Piroozi & Piroozi
[2023] FedCFamC1F 359
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Piroozi & Piroozi [2023] FedCFamC1F 359
File number: SYC 4175 of 2019 Judgment of: SCHONELL J Date of judgment: 11 May 2023 Catchwords: FAMILY LAW – PROPERTY – Where both parties sought financial adjustment and agreed that contributions during the marriage were equal – Where the parties’ daughter was sexually abused by the husband’s brother who was found guilty – Where the children have not spent any time with the husband since separation – Where the wife and children have significant mental health issues – Where an adjustment ought to be made in favour of the wife – Where a just and equitable outcome was found to be 65 per cent to the wife and 35 per cent to the husband.
FAMILY LAW – SPOUSAL MAINTENANCE – Where the wife sought an order for spousal maintenance – Where the husband conceded that the wife is unable to support herself – Ordered that the husband pay spousal maintenance.
Legislation: Family Law Act 1975 (Cth) ss 72, 75
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Cases cited: AJO & GRO (2005) FLC 93-218; [2005] FamCA 195
Atwill and Atwill (1981) FLC 91-107; [1981] FamCA 72
Briese and Briese (1986) FLC 91-713; [1985] FamCA 23
Dickons v Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143; [2003] FamCA 395
Horrigan & Horrigan [2020] FamCAFC 25
Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78
Kannis & Kannis [2002] FamCA 1150
Mitchell and Mitchell (1995) FLC 92-601; [1995] FamCA 32
Oriolo & Oriolo (1985) FLC 91-653; [1985] FamCA 54
Palumbo & Mandel (2019) FLC 93-929; [2019] FamCAFC 228
Robb and Robb (1995) FLC 92-555; [1994] FamCA 136
Rowan and Rowan (1977) FLC 90-310
Singerson & Joans [2014] FamCAFC 238
St John v St John (1979) 6 Fam LN N14
Stacy and Stacy (1977) FLC 90-324
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Wilson and Wilson (1989) FLC 92-033; [1989] FamCA 34
Division: Division 1 First Instance Number of paragraphs: 138 Date of hearing: 17 – 19 April 2023 Place: Sydney Counsel for the Applicant: Ms Petrie Solicitor for the Applicant: Mills Oakley Counsel for the Respondent: Mr Scarlett OAM RFD Solicitor for the Respondent: Burke & Mangan ORDERS
SYC 4175 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PIROOZI
Applicant
AND: MR PIROOZI
Respondent
order made by:
SCHONELL J
DATE OF ORDER:
11 may 2023
THE COURT ORDERS THAT:
1.The applicant wife (“the wife”) and the respondent husband (“the husband”) shall forthwith and within seven (7) days of the date of these orders, do all such things and sign all such documents as may be necessary to authorise and direct Mills Oakley to pay to the wife, or as she directs, the balance of the funds held in the controlled monies account by Mills Oakley on behalf of the parties.
2.The husband and the wife shall forthwith do all such things as may be necessary to list the property situated at and known as O Street, Suburb T in the State of New South Wales being all of the land comprised in Folio Identifier … (“the Suburb T property”) for sale by private treaty or auction with an independent real estate agent agreed, and for the purpose of this order, the wife shall nominate three agents for the husband to select one, and to sell the Suburb T property for the best price reasonably obtainable as soon as practicable.
3.If the parties are unable to agree as to the listing price or sale price of the Suburb T property then they shall appoint a valuer nominated by the president for the time being of the New South Wales Division of the Australian Property Institute or his/her nominee on the application of either party to determine the market value of the Suburb T property and:
(a)In the case of the listing price of the Suburb T property shall list the Suburb T property for sale at a price not more than 10 per cent higher than the value so determined; and
(b)In the case of the sale price shall accept any offer to purchase the Suburb T property at that price of higher.
(c)In the event that a valuer is appointed by the parties pursuant to the above order then the parties shall pay the costs thereby incurred in equal shares.
4.In the event that contracts for the sale of the Suburb T property by private treaty have not been exchanged within months (3) months after the date of these orders then the husband and the wife shall thereupon do all such things as may be necessary to list the Suburb T property for sale by auction upon the following terms and conditions:
(a)The auction shall take place within six (6) weeks after the date three (3) calendar months after the date of these orders or as soon as practicable, whichever is the later.
(b)The husband and the wife shall attend at the auction and in the event that the Suburb T property is passed in, the husband and the wife shall negotiate with the highest bidder and shall accept any offer to purchase the Suburb T property at no less than 90 per cent of the reserve price.
(c)In the event that the Suburb T property does not sell at auction or does not sell by private treaty within two (2) weeks after the date of the auction then the husband and the wife shall relist the Suburb T property for sale by auction at intervals of no more than six (6) weeks upon the same terms and conditions as set out herein until the Suburb T property is sold.
5.Upon completion of the sale of the Suburb T property, the parties shall distribute the proceeds of such sale as follows:
(a)In payment of real estate agent’s commission and expenses on the sale;
(b)In payment of proper legal costs and disbursements of and incidental to the sale;
(c)In adjustment of rates, levies and taxes on the Suburb T property;
(d)In payment of 65 per cent of the balance then remaining to the wife plus a further $61,521; and
(e)The balance to the husband.
6.Simultaneously with the husband’s compliance with Order 1 hereof:
(a)The wife shall:
(i)Resign as a director of, and transfer to the husband her shareholding in, U Pty Ltd;
(ii)Assign to the husband any debit or credit loan accounts held by the wife in U Pty Ltd and V1 Pty Ltd;
(iii)Otherwise relinquish any right, title or interest in either U Pty Ltd, V1 Pty Ltd, the Piroozi Family Trust and H1 Business.
(b)The husband shall indemnify the wife and keep her forever indemnified in relation to any liability howsoever arising, including any liability for personal income tax, with respect to the following:
(i)U Pty Ltd;
(ii)V1 Pty Ltd;
(iii)The Piroozi Family Trust;
(iv)H2 Pty Ltd, trading as H1 Business.
7.Upon implementation of Order 1 hereof, the husband and the wife shall thereafter forthwith do all such things as may be necessary to cause the wife’s entitlement in Superannuation Fund 1 to be rolled over to another superannuation fund nominated by the wife and that the wife thereupon forthwith do all such things as may be necessary to:
(a)Resign as a director of, and transfer to the husband her shareholding in, W1 Pty Ltd;
(b)Resign as a director of, and transfer to the husband her shareholding in, W2 Pty Ltd.
8.The husband shall pay the wife $600 per week by way of spousal maintenance from the date of making these orders until such time as the wife receives all of the amounts ordered pursuant to Order 5(d).
9.In the event that either party fails to execute any deed or instrument necessary to give effect to these orders within seven days of being requested to do so, the registrar of the Federal Circuit and Family Court of Australia at Sydney shall be appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to execute such deed or instrument in the name of such party and do all acts and things as may be necessary to give validity to the operation of the deed or instrument.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Piroozi & Piroozi has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
These are proceedings for financial adjustment following a 20 year relationship. While the parties’ affidavits addressed a broad sweep of allegations, by the time the matter came to submissions the issues between the parties had significantly narrowed.
The parties were in agreement that the respective contributions of the parties over the course of the relationship were equal. The applicant wife (“the wife”) contended, however, that there should be a 5 per cent adjustment in her favour for the period between separation in March 2019 to the hearing as a consequence of the wife’s significant contributions to the care of the parties’ children, particularly X.
The respondent husband (“the husband”) for his part contended that contributions should be found to be equal to the time of hearing.
The wife sought an adjustment in her favour under s 75(2) of the Family Law Act 1975 (Cth) (“the Act”) of 15 per cent based upon her health issues, her obligations to support two of her adult children, a differential in income and earning capacity compared to the husband, and for what was said to be non-disclosure by the husband. She thus sought an overall division of the parties’ assets as to 70 per cent to her and 30 per cent to the husband.
The husband contended that there should be a 5 per cent adjustment in his favour under s 75(2) as a consequence of problems with his vision. His counsel, however, conceded that the evidence warranted a modest adjustment in favour of the wife, contending that that adjustment would be 5 per cent but not as high as 10 per cent. As best I can analyse the submission, the husband’s counsel contended that the parties’ assets overall should be divided equally.
The wife also sought an order for spousal maintenance for a period of two years. The order sought the husband pay various expenses of the wife including fuel, tolls, vehicle registration and insurance costs, health insurance and rent. It is curious that the wife sought an order in such form given her evidence of difficulties in the past in having the husband pay or reimburse her for monies the subject of interim orders. The wife’s counsel was not opposed to a periodic order in a set amount.
The husband’s counsel agreed that the wife had a need for spousal maintenance but contended that the husband did not have the capacity to meet an order.
The parties were in agreement as how the assets in a structural sense should be divided. In that respect, the parties agreed that the husband would retain the parties’ self-managed super fund subject to rolling out the wife’s superannuation entitlement and that he would retain the various corporate structures. The husband was opposed to the indemnities the wife sought.
