affidavits of AD filed on 15 March 2013 and 14 August 2013 which provided valuations of the Queensland property as at 1992 being $30,592 and $320,000 in 2005. 

34. The wife relied on the evidence of Ms ML filed on 20 March 2013, the former landlord and housemate of the husband.   She gave evidence about the relationship between the husband and wife in 1992 and 1993 when the husband and wife were living as a couple and sharing a room.  Her evidence was not challenged in any significant way in cross-examination. 

35. The Court received the affidavit of Ms F filed on 8 April 2013.  Much of the affidavit refers to conversations with Mr G, the valuer.

36. The affidavits of Ms F annexed the Share Sale Agreement and the Shareholders’ Agreement, correspondence between Withnalls Lawyers and NC Financial Services (“NC”) with ASIC searches and correspondence in relation to instructions to NC with respect to the valuation of the husband’s shares in E Pty Ltd.

37. Ms F gave oral evidence.  She was cross-examined by Mr Lloyd specifically about dates of various documents provided by her.  She was also cross-examined about the valuations.  Her evidence was that she did not inform Mr G of the C Pty Ltd’s valuation, but had asked him to consider comparable sales of three properties in close proximity.

38. Her evidence concerning the information available to the wife and subsequent information which became available after the consent order was not significantly challenged.

39. The affidavit of Mr MM was filed on 5 September 2013.  He was a previous owner of D Street, Suburb F.  He sold the property to the husband and wife in July 2002.  The affidavit referred to the status of the property at the time of the sale, including that the upstairs bathroom was “totally gutted”.  When he was cross-examined he conceded that his memory as to actual dates was rather vague.

40. The affidavit of a law clerk at Withnalls Lawyers, and annexures which related to the draft affidavit of Mr Q was received without cross-examination being required.

41. The affidavit of Mr Q was filed on 30 September 2013.  He is a mortgage broker.  The husband was a client of his company for approximately 10 to 12 years.  He assisted the wife with finance in 2005 and 2006.  His affidavit relates to borrowings by the husband from Bank SA “in March to July 2005”.  He made notes on 10 March 2005 in relation to the loan application by the husband.  The affidavit also referred to communications between the parties and their legal representatives.

42. There were no significant challenges to his evidence.  His evidence was that when he asked the wife about the address at which she was living, on both occasions she had indicated an address in Suburb AA.  He could not recall whether she said she was living by herself or not.  He said that in 2006 he did not know her marital status.

43. During cross-examination he gave evidence about the notes he had taken concerning matters which were not in his earlier affidavit.  After the matter was stood down there was no further cross-examination or re-examination.

44. The wife relied on the affidavit of Ms Jodi Truman, legal practitioner, who acted for the wife at one time.  She had no independent recollection of the matter. 

45. Ms Truman’s evidence was that she would normally only sign the Certificate confirming independent legal advice if she was confident that the valuation or appraisal of the real estate had been obtained.  She was unable to say whether that was the case in this matter however.

46. The wife relied on the affidavit of Ms AE, building certifier, filed on 9 November 2013.  The affidavit says that she had no independent recollection of her attendance on 20 June 2006 but annexed the project building certificate confirming inspection of the D Street property on 20 July 2006.  She was not required for cross-examination.

47. Mr H, forensic accountant, was instructed by lawyers for the wife to value the husband’s interest in E Pty Ltd at 30 June 2005.  His affidavit annexed his valuation.  He was called to give evidence and was cross-examined.

48. Mr H’s evidence was that Mr A’s report did not change his opinion.

49. He was cross-examined at length about the material he used and the information obtained for the preparation of the valuation.  He conceded that the valuation was “of limited scope”.

50. His evidence was that he had not taken into account information relating to post 2005 year earnings.  He conceded that his assessment of market value was based on limitations and that a genuine purchaser would carry out more investigations.  When other materials were put to him as to his methods, he maintained his report’s reliability.

51. The respondent husband relied upon his affidavits providing his evidence in relation to the relationship of the parties, his interest in the various businesses and investments and the arrangements prior to the consent orders including the acquisition of his interests in E Pty Ltd and the W Street property and the state of the renovations to the D Street property. 

52. The husband also relied upon the Financial Statement filed on 1 March 2013 and the Financial Statement filed on 6 September 2013.  The latter included his interest in the business DD Pty Ltd, trading as AS Company (worth $3.1 million, but with alleged debts of $2.34 million).

53. Later the husband filed an affidavit on 19 December 2013 setting out his evidence in relation to building works to D Street with drawings in relation to the stage of renovations.  This further affidavit deals with the purchase of his interest in E Pty Ltd from Mr and Mrs O, refers to the Share Sale Agreement and the Shareholders’ Agreement which he signed on 30 June 2005 and the negotiations with continued thereafter.  It also set out the advice he received from Mr TC. 

54. The settlement of the purchases took place on 10 August 2005.  Stamp duty assessments of the value of the interest in W Street and the half interest in E Pty Ltd at the time were included.

55. The husband was cross-examined at length about his bank accounts in 2005 and the arrangements he made for finance at about the time of the consent orders in 2005.

56. At times his evidence indicated that he was not a reliable witness.  When asked whether he had read Mr J’s valuation report, he said “not really”.  When asked if he had been made aware that there was material that had not been supplied to Mr J for the report, he also replied “not really, no”.  He had no explanation for the failure to supply Mr J with BAS statements.  He was unable to give any reason why updated material had not been supplied to the expert.

57. The husband maintained that he did not have any documents or copies of any documents about his purchase of the fifty per cent share in E Pty Ltd and had not retained any records.

58. During cross-examination he admitted that he had borrowed millions of dollars in the last seven years and had refinanced numerous times.

59. During cross-examination he was asked to produce other documents and in particular, applications for building approval for work on the W Street property.

60. During cross-examination the husband admitted that some of the dates in his affidavit were not correct.

61. It was not until cross-examination about paragraph 7 of his affidavit that the husband admitted that he had not bought the K Street property in 1987 but had not purchased it until 1991.  He then said that he apologised again if he had misled the Court.

62. The husband was then referred to Exhibit 19 which said the property was not erected until 2003 or 2004.  He said that he was guessing when he said 1996 to 1998.  He then admitted that the dates in paragraphs 26 and 27 of his affidavit are wrong and “it was a mistake”.

63. When cross-examined in relation to documents concerning the building works, the husband admitted that the documents which he had signed referring to extensive renovations had been “glossed over”.  He admitted that he had signed the document, knowing or believing it was not true.  (See Exhibit 22). 

64. The husband was then asked about photographs he had supplied before the trial commenced in September 2013.  He admitted that the dates he had previously indicated were now incorrect dates.  He then gave evidence relating to each of the photographs and the dates written on the back.  The evidence was unsatisfactory and inconsistent.

65. The husband was cross-examined about paragraph 27 in his affidavit relating to the V Street property.  He said that it was wrong; the house was not built in 2004.  When presented with Exhibit 26 in relation to Westpac Bank borrowing for the property, his reply was to the effect that “Yeah, okay”.

66. During cross-examination he admitted that the parties had not separated when they purchased the V Street property together.  He conceded that they were still a couple “but things were not going that well”.  His evidence generally about the dates of separation in or about July 2005 was not reliable.

67. During cross-examination the husband also admitted that paragraph 30 in his affidavit was “a mistake”.  He agreed that in November 2006 the wife was still living at D Street.

68. When cross-examined about the Consent Orders and the time they were made the husband conceded that his solicitors had prepared the documents for the Application for the Consent Orders and the Consent Orders. 

69. His evidence concerning the agreement between himself and the wife as to the valuation figures was not convincing.

70. The husband’s evidence concerning the contract which was signed, the value of the W Street property and the amount that was paid for the property, was very unconvincing.

71. The husband then gave evidence denying that he had increased the mortgage over the D Street property to buy the W Street property.  He said words to the effect “I don’t remember the mortgage, my mother and father lent me $40,000”.  When asked why this information had not been in his filed affidavits he said that he “had forgotten about it”.  He said he had to repay them when he sold the Town T property.

72. The husband’s evidence then became most unreliable when he said words to the effect:

    I’m – I’m – I – I shouldn’t have –not have said it, because at the end of the day, I’m guessing … Well, I’m – I’m still – I’m guessing. All I know is I had to borrow money off my mother and father. I don’t remember where it went to okay. I’m speculating. I shouldn’t say that.

73. The husband was cross-examined about the application for a loan.  He initially was asked whether he would intentionally mislead the bank then and now.  His answer was words to the effect that “Well, sometimes you’ve got to tell them what they want to hear”.

74. He then changed his evidence and said, “No, that is not my character”.  He conceded that the information Mr Q had supplied was information that had been provided by him.

75. He also conceded that the wife did not know about the application for a loan when she signed the documents for the Consent Order.

76. The husband was re-called for limited cross-examination concerning the state of the property at D Street.  Drawings were received as merely the husband’s assertion as to the status of the property not the evidence of the truth of those assertions.

1. He was then cross-examined by Mr Lloyd, SC about the annexures to his affidavit concerning the status of the property.

2. Later that day it was agreed that the husband could give further evidence in chief about page 55 of Exhibit 40 which was a contract for the acquisition of W Street.  He was also questioned about Exhibit 44 with regard to the purchase of E Pty Ltd and the request for the valuation to which he had regard when purchasing his interest in E Pty Ltd.

3. His evidence was that he had not paid any debt in relation to EE Group since 2005.

4. He said that the acquisition of W Street had to wait until the Consent Orders were made so that he could borrow the funds as he did not have any available funds.

5. The husband then claimed to have discussed with the wife the letter from the solicitors to the husband and the wife about the shares in E Pty Ltd.

6. The husband was cross-examined about arrangements he made to purchase the interest in the E Pty Ltd business and the original arrangements which existed in February 2004 in which it was proposed that the wife acquire shares in the E Pty Ltd business.

7. He confirmed that he was under a restraint of trade order until July 2005 which was “possibly why” the wife was proposed as a shareholder in February 2004. 