The parties agreed that an order could be made immediately by consent that the wife receive $250,000 from the controlled monies account with such order made on 19 April 2023. The parties agreed that the wife would receive all of the funds in the controlled monies account. I indicated that I did not propose to change the entries in the balance sheet to give effect to this agreed position. There was no demurrer to this position.
The wife relied upon the following documents:
(1)Initiating Application filed 27 August 2021;
(2)Affidavit of wife filed 29 November 2022;
(3)Affidavit of Mr Z filed 29 November 2022;
(4)Affidavit of Dr D filed 1 December 2022;
(5)Affidavit of Ms BB filed 12 December 2022;
(6)Affidavit of Dr P filed 27 January 2023;
(7)Financial Statement filed 30 November 2022; and
(8)Case Outline document.
The husband relied upon the following documents:
(1)Amended Response to Initiating Application filed 24 September 2021;
(2)Affidavit of husband filed 30 November 2022;
(3)Affidavit of Dr DD filed 30 November 2022;
(4)Affidavit of Mr AA filed 27 January 2023; and
(5)Case Outline document.
Each of the parties also relied upon the report dated 14 December 2022 of Mr EE, the single expert accountant.
The husband required the wife, her witness Mr Z, and her psychologist Ms BB for cross‑examination. Each of the wife and the above witnesses were cross-examined as was the husband and his brother, Mr AA. Both parties asked questions of Mr EE.
BACKGROUND FACTS
The wife was born in City FF in 1968 and is currently 54 years of age.
The husband was born in Country GG in 1968 and is currently 54 years of age.
The wife contends that the parties commenced cohabitation in late 1998 while the husband contends that the parties commenced cohabitation following their marriage in early 1999. The parties separated on a final basis on 9 March 2019 and were divorced in mid-2020.
There are three children of the marriage, namely, Mr E born 2001, aged 21 years, and X and Y born 2004, aged 18 years.
The wife also has two children from an earlier relationship, namely Ms HH and Ms JJ. At the time of cohabitation, they were about 8 and 7 years of age, and primarily lived with the wife and spent time with their father. The parties are in dispute as to the extent of the husband’s involvement in caring for Ms HH and Ms JJ. The wife contends that she cared for Ms HH and Ms JJ, and that the husband rarely attended to their schooling or sporting as he would be working. The husband contends that he would collect them from school most days and care for them afterwards as the wife would be at work until 5.00 pm. It is not in dispute that expenses for Ms HH and Ms JJ were paid from the parties’ joint account and that nominal child support was received from their father. In circumstances where the husband conceded that the contributions were equal and made no submissions consistent with the Full Court’s decision in Robb and Robb (1995) FLC 92-555, I do not need to resolve the controversy on this issue.
In circumstances where there is agreement that the contributions to the date of separation are equal then it is superfluous to recite the historical matters of contribution, particularly where much of it is disputed and unresolved by cross-examination given the very sensible concession referred to above. I will therefore only address such matters of history as are necessary to either resolve the remaining matters of contention or inform my ultimate findings.
In late 2008, the parties registered U Pty Ltd. The parties also established the KK Family Trust, which was subsequently renamed the Piroozi Family Trust, and U Pty Ltd was appointed as the trustee. In the same year the parties through U Pty Ltd established V1 Pty Ltd of which the husband is the sole director and secretary.
In mid-2014, H3 Pty Ltd was registered. The husband and Ms LL were the directors of the company, and the shares were equally held by U Pty Ltd and an entity controlled by Mr LL and Ms LL (collectively “Mr & Ms LL”). Subsequently, the H1 Business was established as a partnership.
In or around mid to late 2018, V1 Pty Ltd purchased bulk products from M Company for $627,517 of which $375,712 was sold to NN Company at costs price. The parties are in dispute as to where and how the remainder of the stock was utilised. The husband contends that the remaining stock was used in the ordinary course of business. The wife contends that the remaining stock has gone missing.
In or around late 2018, the husband and Mr LL had a falling out resulting in the need to end the partnership and sell the H1 Business.
In late 2018, the parties ceased their involvement in operating the H1 Business and $150,000 was paid according to the wife in repayment for a loan owed to the directors. The wife contends that in late 2018, the parties confirmed to Mr & Ms LL that the partnership had ended and that responsibility for the business was thereafter relinquished to Ms LL. The wife contends that a Heads of Agreement was prepared to allow Mr & Ms LL to buy the parties out of the business. She says that following separation, the husband refused to provide further instructions regarding the sale.
In early 2019, V2 Pty Ltd was registered. The husband’s brother Mr AA is the sole director, secretary and shareholder.
The parties separated on 9 March 2019. Since separation, the children have resided with the wife and not spent any time with the husband.
The circumstances surrounding the parties’ separation involve allegations of sexual assault raised by the party’s daughter X against the husband’s brother Mr C.
Mr C was subsequently charged with sexual assault of X.
X has been self-harming since 2019. Photographs of self-inflicted injuries to her arms were tendered (Exhibit 25).
In March 2019, Mr E was diagnosed with severe anxiety and severe clinical depression. The wife says that he had been under the care of Dr D for the same symptoms since about 2017.
In early 2019, an apprehended domestic violence order (“ADVO”) was taken out against Mr E for the protection of Mr AA. Mr E was also charged with using carriage service to threaten to kill.
In early 2019, the husband obtained a loan of $150,000 on interest free terms from Mr MM. The husband says the purpose of the loan was to assist with V1 Pty Ltd’s cash flow and to make ends meet.
In early 2019, the wife was diagnosed with anxiety and depression.
The husband contends that between March and April 2019, Mr MM loaned H3 Pty Ltd the sum of $421,000 so that it could meet its expenses.
On 28 June 2019, the wife commenced proceedings in the Family Court of Australia (as it then was).
In mid-2019, the Children’s Court dismissed the ADVO and charge against Mr E subject to him maintaining appointments with various health professionals.
In late 2019, the husband says he received a letter requesting payment of the loan to Mr MM of $150,000.
The wife contends that in or around late 2019, H3 Pty Ltd ceased operating the H1 Business and the husband caused H3 Pty Ltd interest to be transferred to Mr MM for nil consideration. The wife says that H3 Pty Ltd was subsequently deregistered.
The husband contends that in early 2020, Mr MM assumed responsibility for H3 Pty Ltd as well as the loan of $421,000 that was owed to Mr MM.
The husband contends that H3 Pty Ltd was deregistered in mid-2021.
Mr C’s criminal trial commenced in early 2022 and lasted three weeks. At the trial’s end, Mr C was found guilty and sentenced to a maximum jail term. The wife says that X struggled with the trial and that she is still struggling with the impact that it had on her.
On 17 February 2023, the matter was set down for trial for four days. The trial commenced on 17 April 2023 and finished on 19 April 2023. Judgment was reserved.
NON-DISCLOSURE
The wife contended that the husband had failed to make a full and frank disclosure.
The authorities make plain that a party to financial proceedings is required to make a full and frank disclosure (see Oriolo & Oriolo (1985) FLC 91-653; Weir and Weir (1993) FLC 92-338 (“Weir”)). The case law is reinforced by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The duty of disclosure is absolute. It is a continuing obligation throughout the litigation and until the point of judgment. It does not relate simply to documents but includes information pertinent to all relevant and material facts.
Justice Hutley observed in St John v St John (1979) 6 Fam LN N14:
… faced with the party whose affairs were tangled and who did not give the assistance within his power to disentangle them the trial Judge in my opinion was well entitled to simply take the view that it lies upon that party to devise means to comply with the order. If the burden is impossible, he cannot complain as he is the author of his own misfortune.
In Kannis & Kannis [2002] FamCA 1150, the Full Court underscored the relevance and consequence of a failure to disclose:
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude that the asset pool is greater than demonstrated. In those circumstances it might be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour.
A failure to disclose goes to the very heart of the Court’s obligation to make a determination that is just and equitable. In Briese and Briese (1986) FLC 91-713 at 75,181, Smithers J determined:
… A person in the position of the husband in the present case has a positive obligation to set out at an early stage his financial position in a clear and comprehensive manner. …
… in financial proceedings between spouses each party must make a full and frank disclosure of all material facts. … full and frank disclosure was required as a matter of principle in the light of the fact that it was the duty of the Court, taking into account a number of designated criteria, to make a decision which basically involved the exercise of a discretion. …
… There is an obligation on each party to act so as to provide a basis upon which the two of them are in a position to resolve the case by agreement, or proceed to a hearing, as expeditiously as may reasonably be done.