8. The husband was then cross-examined about Exhibit 44.  His answers in relation to that cross-examination were vague as to whether he had received it and discussed it before he signed the contract for the acquisition of the E Pty Ltd shares.  During cross-examination he maintained that he did not remember whether he saw the information before he paid the deposit.  He confirmed that the Share Sale Agreement and the Shareholders’ Agreement were both dated 30 June 2005 and that the other parties had signed it at that time.

9. When he was asked about the settlement statement for the 10 August 2005, he was referred to his affidavit (paragraph 45) in which he referred to “acquiring the interest in late July”.  He then indicated that the statement in the affidavit was “not correct” and maintained that it should be 10 August 2005.  He could not recall how the question of a $40,000 deposit arose because it was not mentioned in the contract.

10. The husband was inconsistent in his evidence about the increase in profit of E Pty Ltd due to his contributions to the business.  When cross-examined he conceded that the evidence which he had previously given about increase of the mortgage to fund the purchase of the land was a “misstatement there”.  He confirmed that he did not increase the mortgage.  Again, he was inconsistent in relation to the evidence about funding for the purchase being organised before the contract.

11. In cross-examination he confirmed that he had not informed the wife at the time of the Consent Orders about any debt to his parents or that there was $40,000 due to them.  When asked about the extra $590 paid to his parents, he giggled and laughed.  He said he had made an assumption that it was interest but had no recollection of what the $590 was for.

12. During his cross-examination the husband maintained that his excuse for not declaring the shares on the application for Consent Orders was because the contract had not been finalised at that time.  A similar explanation was given for the omission of the contract for the purchase of W Street.

13. When cross-examined about a document which related to profits to January 2005 the husband indicated that he was aware of the document but had not disclosed it to the Court.  He disagreed that he expected a significant increase in income, but was unable to explain why.  The notes in the Consent Orders referred to an expectation of a significant diminution of income.  He said “No, there is a mistake”.  He confirmed he expected more income not significant diminution of income, but maintained that it was not significantly more income.

14. When cross-examined about the cost of the renovations, he maintained that the funds came from E Pty Ltd, either as business drawings or wages.

15. When cross-examined about his interest in the BY Unit Trusts he confirmed that BB had lent money to the BY Unit Trust, but that he had “pulled out of it”.  He confirmed that his current partner, Ms JJ, was one of the purchasers.  He informed the Court that his relationship with Ms JJ was more a “boyfriend/girlfriend” relationship.  They had separate residences but he does classify her as his partner.

16. The husband relied on the affidavit of Mr WL, an electrician who had carried out work on the D Street property between 2006 and 2007.  Mr WL could not recall exact dates.  He did not enter into a contract.  His evidence was that he would complete the work “as needed”.  At paragraph 11 he says “I do not recall sending an invoice to [the husband].  I was paid through [E Pty Ltd]”.  His affidavit indicated that the wife did not assist with any of the work, nor did she provide directions.  His written evidence was that he could not recall her being at the property whilst he was completing the work.  At paragraph 14 he said, “As far as I can recall [the wife] only resided at [D] Street for a few months but I am unable to recall the exact dates”.

17. He gave oral evidence by telephone.  He was cross-examined about the work he did on the D Street property which he maintained he did over and above his normal working hours and was paid in addition to his normal salary.  He said he could not recall getting instructions from the wife.

18. The husband relied on the evidence of Mr O, a director of EE Group and previously a director of E Pty Ltd with the husband. 

19. His proof of evidence became Exhibit 62. 

20. His affidavit referred to the husband buying an interest in E Pty Ltd in September 2005 for $200,000. 

21. When cross-examined by Mr Looney, QC, Mr O agreed the husband joined E Pty Ltd in late 2003.  The husband built up the main side of the business.  He agreed to the increase in the profitability contained in Exhibit 41 for the accounts for 2002 and 2005.  He agreed that it was a significant increase.

22. When shown Exhibit 39 (being the proposal in February 2004 for the wife to obtain an interest) he agreed that it had not gone ahead and that the restraint of trade from the husband’s previous business was why the wife was being proposed as a shareholder.  He agreed that Exhibit 40 (documents in relation to the purchase of a half-share in W Street, the Shareholders’ Agreement and the Share Sale Agreement) were all dated 30 June 2005.  He was shown the settlement statement of 10 August 2005 and said that was correct.

23. When it was put to him that paragraph 5 of his affidavit, which referred to September 2005 should in fact be the 10 August 2005 he agreed.

24. In cross-examination he agreed that the W Street property had been valued by C Pty Ltd on 25 May 2005 at $260,000 and this was the basis of the sale of half-interest to the husband.  He said he would have shown the valuation to the husband, but could not be sure.

25. He conceded that the proposed price for the purchase of the shares in February 2004 was $200,000.  He said it was not based on future profits.  He agreed that by mid-2005 there had been a significant increase in profits.

26. In his evidence, Mr O said that the Family Court matters had not had any bearing on the settlement arrangements.  He was unable to recall whether he agreed on 7 July 2005 to extend the time for settlement, but agreed that it was possible that it had been extended to 10 August 2005.  When asked about the deposit of $40,000 being due to the delay in the Family Court proceedings he said he was not aware of that.

27. The husband relied on the affidavit of Mr RL filed on 6 March 2013.  He was a director of EE Wholesalers Pty Ltd.  The affidavit refers to the husband purchasing an interest in the company in 1996/1997 and investment in the business.  It was estimated that in 2005 the company had trading debts of half a million dollars.  There was a subsequent sale of the business for no profit.  Mr Lloyd, SC called Mr RL who appeared in Court was then told that he was not required.

28. The husband relied on the affidavit of Mr SN, filed on 9 August 2013.  Many years ago he shared accommodation in a room adjacent to the husband.  He said at that time he did not witness the wife pay any costs associated with household expenses but could not say whether she had contributed to any of the expenses.

29. He also conceded that he could not say whether the wife had paid the husband for outgoings, such as electricity.  The concessions that he made as to errors in his affidavit indicates that little weight should be placed on his evidence.

30. Mr LK filed affidavits about the work he carried out during his employment.  He said he never received instructions from the wife and the only dealings he had with her were social outside business hours.

31. The oral evidence of Mr LK was interposed during the cross-examination of the husband.  He gave evidence by telephone link.  His evidence related to the status of the D Street property when he was residing there for six months.

32. In cross-examination, Mr LK confirmed that in the second half of 2005 he was an employee of E Pty Ltd and received a wage.  He did not receive any extra money for the work done on the D Street property.  He said he did not do it for any charge, but did it as a friend and not during work hours.

33. The husband relied on the evidence of Mr SX, a valuer.  The date of inspection of the D Street property was corrected to August 2013, not August 2012.  He valued the D Street property as at 1 July 2005 at $580,000.  However, he said in cross-examination that this was wrong.

34. He conceded that he had made an error in his first report about the size of the building.  He also conceded that he had withdrawn from the joint valuation the following day.  He maintained that he was not given clear instructions about the purpose of the joint meeting.  He withdrew his valuation the day after and went back to a figure of $615,000.  In cross-examination he agreed that he had not carried out any further inspection after the first inspection.  He also conceded that he had met with the husband between the first report and the second report.

35. During cross-examination he conceded that one of the comparison properties was not a superior property as he had maintained in his report.

36. During cross-examination he agreed that he had been inconsistent. 

37. The evidence was therefore not as reliable as the evidence of the other expert Mr G.

38. The husband also relied upon the affidavit of Mr SL, accountant at MT Partners, filed 9 September 2013.  The affidavit annexes invoices to either the husband, BB Family Trust or DD Pty Ltd.  The affidavit refers to answering requests from NC Financial Services in preparation of the December 2012 financials for the DD Pty Ltd and BB Family Trust.

39. Mr SL said that he prepared the affidavit because his colleague Mr SC was away and would not have been available for the earlier Court hearing.  The Court received Exhibit 57 in relation to BB Pty Ltd accounts.  His evidence was that the documents could have had other benefits apart from the Family Court proceedings but he did not believe that the document had been used for any other purpose.

40. The husband relied on the affidavits of Mr U.  Mr U was in a relationship with the wife he alleges from 2003 until separation in early January 2011.

41. Mr U corrected a reference in his affidavit correcting it to “East Timor not Darwin”.  During cross-examination he agreed that the reference in paragraph 25 of his affidavit filed on 19 December 2013 to attending a “psychic” was not November 2006 but more like late in November 2007.  After being shown a document he agreed it was August 2007. 

42. He was questioned about previous proceedings between himself and the wife in the Federal Magistrates Court (as it then was) which dealt with the relationship between Mr U and the wife from January 2007 until July 2010.  When asked about inconsistency with his affidavit in the proceedings he said the first affidavit in the Federal Magistrate Court (as it then was) was accurate as the other one was “too broad”.

43. His evidence was that his relationship with the wife did not become public until the New Year Eve’s Ball “at the end of 2005, beginning of 2006”.  He then corrected this saying it was not public until “January 2007”.  Apart from these differences in dates, Mr U was not challenged.

44. The husband also relied upon the affidavits of Mr RR, builder, filed on 28 February 2013 and 19 December 2013.  He undertook work on the D Street property between 2006 and 2007.  Mr RR did not enter into a contract with the husband.  He said that the wife did not give him directions and he could not remember that when he saw the wife whether she was living at the property or not.

45. During cross-examination by Mr Looney, QC, he was asked about dates in paragraph 18 of his affidavit which said it was about September 2005.  In cross-examination he conceded that it should have been December 2005.  He agreed that he remembered the wife “being around” at the time of the work but did not take instructions direct from her.

46. The husband relied upon the affidavit filed 10 December 2013 of Mr TC, solicitor employed by Firm XY who acted for the husband in relation to the purchase of the one-half interest in the company E Pty Ltd from Mr and Mrs O and his purchase of a half interest in the W Street, Suburb L property from Mr and Mrs O.  Annexed to the affidavit was the agreement by way of retainer dated 25 June 2005 and the evidence in relation to the Share Sale Agreement and Shareholders’ Agreement.  Paragraph 7 of the affidavit states the “29 June 2013” but presumably it relates to “29 June 2005” (which is Annexure “B”).