In Weir, the Full Court stated at 79,593 that:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
The wife contended that there were a number of instances of non-disclosure. By the time of submissions her counsel identified them to be as follows:
(1)That the husband had an undefined and undisclosed interest or association in V2 Pty Ltd, a company owned and controlled by his brother;
(2)That the husband had entered into what were described as various sham transactions with the other partners in H3 Pty Ltd;
(3)That the husband had failed to disclose what happened to a bulk product purchase by V1 Pty Ltd; and
(4)That the husband had failed generally in his duty of disclosure.
V2 Pty Ltd
The evidence reveals that the husband’s brother Mr AA incorporated V2 Pty Ltd prior to the parties’ separating. The wife contends that the date of incorporation is not a mere coincidence nor is the similarity in the name of the company with that of V1 Pty Ltd.
In mid-2019, V2 Pty Ltd entered into a contract with OO Pty Ltd for services totalling $80,000 (Exhibit 28). The husband is neither a subcontractor for nor a director or secretary of V2 Pty Ltd. The husband’s brother represented that he undertook all negotiations with OO Pty Ltd in relation to the contract.
It is agreed that the contract was signed by the husband in the capacity of subcontractor, director and secretary for a company with which he has no association and does not hold the asserted positions. The husband said that he only signed the contract because his brother was away on holidays and did it as a favour for him. His brother agreed that the husband signed the contract as he was away camping. When cross-examined further by the wife’s counsel, the cross‑examination revealed that the brother’s partner had just given birth to their child, being shortly prior to the date the contract was signed. The wife’s counsel suggested with some incredulity that it was inconceivable he would go camping with a new born.
The contract also recorded the husband’s mobile phone number as the afterhours phone number for the subcontractor. The husband did not adequately explain why his phone number was recorded. Part of the contract identifies in typed form that the representative for V2 Pty Ltd is “Mr Piroozi”, being the husband.
I find the explanation given by the husband and his brother as to the husband’s only involvement in this transaction being limited to signing the contract as a favour as fanciful. Likewise, I find it implausible that the husband would write his mobile phone number on a building contract if he had nothing to do with contract or his brother’s company. It would have been easy for the husband to have written his brother’s phone number on the contract. I also find the reference to the husband’s name as the representative on behalf of V2 Pty Ltd as completely inconsistent with the explanation given by the brother that he was the one who undertook all negotiations in relation to this contract.
I am not satisfied that the husband has given a fulsome and truthful explanation of his involvement in the company of his brother. I am confident in coming to the conclusion for the above reasons that the husband has in this respect failed in his obligation of disclosure.
H3 Business
The wife’s Case Outline asserts the following:
1.15 In [mid] 2014 [H2 Pty Ltd] t/as [H1 Business] was registered [The husband] and [Ms LL] were the Directors. [U Pty Ltd] held 50% of the shareholdings and an entity controlled by [Ms LL] the other 50%. It was a [trade related] business; the [H2 Pty Ltd] property was used as a warehouse for storing [product] for the business and [the H1 Business] had the benefit rent free for almost 6 years. The parties from their joint account paid $211,483.50 for initial capital to establish the business.
1.16 In [late] 2018 the parties, together with [Mr MM] and [Mr & Ms LL], agreed to sell the H1 Business after a falling out between the Husband and [Mr LL], and it was agreed that each couple would receive the sum of $150,000.
1.17 In [late] 2019 [H3 Pty Ltd] ceased operating the [H1 Business] franchise and the Husband caused [H3 Pty Ltd’s] interest in [the H1 Business] to be transferred to [Mr MM], [Mr & Ms LL’s] son, for nil consideration. [H3 Pty Ltd] was deregistered.
1.18 The Wife contends that the Husband entered into a sham loan agreement as sole guarantor for a loan by [H3 Pty Ltd] from [Ms LL’s] son [Mr MM] in [early] 2019 of $420,000 to defeat the Wife’s claim in relation to that business.
(Footnotes omitted)
The wife contends that an agreement was reached as how the parties’ interest in H3 Pty Ltd would be dealt with. In that respect, the wife points to draft Heads of Agreement prepared by solicitors on behalf of the wife and the husband which records how the partners were to divide the assets of the partnership. One of the provisions of the draft Heads of Agreement (Exhibit 20) provided that U Pty Ltd would receive $200,000 as repayment of a loan account for its interest in the partnership.
The wife’s affidavit records the following:
124. [In late] 2018, [the husband] and I confirmed to [Mr & Ms LL] the end the partnership of [the H1 Business], and from that date handing over the responsibility for the business to [Ms LL] and thereafter relinquishing responsibility for the business. Exhibited hereto and marked “[AE]-19” is a true copy of email exchanges between [the husband], myself, [Mr & Ms LL] and [the H1 Business] head office commencing [late] 2018 in this regard.
125. Despite our exit from the business and being in the process of dissolving the partnership of [the H1 Business], [over two days in early] [H3 Pty Ltd] paid substantial amounts to Head Office for stock of $80,000 and $17,597.23 respectively totalling $97,597.23.
126. [The husband] said to me in [late] 2018 “me and [Mr LL] initially discussed attributing a value of $400,000 for the business, and [Mr LL] has proposed to purchase our half interest for $200,000”. This sum is consistent with the stocktake […] had provided to us [in late] 2018. [The husband] and I engaged [PP Lawyers] to act on this transaction. Heads of Agreement were ultimately drafted reflecting a value of $400,000, or $200,000 each
127. [The husband] met with [Mr QQ] [in early] 2019 in his […] office, I joined the meeting halfway through. [The husband] was in direct contact with [Mr QQ] via phone calls and text messages, and also by giving me instructions to send to [Mr QQ] via email. Exhibited hereto and marked “[AE]-20” is a true copy of the draft Heads of Agreement, the contents of which [The husband] and [Mr LL] agreed upon [in early] 2019, but was not been signed.
128. However, following our separation, [the husband] refused to provide further instructions to [Mr QQ] and I was not provided with any information about, or input in, progress of discussions regarding the proposed sale. Exhibited hereto and marked “[AE]-21” is a true copy of correspondence exchanged between my former solicitors and [Mr & Ms LL’s] solicitors in this regard.
I accept the wife’s evidence. It was not the subject of challenge.
The husband agreed that he had met with the solicitor but denied any knowledge of the Heads of Agreement saying that this was the first time he had seen the document. In circumstances where the wife was not challenged on this evidence and given that the husband was present at the solicitor’s office, I find his explanation that he has never seen the Heads of Agreement unconvincing.
The husband’s affidavit evidence as to this issue is as follows:
108. Immediately prior to separation we negotiated with [Mr & Ms LL] as to selling our interest in [H3 Pty Ltd]. However, we could not come to agreement on a sale price and rather split the remaining amount in the [H3 Pty Ltd] bank account between us. We received $150,000 and [Mr & Ms LL] took $150,000 leaving the [H3 Pty Ltd bank account with nothing.
109. [The wife] engaged a lawyer to further negotiate with [Mr & Ms LL]. I terminated the lawyer’s retainer after separation as I considered we were paying substantial legal fees and getting nowhere. We received no further moneys and the business was taken over by [Mr MM] as deposed below. I have since learned that [Mr MM] disposed of the business as it was not profitable.
This evidence is in conflict as to timing with that of the wife. In her affidavit she says:
120. Prior to [the husband] and I separating, we engaged in negotiations to sell the [H1 Business]. [The husband] and [Mr LL] had a falling out after 22 years of business relationships and friendship. This conflict necessitated the need to end the partnership of [the H1 Business], as I detail further below.
121. In November 2018, [Mr & Ms LL], and [the husband] and I, agreed to each couple receiving $150,000 by way of part reduction of the loan owing by [H3 Pty Ltd] to the directors ([the husband] and [Ms LL]). Accordingly from the [H3 Pty Ltd] Commonwealth Bank account ending […86]:
(a) On 8 November 2018, [V1 Pty Ltd] received $50,000;
(b) On 21 November 2018, [V1 Pty Ltd] received $100,000; and
(c) On 22 November 2018, [Mr & Ms LL] received $150,000.
122. The balance of the [H3 Pty Ltd] account […86] after the directors’ loans reductions on 8, 21 and 22 November 2018 was $155,793. The closing account balance [in early] 2019 was $98,241.63. Exhibited hereto and marked “[AE]-17” are true copies of the statements confirming the said balances.
The wife was not challenged on her assertions and the husband’s evidence is inconsistent with documents that were tendered that demonstrate the accuracy of the wife’s assertions. Contrary to what the husband says, the payment of $150,000 was not received immediately prior to separation leaving the bank account with nothing. The wife’s evidence is that the payments were made between 8 and 22 November 2018 (some 3 months prior to separation) and as at that date the bank account for the company held over $140,000.
I prefer the wife’s evidence as to when the monies were paid and the bank account balance as it is specific, accurate and supported by documents (Exhibit 36) as opposed to the husband’s evidence which is general and inaccurate. Nor do I accept the husband’s evidence that it was the wife who engaged the lawyer. Again, I prefer her evidence which is much more detailed and was not the subject of challenge.