47. At paragraph 9 of the affidavit it states:

    9.        On 7 July 2005 [the husband] requested that I seek an extension of time from Mr and Mrs [O] to complete the transfer of the shares on the basis that his family law matter had not finished and on the basis that provisions of the Shareholder’s Agreement had not yet been settled.  [The husband] instructed that Mr and Mrs [O] had agreed to accept a deposit of $40,000 from him.  Annexed hereto and marked with the letter “D” is a copy of the email communication from M  [Pearce].

48. The rest of the affidavit deals with the negotiations of the lawyers for the husband and Mr and Mrs O leading up to those acquisitions in June, July, August and September 2005.

49. He confirmed that he had a retainer agreement with the husband on 25 June 2005 and therefore would have received instructions shortly before that time.  In reference to Exhibit 40 (page 125) he indicated that this was not the same document as the Shareholders’ Agreement.  He said that document related to the conversation on 1 July 2005 which preceded the email of 7 July 2005.

50. He was then asked about the reason for the delay in settlement and whether the only reason was the Family Court proceedings.  He did not accept that this was the only reason.  He then conceded that there was a mistake in paragraph 11 of his affidavit when it referred to “Clause 17” because it was the Shareholders’ Agreement and not the Contract of Sale.  He then explained that reference to the contract was a reference to “the whole deal”, meaning the Shareholders’ Agreement and the Share Sale Agreement.

51. Mr TC returned on Monday 20 January 2014 seeking to make changes to his evidence “because he had made a serious error”.  This issue was delayed whilst Mr Looney, QC had an opportunity to examine the transcript.

52. Mr TC’s rectification of his evidence was that:

    … I was not aware of whether the condition that was noted in handwriting at the bottom of the shareholder agreement in connection with clause 17.1 and initialled by all parties was ever resolved. In further rectification of my evidence, on 5 August 2005 I was not aware and have never been aware since that date of any resolution of the condition just referred to.

53. Mr KH, property developer, filed an affidavit on 19 December 2013.  He sold the V Street property to the husband in October 2004.  His affidavit referred to sale prices for blocks in 2005.

54. The husband also relied upon the affidavit of Mr HN, who owned a business which supplied internal wall, ceiling linings and internal framing.  He carried out work on the D Street property between March 2006 and July 2011.  He said he did not receive instruction or advice from the wife.  He referred to the “drawings” and tax invoices.

55. He confirmed that he began his work in March 2006 and that the annexure to his affidavit refers to the condition of the property in March 2006.

56. In an affidavit filed on 16 January 2014 of Ms P, the husband’s mother gave evidence about the loan to the husband of $40,000 on 21 June 2005.  The affidavit said the loan was repaid “at a later date with interest” (my emphasis) but she did not recall when or what the loan was required for.

57. Ms P gave evidence by video link from Brisbane.

58. In cross-examination she confirmed that she had made a payment to the husband of $40,000 on 21 June 2005.  She had no memory of the circumstances of the payment.  When asked how she knew that the husband had repaid with interest she said “I would imagine”.  She was asked if she had any memory of such and she then said “No too long ago”.

59. Although she confirmed the loan of $40,000, she said the interest was “just a guess”.  She was not convincing when cross-examined about why she had said in the affidavit that it was “with interest”.  She denied that the payment to the husband was a gift.

60. The husband relied upon the affidavit of Mr AT, information technology expert, which annexed the Google Earth Images, between the 1 January 2006 and 1 January 2007 of the D Street property.  He was not required for cross-examination.

61. Mr A, chartered accountant, filed an affidavit on 20 January 2014.  Mr A prepared the reports which are annexed to his affidavit.

62. Questions were raised about the weight to be placed on his evidence.

63. He was cross-examined by Mr Looney, QC.  In particular the cross-examination related to the discussions he had had with the parties.

64. In cross-examination he conceded that he had correspondence and discussions which were not referred to in his report.  He also conceded that his report was a “critique” of the other valuation, but not a valuation in itself.

65. He also gave evidence that before the report was completed he had had discussions with the husband and his current partner, Ms JJ and had sent the draft report to the husband and/or his solicitors (he was not sure which) asking for their response.

66. He conceded that the report did not record that information had been received from Ms JJ nor the discussions he had had with her.  He maintained that he had not taken into account her criticisms when he prepared the report.

67. Later during cross-examination he accepted that there had been errors in his calculations and that at times he was twenty-five per cent in error.  

68. He conceded that he did not consider that some of the figures referred to were accurate. 

69. The concessions he made in relation to the errors in his report called into question the conclusions that he reached in his report. He also conceded that some of the methods used by Mr H were appropriate.

70. The evidence of Mr H is to be preferred.

71. The husband relied on the affidavit sworn by “CS”.  When he gave oral evidence he corrected his name to CS-F.  He also corrected his affidavit evidence indicating that he started work in 2003 and worked from late 2003 to late 2006.  He described himself as a work friend and old school friend of the husband.

72. During cross-examination about the dates when he had observed the renovations he was not sure about the dates.  He also could not remember if the wife had been living in the property when he spoke to her at the property.

73. The oral evidence of Mr MD was received by telephone link.  He was a painter.  He confirmed that the wife had liaised with him in 2006, near the end of that year (not the start) about the colour selection.  He was not significantly challenged in brief cross-examination.

1. The oral evidence of Mr J was then received by telephone.  The witness made a correction to a date and confirmed that the valuation was prepared on the basis that the whole liability was payable and had not been discounted at all.  The Court then received Exhibits 58 and 59.  His evidence was not challenged in any way.

2. Numerous exhibits were received and considered.

3. The matter was listed for final submissions on 22 January 2014 when judgment was reserved.

Findings

1. The evidence of the husband was at times considerably unreliable.  To the extent that there is variation in the factual matters presented on behalf of the wife and on behalf of the husband, the Court prefers the evidence presented on behalf of the wife.  This takes into account some of the inconsistencies in the evidence of the wife and the inability of some of the witnesses to remember exact dates or slight changes in their evidence about dates.

2. In particular, the Court takes into account the husband’s evidence in cross-examination in which he conceded on numerous occasions that his sworn affidavit evidence was wrong and said words to the effect that he “had made a mistake”.

3. There were, as indicated in the previous summary of the evidence of the parties, many inconsistencies in the husband’s evidence and many of these related to significant issues such as the status of the business, his role in the business, differences in values of properties and the relationship between himself and the wife at various dates.

4. As previously indicated the Court prefers the expert evidence of Mr G to that of Mr SX in relation to the value of the D Street property at the time of the application for the Consent Order. 

5. Whilst there were discrepancies in the state of the D Street property at the relevant time, the Court is unable to accurately make any determination as to each of the disputed items due to the variation in the witnesses’ affidavits which changed or became less exact during cross-examination.

6. The Court prefers the expert opinion of Mr H in relation to the husband’s interest in E Pty Ltd shares in mid-2005 rather than the evidence of Mr A.

7. Although the opinion of Mr H was based upon the material provided prior to his valuation and did not include other information that might have been available if it had been provided by other persons such as Mr and Mrs O, the expert evidence of Mr H is to be preferred, particularly taking into account the errors and concessions conceded by Mr A during his cross-examination.

8. The Court is therefore satisfied that many of the significant facts asserted by or on behalf of the wife have been made out by the evidence received.

9. Significant examples of this are set out hereafter.

10. The purchase price of the W Street property was initially alleged by the husband to be $90,000 but was later corrected to $130,000 plus GST.

11. There were significant inconsistencies in the husband’s evidence in relation to the role he played in the business of E Pty Ltd and the arrangements made by him to acquire shares in E Pty Ltd.

12. The evidence received from the parties indicates that the information provided to the wife before the Consent Order did not give her sufficient information about the husband’s negotiations to acquire a share of the business and a share of the W Street property.

Summary of Findings

1. Taking into account all of the evidence and the findings concerning the reliability of the evidence I am satisfied that the wife has established that the application for Consent Orders and the Consent Orders themselves were prepared initially on the instructions of the husband to his solicitors.

2. At the time of the wife’s consent to the orders prepared, the wife had not been informed, and the husband had failed to inform her or her advisers, that he had previously represented to a bank that the D Street property was worth $700,000.  This was known to the husband.  The husband maintained that the property was worth $550,000 where as its value was $660,000. 

3. Similar factors relate to the disputed values of the other properties.  The value of the Town T property was claimed to be $280,000, but it is now asserted that it was at that time $320,000. 

4. The value of the V Street property retained by the wife was considered at $205,000 for the purposes of the making of the Consent Orders, however it is now alleged its true value was at the time $180,000. 

5. Such variations in the value of real estate properties (other than the D Street property) would not individually be significant.

6. If this were the only factor to be considered such a variation (by small percentage) would not necessarily establish a miscarriage of justice.

7. The significant variation in the value of D Street and the husband’s previous assertion of a much greater value ($700,000 not $550,000) does need to be considered as a factor.

8. At the time of the making of the Consent Order the husband maintained that he had no interest in any business other than the EE interest.  It has however been established that by the time the Consent Orders were made on 20 July 2005 the husband had completed the negotiations.  The Share Sale Agreement dated 30 June 2005 gave the husband shares in E Pty Ltd to a value of more than $500,000 for which he was to pay $200,000.  The purchase price took into account the interest the husband had in the business because of his contribution to the development of the business.

9. This is a significant factor.  On its own it would be sufficient to establish the necessary grounds of a miscarriage of justice.  The husband was aware of the state of the negotiations before the Consent Order was made.  He was aware of the particulars of the agreements he had entered into with Mr and Mrs O which acknowledged that he had a substantial interest in the business. 

10. The notes forming part of the Consent Order suggested that the acquisition of the share of E Pty Ltd would cause debt and reduce income.

11. His failure to disclose these particulars, the value of this interest and the information relating to it, establishes that the Consent Order was made by the Court without the Court being aware of the significant proposed interest of the husband in the business. 

12. The Court is also satisfied that the wife would not have agreed to the terms of the Consent Order if she had been aware of the details of the  negotiations and the agreement which was concluded on 30 June 2005.

13. Similar considerations relate to the acquisition by the husband of the interest in the W Street property.  In the application for Consent Order the husband did not disclose any interest in that property.  However, the evidence clearly establishes that the husband had entered into a contract for the purchase of the 50 per cent interest as part of the arrangements with Mr and Mrs O and included in the Contract of Sale dated 30 June 2005.