In March 2019, the husband entered into a loan in the sum of $150,000 with Mr MM. The husband’s evidence in relation to this loan is as follows:
81. [In] March 2019, I obtained a loan from [Mr MM] of $150,000 on interest free terms to assist with [V1 Pty Ltd] cashflow (1st [Mr MM] loan). [Mr MM] is [Mr LL’s] son whom I had known for over 20 years.
…
85. I used the 1st [Mr MM] loan to make ends meet for the business until things could pick up again. I also reduced my income and was supplemented by the Covid-19 payments.
…
89. On 31 October 2019, I received correspondence from [RR Lawyers] regarding the 1st [Mr MM] loan, and requesting immediate payment. To avoid immediate legal action I paid $50,000 from funds held by me from the sale of [Motor Vehicle 1]. I paid the balance of the 1st [Mr MM Loan] from the funds I received pursuant to court order dated 26 April 2021.
The wife is very suspicious about this loan. Her suspicion is reinforced by the fact that the husband did not disclose to her the existence of this loan until about November 2019.
The financial accounts for the partnership as at 20 December 2018 disclose net assets of $375,399 (Exhibit 35). Even allowing for inflated stock figures as identified in Exhibit 33, the husband has not explained why he ceased engaging with the solicitor, Mr QQ, to pursue recovery of the parties’ interest in the partnership if he needed money, being his asserted explanation for borrowing $150,000.
In March 2019 the husband provided a guarantee in the sum of $421,000 for a loan obtained by H3 Pty Ltd (Exhibit 41). The husband’s affidavit says:
110. Between 5 March 2019 and 23 April 2019 [Mr MM] loaned [H3 Pty Ltd] the sum of $421,000 as it could not meet its immediate expenses (2nd [Mr MM] loan). [H3 Pty Ltd entered into a loan contract between myself, [Ms LL], [Mr MM] and [H3 Pty Ltd] for the 2nd [Mr MM] loan.
111. As deposed to above, [the wife] and I no longer had anything to do with the business after [late] 2018. I was required to sign loan documents as I was still a director, although I no longer dealt with the business in any capacity.
The husband explanation about why he signed this guarantee was unsatisfactory. His only response was a meekly made assertion that he did not obtain legal advice. This is an unconvincing response in circumstances where he had met with a solicitor in February 2019, some weeks if not days prior to signing the guarantee.
Signing this guarantee was for no apparent disclosed benefit to the husband but carried the potential of significant financial risk in circumstances where he asserts that the parties had not had anything to do with the business since late 2018.
I am satisfied that the parties’ interest in the partnership had a value at or about the date of separation. I find the husband’s explanations as to why he suddenly stopped pursuing the recovery of the parties’ asset in the partnership after separation in circumstances where he had immediately prior to separation negotiated a payment to the parties as unconvincing.
Nor has the husband convincingly explained why he pledged his guarantee, putting at risk his and the wife’s financial position for no apparent benefit and then causing H3 Pty Ltd’s interest in the H1 Business to be transferred to Mr MM for no consideration.
I am satisfied for the above reason that the husband has failed in his obligation to transparently and fulsomely disclose what really happened to the parties’ interest in the partnership.
Bulk product purchases
The wife contended that the husband had failed to disclose what happened to a bulk product purchase by V1 Pty Ltd. The wife in her affidavit says:
109. From […] July 2018 until […] October 2018, V1 Pty Ltd purchased [product] from [M Company], at significantly reduced wholesale pricing, for collectively $627,517.01, during a promotional sale. The usual terms with [M Company] was for stock to be purchased and paid for within three months. With this particular promotion, the payment terms as [the husband] told me he understood, was twelve months. There was subsequently a dispute between [the husband] and [M Company] as to the timeframe for repayment.
110. The purchase included [several products]. Ordinarily, I observed from my regular review of [V1 Pty Ltd's] accounts in the course of my work described above, that [V1 Pty Ltd] spent about $40,000 on [M Company] [product] per month for use in the [trade related] business and so the volume of [product] purchased over this two-month period should have lasted around eighteen months.
111. Of the [product] purchased between July and October 2018:
(a) Some of the [product] was utilised by [V1 Pty Ltd];
(b) Some of the [product] was on-sold by [the H1 Business] to [NN Company] on four separate invoices, with a sale value totalling $375,712:
(i) $203,690 on 11 October 2018;
(ii) $76,502 on 12 February 2019;
(iii) $46,280 on 8 March 2019; and
(iv) $29,240 on 7 January 2019.
(c) As to the remainder, this is a significant point of contention between [the husband] and I in these proceedings.
The husband in his affidavit says:
90. [The wife] has continued to make allegations that I have taken [product] from [V1 Pty Ltd], and kept the sale proceeds for my own use despite me providing documents to show otherwise in 2019 when we initially separated, she continued to make this allegation each time she sought an interim distribution.
91. [V1 Pty Ltd] purchased [product] from [M Company] on 50 day payment terms. This meant we purchased [product] and paid for the [product] within 50 days from the date of order. [The wife] was aware of this as she assisted with the books and generally controlled the finances.
92. In [late] 2018, [V1 Pty Ltd] purchased $627,517 worth of [product] during a promotion at [M Company] which was to be paid within 12 months instead of the usual terms. The [product] was purchased on credit, and was not paid for in cash, rather on payment terms for 12 months. We purchased in Bulk to receive a bigger discount and also to raise commission for the [H3 Pty Ltd] business, which I will depose to further under the cover of a separate heading.
93. The sales representative who sold us the [product] subsequently left [M Company], and [M Company] informed us that the repayment terms was not authorised by them, and requested we repay them within 50 days. The business could not afford to do that, and we budgeted for the entire 12-month period.
94. [V1 Pty Ltd] sold $375,712 of the stock to [NN Company] at cost price in an effort to appease [M Company] and repay them as soon as we could. The funds received from [NN Company] were paid to [M Company] save for $20,000 which [the wife] transferred to herself on 9 March 2019. I have provided disclosure to [the wife] on no less than 4 occasions about [NN Company] which she says is "missing [product]" including sales receipts and evidence of receipt of $375,712 into the [V1 Pty Ltd] Bank Account. This was also provided to the Single Expert, [Mr EE]. The balance has been used for ordinary business operations since March 2019 and [M Company] has been fully repaid.
95. On 5 March 2019, prior to separation, I received correspondence from [M Company] notifying me that the [V1 Pty Ltd] account with [M Company] had stopped as [V1 Pty Ltd] had not yet repaid the sum of $346,057 worth of stock.
96. The [product] stock which was not sold was used for ordinary business purposes. At the time [V1 Pty Ltd] used between $30,000 - $70,000 per month of [product] stock as [the wife] has stated.
…
100. I have not hidden any [product] as [the wife] alleges. There is no “missing [product]”. Nor is there any missing money from the sale and use of the [M Company] [product] the subject of paragraph 92.
The wife bears the onus of establishing the contentions for which she advances. I am not satisfied she has discharged that onus. An examination of her evidence reveals that she acknowledged that some of the product was used by V1 Pty Ltd. As much is apparent from paragraph 111(a) of her affidavit.
I am not able to find that there is missing product stock.
General duty of disclosure
The wife contends that the husband has failed to make a full and frank disclosure. I have addressed above a number of instances where the husband has failed to make a disclosure. I am not able to make a finding that the husband has failed in each and every aspect of disclosure but he has certainly failed to make a full and frank disclosure in relation to the matters referred to above.
APPROACH TO PROPERTY PROCEEDINGS
The approach to be adopted in a financial adjustment case under s 79 of the Act is to follow the well-recognised four-step process (see Hickey & Hickey & Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143). Following such an approach, the Court identifies and values the assets and liabilities at the date of hearing for the purposes of division. Secondly, the Court assesses the contributions of the parties within the meaning of s 79(4) of the Act and determines a contribution based entitlement. Thirdly, the Court identifies the relevant matters under s 75(2) and determines such adjustment as is necessary to the contribution based entitlement. Finally, the Court considers the effect of the findings and must then determine whether the order as proposed is in all the circumstances just and equitable.
Consistent with the ratio arising out of the High Court’s determination in Stanford v Stanford (2012) 247 CLR 108, I am of the view that it is just and equitable that an order be made adjusting the property interests of the parties. The parties are no longer living together and there is no longer the common use of their property. The assumptions and undertakings that governed the use of their property ended with separation and both parties sought that there be an adjustive order.