14. Such a proposed acquisition certainly established a possible equitable interest in the property.  In any event, details and particulars of the arrangements between the husband and the Mr and Mrs O and the contracts relating to those arrangements should have been disclosed to the wife and the Court prior to Consent Orders being made in July 2005.

15. Similarly, the evidence establishes that the husband had an interest in other investments of not less than $40,000.

16. The other significant factor in relation to the information provided to the wife upon which the application for Consent Order was based was the reference to the husband’s expected income.  In those documents it was maintained that the husband had no expectation of a significant increase in his income over the next few years, whereas the information established that the arrangements with the Mr and Mrs O were clearly based on an expectation by the husband that his income would be significantly greater following upon the arrangements made in the documents as a result of negotiations prior to the application for Consent Order and the agreements reached on 30 June 2005.

17. The Court received evidence setting out the earnings of E Pty Ltd for the seven months ended 31 January 2005 at $757,144 and the net profit before tax and current earnings for E Pty Ltd for the eleven months ended 30 May 2005 was in excess of $623,000.

18. The wife maintained that there was an oral agreement entered into at the time of the Consent Orders between herself and the husband that he would carry out work or would assist in the management of the construction of electrical works and air-conditioning on the property at V Street.

19. I accept the evidence of the wife that she had an understanding and an expectation that this would occur, but I am not satisfied to the necessary standard of proof that the husband also entered into the Consent Orders on the basis that he was obliged to carry out the wife’s expectations without payment.

20. The Court is also not satisfied that the evidence establishes that this “arrangement” or understanding of the wife establishes that the husband’s failure to carry out the work brought about the miscarriage of justice.

Conclusion

1. The husband failed to disclose to the wife significant information concerning the negotiations and proposals concerning the husband’s acquisition of the substantial interest in the E Pty Ltd business and W Street property.  He also failed to disclose his shares in his other investments.  He failed to disclose the representation that he had made to the bank that the D Street property was valued at $700,000.  He did not disclose the expectation of greater income.  When considered together these factors establish that there was significant information available to the husband which was not disclosed to the wife prior to the Consent Order being made.

2. The Court is also satisfied that had the wife been aware of these matters she would have made further enquiries before consenting to the property settlement order.

3. The Court is therefore satisfied that the wife has established that there has been a miscarriage of justice due to the failure by the husband to disclose relevant information.

4. The Court is therefore in a position to exercise its discretion to vary the order or set the order aside, and if appropriate, to make another order under s 79.

5. One of the factors the Court must consider in relation to the exercise in the discretion pursuant to s 79A is the delay and hardship caused to any of the parties.

6. The Consent Order was made in July 2005.  I am satisfied that the parties reconciled in January or February 2006 and remained in a relationship until late 2006 / early 2007.  These proceedings were not commenced until November 2010.  By this time the husband’s financial arrangement had changed significantly.  Some of the improvement in his financial position is based upon the assets which he retained or acquired at the time of the Consent Orders.

7. Whilst the Court accepts that the delay is a significant factor, this factor needs to be balanced against the injustice done to the wife as a result of the failure to disclose information to the wife at the time she agreed to the Consent Order. The Court is therefore satisfied that it is appropriate to vary the order under s 79A and consider what order, if any, should be made under s 79.

8. When considering whether any order should be made by way of property settlement the Court takes into account the principles established by the High Court in of Stanford v Stanford (2012) 247 CLR 108 as discussed in Bevan & Bevan (2013) FLC 93-545.

9. Taking into account the assets and liabilities currently retained by each of the parties, their financial circumstances generally, together with the history of their cohabitation, care of the children and their current financial circumstances, I am satisfied that it is just and equitable to make an order under s 79.

10. I accept the evidence relied upon by the wife in relation to the current assets, liabilities and superannuation interest of each of the parties.

11. The wife has the following

    Assets:

    V Street, Suburb N  $950,000.00

    Household Contents  $20,000.00

    Bank Accounts  $329.00

    Wife Total Assets:  $970,329.00

    Liabilities:

    Mortgage on V Street, Suburb N  $569,610.00

    Building Debt  $23,000.00

    ANZ Loan  $17,284.00

    Credit Card  $6,000.00

    Wife Total Debts:  $615,894.00

    Wife Net Assets:  $354,435.00

    Wife’s Superannuation  $502,584.00

    Wife’s Superannuation  $62,916.00

    Total Wife’s Superannuation  $565,500.00

    Total Net Assets Wife including superannuation                $919,935.00

12. The husband has the following:

    Assets:

    D Street, Suburb F  $1,450,000.00

    PP Street, Suburb F  $2,800,000.00

    W Street, Suburb L  $634,500.00

    BB Family Trust  $2,275,000.00

    ·Property 1

    ·Property 2

    ·Property 3

    ·Property 4

    ·Property 5

    ·Property 6

    Loan to BB Family Trust  $4,048.00

    Loan to BB Pty Ltd  $1,575,773.00

    DD Pty Ltd t/a AS Company  $3,100,000.00

    Boat and equipment  $45,000.00

    Household contents  $30,000.00

    Long Service Leave  $36,006.00

    Annual Leave  $12,500.00

    Husband Total Assets:  $11,962,827.00

    Liabilities:

    Mortgage on PP Street, Suburb F  $2,100,000.00

    Mortgage on W Street, Suburb L  $240,000.00

    Husband Total Liabilities:  $2,340,000.00

    Husband’s superannuation  $149,000.00

    Total Husband’s Superannuation  $149,000.00

    Total Net Assets Husband (including superannuation)   $9,771,827.00

    Total of both parties net assets and superannuation              $10,691,762.00

13. As previously indicated the Court accepts with only slight variations the wife’s evidence in relation to the period in which they resided together.  It is accepted that the parties had a relationship in late 1992, separated in early 2005 and reconciled for a period after the Consent Order was made.  There are two children of the marriage.