BALANCE SHEET
The parties’ assets and liabilities were captured in a document, which became Exhibit 50 in the proceedings. By the time of submissions, it revealed the following:
ASSETS Ownership Description Wife's value Husband's value 1 Joint Controlled monies account – proceeds of sale of TT Street, Suburb B 280,142 280,142 2 Husband O Street, Suburb T 1,150,000 1,150,000 3 Joint Piroozi Family Trust
V1 Pty LtdNK 0 4 Husband Loans owed by V1 Pty Ltd 41,113 41,113 5 Wife Loan owed by V1 Pty Ltd 4,102 4,102 6 Husband Loan owed by Piroozi Family Trust 2,272 2,272 7 Wife Loan owed by Piroozi Family Trust 2,272 2,272 8 Wife Motor Vehicle 2 24,600 24,600 9 Wife Motor Vehicle 3 380 380 10 Husband Motor Vehicle 4 49,150 49,150 11 Wife UU Bank Account account …52 4 4 12 Wife UU Bank account …89 3,022 3,022 13 Wife Mills Oakley Trust Account 0 0 14 Husband Commonwealth Bank account …13 4,053 4,053 15 Husband Burke & Mangan Lawyers Trust Account 64,276 64,276 16 Wife VV Limited Shares 4,226 4,226 17(blank intentionally) 18 Wife Household contents 5,000 5,000 19 Wife Musical instruments 11,900 11,900 20 Husband Household contents 5,000 5,000 21 Husband Funds received after separation 300,947 300,947 22 Wife Funds received after separation 0 485,686 Total $ 1,952,459 $ 2,438,145 ADDBACKS Ownership Description Wife’s value Husband’s value 23 Husband Paid legal fees 264,053 264,053 24 Wife Paid legal fees 421,149 421,149 25 Wife Motor Vehicle 5 0 0 Total $ 685,202 $ 685,202 LIABILITIES Ownership Description Wife’s value Husband’s value 26 Wife WW Pty Ltd credit card account ending …59 0 0 27 Wife XX Finance credit card account ending …92 0 0 28 Wife YY Pty Ltd credit card account ending …01 0 0 29 Wife ZZ Finance credit card account ending …05 0 0 30 Husband AB Finance 40,000 40,000 Total $ 40,000 $ 40,000 SUPERANNUATION Member Name of Fund Type of Interest Wife’s value Husband’s value 31 Husband Superannuation Fund 1 Self managed superannuation fund 182,789 182,789 32 Wife Superannuation Fund 1 Self managed superannuation fund 149,236 149,236 Total $ 332,025 $ 332,025 FINANCIAL RESOURCES Ownership Description Wife’s value Husband’s value 33 Husband Interest in V2 Pty Ltd NK 0 Total $ NK $0 NETT TOTAL ASSETS (including Superannuation) $ 2,929,686+ NK $ 3,415,372
The parties were apart in relation to the composition of the Balance Sheet by reference to the funds received after separation. In that respect it was agreed that the husband had received $300,947 (albeit that the amount in Exhibit 49 is a little higher) after separation and the wife had received some $485,686 after separation. Both of these amounts are captured in Items 21 and 22.
This does not actually represent the only funds that the parties had received after separation. Exhibit 49 is an agreed schedule representing all of the monies that the parties have received since separation with the exception of any income and/or benefits the husband has received from V1 Pty Ltd.
In gross terms the husband received the sum of $1,662,000 whilst the wife received $1,272,000. A simple reference to these amounts is illusory in the sense that some of the monies that the husband received were applied to the purchase of the Suburb T property which finds its way into the Balance Sheet. Likewise, each of the parties used their share of the funds to pay their legal fees which are also included in the Balance Sheet. The husband as a consequence of the acquisition of the Suburb T property has had the benefit of rent free accommodation whilst the wife has had to pay rent. The rental payments by the wife total some $215,165. When allowance is also made for the fact that the wife received a lump sum spousal maintenance order, then the balance after all of the above amounts are the items that are referred to at 21 and 22 of the Balance Sheet.
I am not satisfied that it is appropriate to include in the Balance Sheet monies which each of the parties received after separation and which no longer exist. While the items are included in the Balance Sheet as assets, they are in reality more properly described as addbacks. The category of cases to which addbacks apply are narrow.
In AJO & GRO (2005) FLC 93-218, the Full Court observed in relation to addbacks:
30.To date, three clear categories of cases have emerged where the Court has determined that it is appropriate to notionally add back to the pool of assets, that is, assets that no longer exist. They are:
(a) Where the parties have expended money on legal fees. In DJM and JLM (1998) FLC 92-8l6 the Full Court said at 85,262:
“11. 6 For reasons set out in Farnell, s 117 provides that each party to proceedings under the Family Law Act shall bear their own costs unless the Court otherwise orders. Failing to add back monies expended by parties on costs frequently has the effect of defeating the policy of s 117 by permitting the pool of available assets for distribution between the parties to be diminished by any monies that either of the parties have managed to spend on their costs up to the date of trial. We are of the view that the normal approach ought be to add costs already paid back into the pool. Whilst there may be cases where that approach is inappropriate, the reasons why it is not taken ought normally be spelt out.”
(b) Where there has been a premature distribution of matrimonial assets. In Townsend and Townsend (1995) FLC 92-569 Nicholson CJ as he then was with whom Fogarty and Jordan JJ agreed, said at 81,654:
“In my view, what occurred in this case, as I said during the course of argument was, in fact, a premature distribution of a proportion of the matrimonial assets. What the husband did was to distribute to himself an asset in which the wife had a legitimate interest. In such circumstances I consider that it would be unjust in the extreme to simply treat such conduct by the husband as a matter to which regard should be had under section 75(2). It seems to me that the husband has had the benefit of that money. Had he retained, for example, the taxi licence instead of selling it, that would have been brought into account as an item of property which would have been dealt with in the same way as the remaining items of property in this case. Accordingly, I am of the view that the correct way in which to deal with the husband's receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly.”
(c) In the circumstances outlined by Baker J in Kowaliw and Kowaliw (1981) FLC 91-092 at 76,644:
“As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.
Conduct of the kind referred to in para. (a) and (b) above having economic consequences is clearly in my view relevant under sec 75(2)(o) to applications for settlement of property instituted under the provisions of sec 79.”
While in Trevi & Trevi (2018) FLC 93-858, the Full Court observed:
27.The Full Court held in [AJO and GRO] that addbacks fall into “three clear categories”: where the parties have expended money on legal fees; where there has been a premature distribution of matrimonial assets; and “waste” or wanton, negligent, or reckless dissipation of assets.
28.However, the Full Court also made it clear that an addback does not necessarily occur whenever “a party has expended money realised from the disposition of assets that existed as at the date of separation”, the Full Court describing such a proposition as “unduly simplistic”. An earlier Full Court made the same point, saying that adding back is “the exception rather than the rule”.
29.The fundamental precept that addbacks are exceptional, reflected in the decisions just referred to, also mirrors what has been said in earlier decisions of the Full Court that, for example, “the Family Court must take the property of a party to the marriage as it finds it” at trial. An important parallel proposition is that the parties do not “go into a state of suspended economic animation” after separation. Thus, reasonably incurred expenditure does not usually come within accepted categories of addback.
30.Two fundamental premises emerge from [AJO & GRO] and the authorities preceding it. First, “adding back” is a discretionary exercise. When the discretion is exercised in favour of adding back, it reflects a decision that, exceptionally, in the particular circumstances of a case, justice and equity requires it. The second premise is its corollary: in cases that are not “exceptional” justice and equity can be achieved, not by adding back, but by the exercise of a different discretion – usually by taking up the same as a relevant s 75(2) factor. Indeed, it has been said that the latter is “a course which is, perhaps, technically more correct” than adding back to the list of existing interests in property.
(Footnotes omitted)
I am not satisfied that the present circumstances are exceptional and thus I am not satisfied that it is appropriate to either addback or include any of these monies in the pool of assets for division between the parties. The reality is the funds no longer exist. While the wife has had more than the husband, she has had to support herself and the children with a very modest amount of child support in exceptionally trying circumstances. Neither party suggested that by the inclusion or removal of the items the contribution of the other was either greater or less.