14. The Court takes into account that at the time of the cohabitation of the parties commenced the husband already owned the Town T property which he had purchased in January 1992 for $30,500.  The Court accepts that the property was worth approximately $37,000 by the time the parties commenced residing together.

15. This is a substantial asset at the commencement of the relationship of the parties and should be taken into account as a contribution by the husband.

16. During the relationship the parties cared for the children.  The parties both worked full time, save and except that the wife had short periods of maternity leave when the children were born.

17. The Court accepts the evidence that the husband’s income was used to acquire, maintain and improve the properties acquired during the relationship, whilst the wife’s earnings were contributed to the day to day living expenses of the family.

18. After the separation of the parties, the husband continued his work for the business E Pty Ltd.  He also continued to carry out improvements to the various properties and acquired his significant interest in the E Pty Ltd business.

19. The care of the children was shared and arrangements were made in relation to the financial expenses for the children.

20. At times the wife had a greater proportion of the care of the children when the husband was unable to care for them due to his work commitments.

21. Since early 2013 the parties’ daughter Y (born in 1999) has resided with the mother, whilst their son B (born in 1998) has continued in a week about arrangement.

22. The husband pays child support in accordance with a Child Support Assessment.

23. It was maintained on behalf of the wife that the Court should regard the contributions prior to the final separation as equal and that, taking into account the property currently owned by the parties, the contributions should currently be considered as 65 per cent by the husband and 35 per cent by the wife.

24. What is significant, however, is that since the parties finally separated the husband has acquired assets and the value of assets has increased.  In particular, the wife seeks to take into account the assets held by the husband in the BB Family Trust, representing considerable real estate assets with a total value of in excess of $2.2 million and loans due to the husband from BB Family Trust and BB Pty Ltd in excess of $1.5 million.  There is also the significant value of the business now known as AS Company held by DD Pty Ltd of $3.1 million.

25. The total net assets of the parties considered at the time of the Consent Order in July 2005 was approximately $1.25 Million. 

26. The values of the assets, liabilities and superannuation of the parties at July 2005 (and the brief cohabitation of the parties in 2007) needs to be considered when assessing the contributions of the parties.

27. The Court finds that up until the final separation of the parties in late 2007 the contributions of the parties, both financial and non-financial should be considered equal. 

28. The husband used his available funds to purchase his 50 per cent interest in E Pty Ltd and W Street property.

29. The current business AS Company operated by the husband, which has a significant value, was established after the husband and Mr O divided the E Pty Ltd business between them.  The wife has not made a significant contribution to the current value of AS Company.

30. The Court however takes into account the husband has used his interest in the D Street property to assist in his significant improvement in his business and financial assets.

31. Since the separation the parties have both made significant contributions in relation to the care of the children, although the wife has at times provided more care than the husband.

32. Taking into account all of the necessary factors the Court is satisfied that the contributions of the parties, both as to financial and non-financial matters, should be considered on the basis of 75 per cent by the husband and 25 per cent by the wife.

33. Apart from s 75(2) the other factors in s 79 (4) do not require any further adjustments in this matter.

Section 75(2) Factors

1. The evidence establishes that the husband has much greater income earning potential than the wife.  I am also satisfied that the arrangements concerning the care of the children provide for one child to be in the primary care of the wife and the other child to be shared on a week about arrangement.  This requires a further adjustment.  I take into account the ages of the children and the financial arrangements made in relation to the children, including the ongoing financial responsibility of both parties.

2. I consider therefore a further adjustment of 2 per cent is appropriate, just and equitable in the circumstances.

3. A total adjustment which would provide for the wife with 27 per cent of the net assets (including superannuation) is just and equitable in all the circumstances.

4. Twenty-seven per cent of $10,691,762 is $2,886,775.74.  The wife has retained $919,935 of net assets and superannuation.  This would therefore require the payment to her by the husband of a further $1,966,840.74.

5. The husband has the loan due to him by BB Pty Ltd in excess of $1.5 million and real estate assets.  He also has substantial income expectations.  I am satisfied that an order requiring the husband to pay the wife $1,967,000.00 (rounded up) is just and equitable in all of the circumstances.

6. Taking into account the date of this judgment and the necessary arrangements which may have to be undertaken for the payment of such a large sum the order will provide for the payment to be made within ninety days.

7. For the above reasons I make the orders which appear on page 2 of these reasons.

I certify that the preceding two hundred and seventy five (275) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Dawe delivered on 12 December 2014

Associate: 

Date:  12 December 2014