Each counsel contended that I should adopt a consistent approach that is either they were both in or alternatively both out. I advised the parties that I intended to remove them both. There was no demurrer to that approach. Accordingly, I find the pool of assets for division between the parties to be as follows:
ASSETS Ownership Description Value 1 Joint Controlled monies account – proceeds of sale of TT Street, Suburb B 280,142 2 Husband O Street, Suburb T 1,150,000 3 Joint Piroozi Family Trust
V1 Pty Ltd0 4 Husband Loans owed by V1 Pty Ltd 41,113 5 Wife Loan owed by V1 Pty Ltd 4,102 6 Husband Loan owed by Piroozi Family Trust 2,272 7 Wife Loan owed by Piroozi Family Trust 2,272 8 Wife Motor Vehicle 2 24,600 9 Wife Motor Vehicle 3 380 10 Husband Motor Vehicle 4 49,150 11 Wife UU Bank Account account …52 4 12 Wife UU Bank account …89 3,022 13 Wife Mills Oakley Trust Account 0 14 Husband Commonwealth Bank account …13 4,053 15 Husband Burke & Mangan Lawyers Trust Account 64,276 16 Wife VV Limited Shares 4,226 17(blank intentionally) 18 Wife Household contents 5,000 19 Wife Musical instruments 11,900 20 Husband Household contents 5,000 Total $1,651,512 ADDBACKS 23 Husband Paid legal fees 264,053 24 Wife Paid legal fees 421,149 25 Wife Motor Vehicle 5 0 Total $ 685,202 LIABILITIES 26 Wife WW Pty Ltd credit card account ending …59 0 27 Wife XX Finance credit card account ending …92 0 28 Wife YY Pty Ltd credit card account ending …01 0 29 Wife ZZ Finance credit card account ending …05 0 30 Husband AB Finance 40,000 Total $ 40,000 SUPERANNUATION Member Name of Fund Type of Interest Value 31 Husband Superannuation Fund 1 Self managed superannuation fund 182,789 32 Wife Superannuation Fund 1 Self managed superannuation fund 149,236 Total $ 332,025 FINANCIAL RESOURCES Ownership Description Value 33 Husband Interest in V2 Pty Ltd 0 Total $0 NETT TOTAL ASSETS (including Superannuation) $ 2,628,739 ASSESSMENT OF CONTRIBUTION
I have read all of the evidence relied upon in the proceedings including the exhibits but do not propose to repeat all of it in these reasons. As the High Court reminds in Whisprun Pty Ltd v Dixon (2003) 200 ALR 447:
62. … 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.
The assessment in a property case calls for the exercise of a discretion and a holistic value judgment of the respective contributions of the parties. The Court is required to consider all of the contributions of the parties as the Full Court in Dickons v Dickons (2012) 50 Fam LR 244 makes plain:
24. … 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.
25.Doing so is also consistent with the demands of authority that the ultimate assessment of contributions should be made without “giving overzealous attention to the ascertainment of the parties’ contributions” (Norbis v Norbis (1986) 161 CLR 513 at 524 ; 65 ALR 12 at 18 ; 10 Fam LR 819 at 825 ; [1986] HCA 17) and the well-established recognition in the authorities (acknowledged specifically by her Honour in this case) that the process required of the court by s 79 is the exercise of a wide discretion, not the performance of a mathematical or accounting exercise.
26.The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
The Full Court in Horrigan & Horrigan [2020] FamCAFC 25 emphasised and reinforced that the proper approach to the assessment of contributions is:
35.… well established that an assessment of contributions is not a mathematical exercise, but rather involves the identification and assessment of all of the parties’ respective contributions, in a holistic way across the course of the relationship and in the post separation period to the point of assessment. …
I am also mindful of what the Full Court said in Singerson & Joans [2014] FamCAFC 238 at [66] that for the purposes of s 79 of the Act, there is nothing to suggest that any category of contribution needs to be quarantined and applied solely to particular assets. In my view, the authorities require evaluation of all contributions to the property of the parties, notwithstanding that the categories of property may be different. This view has been confirmed by subsequent Full Courts such as in Jabour & Jabour (2019) FLC 93-898, where their Honours observed that a primary judge should be cautious in emphasising the importance of an increase in value of a particular item of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (at [35]).
The consistent theme from the authorities is that the multifarious contributions over the relationship and subsequently of all types are to be assessed in a holistic way.
Guided by such Full Court determination, I propose to assess the parties’ contributions.
FINDINGS AS TO CONTRIBUTION
The parties agree that the contributions to the date of separation were equal. From my independent assessment of the evidence, I am satisfied that this was an appropriate concession. The husband contended that the parties’ contributions to the date of hearing were equal. The wife sought a 5 per cent adjustment in her favour in circumstances where she had the sole responsibility for the physical, emotional and psychological support of the children post separation.
I am satisfied that it is appropriate that there should be a 5 per cent adjustment in favour of the wife. The unchallenged evidence is that the parties separated in March 2019 and that none of the children have spent any time with the husband since separation. At the time of separation, the children were aged 17 and 14. The wife gives evidence as follows:
11.[X] was a victim of serious sexual assaults at the hands of [the husband’s] brother (her paternal uncle), [Mr C]. Following three years of an investigation and criminal proceedings, the trial took place before the District Court, […] for a period of three weeks which commenced [in early] 2022. [At the end of the trial] [Mr C] was found guilty of four charges […]. This is in addition to the one charge to which [Mr C] pleaded guilty.
12. [Mr C] was sentenced [in mid] 2022 to a maximum gaol term […], with a non-parole period […]. The gaol term was backdated to commence from [early] 2022 to account for the period of incarceration previously served.
…
250. [In late] 2019 the proceedings against [Mr C] were transferred from the Local Court to the District Court. [In late] 2019 the proceedings were listed for arraignment before the District Court […]. [Mr C] pleaded guilty to one charge […] and determination of his sentence was deferred until the conclusion of the proceedings. As such [Mr C] defended the remaining eleven charges against him. The matter was accepted into a program for a […] specialist division of the District Court for child sexual abuse matters. The proceedings were listed for a trial for three weeks in [early] 2022. [Y] and [X's] cross-examination was scheduled to occur via CCTV over the course of two days in [late] 2019 and [Mr E] was to do so in [early] 2020. However, [X] made fresh disclosures to the police which lead to additional charges being laid. The total charges against [Mr C] were [more than 20]. The three children were cross examined [mid] 2020 via CCTV at the [Suburb S] Centre due to the delays in the trial.
The mother gives evidence that X is significantly affected by the sexual assault and subsequent criminal proceedings. She says:
245. [X] has been self-harming since 2019, several times a year. … She is also sleeping with me in the evenings due to the fear and nightmares she is experiencing several nights a week. Exhibited hereto and marked “[AE]-38” are true copies of:
(a) Photographs obtained by me from google on about [mid-] 2021 depicting snake bite injuries;
(b) Photographs taken by me of [X’s] self harming injuries, which
…
251. I am on call with [X] to pick her up from school (until last month) or [L College] at a moment’s notice. At times she is anxious and cannot cope and just wants to be at home with me. At times she vomits due to stress. [X] was unable to attend school or [L College] consistently for the duration of 2022, due to the listing of the District Court trial and the stress and anxiety that [X] has experienced as a result of the trial.
252. From [early] 2022, [X] attended school 2 days per week to receive the support of her peers and lead a somewhat stable life. She has graduated with her peers but did not receive her HSC. [X] reported to me in early 2022 that she did not “feel mentally capable of sitting the exams and did not have adequate school attendance”.
253. [X] attended [L College] until mid-2022 when she deferred her course until early 2023. As of [late] 2022, [X] has withdrawn from the [L College] course altogether. I have observed [X's] mood to be very low and she is despondent.
254. Whilst [X] was initially managing with the pending criminal trial since the matter was reported to the police in [early] 2019, her condition deteriorated particularly since early […] 2019 … [X] was attending upon [Dr AC], psychiatrist once a month until [early] 2022 …
…
257. Having now concluded Year 12, [X] is presently at home after finishing her high schooling. She is at home in a depressed state and reports to me that she struggles with the new changes in her life. [X] also reports to me that she is “finding it difficult to adjust to not seeing her peers on a regular basis and sees her future as hopeless”. She is further “depressed that she has not received her HSC because of the trauma she has suffered from years 9-12”.
…
260. As to [X’s] present condition, my observations are as follows:
(a) [X] generally does not get out of bed until midday or 1.00pm, despite my efforts to rise her earlier;
(b) [X] reports to me on an almost daily basis that she:
“I am not in my body”;
“I am nothing”;
261. On my observations, [X’s] displayed anxiety in the lead up to the trial in [early] 2022 for her was almost debilitating. The day the verdict was delivered I was in hospital having emergency […] surgery which added to her anxiety and distress.
262. Once all of the evidence had been given, [X], [Y] and myself were allowed to attend the trial. [X] delivered her Victim Impact Statement. It was very traumatic for her to face her uncle for the first time after disclosing the abuse some three years earlier. She addressed her statement to her uncle with the permission of the Justice Christopher Hoy. [X] was very upset and in tears during her statement. She then had to sit and listen to the defence barrister and the hurtful allegations against her that her uncle had made. This was a very distressing time for [X] and she is still struggling with the emotional impact it has had on her. I will seek leave to tender a copy of this document at the final hearing of these proceedings.
The mother also gives evidence that the criminal proceedings have impacted significantly on the other children. She gives evidence in relation to Mr E as follows:
230. [Dr G] diagnosed [Mr E] with severe anxiety and severe clinical depression [in early] 2019, though [Mr E] was under the care of [Dr D] for the same symptoms for this condition since about 2017.
231. [Mr E] continues to suffer from chronic anxiety and depression and attends his psychologist on a monthly basis, and his psychiatrist on a quarterly basis. [Mr E] continues to administer anti-depressants as prescribed by [Dr P].
232. [Mr E] commenced a […] course at [L College] for […] but was unable to continue with it due to the depression he was experiencing due to the sexual abuse trial. [Mr E] deferred his studies until later in 2022 but did not get to completing same. He hopes to complete his studies in 2023.
In addition, she has had to deal with her own difficulties following the parties’ separation. In that respect she gives evidence to the following effect:
209. I suffer from anxiety and depression, for which I was diagnosed [in early] 2019 by my General Practitioner, [Dr K]. I am prescribed with anti-depressant medication and was attending upon my psychologist on a monthly basis, until I had to cease due to financial restrictions. I was subpoenaed by the Crown Prosecutor as the main witness after [X] to the sexual abuse trial and have been preparing myself mentally and emotionally …
Her psychologist, Ms BB, gave evidence to the following effect in a report dated 5 December 2022:
Background Summary: [The wife] was referred for treatment by [Dr AD]. The initial consultation was [in mid], 2022. The referring reason was for treatment of Adjustment Disorder that is symptom reduction, mindfulness, thought challenging, sleep hygiene, patient education, trigger identification, and avoidance. In addition, the GP requested treatment for Depression due to recent trauma as a result of her daughter’s sexual assault.
…
As described by [the wife], symptomatology was indicative of a Major Depressive episode, with high levels of stress and some features of Anxiety. [The wife] reported a depressed mood, a loss of interest in activities, and sleep disturbance. She reported that she had gained weight and found it difficult to engage in daily activities as she was fatigued. She explained that she went about conducting the bare minimum for her children’s sake and felt that she had to continue daily in some routine to assist her children.
[The wife] described an inability to stop ruminating on the outcome of the court case and the events that led to the court case, her daughter’s disclosure of sexual abuse by a relative. In addition to depressive symptomatology, [the wife] presented with self-blame and guilt concerning her daughter’s disclosure of sexual abuse. She reported feeling like she “should have known.” She also presented with feelings of grief and loss for her daughter, the loss of her second marriage and the family life she had.
Current clinical presentation: [In late] 2022, a second Mental State Examination was conducted. [The wife] presented as somewhat flat. She reported that she was tired and had trouble concentrating. Her appearance was clean; however, she appeared to have gained weight, though she reported losing her appetite. She reported that she had experienced some trouble with her health. She made references to increased weight, fatigue, a desire to sleep but poor sleep, headaches, IBS and the appearance of white blemishes and red dots on her skin.
(Affidavit of Ms BB, Exhibit AE1-1)
I accept all of the above evidence which was not the subject of challenge. I am satisfied that the wife has made significant contributions to the care of the children in the period following their separation in the most arduous and difficult of circumstances. Dealing with children with depression and anxiety requires more effort and energy than dealing with those who do not. The added stress of dealing with a child who has been sexually assaulted by a relative and is self-harming and expressing suicidal thoughts is significant. I am satisfied that the wife’s parenting contributions in those circumstances were substantial. They are made even more arduous where she is suffering from her own mental health problems and is doing it all completely unassisted by the children’s father. I am comfortably satisfied that the wife’s contributions in the period post separation have been significant and substantial and were undertaken in the most trying of circumstances. A 5 per cent adjustment is in my view a most appropriate adjustment reflecting her significant contribution post separation.
Accordingly, I am satisfied that a contribution based analysis leads to the conclusion that the parties’ assets should be divided in the proportions as to 55 per cent to the wife and 45 per cent to the husband.
ADJUSTMENTS UNDER SECTION 75(2) OF THE ACT
Each party sought an adjustment in relation to the matters under s 75(2). On the part of the husband, he sought an adjustment as to 5 per cent as a consequence of the deterioration of the vision in his left eye. In that respect he relied upon a report dated late 2022 from Dr DD, clinical associate professor, who specialises in medical and surgical retinal disease. Dr DD in his report states that the husband suffers from a serious eye condition. He opines that the “condition cannot be completely cured” and that the husband “has reduced vision in his left eye […] when he was seen [in late] 2022” (affidavit of Dr DD, Annexure B). He opines that:
[This condition] is associated with scarring of the neural tissue and the underlying pigment layer. This will limit the recovery of sight. I do not anticipate that [the husband] will recover 6/6 vision in the left eye.
(Affidavit of Dr DD, Annexure B)
Under the heading “[w]hat is [the husband’s] long term prognosis”, he reports:
This question is difficult to answer as the course of [this condition] is so variable. At best, the exudation at the left macula settles but there will be continued reduced vision in the left eye due to scarring. There remains a constant risk of recurrence […]. This will ultimately affect the long term prognosis of sight in the left eye.
(Affidavit of Dr DD, Annexure B)
Under the heading of “[w]hat are the potential complications of [the husband’s] condition and how likely is it that they will occur”, he reports:
There is a significant risk that [the husband] will develop continued exacerbation of [the symptom]. With the development of scarring, there is a risk of developing [another condition] and this would cause a more severe acute loss of sight.
(Affidavit of Dr DD, Annexure B)
The husband’s counsel conceded that it was appropriate that there be an adjustment in favour of the wife for the matters under s 75(2). He contended that that adjustment would be 5 per cent but it would not be as high as 10 per cent.
The wife contended that there should be an adjustment in her favour under s 75(2) because of the disparity as to income, her ongoing obligation to support X and Y, her mental health issues and for the matters of non-disclosure.
There is a clear income disparity between that of the husband and that of the wife. Currently, the husband’s income is identified in his Financial Statement at $800 per week together with a $70 meal allowance. These are said to be gross payments. The husband gave evidence to the effect that he paid himself $1,000 per week. His oral evidence is inconsistent with his Financial Statement.
The husband is an experienced tradesman. He agreed during the course of his cross‑examination that he pays his subcontractors $400 per day. Accordingly, if the husband chose to work as a subcontractor tradesman, then his income may well be approximately double that which he earns through his own business.
The wife currently earns no income. Her psychologist indicated that she was currently unfit for full time employment, however, she did not opine as to her capacity to undertake any form of part time employment. Her psychologist diagnosed her as having a major depressive disorder and that her health was currently vulnerable. I accept the evidence of the wife’s psychologist.
The wife’s psychologist opines:
Level of dependence on [the wife] by her children: the information obtained in the course of the interviews/ sessions with [the wife] indicates that her children are highly reliant on her for their well-being and mental health, especially her daughter [X] [sic]. The information provided by [the wife] of the symptoms that she notices in her daughter indicates that she is expressing a severe depressive episode.
[The wife] reported that her daughter has stopped engaging with her friends, has odd times when she is awake and asleep, prefers to sleep late, experiences fluctuating moods and appetite fluctuations, and has repeatedly expressed suicidal thoughts and feelings of helplessness, hopelessness and no future. The information presented by [the wife] indicates that her daughter relies heavily upon her to help her process her emotions and the trauma she has experienced. [The wife] reported that her daughter is currently taking medication, but she is not receiving psychological help as she has turned 18 years and she is unable to continue to receive support from the Child Protection Unit of [AF Hospital]. The information presented by [the wife] suggests that her daughter is extremely vulnerable at this point in time and requires psychological, physical and emotional support due to her frail mental health.
(Affidavit of Ms BB, Exhibit AE1-2)
Y currently attends upon Dr D, psychologist. He was not required for cross-examination. I accept his evidence. His report records the following:
2.[Y’s] mental State, including whether he presents with any symptoms which meet the criteria for a mental illness or disorder according to the DSM-5, and any diagnosis that you make of [Y’s] mental state.
Further to my comments above, it is my opinion that [Y’s] initial presentation which included symptoms of stress, feeling sad or hopeless, irritability and anxiety as a response to the disclosure of his sister’s abuse and its subsequent events met DSM 5 diagnostic criteria for Adjustment Disorder, with mixed disturbance of emotions and conduct (309.4).
Both emotional symptoms and disturbance of conduct were predominant. His presentation was not better explained by pre-morbid functioning, bereavement, was not an exacerbation of a pre-existing disorder, and I did not have evidence that criteria for another mental disorder was met.
Current diagnosis is Adjustment Disorder, with Anxiety (309.24). His main presentation includes nervousness, worry, doubts, and general apprehension which are greater than expected developmentally. Importantly, [Y] has expressed that these emotions are predominantly present in relation to the life events described above.
In relation to his mental state. [Y] continues to experience some emotional outbursts, which include aggressive behaviour, however my understanding is that these have been rare this year, better managed, and are not a predominant feature of his presentation. Nevertheless, they are still of concern.
…
4.The level of dependency reported by [Y] that he places upon his mother with respect to his care physically, emotionally, psychologically or otherwise
[Y] has a strong positive attachment to his mother. In session, he has described her as an integral part of his current and past ability to cope with the events that I have described above. Although he does not deny that sometimes they may experience disagreements, [Y] acknowledges benefiting from her input and advice in relation to his daily functioning. This includes his day-to-day organisation for health, school, work, and social life.
He has described the support from his mother includes encouraging his independence through the assignment of chores, getting him to source information about activities and providing him freedoms in relation to social activities and encouraging his musical persuits (sic).
[Y] has described his mother as a primary carer even before the separation. He has stated that his primary recollection during his life is of his mother being the one who took care of things for him and his siblings.
(Affidavit of Dr D, Exhibit AE-2-2)
I have earlier referred to the significant problems that X is suffering from and the role that the wife is playing in providing her with support. It is clear that she will play an important ongoing role in both children’s care.
I accept the wife’s evidence in relation to her ongoing responsibilities in relation to X and Y. This was not the subject of any challenge by the husband’s counsel. In Palumbo & Mandel (2019) FLC 93-929, the Full Court observed:
56.There is no doubt that s 75(2)(c) directs attention to children of the marriage who have not attained the age of 18 years. However, s 75(2)(o) is expressed in the widest terms and enables the Court to take into account “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”. It is well settled that s 75(2)(o) enables the Court to take into account the financial consequences to a party arising from that party’s care or support of an adult child.
57.In Lint & Lint [2011] FamCAFC 115 the primary judge made an adjustment in favour of a party by reason of that party’s care of an adult child who had autism. The primary judge also took into account that party’s expected “financial burdens” for a child who was then 17 years old that would arise once that child commenced tertiary studies. The Full Court in that case said at [183]:
…[T]he section 75(2) adjustment determined by the trial Judge included, as we have earlier indicated, a significant adjustment for the future care of the parties’ children. Nothing to which we have been referred demonstrates that the trial Judge’s discretion miscarried, or was based upon material errors of fact. Nothing to which we have been referred demonstrates that the section 75(2) adjustment determined by the trial Judge, which favoured the wife by approximately $1.4 million, was based upon inadequate recognition of the wife’s future parenting of the children.
58.In Zaruba & Zaruba (2017) FLC 93-776, an adjustment was made in favour of a party by reason of that party’s ongoing care of her adult daughter who had a significant disability, albeit, the adult daughter was not a child of the other party. In relation to this approach, the Full Court said at [130]:
His Honour found that “[the wife’s disabled daughter] is now 18 years old and whether the wife has a legal duty to maintain her remains an open question on the evidence” (at [156]). Given the combined effect of s 66C and s 66L of the Act in light of his Honour’s findings that the adult child suffers from a “significant disability”, it may be said that the wife does indeed have “a legal duty to maintain her”. Be that as it may, past care of that child, now an adult; receipt of the carer’s pension and the evidence of the modifications to the Mindarie property to which we have referred all point to the future care of the wife’s daughter being a significant matter pursuant to s 75(2)(o) of the Act.
59.A similar approach was taken in D & D [2004] FMCAFam 154 by Bryant CFM (as she then was) who made an adjustment in favour of a party who had full time care of the parties’ 26 year old child who had a significant disability. Bryant CFM determined that caring for the adult child was “a full time and unrelenting task which [the mother] will undoubtedly carry out for the rest of her life, at least until she becomes unable by virtue of her own health to do so” [31] and which justified a sizeable adjustment in the mother’s favour.
60.From these cases, it can be seen that cogent reasons were given for the adjustment arising from the care and support of adult children and the evidence was much more than mere speculation about whether the adult child would remain in that party’s care.
I am satisfied in all the circumstances that her ongoing responsibilities in relation to the adult children, the income disparity, her health issues and the non-disclosure warrant an adjustment under s 75(2). I accept that the husband’s vision issues also warrant an adjustment. I also take into account the effect of my findings as to contribution.
Having regard to all of the evidence and the matters in support of each party under s 75(2), I am satisfied that taking all of this into account warrants a further adjustment in the wife’s favour as to 10 per cent.
The consequence of my findings is that the property of the parties will be divided as to 65 per cent to the wife and 35 per cent to the husband.
CONCLUSION
The effect of my findings as against the pool of assets is that the wife will receive assets having a value of $1,708,680 while the husband will receive assets having a value of $920,058. I recognise, however, that a division in those monetary terms is somewhat illusory as part of it includes paid legal fees.
The wife seeks orders for the immediate sale of the Suburb T property while the husband’s counsel asked that the husband be given three months to raise funds to pay the wife’s entitlement failing which the property be sold. The husband has adduced no evidence that he has a capacity to raise funds of the magnitude necessary to pay the wife’s entitlement. In the absence of evidence, I see no reason why the wife should have to wait. I will order an immediate sale of the property with the wife to receive 65 per cent of the proceeds of sale and the husband to receive the balance.
No submissions were advanced by the husband’s counsel as to the appropriateness or otherwise of the wife’s orders for sale of the property. In circumstances where the husband’s orders provided no mechanism and in the absence of a submission I adopt the wife’s orders.
The balance of the parties’ property including superannuation entitlements totals $1,478,739. The wife is entitled to 65 per cent of that amount being $961,180. As the wife already has property and superannuation entitlement’s having a value of $899,659, the husband will be required to pay her the difference being $61,521 from his share of the proceeds of sale.
The husband’s counsel made no submissions on the issue of the indemnities as sought by the wife. In circumstances where the husband will retain the corporate entities and where I am satisfied that there has been non-disclosure, I will order that the husband give the indemnities sought by the wife.
I am of the view that this represents a just and equitable outcome.
SPOUSAL MAINTENANCE
The wife sought an order by way of spousal maintenance in the following terms:
9.Pursuant to Section 72 of the Family Law Act 1975 (Cth) the Husband shall pay by way of spousal maintenance the following for a period of two (2) years from the date of these Orders:
(a)All instalments for the premiums for the Wife’s private health insurance policy at the present level of cover, and any gap payments for medical expenses;
(b)All instalments for the premiums for the Wife’s comprehensive and compulsory third party motor vehicle insurance, and registration fees, for the Wife’s motor vehicle;
(c)The Wife’s fuel expenses and toll expenses;
(d)The rental bond and the ongoing periodic rental payments for the Wife’s accommodation.
Upon inquiries with counsel for the wife, she indicated that the wife was not opposed to an order by way of a periodic sum. By reference to the wife’s Financial Statement, the quantum of funds she seeks by reference to the categories referred to above is in excess of $1,300 per week.
There was no challenge to any of the wife’s estimated expenses in her Financial Statement.
The wife is required to establish to the satisfaction of the Court that she is unable to support herself adequately not only by reason of the matters set out in s 72(1)(a), (b) and (c) but also having regard to any relevant matter referred to in s 75(2). There is no liability to pay maintenance unless the need of the applicant is first established.
The onus of establishing a need is on the applicant. If the applicant cannot establish an inability (which will not be inferred) to support himself or herself, then an order for spousal maintenance cannot and will not be made (see Rowan and Rowan (1977) FLC 90-310 and Stacy and Stacy (1977) FLC 90-324).
Determination of the question of whether an applicant for spousal maintenance can support himself or herself adequately is not to be determined by reference to any fixed standard or absolute standard but by reference to the matters referred to in s 75(2) (see Mitchell and Mitchell (1995) FLC 92-601 at 81,995). In Atwill and Atwill (1981) FLC 91-107, Nygh J held at 76,792:
“Adequately” imports relativity. Subsistence may be adequate for some applicants but not for others. It must be viewed in the light of para. (g) of sec. 75(2) “a standard of living that is in all the circumstances reasonable” …
In Wilson and Wilson (1989) FLC 92-033, their Honours held at 77,453:
… A standard of living that in all the circumstances is reasonable for the party claiming maintenance is not necessarily the same standard as that enjoyed by the party who is ordered to pay maintenance. … Similarly, the standard of living that in all the circumstances is reasonable for the wife in this case, is not necessarily the same standard as that enjoyed during cohabitation. …
The husband’s counsel properly conceded that the wife was unable to support herself adequately. The argument turned on whether the husband has a capacity to pay ongoing spousal maintenance.
The husband’s Financial Statement reveals his income to be $870 per week. His expenses are $869 per week. He gave evidence, however, that his income was actually $1,000 per week plus I am satisfied that he has the capacity to earn more as a subcontractor. I have also found that the husband has failed in his obligations of disclosure in the circumstances to which I have referred to earlier.
I do not think it appropriate to make the orders in the form as sought by the wife. In circumstances where there has already been significant disputation between these parties about the payment of various expenses, an order that requires the husband to make the various payments sought by the wife will only cause further conflict between the parties.
No submissions were advanced as to why the order should last for two years. In those circumstances it seems purely arbitrary.
Part of the wife’s expenses included expenses which in part benefited the children such as rent. Doing the best I can in assessing the wife’s need, taking into account the effect of the orders I will make under s 79 and the concession by the husband’s counsel, I am satisfied that the husband should contribute the sum of $600 per week by way of spousal maintenance up until the time she receives all of her property settlement entitlement.
I accept this is less than her asserted need but I recognise she also will have a capital sum.
I propose to make orders accordingly.
I certify that the preceding one hundred and thirty-eight (138) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 11 May 2023
2
8
0